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The Hot Property That’s Next on Tech’s Agenda: Real Estate

nytimes.com

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Re: The Hot Property That’s Next on Tech’s Agenda: Real Estate

#31

Post by lallysingh »

leetcrew wrote: post #16
ianai wrote: post #4

Caveat: I can’t read the article. I’m just riffing based on my knowledge of RE and personal experiences with tech. As someone who’s researched real estate, I have a hard time seeing how tech can help the RE industry. For starters, RE bubbles have led to the worst economic downturns. If people can buy homes so easily that they can profit on making superficial changes, then prices will go up far above efficient. That p…

> Rent shouldn’t be anywhere near comparable to mortgages? why not? rent probably should not be egregiously larger than the mortgage payment, but rent needs to at least price in the risks related to owning a property long term.

The markets for owners vs renters is different. People with the means will buy if they have reasons for staying in one place for a long time. They will rent if they don't. That can depend on the local economy, schools, livability of the area, industry trends, etc.

Re: The Hot Property That’s Next on Tech’s Agenda: Real Estate

#32

Post by lallysingh »

saiya-jin wrote: post #25
newacctjhro wrote: post #17

Earlier quoted context omitted.

You're building equity with the difference between rent (plus repairs etc) and the mortgage. The renter isn't.

Yes, and you are exposed to myriads of risks that tenant isn't either - property market crash, tons of possible environmental disasters, issues with plumbings, fires, damage done to property, gradual degradation of, well everything. Another thing is the amount of time and energy invested into acquiring, renovation, maintenance and improvement of the property. Financially any of those, especially market crash can ruin…

Yup, but the difference is that some of your appreciating asset is being paid for by someone else. In some cases that's worthless, in others quite valuable.

As for pricing, the market does that for you.

Re: The Hot Property That’s Next on Tech’s Agenda: Real Estate

#33

Post by anoncoward111 »

lallysingh wrote: post #31
leetcrew wrote: post #16

Earlier quoted context omitted.

> Rent shouldn’t be anywhere near comparable to mortgages? why not? rent probably should not be egregiously larger than the mortgage payment, but rent needs to at least price in the risks related to owning a property long term.

The markets for owners vs renters is different. People with the means will buy if they have reasons for staying in one place for a long time. They will rent if they don't. That can depend on the local economy, schools, livability of the area, industry trends, etc.

Here on Long Island, NY, renting with one roommate is infinitely more profitable than owning a house:

Renting = $1,900 a month for brand new construction, centrally located 1br apartment including utilities

Owning = $3,300 a month for 2br dilapidated house, inclusive of property tax, home owners insurance, massive utility bill, and I haven't even factored in repairs of equipment from before 1960

Sure, you could rent out your basement and your bedroom for an extra $1500, but now you are running a hotel and have to report that income :)

Re: The Hot Property That’s Next on Tech’s Agenda: Real Estate

#34

Post by stephengillie »

baybal2 wrote: post #18
tim333 wrote: post #14

Earlier quoted context omitted.

I googled Ziroom and see they long lease apartments and then sublet, and their doing so has raised the cost of long leases in places. How is this burning anything to the ground? I'm confused.

Just take a look on a very impressive list of RE companies they took over. Besides of them doing all kinds of leasing models, they put a very thick slab of butter on top with add on services, something nobody else can match. With a single click you can: get a handyman to fix anything, order renovations, moving, breakfast delivery, daycare, cleaning, maids, buy furniture, order a restyling, get new appliances, remote…

> get a handyman to fix anything, order renovations, moving, breakfast delivery, daycare, cleaning, maids, buy furniture, order a restyling, get new appliances, remote lock it, pay for every service, or even Airbnb it on your behalf if you leave for extended amount of time, or do that in reverse while you are on a trip to another city.

So... apartment concierge. Americans already have most of those services, provided by another app. The value added here is the patented one-click single point of failure.

Some of these - renovations, daycare, furniture, appliances - I would want more involvement than just tapping "buy" in an app.

Re: The Hot Property That’s Next on Tech’s Agenda: Real Estate

#35

Post by anoncoward111 »

lallysingh wrote: post #32
saiya-jin wrote: post #25

Earlier quoted context omitted.

Yes, and you are exposed to myriads of risks that tenant isn't either - property market crash, tons of possible environmental disasters, issues with plumbings, fires, damage done to property, gradual degradation of, well everything. Another thing is the amount of time and energy invested into acquiring, renovation, maintenance and improvement of the property. Financially any of those, especially market crash can ruin…

Yup, but the difference is that some of your appreciating asset is being paid for by someone else. In some cases that's worthless, in others quite valuable. As for pricing, the market does that for you.

When it works, it works really well.

When it goes wrong, it fails catastrophically.

That is to say, the variance of slumlording and poker arr probably equal :)

Re: The Hot Property That’s Next on Tech’s Agenda: Real Estate

#36

Post by voicedYoda »

anoncoward111 wrote: post #33
lallysingh wrote: post #31

Earlier quoted context omitted.

The markets for owners vs renters is different. People with the means will buy if they have reasons for staying in one place for a long time. They will rent if they don't. That can depend on the local economy, schools, livability of the area, industry trends, etc.

