https://wraltechwire.com/2022/02/24/investors-are-buying-1-in-4-homes-in-raleigh-1-in-5-in-durham/
I suspect that % has risen since February, given the relentless rise in prices that has priced a lot of individual buyers out of the market altogether.
The green dot is when I bought my current house.
My understanding with most local landlords is that they own apartments or a couple of duplexes as a side investment, or somebody will move and rent out their house rather than sell. My understanding was that the big change was in big far away investors buying up single family houses.
Additionally, a lot of it seemed to be on the lower end of the market (bidding up prices quite a bit) and especially in minority neighborhoods. $225 k houses are now $300k. I don't see it happening in my town or the much more well off towns near me with the $2.5-$4 million dollar houses.
1: Yes, I wonder about how common that is here -- as I probably have mentioned before, people call me all the time wanting to buy my house.
According to this article, about 1 in 5 homes in Columbus are bought by investors.
https://mortgageorb.com/investors-continue-to-buy-single-family-homes-at-record-rates-in-q1-2022
I say (a) yes, cutting down on them would help somewhat, and (b) they're nowhere near the root problem, they only got into the business after excess scarcity started making it worthwhile. (Private equity firms make this point super-explicit in their prospectuses.)
My favorite house in town went on the market last year, and was bought by an investment company and sat empty all year before going on the market again. I just looked it up and it sold *to another investment company*. The faculty who lived there before bought it in 2011 for 300k, the first investment company bought it in August 2021 (which is very late in the season for housing sales here) for 480k, they listed it this summer at 565k and somehow sold it to another investment company for 455k taking a loss. I wonder how long it's going to sit empty? Maybe I should try to buy it the next time it goes on the market.
This is very popular practice in university towns because there's almost always lots of potential, not overly fussy renters. Which is consistent with the trend being most pronounced on less expensive homes. This was happening to some extent in my town even before investment groups jumped in big time, mostly foreign buyers.
I'm curious how the huge drops in undergrads from mainland China is going to effect the top end of our real estate market. Who is going to buy a $1m condo now?
Everyone loves the single-villain explanation, although the villains vary...
I wonder how the bump in mortgage rates will affect this phenomenon. If they are paying cash and think they' can jack up rents regardless of what the Fed does, then the rate hikes will only serve to accelerate the trend, no?
I guess all the money in commercial real estate had to go somewhere in anticipation of the "office is ded" phenomenon. Locally I think it's a similar percentage, and home prices have risen 10% per year since 2018. We are fortunate to have bought in 2011 but there's nothing for us to upgrade to that we like in a reasonable price range - and ours is considered a starter home.
We bought a condo in Boston in December, after several months of making losing bids, usually to cash offers made on the first day the place showed. A few of those went for 10-15% over asking. I don't know how many of those were institutional investors, though. Cash offers aren't only happening at the low end of the market. It did seem that properties toward the upper end (above maybe $2.5M or $3M) have been slow to sell, but anything below that gets snapped up as soon as it goes on the market.
We may have overpaid a bit, but we managed to get in just before interest rates started going up again. If we had waited any longer we would have been priced out of anything in the location and size range we were after.
Locally, I've heard that "cash offer" just means they waived the mortgage contingency, but most of them are indeed getting a mortgage. They are just betting their hand money that they will get the mortgage on time.
We did hear that about one of the places we lost to. Maybe it was true of the others too. I wouldn't be surprised if they were all just bought by families, but I also wouldn't be surprised if there were some institutional investors.
https://better.com/content/better-cash-offer-faq/
This company, Better Mortgage, buys the house first and then sells it to the home-buying individual if you use one of their agents. They are skipping the appraisal step which means that the sale can close faster. Someone made a "cash offer" on the house we bought but then walked away because they couldn't get a loan to cover renovations. When the former owner''s heirs put he place back on the market, they were spooked and took our offer, which I'm sure was lower, because our mortgage person was well known, and they were assured that our loan would close on time.
essear - I didn't realize you were still/back in the Boston area.
16.last: It's like you don't even know what a puppy is!
17: I must have missed a thread.
The puppy turned out to be one that could be kept. It's now a full-grown dog. A solid achievement.
Truly what has become of the world when a full-grown dog is having trouble purchasing property.
21: I think the place even helps with getting less than 20% down loans without having to pay PMI.
21: I think the place even helps with getting less than 20% down loans without having to pay PMI.
I certainly wouldn't trust a puppy to pay a mortgage reliably.
If you're paying your mortgage on the internet, nobody knows you're a dog.
There's a popular theory--I've seen Yggles say it many times, but I don't believe it's his own idiosyncrasy--that professional, large-scale property management would be a good thing. It's based on one solid observation--that a lot of small-scale landlords lack the capacity to do a good job, esp. RE maintenance--but falls apart under any examination because, duh, large management companies already exist, and everybody knows that they're just as likely to be shitty as anyone else, but with the added advantage of a much less flexible approach to rent payment.
I would guess that management companies that hold a portfolio of new & recently-renovated properties probably tend to be OK because their business model is akin to a luxury car dealer--they can afford to give you a nice loaner and have decent coffee in the waiting room because you're paying for it. But that doesn't transfer at all once you get into the middle and bottom of the market, where the profits basically come from merciless rent extraction and deferred maintenance.
Yeah, professional property management has the capability to provide better service, but not necessarily the inclination.
