Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I know this was brought up tangentially in a few other threads, but figured it deserved its own more recent one (did a quick perusal so apologies if I missed if there already was one).
Yes, I know it depends on location...
When I first heard about it, I wrote it off as not a significant factor in the housing market since it wasn’t that big of a % of sales.
But now I’m hearing it could be 20% of sales or more in some places like Atlanta, Charlotte and Phoenix (although not sure if they’re referring just to city limits) - https://slate.com/business/2021/06/b...al-estate.html
That’s a pretty big deal IMO.
I know they bought up a lot of homes in 2011ish after the crash. Which makes sense: buy up homes for pennies on the dollar, rent them out and make a fortune when prices/rents increase.
At first glance, one (including myself) would think it doesn’t make sense to buy up homes now when prices may be at a peak.
On one hand maybe they’re of the opinion that “a crash like 2011 is rare” so are hoping prices don’t drop all that much and they still make money due to the premium of renting over buying, not to mention their apparently outrageous fees (which may be worthy of it’s own thread along with their reputation for being pisspoor landlords.)
But I guess the bigger fear is their overall effect on certain markets. If they are able to buy up significant inventory in certain areas, will they be able to keep sales prices high due to the low supply, which would likely in turn keep rent prices high?
Maybe this is partly a question for agents too. What % of sales in your areas are being bought by investment firms?
If they are indeed buying 20% of the homes that come up on the market, that will support prices and keep prices from falling.
That's a lot of money to put into real estate, so they won't be able to keep it up for too long.
That's also a heck of a lot of rentals to keep track of and manage.
I do know of one guy who owns about 20,000 homes, but in a city like Phoenix, with a population of 1.6 million, that's not enough houses to control the housing market.
..........hedge funds can build low income apartment buildings all over the country?.........
I suspect that hedge funds have very little interest in building low income housing. They are interested in profit and unless the government is heavily subsidizing the low income housing, there is no profit to be made in building it. Hedge funds are not altruistic non-profits and it costs lots of money to purchase land and build buildings.
Plus, the cost of building will be even higher with all the minimum wage increases. There is a lot of labor in putting up a new building and it isn't cheap labor, so that drives up the cost of any new housing, no matter what income level it is aimed at.
If they are indeed buying 20% of the homes that come up on the market, that will support prices and keep prices from falling.
That's a lot of money to put into real estate, so they won't be able to keep it up for too long.
That's also a heck of a lot of rentals to keep track of and manage.
Well as mentioned, it seems that they already don't mind being slumlords. Which doesn't appear to be stopping them from buying more.
Quote:
Originally Posted by anicon
the more likely scenerio- if/when the housing bubble collapses, everyone loses their pension in addition to their equity.
sounds like good times...
Certainly a possibility. I guess one could argue it is reminiscent of the mortgage-backed securities fiasco that contributed to the recession and RE crash. But somewhat tying back to oregonwoodsmoke's comments, I guess that may depend on how much of their total portfolio is tied to real estate (I have no idea).
But honestly part of the reason I posted this was because I saw an advertisement on facebook for a company called Doorstay, which apparently will buy your home from you and rent it back to you. I laughed at one of the commenters saying, "Great, it's the American Dream in reverse!" which I guess is true, but on the surface it could make sense for the speculators out there that think we are headed for a crash so that they can cash in on their equity and wait to see if prices drop, without having to move and rent somewhere else (depending of course on the sale and rent prices they offer). But if Wall Street is already buying up a lot of houses, we probably don't want to make it easier for them (although technically not sure if Doorstay is also "Wall Street")...
IMO, the only way for investors to make money on single family housing is through price appreciation. With all the expenses associated with owning a house in addition to the mortgage payment (taxes of numerous kinds, insurance, repairs, management fees, etc), you just can't get much, if any, positive cash flow unless you wait a decade or three and hope that inflation bails you out.
I just can't see investors willing to have zero (or negative) returns for a couple of decades in the hopes that they can cash in at some later date. I think it's a big gamble on housing inflation and that doesn't seem like a smart bet right now, IMO.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,351 posts, read 8,569,440 times
Reputation: 16693
Quote:
Originally Posted by Chas863
IMO, the only way for investors to make money on single family housing is through price appreciation. With all the expenses associated with owning a house in addition to the mortgage payment (taxes of numerous kinds, insurance, repairs, management fees, etc), you just can't get much, if any, positive cash flow unless you wait a decade or three and hope that inflation bails you out.
I just can't see investors willing to have zero (or negative) returns for a couple of decades in the hopes that they can cash in at some later date. I think it's a big gamble on housing inflation and that doesn't seem like a smart bet right now, IMO.
I disagree. I own sfh rentals and live off the net cash flow. I do not have a job.
I know this was brought up tangentially in a few other threads, but figured it deserved its own more recent one (did a quick perusal so apologies if I missed if there already was one).
Yes, I know it depends on location...
When I first heard about it, I wrote it off as not a significant factor in the housing market since it wasn’t that big of a % of sales.
But now I’m hearing it could be 20% of sales or more in some places like Atlanta, Charlotte and Phoenix (although not sure if they’re referring just to city limits) - https://slate.com/business/2021/06/b...al-estate.html
That’s a pretty big deal IMO.
I know they bought up a lot of homes in 2011ish after the crash. Which makes sense: buy up homes for pennies on the dollar, rent them out and make a fortune when prices/rents increase.
At first glance, one (including myself) would think it doesn’t make sense to buy up homes now when prices may be at a peak.
On one hand maybe they’re of the opinion that “a crash like 2011 is rare” so are hoping prices don’t drop all that much and they still make money due to the premium of renting over buying, not to mention their apparently outrageous fees (which may be worthy of it’s own thread along with their reputation for being pisspoor landlords.)
But I guess the bigger fear is their overall effect on certain markets. If they are able to buy up significant inventory in certain areas, will they be able to keep sales prices high due to the low supply, which would likely in turn keep rent prices high?
Maybe this is partly a question for agents too. What % of sales in your areas are being bought by investment firms?
Look at what else Blackrock owns.... and then look at WHO owns blackrock. One cannot easily find the latter. Pretty scary stuff.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
