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Shameless apologia for private equity vultures buying up all the houses, what a terrible article. "Oh but renting costs less so it makes your neighborhood more

Shameless apologia for private equity vultures buying up all the houses, what a terrible article. "Oh but renting costs less so it makes your neighborhood more diverse with more lower-income residents!" Yeah and renting also ensures you stay low-income forever by never getting the opportunity to build any equity. Real 'you'll own nothing and you'll be happy' energy The opening paragraph is also a laugh. "Daniel Erb became a corporate landlord kind of by accident." Yeah he was an investment banker who decided he wanted to invest in real estate so he decided to call his cousin at BlackRock- woopsie! what a weird accident!

crooked-v 1y ago
Private equity doesn't own a lot of houses. For example, in California large landlords (including private equity but also traditional landlord companies) own 1.9% of houses, small landlords (under 10 houses) own about 20% of houses, and individuals own the rest.
- cheeseomlit 1y ago
  And which way is it trending? Massively upwards, as per the article. I've been getting constant texts for years from private equity parasites trying to buy my house, everyone who owns one does. It won't take long for that 2% to become 5% and then 10% and onwards if nothing is done about it.
  - deleted 1y ago
    [deleted]
  - crooked-v 1y ago
    Where do you think they're supposed to get all those houses? New construction is negligible in much of the US, and ironically enough, the same housing shortage they're benefiting from would make it incredibly expensive to buy out that many individual homeowners.
  - BeetleB 1y ago
    Are you sure those texts are from private equity? I've dabbled with RE investments and hang out with those clubs. It's highly likely the origin of those mailings/texts is from an average person like you and me (most of whom have a full time job earning less than most SW engineers). They are doing RE as a side business, and are paying a service to send out those mailers/texts. They're looking for distressed homeowners (e.g. people who are about to lose the house due to unpaid property taxes, etc). They've been doing this for decades, but the easier availability of data due to the Internet, as well as the growth of online services, has made it much more accessible to the average Joe. It requires very little capital to send out those mailers/texts. If you're getting more of these now than 20 years ago, it's because RE investing has become a lot more democratized/accessible.
    - cheeseomlit 1y ago
      A lot of them say so at least ("Hi I'm $Name with $FinancialCompany, we're looking to buy houses in your area...)- Though yes, I'm sure some portion of them are just private individuals or smalltime 'flippers'
      - BeetleB 1y ago
        My bet is the majority are private individuals. Because people are more likely to respond to that than a "normal" person. Just look at your sibling comment who said: > I'm not sure if I'd count a person who can buy enough investment properties to justify using a mass-texting service an "average person like me" If your average HN reader can't believe an average person can buy investment properties, then likely most Americans won't :-) Anyone can set up a company in a few minutes. And then pay someone to design a professional looking mailer. There are RE bootcamps/gurus that walk you through the whole process (which LLC to set up, in what state, which online service to use to make those mailers, which data broker to get the mailing addresses from, etc). BTW, don't pay for those bootcamps. They are anywhere from 10-100x overpriced.
    - pavel_lishin 1y ago
      I'm not sure if I'd count a person who can buy enough investment properties to justify using a mass-texting service an "average person like me".
  - deleted 1y ago
    [deleted]
- peterbecich 1y ago
  Agreed, the meme of private equity buying up enough houses to make houses scarce is overblown. However, PE is an easy target for populist politics.
- brewdad 1y ago
  How many of those “small landlords” are shell companies under a larger corporation? I’ve never seen an analysis of this but any smart mega corporation would be wise to create many small companies to shield themselves from localized market risks.
jameshart 1y ago
The fact that most people can only get exposure to the housing market by taking a massive loan to perform a leveraged buy-in, at which point a single asset forms the bulk of their capital portfolio, is not a good way to build generational wealth, and it certainly shouldn’t be the only way to a middle class life. It’s honestly possible that people would be better off putting their money into a diversified investment fund that includes a spread portfolio of housing among other assets, so they can benefit from that growth. If your 401K includes Blackrock assets, you’re still benefitting from overall housing market growth, without that being tied up in also being the building you live in. The big win buying a house historically represents – for those for whom it works out – is of course that you can buy a house with borrowed money on a fixed rate, pay off the loan over 30 years, and pocket the appreciation in the asset over the loan value. That’s an amazing deal if you’re lucky enough to buy and sell the right house at the right time and get your loan at the right interest rate. But it definitely doesn’t work out for everyone.
- cheeseomlit 1y ago
  I agree that the 'housing as an investment' situation is awful but what are the prospects, realistically, for someone looking for a home right now? If it's a choice between renting or paying off a mortgage then to me it's a no brainer to go for the loan if you can get one on reasonable terms. Otherwise you're just throwing money away on rent, you'll never see those rent payments again. And that's what I don't want to see, private equity home ownership reaching a point where more and more people have no choice but to rent. Whatever the solution is to the housing crisis (probably building more homes, duh), I don't think it's relinquishing ownership to wall street and becoming a society of renters And yes I know they don't own that many houses relatively speaking, right now, but I personally don't see any upside to allowing the practice at all.
  - bluGill 1y ago
    > Otherwise you're just throwing money away on rent, you'll never see those rent payments again. This propaganda is not the whole truth. Renting almost always means you live in a smaller/cheaper place (or perhaps in a more expensive place but you don't own a car) after maintenance costs are accounted for. People who take that different and invest it well end up just as rich as people who invest in houses - it isn't hard to find investments that have a much better long-term returns than real estate.
bluGill 1y ago
In the real world it has been shown in many many cases that renters can get just as rich as homeowners. Details of your situation matters, so I cannot say what is right for you. However I can say with all confidence that renting is not why you are poor, nor is it why you won't build wealth long term.

