4 ms·

Raise the rent

by Phlarp 5y ago

Raise the rent

WalterBright 5y ago
If someone's business plan was to buy all the houses, then my business plan would be to aquire/build houses, and sell to that person at enormous markups.
- rsj_hn 5y ago
  Yup. Buying all the houses is possible in a constrained market, but Phoenix is unconstrained, and transportation allows us to substitute constrained for unconstrained locations.
- brendoelfrendo 5y ago
  That would be, more or less, exactly what they want, because the artificial scarcity begins dictating prices. You might try to sell to them, but they're not obligated to buy from you; they could simply point to the properties you're offering at enormous markup to unload some of the property they own at an enormous markup. And if they did buy from you at an enormous markup, they can point to those purchases as "comps" for the purposes of valuing their portfolio. This actually happens in the art world; there's a guy who goes out of his way to overpay for Warhol paintings, because a) he can corner a finite market and b) when a Warhol painting sells for a record amount, the value of his entire collection goes up even if he's the buyer.
  - lotsofpulp 5y ago
    Until no one wants to buy a Warhol at the price he is seeking. There is no guarantee that this will work indefinitely, just like houses in Boston becoming undesirable at a certain price point. It is possible that Boston houses are underpriced, but it is also possible people will start looking elsewhere. Probably have to dig into income trends and more data rather than just “Boston has limited housing, so it will always be rentable/sellable at a higher price”.
    - brendoelfrendo 5y ago
      Well, the other side of the financial engineering project is that he can donate a Warhol to a museum and get a tax write-off for the value of the painting--a value that is likely set primarily by his actions. Not something you can do with a house, I grant you. You'd more likely end up in a bubble situation where property just churns through the hands of investors until the bubble pops and someone is left holding the bag.
  - WalterBright 5y ago
    > but they're not obligated to buy from you Hence attempting to buy all the houses is an impractical business plan, unless, of course, it becomes possible as a side effect of government mismanagement. The Warhol example is fundamentally different, as Warhol isn't painting any more.
- JKCalhoun 5y ago
  Why not both? That's the f'ed up future that's already begun: the builders are also the landlords.

Raise the rent

by Phlarp 5y ago

Raise the rent

If someone's business plan was to buy all the houses, then my business plan would be to aquire/build houses, and sell to that person at enormous markups.

rsj_hn 5y ago
Yup. Buying all the houses is possible in a constrained market, but Phoenix is unconstrained, and transportation allows us to substitute constrained for unconstrained locations.
brendoelfrendo 5y ago
That would be, more or less, exactly what they want, because the artificial scarcity begins dictating prices. You might try to sell to them, but they're not obligated to buy from you; they could simply point to the properties you're offering at enormous markup to unload some of the property they own at an enormous markup. And if they did buy from you at an enormous markup, they can point to those purchases as "comps" for the purposes of valuing their portfolio. This actually happens in the art world; there's a guy who goes out of his way to overpay for Warhol paintings, because a) he can corner a finite market and b) when a Warhol painting sells for a record amount, the value of his entire collection goes up even if he's the buyer.
- lotsofpulp 5y ago
  Until no one wants to buy a Warhol at the price he is seeking. There is no guarantee that this will work indefinitely, just like houses in Boston becoming undesirable at a certain price point. It is possible that Boston houses are underpriced, but it is also possible people will start looking elsewhere. Probably have to dig into income trends and more data rather than just “Boston has limited housing, so it will always be rentable/sellable at a higher price”.
  - brendoelfrendo 5y ago
    Well, the other side of the financial engineering project is that he can donate a Warhol to a museum and get a tax write-off for the value of the painting--a value that is likely set primarily by his actions. Not something you can do with a house, I grant you. You'd more likely end up in a bubble situation where property just churns through the hands of investors until the bubble pops and someone is left holding the bag.
- WalterBright 5y ago
  > but they're not obligated to buy from you Hence attempting to buy all the houses is an impractical business plan, unless, of course, it becomes possible as a side effect of government mismanagement. The Warhol example is fundamentally different, as Warhol isn't painting any more.
JKCalhoun 5y ago
Why not both? That's the f'ed up future that's already begun: the builders are also the landlords.