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How private equity is changing housing

theatlantic.com

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Re: How private equity is changing housing

#291

Post by immibis »

potato3732842 wrote: post #11
mwkaufma wrote: post #3

Summary: they're pulling "starter homes" off the market, predominantly in nonwhite neighborhoods, and skimping more on maintenance/landscaping.

>and skimping more on maintenance/landscaping I.e the kind of stuff everyone wants to do but can't justify flying so close to the sun on because they don't have a legal army say "we are in compliance and here's why" on their behalf when the municipal government comes looking for fine money or the slip and fall lawyer tries to make something their fault. In "reasonable" (note for the bottom feeders, I did not say "fre…

I remember there was once a guy who just went around fixing potholes with no official authorization or anything (he did it properly), and I think he got arrested but then released with a warning.

Re: How private equity is changing housing

#292

Post by BeetleB »

gamblor956 wrote: post #262
BeetleB wrote: post #199

Earlier quoted context omitted.

> 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.

> First, depreciation on real property is about 27 years.

That's straight line depreciation. Look elsewhere in the thread and you'll see cost segregation and bonus depreciation. To give you an idea, I once invested $50K in a multifamily property and my depreciation for the first year was $18K. I never paid taxes on any of my income (but did pay more taxes when it was sold due to the lowered cost basis).

Re: How private equity is changing housing

#293

Post by BeetleB »

jjav wrote: post #285
BeetleB wrote: post #39

Earlier quoted context omitted.

> Ban corporate ownership of residences. Only individuals, Many/most corporate owners are individuals (as per the linked report). See my comment here: https://news.ycombinator.com/item?id=46208561 > Cap how many rentals an individual can own. Yes. Cap to 0. Until we get data on the breakdown (what percentage of rental homes are by owners who own 1, 2, 3, etc), we don't really know. It won't be easy to determine becau…

> > Cap how many rentals an individual can own. > Yes. Cap to 0. That is saying let's eliminate rentals entirely. If nobody can own a rental, there can be no rentals. Some people do prefer to rent. I wouldn't, but I know people who truly prefer that.

Let's elaborate to: Cap condominiums and detached houses to 0. Apartment complexes is how people should rent.

It is, of course, an extreme scenario. As I said, this is absent good data. If we get a sense of the impact one would have if we limit it to 1, supported by data, sure - cap it to 1.

Re: How private equity is changing housing

#294

Post by the_sleaze_ »

asdff wrote: post #188
the_sleaze_ wrote: post #101

Earlier quoted context omitted.

There will be a squeeze on real estate as the sea level rises and insurance increasingly withdraws from coastal and fire-prone areas.

I'd expect to see a surge in self insurance. These areas are so valuable already in a lot of cases where rich people are content to pay six figure property tax bills. Especially with cost of construction being a fraction of that property's value.

> a surge in self insurance

What is this? Would this just be "putting a little to the side each month" to cover your 12 million dollar loss to Hurricane Micheala ?

Re: How private equity is changing housing

#295

Post by NickC25 »

SoftTalker wrote: post #278
NickC25 wrote: post #229

Earlier quoted context omitted.

The idea is that tracking it is effectively impossible for a foreign government...and we've made that whole infrastructure incredibly easy via making it legal for LLCs to purchase homes. We don't prevent foreigners from forming LLCs, and often times there are brokers that make their vig on doing just that for wealthy foreigners - they set up a myriad of LLCs to protect the identity of a buyer, who then drops $1mm+ on…

That LLC is going to have to pay property taxes or the sheriff will seize and auction off the property. And there won't be a mortgage or homestead exemption so they will be at the top tax rate. They'll probably want insurance on that property, which is more expensive for an investment property especially if it's sitting vacant, and they'll need to have electric and gas hooked up and paid so it can be temperature cont…

In the case of vacant South Florida condos, sure, the LLC pays a small tax. Sure, they pay some insurance, but most of that if managed properly is absolved by the HOA (idea is that the building HOA if managed well basically mitigate a lot of longterm risk of property damage - this is the case in my building), they won't need electric or gas hooked up past what came with the unit when it was finished....most of the time the floor isn't even finished in these units.