crooked-v 1y ago

Private equity doesn't own a lot of houses. For example, in California large landlords (including private equity but also traditional landlord companies) own 1.9% of houses, small landlords (under 10 houses) own about 20% of houses, and individuals own the rest.

cheeseomlit 1y ago
And which way is it trending? Massively upwards, as per the article. I've been getting constant texts for years from private equity parasites trying to buy my house, everyone who owns one does. It won't take long for that 2% to become 5% and then 10% and onwards if nothing is done about it.
- deleted 1y ago
  [deleted]
- crooked-v 1y ago
  Where do you think they're supposed to get all those houses? New construction is negligible in much of the US, and ironically enough, the same housing shortage they're benefiting from would make it incredibly expensive to buy out that many individual homeowners.
- BeetleB 1y ago
  Are you sure those texts are from private equity? I've dabbled with RE investments and hang out with those clubs. It's highly likely the origin of those mailings/texts is from an average person like you and me (most of whom have a full time job earning less than most SW engineers). They are doing RE as a side business, and are paying a service to send out those mailers/texts. They're looking for distressed homeowners (e.g. people who are about to lose the house due to unpaid property taxes, etc). They've been doing this for decades, but the easier availability of data due to the Internet, as well as the growth of online services, has made it much more accessible to the average Joe. It requires very little capital to send out those mailers/texts. If you're getting more of these now than 20 years ago, it's because RE investing has become a lot more democratized/accessible.
  - cheeseomlit 1y ago
    A lot of them say so at least ("Hi I'm $Name with $FinancialCompany, we're looking to buy houses in your area...)- Though yes, I'm sure some portion of them are just private individuals or smalltime 'flippers'
    - BeetleB 1y ago
      My bet is the majority are private individuals. Because people are more likely to respond to that than a "normal" person. Just look at your sibling comment who said: > I'm not sure if I'd count a person who can buy enough investment properties to justify using a mass-texting service an "average person like me" If your average HN reader can't believe an average person can buy investment properties, then likely most Americans won't :-) Anyone can set up a company in a few minutes. And then pay someone to design a professional looking mailer. There are RE bootcamps/gurus that walk you through the whole process (which LLC to set up, in what state, which online service to use to make those mailers, which data broker to get the mailing addresses from, etc). BTW, don't pay for those bootcamps. They are anywhere from 10-100x overpriced.
  - pavel_lishin 1y ago
    I'm not sure if I'd count a person who can buy enough investment properties to justify using a mass-texting service an "average person like me".
- deleted 1y ago
  [deleted]
peterbecich 1y ago
Agreed, the meme of private equity buying up enough houses to make houses scarce is overblown. However, PE is an easy target for populist politics.
brewdad 1y ago
How many of those “small landlords” are shell companies under a larger corporation? I’ve never seen an analysis of this but any smart mega corporation would be wise to create many small companies to shield themselves from localized market risks.

jameshart 1y ago

The fact that most people can only get exposure to the housing market by taking a massive loan to perform a leveraged buy-in, at which point a single asset forms the bulk of their capital portfolio, is not a good way to build generational wealth, and it certainly shouldn’t be the only way to a middle class life. It’s honestly possible that people would be better off putting their money into a diversified investment fund that includes a spread portfolio of housing among other assets, so they can benefit from that growth. If your 401K includes Blackrock assets, you’re still benefitting from overall housing market growth, without that being tied up in also being the building you live in. The big win buying a house historically represents – for those for whom it works out – is of course that you can buy a house with borrowed money on a fixed rate, pay off the loan over 30 years, and pocket the appreciation in the asset over the loan value. That’s an amazing deal if you’re lucky enough to buy and sell the right house at the right time and get your loan at the right interest rate. But it definitely doesn’t work out for everyone.

cheeseomlit 1y ago
I agree that the 'housing as an investment' situation is awful but what are the prospects, realistically, for someone looking for a home right now? If it's a choice between renting or paying off a mortgage then to me it's a no brainer to go for the loan if you can get one on reasonable terms. Otherwise you're just throwing money away on rent, you'll never see those rent payments again. And that's what I don't want to see, private equity home ownership reaching a point where more and more people have no choice but to rent. Whatever the solution is to the housing crisis (probably building more homes, duh), I don't think it's relinquishing ownership to wall street and becoming a society of renters And yes I know they don't own that many houses relatively speaking, right now, but I personally don't see any upside to allowing the practice at all.
- bluGill 1y ago
  > Otherwise you're just throwing money away on rent, you'll never see those rent payments again. This propaganda is not the whole truth. Renting almost always means you live in a smaller/cheaper place (or perhaps in a more expensive place but you don't own a car) after maintenance costs are accounted for. People who take that different and invest it well end up just as rich as people who invest in houses - it isn't hard to find investments that have a much better long-term returns than real estate.

bluGill 1y ago

In the real world it has been shown in many many cases that renters can get just as rich as homeowners. Details of your situation matters, so I cannot say what is right for you. However I can say with all confidence that renting is not why you are poor, nor is it why you won't build wealth long term.