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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 h

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.

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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".
  - BeetleB 1y ago
    > I'm not sure if I'd count a person who can buy enough investment properties Enough means "1 or 2". So yes, many average people can. They'll often put, say, $50K down and that's it. Here's how it works.[1] Homeowner has a house that has some significant flaw that's so bad no bank will mortgage it. This means the homeowner cannot sell via traditional methods. It will cost, say, $100K to repair the house and bring it up to market standards, but homeowner doesn't want to spend the money. He may already be ready to move (this may be a second house - or an inherited house, etc). His only option is to sell for cash. The house is currently worth $250K, but market rates are $450K. Wealthy non-RE investors won't buy his house - they want a house ready to move in to. So what does the "average person like you" do? He gets a hard money loan. A private lender gives him $300K. $250K is to buy the house, and $50K is to help with the repairs. The average guy also puts in $50K of his own. At the end of 6 months, the house is all fixed up, and now worth $450K. He sells the house, and pays back the loan, and makes a decent profit. Alternatively, he gets a mortgage on the house, pays back the private lender, and rents the house out. What's in it for the lender? A very high interest rate. Back when mortgage rates were 4%, private lenders charged 12%. While this sounds scary high, the average guy plans to be done with everything in 6 months, so it's only 6 months of high interest. What's in it for the "average guy"? Well, he just got a house, right? Also, what happens if things go south (e.g. runs out of money because he misestimated repair costs)? He loses the interest and his $50K, and that's it. The private lender gets ownership of the house, but cannot go after his assets. So if you can save up $50K, you can get a house. The real hard work is to identify the right property (i.e. one that can't be sold easily). Everyone I know who's done this earns less than a SW engineer. Some people are blue collar workers. Another model: The homeowner is in a bad financial situation and has not have been paying property taxes. Now the county is threatening to take away his house because he owes $20K in taxes. There are only a few weeks left for the deadline. The investor contacts the owner and says "Hey, let me pay the $20K you owe, and sell me the house for $30K. If you can sell the house for more to someone else, go for it. But if not, here's my number." If the owner could have sold it for higher, he likely would have already. Both ways he's losing the house, but this way he gets money. Again, such properties are hard to find. [1] This is just one model. There are others.
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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".
- BeetleB 1y ago
  > I'm not sure if I'd count a person who can buy enough investment properties Enough means "1 or 2". So yes, many average people can. They'll often put, say, $50K down and that's it. Here's how it works.[1] Homeowner has a house that has some significant flaw that's so bad no bank will mortgage it. This means the homeowner cannot sell via traditional methods. It will cost, say, $100K to repair the house and bring it up to market standards, but homeowner doesn't want to spend the money. He may already be ready to move (this may be a second house - or an inherited house, etc). His only option is to sell for cash. The house is currently worth $250K, but market rates are $450K. Wealthy non-RE investors won't buy his house - they want a house ready to move in to. So what does the "average person like you" do? He gets a hard money loan. A private lender gives him $300K. $250K is to buy the house, and $50K is to help with the repairs. The average guy also puts in $50K of his own. At the end of 6 months, the house is all fixed up, and now worth $450K. He sells the house, and pays back the loan, and makes a decent profit. Alternatively, he gets a mortgage on the house, pays back the private lender, and rents the house out. What's in it for the lender? A very high interest rate. Back when mortgage rates were 4%, private lenders charged 12%. While this sounds scary high, the average guy plans to be done with everything in 6 months, so it's only 6 months of high interest. What's in it for the "average guy"? Well, he just got a house, right? Also, what happens if things go south (e.g. runs out of money because he misestimated repair costs)? He loses the interest and his $50K, and that's it. The private lender gets ownership of the house, but cannot go after his assets. So if you can save up $50K, you can get a house. The real hard work is to identify the right property (i.e. one that can't be sold easily). Everyone I know who's done this earns less than a SW engineer. Some people are blue collar workers. Another model: The homeowner is in a bad financial situation and has not have been paying property taxes. Now the county is threatening to take away his house because he owes $20K in taxes. There are only a few weeks left for the deadline. The investor contacts the owner and says "Hey, let me pay the $20K you owe, and sell me the house for $30K. If you can sell the house for more to someone else, go for it. But if not, here's my number." If the owner could have sold it for higher, he likely would have already. Both ways he's losing the house, but this way he gets money. Again, such properties are hard to find. [1] This is just one model. There are others.

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