4 ms·

How to profit from rising rents even more if you already own apartments: Prevent new apartments from being built

andy_ppp 11y ago
Buy land in the good places and sit on it until the land and property has gone stratospheric. Aim to never increase supply to the level the market needs to maintain prices; instead constantly force up asset prices forever until you essentially have two classes of people, renters and owners. Keep splitting the housing into smaller and smaller units, make the renters share housing, constantly increase prices at more than the rate of inflation. Only sell newly created housing at a huge premium above market rate. Buy more land and more property. Rinse repeat. Also https://www.ted.com/talks/thomas_piketty_new_thoughts_on_capital_in_the_twenty_first_century?language=en https://www.ted.com/talks/thomas_piketty_new_thoughts_on_cap...
- randyrand 11y ago
  This is bad advice. Unless you own a significant fraction of the market, you'd make way more developing the second property than sitting on it.
  - deleted 11y ago
    [deleted]
  - andy_ppp 11y ago
    You wouldn't make more if at the same time everyone started developing properties... If we build enough properties to meet demand the price goes down which means there is never any incentive to do this. I'm saying scarcity is a very effective model for increasing prices. I mean in London you need a special mortgage when buying new build housing because usually the price you pay is far in excess of the market value - you can literally make a 20% loss if you sold it in the first year or two! Of course as we all know housing always goes up in value and that's built in to the price!! It feels as though you could build a huge number of houses in London but it never comes close to matching the required supply. In every other industry you would assume everyone should have a car and everyone should have a tv or computer, but within reason, everyone who wants to should be able to live in New York or London? We think that is insane.
- secondtimeuse 11y ago
  Thanks for this beautiful comment. I especially liked this part "Keep splitting the housing into smaller and smaller units, make the renters share housing, constantly increase prices at more than the rate of inflation" This has been my exact experience in Manhattan, where a 3 Bed apartment got converted into 5 Bed. After we refused to pay additional rent. Interestingly in Mumbai my apartment building (a Co-op where we own) decided to demolish / rebuild and reduce the playground associated with the building. This allowed us to raze the 6 storey building built in 1960 into a 12 storied one. As a result, we now have an apartment in the same co-op with equivalent sq. footage and were paid additional money plus rent while the building was being rebuilt. Since it was a Co-op we could shop around for a developer who offered us the best deal. The current building will at least sustain till another 50 years. I have never found this happening in US. Since either the building did not have enough free space to expand upon adjacent to them or restriction on height increase.
- cmurf 11y ago
  Oh yeah, feudalism!
- jstalin 11y ago
  Sounds good, in a complete vacuum. This ignores basic economic realities. But of course, these sorts of actions become far easier when the cost of capital is essentially zero.
  - andy_ppp 11y ago
    I'm saying where is the economic incentive to build enough new housing to reduce or maintain current prices. >>> This ignores basic economic realities Maybe you can see a time where in San Fran or New York or London there will be enough housing built to simply maintain the current price? I can't though...
- dikdik 11y ago
  Don't forget to instill a sense of ingratitude into the renter class for disliking their falling quality of life. Point out to them that poorer people around the world are experiencing an incline in living standards, so they should be thankful for the opportunity to work for less and less since there's still someone worse off!
sbov 11y ago
How to profit even more: sell them to someone who is going to tear them down and build a skyscraper.

Buy land in the good places and sit on it until the land and property has gone stratospheric. Aim to never increase supply to the level the market needs to maintain prices; instead constantly force up asset prices forever until you essentially have two classes of people, renters and owners. Keep splitting the housing into smaller and smaller units, make the renters share housing, constantly increase prices at more than the rate of inflation. Only sell newly created housing at a huge premium above market rate. Buy more land and more property. Rinse repeat. Also https://www.ted.com/talks/thomas_piketty_new_thoughts_on_capital_in_the_twenty_first_century?language=en https://www.ted.com/talks/thomas_piketty_new_thoughts_on_cap...

randyrand 11y ago
This is bad advice. Unless you own a significant fraction of the market, you'd make way more developing the second property than sitting on it.
- deleted 11y ago
  [deleted]
- andy_ppp 11y ago
  You wouldn't make more if at the same time everyone started developing properties... If we build enough properties to meet demand the price goes down which means there is never any incentive to do this. I'm saying scarcity is a very effective model for increasing prices. I mean in London you need a special mortgage when buying new build housing because usually the price you pay is far in excess of the market value - you can literally make a 20% loss if you sold it in the first year or two! Of course as we all know housing always goes up in value and that's built in to the price!! It feels as though you could build a huge number of houses in London but it never comes close to matching the required supply. In every other industry you would assume everyone should have a car and everyone should have a tv or computer, but within reason, everyone who wants to should be able to live in New York or London? We think that is insane.
secondtimeuse 11y ago
Thanks for this beautiful comment. I especially liked this part "Keep splitting the housing into smaller and smaller units, make the renters share housing, constantly increase prices at more than the rate of inflation" This has been my exact experience in Manhattan, where a 3 Bed apartment got converted into 5 Bed. After we refused to pay additional rent. Interestingly in Mumbai my apartment building (a Co-op where we own) decided to demolish / rebuild and reduce the playground associated with the building. This allowed us to raze the 6 storey building built in 1960 into a 12 storied one. As a result, we now have an apartment in the same co-op with equivalent sq. footage and were paid additional money plus rent while the building was being rebuilt. Since it was a Co-op we could shop around for a developer who offered us the best deal. The current building will at least sustain till another 50 years. I have never found this happening in US. Since either the building did not have enough free space to expand upon adjacent to them or restriction on height increase.
cmurf 11y ago
Oh yeah, feudalism!
jstalin 11y ago
Sounds good, in a complete vacuum. This ignores basic economic realities. But of course, these sorts of actions become far easier when the cost of capital is essentially zero.
- andy_ppp 11y ago
  I'm saying where is the economic incentive to build enough new housing to reduce or maintain current prices. >>> This ignores basic economic realities Maybe you can see a time where in San Fran or New York or London there will be enough housing built to simply maintain the current price? I can't though...
dikdik 11y ago
Don't forget to instill a sense of ingratitude into the renter class for disliking their falling quality of life. Point out to them that poorer people around the world are experiencing an incline in living standards, so they should be thankful for the opportunity to work for less and less since there's still someone worse off!

sbov 11y ago

How to profit even more: sell them to someone who is going to tear them down and build a skyscraper.