Here on Long Island, NY, renting with one roommate is infinitely more profitable than owning a house: Renting = $1,900 a month for brand new construction, centrally located 1br apartment including utilities Owning = $3,300 a month for 2br dilapidated house, inclusive of property tax, home owners insurance, massive utility bill, and I haven't even factored in repairs of equipment from before 1960 Sure, you could rent…

Just as a slight clarification, if you set yourself up to rent part of the house, you could convert ownership of the house to an llc, or soon legal entity, and then that organization collects rent from you and tenant, which pays the mortgage, property taxes, utilities, etc. Do this only if you intend to rent portions out, as it can reduce liability. Ymmv and ianaa

Re: The Hot Property That’s Next on Tech’s Agenda: Real Estate

#37

Post by bluedevil2k »

saiya-jin wrote: post #25
newacctjhro wrote: post #17

Earlier quoted context omitted.

You're building equity with the difference between rent (plus repairs etc) and the mortgage. The renter isn't.

Yes, and you are exposed to myriads of risks that tenant isn't either - property market crash, tons of possible environmental disasters, issues with plumbings, fires, damage done to property, gradual degradation of, well everything. Another thing is the amount of time and energy invested into acquiring, renovation, maintenance and improvement of the property. Financially any of those, especially market crash can ruin…

All this, plus you forgot taxes & insurance. Not even homeowners insurance, but liability insurance in case someone hurts themselves on your property. You need to cover times it's not occupied, pay for a property manager, any legal costs when a renter abandons the property and you need to instantly evict them, clean up costs between each tenant.

Building equity on a property backed by a mortgage is such a slow process that the only way to make profit (in my real estate market) is to eek out a thin margin every month and cross your fingers nothing breaks.

Re: The Hot Property That’s Next on Tech’s Agenda: Real Estate

#38

Post by mhjas »

humanrebar wrote: post #19
lr4444lr wrote: post #13

Earlier quoted context omitted.

I agree with your last point, but what is tech supposed to help about it? That's a systemic problem of jobs continually concentrating in dense urban cores where land is simply more scarce.

Tech could absolutely help jobs and services decentralize. But we wouldn't call it "real estate tech". If Google really wanted to make a dent here, getting serious about remote first employment at Google would be a game changer even if the enabling tech never made it into the Google suite.

Unfortunately I think that is unlikely. Real estate gains and career prospects from centralization is essentially part of the compensation package for large tech companies today.

Re: The Hot Property That’s Next on Tech’s Agenda: Real Estate

#39

Post by dnomad »

baybal2 wrote: post #18
tim333 wrote: post #14

Earlier quoted context omitted.

I googled Ziroom and see they long lease apartments and then sublet, and their doing so has raised the cost of long leases in places. How is this burning anything to the ground? I'm confused.

Just take a look on a very impressive list of RE companies they took over. Besides of them doing all kinds of leasing models, they put a very thick slab of butter on top with add on services, something nobody else can match. With a single click you can: get a handyman to fix anything, order renovations, moving, breakfast delivery, daycare, cleaning, maids, buy furniture, order a restyling, get new appliances, remote…

Pretty much this. Ziroom is pretty much the future of real estate.

Real estate will be virtualized like every other illiquid asset. This means:

* Ownership of real-estate gets rolled up into REITs. REITs are experts at building, buying and selling real-estate and they can do it at scale. "Home ownership" where small-time retail investors buy and sell real-estate will get selected away as its a grossly inefficient model.

* Real-estate property managers like Ziroom and WeWork and AirBNB will take out leases and resell highly customized and liquid packages. They provide not just access to the property but to a wide range of services and auxiliary services.

* The PMs now manage their inventory and pricing in real-time.

At this point you can start to think of real estate as any other "cloud service": acquired on demand, at fluctuating prices, and accessible through a whole clearly defined service/API layer.

We're starting to see this in China and SEA already in a big way [1]. Here again Asia is way ahead of the curve. Real-estate "on demand" means companies and even families are basically moving between different properties every month based on prices and needs. Office desks can be rented for as little as 15 minutes.

The key obstacle here has always been renter quality and the various housing legal regimes. In Asia at least the government seems primed to step in and vouch for renter quality which which will likely evolve into something like a credit rating for renters. The legal questions are still totally up in the air but that's not stopping people for now. Companies like Ziroom have been known to get up to some shady antics like evicting people in the middle of the night or hiring policemen to intimidate people.

[1] https://chinaeconomicreview.com/why-chinese-millennials-are-...

Re: The Hot Property That’s Next on Tech’s Agenda: Real Estate

#40

Post by acct1771 »

stephengillie wrote: post #34
baybal2 wrote: post #18

Earlier quoted context omitted.

Just take a look on a very impressive list of RE companies they took over. Besides of them doing all kinds of leasing models, they put a very thick slab of butter on top with add on services, something nobody else can match. With a single click you can: get a handyman to fix anything, order renovations, moving, breakfast delivery, daycare, cleaning, maids, buy furniture, order a restyling, get new appliances, remote…

> get a handyman to fix anything, order renovations, moving, breakfast delivery, daycare, cleaning, maids, buy furniture, order a restyling, get new appliances, remote lock it, pay for every service, or even Airbnb it on your behalf if you leave for extended amount of time, or do that in reverse while you are on a trip to another city. So... apartment concierge. Americans already have most of those services, provided…

Then you're perhaps not the target market.

People with that kind of money, if they're dissatisfied, they just roll the dice again.

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