All the companies that tried this failed spectacularly and closed up shop. Even with "free" money.

But what if one succeeds (or is but you don't know about it)?

Yeah, and what if they gave away houses out of the goodness of their hearts?

What-if games don't provide great insights in cases like these. Trust me, if it worked at these scales, you'd hear about it.

There are plenty of REITs operating in my city that have substantial detached residential holdings.

The EV on renting and holding substantially improves if the housing market takes off like a rocket. It might not work in your market, but that doesn't mean it doesn't exist.

Wild speculation and hypothesis doesn't mean it exists, either.

It's not a hypothesis. You don't need to believe it exists and it may be less common in your market. I know this is true firsthand as in the course of my work, I review the financial and legal side of these entities at times.

Open Door alone owns like 600 homes where I live. Black Rock owns entire subdivisions and communities. Not sure what you mean.

Open Door has laid off 20% of it's work force, it's stock has gone from $24 to $1.5 in a year, and it's losses are increasing.

Black Rock was buying entire subdivisions developed for the purpose of being sold to investors. They were basically large scale apartment complexes. That's wildly different than buying up random homes throughout a city.

Zillow had to give up last year and showed a $300 million loss, and now Redfin is too. I'm not saying it's impossible, but SFH flipping doesn't scale well at all.

I still dont know what you're talking about or if you're just unaware of the data.

"Locally, NAR data showed 38% of single-family properties purchased in Harris County in 2021 were bought by institutional investors. Property data from the Harris County Appraisal District shows nearly 7,000 homes in Harris County as of June are owned by five NRHC members and their subsidiaries."

https://communityimpact.com/houston/bay-area/city-county/202...

>Citing NRHC member-provided data, Howard said that out of 23 million single-family rental homes in the U.S., only about 300,000, or 1.3%, are owned by large companies.

NRHC includes the aforementioned Blackrock. Your quote says the top 5 SFH companies own 7,000 homes in Harris County. A county with 1.6 million homes. The sexy headline of 28% of all homes being bought by institutional investors says an LLC is an institutional buyer. It wasn't Blackrock hoovering up all these homes, it was smaller shops and normal people flush with cash and leverage.

Your idea of "normal people flush with cash" is ... private equity lol. It's incredibly common for companies to spin off random LLCs to buy up whatever they want.

Putting a rental in an LLC is very standard advice for anyone buying one. You've clearly made your mind up about this and won't change it if you think PE is buying up all these homes when you linked an article saying 5 public companies with $110 billion in market cap with access to almost unlimited amounts of cash only managed to capture 1.3% of the market.

7,000 homes in ONE county isn't a big deal to you, so there's clearly no convincing you either. Take care.

Yeah I'd have no problem if they want to just swoop in, fix up a house that just needs some love and then get a profit. I don't mind buying an old place but I really don't want to deal with renovating one myself.

If every house costs $600k because it's been "flipped" with brand new appliances, a coat of paint, and other BS things, how the hell is a new generation supposed to afford that?

As soon as someone isn’t improving a property, it isn’t a flipper. Sitting on property exposes them to market risk and makes them a regular corporate landlord.

The driver here is if they can get low interest to zero interest loans. If we remove that then problem blows up.

We could do that by changing how banks come up with the interest rate on corporate loans versus individuals who want loans.

The problem doesn't necessarily blow up immediately. If people's analysis of the EV of a particular deal is positive on the basis of the bubble continuing, some groups will find continued investment is within their risk tolerance and keep going.

However, if interest rates rise, the EV drops, and sentiment may shift which will substantially increase the risk that market appreciation strategy fails.

Eventually the music stops and enough investors stop pumping the asset class, it peaks, and the lack of retail ability to shoulder the debt-load results in collapse in pricing - some major US banks have indicated that mortgage originations are down 90% this year.

Interest rates are only part of a larger calculus. What ultimately blows the problem up is a shift in perception about real estate being a good investment vehicle for large sums of capital.

The home ownership based public policy for this is to have high residential property taxes that are 90% reduced for homesteaders.

The downside is that such a policy reduces rental properties available.

This will never happen because the credit ratings for municipalities depend on property taxes.

This is the kind of take that could fearfully explain why a national corporation like like McDonald's would be able to corner the food supply to raise prices, then buy up restaurant sites to prevent others from using them. Or how billionaires could purchase all the tickets at Disney World so no one else can go.

Sure, you _could_ waste all your money on villainous anticompetitive practices, but it's more profitable to a) provide a service where you have an efficiency advantage b) only purchase things you need, bidding at the margin, where people don't mind selling to you.

I would expect a system where Open Door is active to be better for consumers and investors than the incumbent system you represent.

Yes but opendoor just competes against other companies of scale.

The issue is that individuals who wish to purchase and live in homes cannot compete with companies of scale at all.

So it’s not about anticompetitive practices, because it’s now two corporate incumbents competing, but a corporate incumbent competing against an individual, who stands no chance against that scale of cheap money.

Competitive effects do not always lead to desired outcomes even if they create healthier markets.

Its different from restaurants because housing is a local monopoly, or locally monopolizable. This is due to regulatory constriction of supply and lack of for-like alternatives.

You can't corner the food market by buying restaurants both because there are grocery stores and anyone willing to wade through a small amount of red tape can start a hot dog stand to undercut you. You can corner the housing market in a school district, or neighborhood because families can't live in tents or cars and the government forbids via zoning would-be opportunists from undercutting a monopolization attempt by e.g. turning their 1 unit dwelling into a 5 unit dwelling.

This comment is so intentionally disingenuous I don't even know where to start.

But I'll just offer up this:

"Large investment firms are converting single-family homes to rentals and building communities to rent in the Houston metro area to help meet rising rental demand, while the housing shortage is driving more people into renting. The Houston Association of Realtors reported June 15 the number of leased single-family home rentals increased 24.8% from May 2021 to May 2022. While rising mortgages and low inventory are contributing to the trend, experts said potential homebuyers are also facing competition from real estate investment firms—or institutional investors—buying properties to sell or lease.

Locally, NAR data showed 38% of single-family properties purchased in Harris County in 2021 were bought by institutional investors. Property data from the Harris County Appraisal District shows nearly 7,000 homes in Harris County as of June are owned by five NRHC members and their subsidiaries."

https://communityimpact.com/houston/bay-area/city-county/202...

In what world would you imagine that this is better for consumers?

I also don't "represent" anything. I worked in real estate from a technical side (mostly CRE), and had nothing to do with the trash that goes on from either side. I just got to witness it.

> Sure, you _could_ waste all your money on villainous anticompetitive practices

History shows time and time again that anticompetitive practices are wildly profitable.

I'd argue that the key difference is that the public isn't having to deal with a McDonalds induced food price increase while the public is very clearly having to deal with housing price increases induced by practices of this sort, especially in big cities.