Real Estate Crash thread

[TAFKALVS]

Yes. Buy and hold. It’s cheaper to not have a tenant. They don’t need the cash flow. They are hedging on rates dropping back to the 4-5% range and house prices going upwards again. These are big companies with big portfolios backed by big data/quantitative whiz kids who model this stuff out at scale.

I know someone who works for a company that does data science for portfolio investing of real estate and they will buy up all available homes in an area to hold. There’s money tied to this that is beyond what we can all wrap our heads around as poors.

[pepperdawg]

Someones got the loot for sure - I get unsolicited txts from out-of-state PH#s / Post cards via snail mail w pics of my property on front offering to buy my rental-duplex almost weekly. "Need cash? We close quick for cash etc etc."

Its in a neighborhood made up of similar type properties (multi-family rentals).

We also have a 1BR condo rental property out in the sticks in a rural zip code.......never once have we had one offer(to date).

[MontuckyFried]

Yes. Buy and hold. It’s cheaper to not have a tenant. They don’t need the cash flow. They are hedging on rates dropping back to the 4-5% range and house prices going upwards again. These are big companies with big portfolios backed by big data/quantitative whiz kids who model this stuff out at scale.

I know someone who works for a company that does data science for portfolio investing of real estate and they will buy up all available homes in an area to hold. There’s money tied to this that is beyond what we can all wrap our heads around as poors.

Gentlemen? I think we may have just gotten to the root of the problem!!! Whereas these billionaire dickheads would have us all squabbling about STR and out of towners invading, the ACTUAL truth is more insidious. Everything else is just a distraction. That is so messed up they're purposefully driving down available inventory to both buyers and renters alike.

Next time you see that guy who does all that data science, would kindly please kick him in the nuts on our behalf? Tell them they can pass along the nut kicking to their higher ups. Thank you much.

[Foggy_Goggles]

So the institutional investors are buy and hold passive investors in single family homes. They are activtly reducing supply by just letting them sit. Then they selectively rent them at artificially low prices. Got an Excel or back of the envelope calc you can share?

[MontuckyFried]

So the institutional investors are buy and hold passive investors in single family homes. They are activtly reducing supply by just letting them sit. Then they selectively rent them at artificially low prices. Got an Excel or back of the envelope calc you can share?

Who said they're renting them at low prices? They're not renting them AT ALL is what I've been seeing. They're buying and holding, thus screwing over everybody else in the market. I don't have any hard data to back this up. Just what I've observed in my own neighborhood. Homes that were snatched up at obscene prices that no real sane person could or would compete with, sold within hours of hitting the market, and then sitting permanently vacant. These are good condition homes too, so it's not like they're waiting to reno to get a tenant in or anything. Some have had the lights off for like a year+ now. It's bizarre.

[Foggy_Goggles]

Sorry. low supply was want I meant.

I'm just trying to understand the game and I'm not sure where paying above fair value to have them sit empty fits in.

Sent from my Turbo 850 Flatbrimed Highhorse

[TAFKALVS]

Sorry. low supply was want I meant.

I'm just trying to understand the game and I'm not sure where paying above fair value to have them sit empty fits in.

Sent from my Turbo 850 Flatbrimed Highhorse

Long game. Remember how impossibly expensive and unaffordable houses were in 2008? Don’t you wish you had bought a house in 2008 now?

[Foggy_Goggles]

So RE to the moon! I'm sure their are undervalued markets. Next time you talk to the sharps let me know what they says.

Remember, even the cash buyer needs a return. As mentioned up thread, I'm guessing the number must be 8-10% give what low/no risk liquid investment is paying right now.

And no I don't wish I bought in 08...now 98...that's a different story.

Sent from my Turbo 850 Flatbrimed Highhorse

[liv2ski]

Why are big companies allowed to buy single family units again and are not just limited to commercial projects? O ya, unfettered Capitalism. Such BS. If everyone is all worked up over AirB&B's why is your representatives phone not blowing up over this issue?

[TAFKALVS]

So RE to the moon! I'm sure their are undervalued markets. Next time you talk to the sharps let me know what they says.

Remember, even the cash buyer needs a return. As mentioned up thread, I'm guessing the number must be 8-10% give what low/no risk liquid investment is paying right now.

And no I don't wish I bought in 08...now 98...that's a different story.

Sent from my Turbo 850 Flatbrimed Highhorse

It’s about leveraging debt to buy physical assets that will increase in value at a greater rate than the devaluation of our currency via inflation.

[Foggy_Goggles]

So by "leveraging debt" I assume you mean borrowing in the capital markets to buy residential real estate.

Let's say you've got a 10 year time horizon and you want to build a $100million portfolio. Show be the math.

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[californiagrown]

Long game. Remember how impossibly expensive and unaffordable houses were in 2008? Don’t you wish you had bought a house in 2008 now?

I also dont see how the math favors buying houses and letting some sit empty, vs buying houses and renting them.

How much would you guestimate this strategy would need to increase housing prices to be financially better than rental income/equity building + normal appreciation?

E.g. I have a 500k home that i rent out at $2500/month = $30k/year. Add in about 5% appreciation per year and im at $55k in gross revenue in the first year. If i let my $500k home just sit and hope that the created scarcity raises the appreciation of my other $500k homes, then i would have to hope for about a 10% increase in appreciation, or about double the appreciation rate just to break even and would come with ZERO cashflow. I just dont really see that happening.