They can offset this, as did my previous landlord who was based in China and had 5 units in the building. However, a small 10k to a family worth millions is nothing especially if it means they can escape a despotic regime at any point, and have somewhere to go, and if they need money, they can liquidate a condo VERY quickly.

Re: How private equity is changing housing

#296

Post by quesera »

UncleMeat wrote: post #233
quesera wrote: post #191

Earlier quoted context omitted.

A corporation does not provide services to shareholders. A municipality is charging residents for services. Obligations are progressive (by necessity), and indexed to assessed property value (as a practicality), rather than equity or income. Municipal operations get more expensive with inflation, and with resident demands (ballot initiatives, etc). They are never zero, and must be tied to something in the real world.…

Me owning a bigger house than my neighbor does not mean that I use more services than them. My water bill is my municipality charging me for services. My real estate tax is a charge for the general good of my community. I see no reason why this can't simply be a tax for the national good.

The municipality charges all residents for all services provided. Citizens vote on which services are provided to them, and which they will have to pay for.

The payment obligations are progressive by necessity, and indexed to assessed property value as a practicality.

The municipality does not care how much equity you have in your house, or how much wealth you have in other assets, or how much income you have.

Your property tax obligation is the same, whether you have unrealized gains or not. It is therefore obviously not a tax on unrealized gains.

Re: How private equity is changing housing

#297

Post by burnt-resistor »

seethishat wrote: post #187
burnt-resistor wrote: post #175

Earlier quoted context omitted.

A lot of veterans live in TX because they have reduced or no property taxes, and also no income taxes. It's probably ~ 8-10% of disabled vets in my neighborhood.

The reduction in property taxes is just for vets, right? I read that, in general, property taxes are high in Texas compared to other states.

Yep and yep.

Re: How private equity is changing housing

#298

Post by greenie_beans »

postflopclarity wrote: post #280
greenie_beans wrote: post #152

Earlier quoted context omitted.

also neglects the market's appetite for this risk of building in the current environment, which is the biggest problem. market gonna act like a market

market has plenty of appetite but it's muzzled by selfish and short-sighted NIMBYs

exactly wrong based on my argument. did NIMBYs cause the dramatic drop in building after the great financial crisis? (no)

Re: How private equity is changing housing

#299

Post by klipklop »

I have just laughed over the years as people argued that private equity owned too small of a percentage of the housing stock to move the market. Looks like they were wrong.

The entire arrangement is such a tax and loan leveraged scam. It's time investment groups and corporations are no longer allowed to use tax advantages that were intended to help build families/middle-class build wealth. Too bad PE essentially runs the US now. I would not be surprised that in ten years PE/REITs own 50% of the housing stock in every city that has a functioning job market.

Re: How private equity is changing housing

#300

Post by greenie_beans »

gruez wrote: post #213
greenie_beans wrote: post #157

Earlier quoted context omitted.

can you please explain how these graphics are supposed to support your argument? it's not clear to me and i'm trying to understand the georgist POV. nonetheless, materials and the cost of labor are the most significant costs for new buildings. not land, taxes, or zoning regulations. here is one example where this is a fact: www.vermontpublic.org/local-news/2024-05-23/uvm-halts-student-housing-project-construction-cos…

Switch from "national level" tab to "metro level", and select los angeles for an extreme example. Look at the the figures right of the map, that says "share of SFD units build before 1980 with a land share of" and compare the figures between 2012 and 2024. Just by eyeballing the percentages, it looks like the land share went from 50-60% to 70-80%. This is confirmed if you sum up the figures in a spreadsheet, you go f…

interesting. what about a timeframe that doesn't occur with a period of extremely low interest rates like your 2012 - 2024 time range?
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