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How private equity is changing housing

theatlantic.com

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Re: How private equity is changing housing

#261

Post by ssl-3 »

BeetleB wrote: post #208
ssl-3 wrote: post #192

Earlier quoted context omitted.

I knew these individuals (no scare quotes required) personally before I rented from them. But sure: If you want to bet that you're right about a very specific situation that you have no specific knowledge of, then don't let me stand in your way. A fool and his money are soon to part.

I think you're misreading his intent. It may not be the case for those you rented from, but over the last 15-20 years, the standard practice for them has increasingly become "Form an LLC". In most cities, when you rent a detached house from a corporation, it's really one individual behind it. These people are likely not the minority.

> those "individuals"

The context is my anecdotal experience.

Within that context, their intent was spelled very precisely.

Re: How private equity is changing housing

#262

Post by gamblor956 »

BeetleB wrote: post #199
PopAlongKid wrote: post #170

Earlier quoted context omitted.

>create a $70-80K writeoff on a $120K asset, which often larger than the check they cut for the property in the first place They're only deferring the tax on $70-80K, correct?

> They're only deferring the tax on $70-80K, correct? Yes, if they sell normally. But usually capital gains tax is lower than that on the income so overall they're saving. To be explicit: They use the $70-80K depreciation to offset their rental income (which often means they pay no tax on the income for that year and several years after). They'll pay it eventually when they sell, but at a (usually) lower tax rate. Th…

This is almost completely wrong.

First, depreciation on real property is about 27 years. 80k annual depreciation indicates a 2.2m purchase price.

Corporate capital gains don't get a special rate. They're taxed the same as regular corporate income. The 1031 like kind exchange is also very difficult to achieve as the bar is very high even under the Trump admin.

Re: How private equity is changing housing

#263

Post by gamblor956 »

BeetleB wrote: post #202
JumpCrisscross wrote: post #119

Earlier quoted context omitted.

> PE buyers use 60% bonus depreciation and cost segregation studies to create a $70-80K writeoff on a $120K asset Source? That looks like a juicy target for state taxation…

Bonus Depreciation: https://tax.thomsonreuters.com/en/glossary/bonus-depreciatio... Cost Segregation: https://warrenaverett.com/insights/what-is-cost-segregation/ I believe bonus depreciation is time limited (unless Congress renews it).

Residential rental property does not qualify for bonus depreciation.

Re: How private equity is changing housing

#264

Post by jeffbee »

MetaWhirledPeas wrote: post #249
jeffbee wrote: post #137

Earlier quoted context omitted.

There is absolutely nothing wrong with institutional investors buying tract homes and renting them out. Nothing! It brings the benefits of living in such homes to people who otherwise would be excluded from them by the financial credit system.

Well really I was just trying to explain the GP's post, not adopt their views, but I think I can play devil's advocate here for the sake of discussion. The problem with institutional investors is that in making it big business you drive up home prices which in turn drives up the rental prices. Since they can have a wide portfolio of homes, they are less likely to lower rent prices when demand drops, because they can…

I see that you did your best, but it should be obvious that the people who want to buy homes also have a massive financial machine on their side, and that it also drives up prices. If the insured 30-year mortgage did not exist, homes would be a lot cheaper.

Re: How private equity is changing housing

#265

Post by guyzero »

carlosjobim wrote: post #225
guyzero wrote: post #195

Earlier quoted context omitted.

I just said you're wrong, not that you're prohibited from discussing it.

You also threw a nasty insult at the person, instead of conversing in good faith. What's artificial about housing demand growth due to immigration is that they arrive into the market as adults. The natural demand growth would in contrast be from births.

The foreign-born population of LA and SF hasn't changed significantly in decades. It was like 27% in LA in the 80s. Housing there is expensive because there's a lot of demand from a lot of people. Immigration is like reason 11 out of 10 for why housing is expensive in those areas.

Re: How private equity is changing housing

#266

Post by HarryHirsch »

carlosjobim wrote: post #209
pavel_lishin wrote: post #135

Earlier quoted context omitted.

> nor a Christian ... what bearing does that have on anything?

Dave Ramsey, commonly described as "Christian finance guru", who had a show on the "Christian Broadcasting Network".

