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How Zillow's homebuying scheme lost $881M

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Re: How Zillow's homebuying scheme lost $881M

#211

Post by BirdieNZ »

vincentmarle wrote: post #122
cellis wrote: post #97

Earlier quoted context omitted.

As a potential landlord who is doing this very thing right now, it isn't really "throwing money away", because of asset appreciation. If you get stuck with a bad tenant it's way more hassle than if you had just let it sit and AirBnB'd it every once in a while. Especially for properties where the rent is less than the appreciation per month.

You are neglecting opportunity costs: if you could earn double (appreciation + rent) instead of just appreciation, you're leaving money on the table.

Think about this: land value appreciation is so crazy that you can not charge rent and still make enough money that a property has a good return on investment.

Re: How Zillow's homebuying scheme lost $881M

#212

Post by mistrial9 »

paxys wrote: post #57
jliptzin wrote: post #51

Earlier quoted context omitted.

There's even lower hanging fruit than that. I have a 6 bedroom house, but local regulations state that I am not allowed to live with more than 2 people unrelated to me. Plenty of parking, tons of people looking for housing, but legally I am forced to keep 3 bedrooms empty.

Agreed. Heck I know several people who prefer to keep their condos/houses empty rather than rent them out at market rate because of 100% tenant friendly city and state laws. Someone can move in and refuse to pay rent, refuse to leave, use your house as a drug den, destroy your property and lots more, and you can do nothing about it. At that point the city is just incentivizing homeowners to contribute to the housing…

> you can do nothing about it

lies, damn lies, and landlord lies..

Re: How Zillow's homebuying scheme lost $881M

#213

Post by dntrkv »

bombcar wrote: post #140
TimPC wrote: post #125

Earlier quoted context omitted.

These laws are hard to get actually correct. The major problem is court delays. There is a very high bar for kicking someone out before they get their day in court about whether it is fair to do so. This seems eminently reasonable but there is also a severe shortage of judicial services that result in court dates over a year out to resolve such issues. In that year of time, it's quite possible for a tenant with maybe…

From what I've heard is a common thing for landlords to do is a "pay to vacate" where they show up at the door with $1k in cash if the tenant will just leave.

> show up at the door with $1k in cash

In SF, there have been six-figure buyouts to remove tenants from rent-controlled properties.

Re: How Zillow's homebuying scheme lost $881M

#214

Post by bduerst »

bghdrmz wrote: post #208

I feel this is happening in the automotive space. Companies like carlots and carvana have been completely swallowing up all supply and driving prices up well beyond fair value.

It's definitely happening, also compounded by chip shortages and supply chain issues. I've leased the last six years but only in the 8 months have I had dealerships calling me with offers to buy out my lease just to get the car back early.

Re: How Zillow's homebuying scheme lost $881M

#215

Post by 1024core »

Teknoman117 wrote: post #71
paxys wrote: post #57

Earlier quoted context omitted.

Agreed. Heck I know several people who prefer to keep their condos/houses empty rather than rent them out at market rate because of 100% tenant friendly city and state laws. Someone can move in and refuse to pay rent, refuse to leave, use your house as a drug den, destroy your property and lots more, and you can do nothing about it. At that point the city is just incentivizing homeowners to contribute to the housing…

> Someone can move in and refuse to pay rent, refuse to leave, use your house as a drug den, destroy your property and lots more, and you can do nothing about it. This is one of those things that really just confuses me. It's like no one could agree on happy medium between "landlord can eject you whenever they want for whatever reason" and "no one can make you leave, ever, for any reason". And to whoever downvoted yo…

Could you not put ejection conditions in the lease itself? (SF resident here, but with no experience in landlording). I'm wondering why can't a landlord put in the lease a term like "if tenant does not pay rent for 30 days, tenant gives up all of his rights and landlord has the right to eject tenant within 15 days".

Re: How Zillow's homebuying scheme lost $881M

#216

Post by PaulDavisThe1st »

not2b wrote: post #84
rank0 wrote: post #50

Earlier quoted context omitted.

Sorry man that sucks. I own a property that's effectively a duplex in Atlanta. My buddy owns a duplex in Denver. It's not everywhere that mixed residential homes are banned! Are you in CA?

In California, there's currently a fight between the state government, which wants cities to allow more housing, and local governments, which are opposed to higher density housing because the NIMBYs ("not in my back yard") fight it. The restrictive zoning laws are at the local level, not the state level.

> The restrictive zoning laws are at the local level, not the state level.

True, but the restrictive zoning laws are made possible at the state level.

A thread here on HN a few weeks ago mentioned Japan which they described as having basically 5 classifications for "types of things you can do on land you own", ranging from "essentially anything at all" to "notable limitations". Within whatever classification your land is given, you can do whatever you want, local neighborhood be damned.

I don't know if that's an accurate description, but it sounds like a system with a very different set of tradeoffs than the one found across the USA.

Re: How Zillow's homebuying scheme lost $881M

#217

Post by ilamont »

Any time that you’re working with imperfect knowledge and trying to operate a business on a large scale, you’re likely to run into this kind of trouble.

Can we admit that this is a major problem with the "AI" search algorithms operated by Google, Amazon, and others?

They are assigning "value" to content, or books, or whatever based on an incomplete understanding of the market. It's made even worse because so many owners are able to game the system.

Re: How Zillow's homebuying scheme lost $881M

#218

Post by Traster »

hgomersall wrote: post #172

Why could this not be run as an actual service. Zillow fronts say 75% of the estimated purchase price, then sells it and takes a cut of the premium, the rest going to the original seller. It's an estate agent with financing.

Because very often the reason you're selling a house is that you're buying a house, and so you need 100% of the value of the sale to go towards your new deposit. It's no good having 75% of the cash now, you need it all as a deposit and the mortgage company isn't going to take the risk that that 25% turns up eventually.

Re: How Zillow's homebuying scheme lost $881M

#219

Post by MiroF »

closeparen wrote: post #207
MiroF wrote: post #149

Earlier quoted context omitted.

> Why aren't landlords able to do this? Isn't it seen as immoral to steal property from an owner? Well, for one, the government should enforce contract neutrally - so if you sign a contract leasing your property, you can't unilaterally break this without cause. Second, we as a society have an interest in giving people time to move their stuff out and find a new place to live.

That's just a lease. Leases have fixed terms. When the lease is up either side can give 30 days notice that they will not be renewing. That is true even in places with minimal to no tenant protection laws. In a tenant protection environment, the tenant has the option to cancel when the lease ends, but the landlord does not. Regardless of where you are in the contract cycle, the landlord's only way to end the contract…

> In a tenant protection environment, landlords cannot just decline to renew leases.

Unless we're talking about some rent controlled context, where in the US is this law?

Re: How Zillow's homebuying scheme lost $881M

#220

Post by [deleted] »

gnicholas wrote: post #117
paxys wrote: post #57

Earlier quoted context omitted.

Agreed. Heck I know several people who prefer to keep their condos/houses empty rather than rent them out at market rate because of 100% tenant friendly city and state laws. Someone can move in and refuse to pay rent, refuse to leave, use your house as a drug den, destroy your property and lots more, and you can do nothing about it. At that point the city is just incentivizing homeowners to contribute to the housing…

A friend bought a duplex in Berkeley. Due to the tenant-friendly laws there, she will only rent to international university affiliates whose roles/visas will require them to leave after a year or two. Interestingly, she is very YIMBY and liberal, and even has a PhD in urban planning. But no one wants a forever tenant!

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