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Housing demand isn't going anywhere, and a faltering housing market means less new house construction which will keep rent high. Investors can make all cash of
by CuriouslyC 4y ago
Housing demand isn't going anywhere, and a faltering housing market means less new house construction which will keep rent high.
Investors can make all cash offers, get houses for cheap and rent them out, and if they control enough of the rental market they can push heavily inflated prices to juice their profit margin. What else are they going to do with their money? Securities and bonds are trash.
Mortgages are brutal right now and going to get worse, so Millenials who can't make all cash offers are still going to be fucked.
- rdtwo 4y agoTreasury bonds pay 4.5% right now, so you would at least need to make 6% on your housing investment. There aren’t a lot of properties that you can buy that would yield 6% (of purchase price) rent a year.
- CuriouslyC 4y agoIt doesn't need to yield 6% from rent, it needs to yeild 6% from rent + (home appreciation - maintenance), which is pretty easy if home prices are depressed due to temporarily high interest rates and a glut of new construction, since appreciation will kick in hard as soon as interest rates cool off and new construction scales back.
- rdtwo 4y agoThat’s assuming that we will ever see 0-2% interest rates again. Where we are right now is right in line with historic norms and they will probably hit a lot higher. People are already getting squeezed in other areas I don’t see how they are going to be able to push rents much higher
- CuriouslyC 4y agoEasy. Push rents higher slowly, and when occupancy rates start to go down enough that expected future rent increases will result in a profit loss you stop.