... pitching his books and preaching the Prosperity Gospel, which is antithetical to mainstream Christianity and not good financial advice.

Re: How private equity is changing housing

#267

Post by ssl-3 »

raw_anon_1111 wrote: post #203
ssl-3 wrote: post #134

Earlier quoted context omitted.

From individuals? Anecdotally: I've rented 5 different single-family houses in my life. All of them were rented from individuals. Only 1 out of the 5 had a landlord that owned some other stuff that they also rented out. For the remaining 4 out of 5, the landlord only had that singular property to rent: They lived wherever they lived, and they also had an extra house for whatever reason that they rented to me.

So no apartments? I would much rather do business with another business than deal with individual hobby landlords

I've had apartments, too. Both corpo-owned and owned by some dude who had some apartments.

The corpo ones were the worst.

They invented illegal terms ("Sorry, sir. You may have signed your 1-year lease agreement on the fifth day of the month, but our policy is to close leases only on the last day of the month. You still owe us for the rest of this [13th!] month whether you've moved out or not"), were wildly successful at making all of the security deposit disappear, and were miserable at keeping their word on necessary repairs. They were shit.

The ones that were run by some dude who owned some apartments were very different. I paid my rent on time. If I had a problem, I called the singular responsible person directly and he (being the kind of person who likes to have timely payments in their bank account) would answer the phone himself. There were never any surprises relating to money, and I never had an issue that lasted for more than 24 hours.

Re: How private equity is changing housing

#268

Post by raw_anon_1111 »

ssl-3 wrote: post #267
raw_anon_1111 wrote: post #203

Earlier quoted context omitted.

So no apartments? I would much rather do business with another business than deal with individual hobby landlords

I've had apartments, too. Both corpo-owned and owned by some dude who had some apartments. The corpo ones were the worst. They invented illegal terms ("Sorry, sir. You may have signed your 1-year lease agreement on the fifth day of the month, but our policy is to close leases only on the last day of the month. You still owe us for the rest of this [13th!] month whether you've moved out or not"), were wildly successfu…

And the one person operated apartments are usually undercapitalized and doesn’t have a professional maintenance staff. The ones I have stayed at have on site office personnel.

These were both in the north suburbs of Atlanta - one was mid upper end at the time and the other was in one of the more affluent neighborhoods

Re: How private equity is changing housing

#269

Post by ssl-3 »

raw_anon_1111 wrote: post #268
ssl-3 wrote: post #267

Earlier quoted context omitted.

I've had apartments, too. Both corpo-owned and owned by some dude who had some apartments. The corpo ones were the worst. They invented illegal terms ("Sorry, sir. You may have signed your 1-year lease agreement on the fifth day of the month, but our policy is to close leases only on the last day of the month. You still owe us for the rest of this [13th!] month whether you've moved out or not"), were wildly successfu…

And the one person operated apartments are usually undercapitalized and doesn’t have a professional maintenance staff. The ones I have stayed at have on site office personnel. These were both in the north suburbs of Atlanta - one was mid upper end at the time and the other was in one of the more affluent neighborhoods

Huh?

I have no reason to care about staffing or capitalization. Those aren't my concerns. Those concepts are beyond my purvey as a tenant.

I care only about timeliness. My entire relationship any landlord is that of paying money, and receiving housing and services relating to that housing.

When the aircon dies and it takes weeks of pestering for the corpo entity to address it, that's a problem for me that changes the way I view the world in a negative way.

When the aircon dies and it's fixed the next afternoon by the action of some dude who owns some apartments, then I don't really have anything to complain about at all. There was a problem and it was in the past almost as soon as it was discovered.

Re: How private equity is changing housing

#270

Post by ssl-3 »

carlosjobim wrote: post #218
ssl-3 wrote: post #134

Earlier quoted context omitted.

From individuals? Anecdotally: I've rented 5 different single-family houses in my life. All of them were rented from individuals. Only 1 out of the 5 had a landlord that owned some other stuff that they also rented out. For the remaining 4 out of 5, the landlord only had that singular property to rent: They lived wherever they lived, and they also had an extra house for whatever reason that they rented to me.

Why is it better to rent from individuals? They have the same profit motives as corporations.

Why is it better to buy local instead of from Amazon? I mean: The local place has the same profit motives, so they're basically the same thing -- right?
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