I think it's the last one. It's the ultimate subscription.

Single family homes are about the worst thing you can rent out if you're not counting on appreciation.

Eh it’s a depreciating asset, which you can write off over 27.5 years. There are plenty of advantages for owning SFR as an investment.

And this article was written when rates were still stupidly low.

Ummm

I know multiple people who have secured their life doing that, though with smaller homes (and of course, they prefer duplexes, but the right SFR works).

And, i don't know that many people!

Did you factor out appreciation?

Because gambling on single family appreciation has been a great winning move for decades now, but if you factor out that almost all SFRs have negative cash-flow.

Well, they have negative cash flow but people endure that because of the leveraged appreciation.

I did't do their math.

The people I know that are doing this seem to do well.

I do not know if that is because of the low mortgage rates up until last year or if they have some other secret, like only buying houses they can get a positive cash flow from.

"if you're not counting appreciation" is doing a whole lot of legwork in this sentence.

It's doing all the legwork - SFRs are negative cash flow, and the only reason to hold negative cash flow properties at the absolutely horrendous cap rates they have is because of appreciation.

But appreciation cannot go on forever or each property will be infinitely expensive and nobody will be able to afford them. It is a dance that will end at some point.

Australia is a fantastic image of what happens in that process, and they don't show much sign of slowing, being even worse than the States' issues.

It can certainly go a lot longer than people will expect, and it will have weird side-effects (California also gives some hints, what with huge appreciation and prop 13).

The biggest hurdle now is the jump from renter (or living with parents) to homeowner; there used to be "starter homes" that could get you on the treadmill but even those are quite high.

Once you're on the treadmill it's not that bad as house prices in an area tend to be in lockstep, but that first step can be a big one.

Or, the end result is a separation of lords and serfs, where the very few that can buy houses own all of them and no one else does.

In Australia at least, I'd guess that standalone homes are at the juncture of 'rentable' and 'appreciation of the base land' (which is usually what is rising in value).

Land can be subdivided as lifestyles change. A house can be extended or rebuilt with a second storey. An apartment can generally be updated internally on the same footprint, but not much more. Institutional buyers would be well positioned to redevelop a house to semi-detached dwellings, or apartments, or retirement facility.

Here, over 30 years to mid-2022, houses rose 453%, units 306%. In the last ten years only, that same change was 82% for houses, 47% for units.

For a long time the famous version of this in cities as parking lots.

Buy a lot, pace it as a parking lot which earns enough to cover taxes, and wait 10/20 years.

Karl Marx answered all of these questions back in the 20th century.

19th century my guy

I'm more of a Proudhon guy myself

worked fabulously for those who took his answers to heart!

Like Pol Pot who only seemed to have read the manifesto?

many others who had read more than that but with similar results

Restore serfdom.

My guess is that houses are an inflation-resistant asset. It's a good place to dump money if you have too much. And the downside is limited by political inertia: most voters own homes and would suffer if their house lost value, so the American political system will sacrifice much to prevent housing prices from going down too much.

> I'd love someone in one of the "strategy" arms in one of these funds to explain what they think the end result of this is at it's extent?

You buy homes in a region if you think the population will rise, interest rates will be relatively low, job prospects will be stable, etc which will lead to increasing home values.

Whether they want to profit by flipping the homes or by renting them, I don't know. But it's a bullish bet on texas home prices by people who could politically influence human migration policy ( both domestic and foreign ), fed policy/interest rates and even jobs/economy. Meaning they can place the bet and pull the strings to make the bet pay off.

This is about cashflow. Consistent cashflow at that. To achieve that everything needs some sort of subscription model. Rent is the subscription model for housing. These consistent cashflows then can be bundled into some sort of financial products and sold to investors -- something similar to the financial products during the 2008 crash. Just that now instead of interest payments which might crash, rents can be stabilized. Even if things go wrong equity is still protected due to the house.

1. Find a place with a growing population and restrictive zoning

2. Corner the housing market

3. The population keeps growing but the restrictive zoning means more housing doesn't get built

4. More people competing for the same housing stock means prices increase

Whether they keep the housing forever or not isn't what they're thinking about, they can decide later.