I don't think big concentrated ownership is a major factor in the housing crisis now (more homevoter cartels), but it could become so in the mid-future if ownership concentrates to oligopolistic levels. And I bet those property managers would be more like Comcast. So I'm fine with trying to hinder further concentration.
27, 28: Huh. I've been renter my entire life. And since 2004, always in owner-occupied properties. I've concluded that living on the same property as the owner is key to having a good tenant experience. The idea of renting from some big distant company .... yeah, maybe they're professionalized, but it's not in doing a good job: it's in extracting maximum profit. I always prefer small landlords, even though, sure, some can be assholes. And if they have to live in the same property, maybe there's a limit to how assholish they can be.
You could get hand-crafted artisanal assholery if they don't like you.
Speaking of artisans, apparently trolling Etsy is a thing.
And if they have to live in the same property, maybe there's a limit to how assholish they can be.
Depends how old, cranky, and isolated they get. A relative just got out of a situation where she was the only tenant for many years, but the owner-occupier got increasingly harassing and accusatory.
27 and 28: when does something become large? Our landlord turned out to be inept at accounting, because we had o write a demand letter to get the interest on our last month's they had to pay us 5%, because they had no records. But the family owned 3 medium-sized, and one small apartment building and had a full time maintenance guy with some helpers who were probably casual labor.
Re flexible rent policies. The father basically retired to Florida, and things changed when the two daughters were in charge, though one had worked in real estate for somebody else, and when she came back she did a betters job. We had a guy who had a stroke and wound up on disability, and the father sent a card saying don't worry about the rent for a few months while you get your health and disability insurance sorted out. It was both decent and good business. Eventually at 65, he had to move out (higher rent and lower income when he lost private disability insurance).
How many buildings does it take to become a property management company and not a local landlord?
I think in the "professional would be better" discourse people are talking about multistate or national companies with hundreds of full-time employees. But a lot of rental ownership is in between in a way not much talked of - in particular family businesses that own dozens of buildings and have real sway in one metro area, but might be run fairly informally.
Providence has a legendary slumlord who rents to students that's technically a "family business." Everyone who's in the know withholds their last month of rent from him because he is notorious about never returning security deposits. I think IHMHB the particular bullshit he used to keep our deposit involving paint and naked breasts.
Tim is involved in the Masons and there was this one guy who was super involved for a while, who is a lawyer involved with the county bar association and bragged openly about illegal eviction tactics. He also took money for lead paint remediation without actually doing anything about the paint. He got elected to leadership several times (man6 more times than you are supposed to.). He tried to turn their facility into a daycare and to put a cell phone tower on the lodge. I guess he just didn't think about the need to delead a 1920's building before letting little kids in.
I wish they would kick the guy out on character grounds, The family has this weird obsession with spending money to put up statues of some boxer. Here's a piece about the guy's Dad. An equally upstanding guy, he objected to having his license taken away after he killed someone while driving.
https://www.thesomervilletimes.com/archives/2591
I thought the point of the Masons was to facilitate white collar crime.
This is more NYC triumphalism, but the local regulation requiring a superintendent living either onsite or at least in a neighboring building for apartment buildings over a few units does make a big difference to the experience of apartment living. It's not quite owner-occupied housing, but there is a guy whose job it is to keep your place habitable where you have access to him to bother him 24-7.
40 Just filling the vacuum now that all the Mafiosi are in jail, too old, or dead.
(One such big landlord in Berkeley, CA, who died last year, was convicted of international sex trafficking and served 8 years! Kept his properties though, and now his family has them.)
I had no idea NYC supers were required!
Not just better for tenants, but a sprinkling of steady jobs. How many superintendent jobs are paid/housed well enough to raise a family? I feel like in movies it's always a solitary type, handy but grouchy, but ... movies.
I think the super for my building had a family? At any rate, he had a wife who had been doing their laundry in our washer/drier while the apartment was empty. I hope he was paid well because he had to clean up dog poop in the hallways more than once.
My building is pretty big, so we've actually got two full-time employees. The hereditary super (his dad, and then his mom when his dad died, both had the job before him) moved out to Westchester about ten years ago (he moonlights as a contractor, so he does pretty well). The guy who actually lives in the super's apartment is the porter, but he's fully competent to deal with minor plumbing emergencies and so on. The super is married with kids, the porter is married with no kids.
And most buildings, I believe, are union. Our two guys are both in the SEIU.
It never occurred to me it was a regulatory requirement until a CA friend was complaining that something was wrong with the trash chute in his building, and the trash room was just filling up with garbage. And I had a confused conversation about "why isn't the super coping with it" and found out that he thought supers were a thing on TV -- he, even in a nice and fairly expensive building, had an offsite landlord that wasn't responsive. So I looked it up and there is an NYC reg.
The moral of this story is that appropriate regulation can really appreciably change how well things work.
27: this is a "don't make one policy do the work of two" issue. if you want to make it more difficult to evict someone for non-payment, that's a question of tenants' rights no matter who the landlord is. if you think amateur landlords are a menace - they are! - it's a distinct issue. You're allowed to address different issues with different policies.
I have relatives in a fancy schmancy new condo tower in Seattle and their trash/recycling chutes are perpetually full. But I'm pretty sure they have fulltime building staff (a front door desk certainly) so maybe it was badly designed, or the tenants are twits, or of course the staffing is misallocated, or all three... One of the relatives has been on the condo board and I am fascinated by the, uh, badness of the popular arguments to not save up for maintenance.
Although they are very like the arguments on a *different* relative's rural mountainous private dirt road association to .... not save up for maintenance.