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Ask HN: Which startups are working on solving the housing crisis/urbanization?

6 points by philippnagel 11y ago

deleted 11y ago
[deleted]
brudgers 11y ago
Housing and other real-estate development projects require much more money than moves around the startup ecosystem and such projects don't offer the sort of returns that those investors typically seek. Throw a billion dollars at an active urban real-estate market and maybe it moves a little and maybe it provides a low teens internal rate of return. There aren't unicorns in real-estate. It's a place where pension funds and insurance companies park assets for the term of fifteen and thirty year mortgages by backing project types with track records, e.g. Class A office space. To put it another way, adding a 1000 rental units in a place like San Francisco at an affordable $200,000 each (as if it were possible) requires two hundred million dollars in funding and would take four or five years for acquisition, entitlement, construction and occupancy under the best of circumstances. Rent them out at $3000 per month and the income is $36,000,000 a year. After ten years or so, assuming that the market doesn't go south, there's the potential for a pretty good return...but those just ain't startup numbers and venture capital timelines. And that's just a few units in one local market. At scale the amount of capital required is vast.
- austinjp 11y ago
  I often lazily wonder who builds all the office space in large cities. I'd realised it was megacorps who are in it for the long haul, didn't think of it as backing pensions and similar assets. I wonder if a property startup might be possible in countries where property is far, far cheaper. Micro-loans, divided and pooled investments, that sort of thing. Particularly if funders from comparatively wealthy nations want to invest in "business with a conscience" type startups. In the charity sector, even. The returns might not be large, but that's not what all startups are about. For the more cynical, there may be off-shoring and tax benefits.
  - Maultasche 11y ago
    Yep, I've worked at a pension fund, and they find lots of ways to diversify their investments. In addition to the usual stocks and bonds, they invest in real estate all over the US, owning a number of commercial high rise buildings in cities around the country. They have the money to finance these big building projects, and it the rent they generate usually provides them with steady returns over the long term. I hadn't heard of them investing in residential properties, but it wouldn't surprise me if they owned some.
  - brudgers 11y ago
    The costs of construction are far less variable than the costs of land. Lower construction costs tend to correlate with higher maintenance costs. With real estate investment governmental stability and integrity play a greater role than many other investment types because real-estate assets can't be relocated or wire-transferred. All real-estate markets are local. It's a very specialized industry.

6 points by philippnagel 11y ago

deleted 11y ago

[deleted]

Housing and other real-estate development projects require much more money than moves around the startup ecosystem and such projects don't offer the sort of returns that those investors typically seek. Throw a billion dollars at an active urban real-estate market and maybe it moves a little and maybe it provides a low teens internal rate of return. There aren't unicorns in real-estate. It's a place where pension funds and insurance companies park assets for the term of fifteen and thirty year mortgages by backing project types with track records, e.g. Class A office space. To put it another way, adding a 1000 rental units in a place like San Francisco at an affordable $200,000 each (as if it were possible) requires two hundred million dollars in funding and would take four or five years for acquisition, entitlement, construction and occupancy under the best of circumstances. Rent them out at $3000 per month and the income is $36,000,000 a year. After ten years or so, assuming that the market doesn't go south, there's the potential for a pretty good return...but those just ain't startup numbers and venture capital timelines. And that's just a few units in one local market. At scale the amount of capital required is vast.

austinjp 11y ago
I often lazily wonder who builds all the office space in large cities. I'd realised it was megacorps who are in it for the long haul, didn't think of it as backing pensions and similar assets. I wonder if a property startup might be possible in countries where property is far, far cheaper. Micro-loans, divided and pooled investments, that sort of thing. Particularly if funders from comparatively wealthy nations want to invest in "business with a conscience" type startups. In the charity sector, even. The returns might not be large, but that's not what all startups are about. For the more cynical, there may be off-shoring and tax benefits.
- Maultasche 11y ago
  Yep, I've worked at a pension fund, and they find lots of ways to diversify their investments. In addition to the usual stocks and bonds, they invest in real estate all over the US, owning a number of commercial high rise buildings in cities around the country. They have the money to finance these big building projects, and it the rent they generate usually provides them with steady returns over the long term. I hadn't heard of them investing in residential properties, but it wouldn't surprise me if they owned some.
- brudgers 11y ago
  The costs of construction are far less variable than the costs of land. Lower construction costs tend to correlate with higher maintenance costs. With real estate investment governmental stability and integrity play a greater role than many other investment types because real-estate assets can't be relocated or wire-transferred. All real-estate markets are local. It's a very specialized industry.