I would seem like the smart thing to do would be to buy up all the housing stock (thus creating scarcity for buyers), and renting out the housing stock to create revenue and cashflow, with the ability to sell off inventory that has appreciated when additional capital needs to be raised.

[Conundrum]

What do people need to survive? Food, water, shelter. What are the uber rich people buying-farm ground, water rights, property either high enough at elevation or latitude to avoid climate crisis, and single family houses not in natural disaster areas.

Outside of that, not too many long term safe investments. It's not something new. My grandpa told me when I was pretty young to buy dirt. He said it's something people absolutely need and they can't make more of it. I should have been a better listener.

I don't know the math on letting them sit empty but institutional investment in housing has been around for a long time. There's nothing sacred but find a politician willing to take this one. Their pensions and money is in the funds doing this. I bet a lot of TGR posters have some of their retirement tied up in it whether they know it or not.

[AdironRider]

This thread is taking an odd shift.

So we are just against property rights now? You have the inherent right to let a property sit vacant if you so desire.

[Foggy_Goggles]

I'm not even saying the theory is wrong. I'm just saying "show your work" in addition to some frothy mouthed word sald hot take.



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[rideit]

This thread is taking an odd shift.

So we are just against property rights now? You have the inherent right to let a property sit vacant if you so desire.

And you have an inherent right to be a dick, that is what led us to the disaster of Trump.
Certainly a ‘second way’ of investing that doesn’t screw communities and available housing stock would be better for us as a society. And living in a better society will reap more benefits, ultimately, that focusing on sheer personal or corporate greed.

But alas, some people are incapable of ‘thinking bigger than themselves’, and make decisions that benefit only them (or their corporation).

The choice is yours.

[Conundrum]

Who do property rights serve if a majority can't afford property? I think there was a declaration written about this awhile ago. Something about life and liberty or something.

[mud]

Institutional investors are not a major factor with availability or driving up residential pricing. It sounds good to the masses but there are a dozen more variables involved.

https://www.nar.realtor/sites/defaul...05-12-2022.pdf

[MontuckyFried]

I don't know the math on letting them sit empty but institutional investment in housing has been around for a long time.

Sure, but NEVER to this extent. Blackrock's on another level of dick behavior.

[Bunion 2020]

I strongly believe in personal property freedoms. I am not so supportive of VCs and Hedge Funds manipulating the housing markets.

[MontuckyFried]

So we are just against property rights now?

In US history, when certain corporations got a bit too big for their britches and start blatantly dicking over the average American consumer (yeah, yeah, nothing new), then it got addressed. Not that many didn't end up coming around full circle, but they at least TRIED to break up certain out of control monopolies.

I'm not sure we need to turn property rights on its head, BUT perhaps its time for the people and their representatives to start having some serious conversations. I'm not a big fan of the "DO SOMETHING!" approach as doing that 'something' too often ends up backfiring, but perhaps we really should take a step back and take a real honest look at all the variables and see what we can do about it. I wish there was a way to bring the power back to the consumer somehow without the usual crony corporatism (and choosing winners and losers) that too often happens when the Feds start getting involved (which is no small part of what led to the 2008 crash to begin with). Still, assholes like Blackrock need to go down.

[MontuckyFried]

I strongly believe in personal property freedoms. I am not so supportive of VCs and Hedge Funds manipulating the housing markets.

Exactly. These guys are riding high while the peons fight for scraps while arguing ad nauseum over trivial political issues. These distractions are intentional.

[MontuckyFried]

I also dont see how the math favors buying houses and letting some sit empty, vs buying houses and renting them.

How much would you guestimate this strategy would need to increase housing prices to be financially better than rental income/equity building + normal appreciation?

E.g. I have a 500k home that i rent out at $2500/month = $30k/year. Add in about 5% appreciation per year and im at $55k in gross revenue in the first year. If i let my $500k home just sit and hope that the created scarcity raises the appreciation of my other $500k homes, then i would have to hope for about a 10% increase in appreciation, or about double the appreciation rate just to break even and would come with ZERO cashflow. I just dont really see that happening.

I would seem like the smart thing to do would be to buy up all the housing stock (thus creating scarcity for buyers), and renting out the housing stock to create revenue and cashflow, with the ability to sell off inventory that has appreciated when additional capital needs to be raised.

I don't know about the math on investments, but when it comes to renting, here's an interesting piece about how thanks to software algorithms (thanks, tech bro dickheads), apartment management companies have learned that they can actually make MORE money through increasing vacancies and increasing rent prices. Something previously unthinkable in markets before:

Rent Going Up? One Company’s Algorithm Could Be Why.
https://www.propublica.org/article/y...-realpage-rent

We're doomed.

[Foggy_Goggles]

No shit...but what exactly does that have to do with your hypothesis above?

When we fall trap to the Golden Age of Bullshit we become part of the problem.

Sent from my Turbo 850 Flatbrimed Highhorse

[oldnew_guy]

This thread is taking an odd shift.

So we are just against property rights now? You have the inherent right to let a property sit vacant if you so desire.

No, but the tax code should make houses sitting empty when we have a housing shortage a dubious financial proposition, not something people can game for personal benefit while causing greater societal issues. Maybe once you get over a single entity owning three houses you get hammered. Multi-family owner letting units sit vacant get hit at a certain point. Etc.