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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

#51

Post by ghaff »

alexgmcm wrote: post #24
r_smart wrote: post #11

Earlier quoted context omitted.

>Rent shouldn’t be anywhere near comparable to mortgages. How am I supposed to rent you a house if the rent you pay is less than the mortgage I have on the house? How do I build a pool of money to use for repairing the things that inevitably break?

Traditionally those letting houses owned the houses outright - the mortgage was paid off. "Buy-to-let" has changed this but perhaps that is not a good model.

>Traditionally those letting houses owned the houses outright - the mortgage was paid off.

So, in other words, they have a bunch of money invested in an asset that, if they sold it, could otherwise be earning some rate of return in some other investment.

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

#52

Post by emodendroket »

JoeAltmaier wrote: post #50
emodendroket wrote: post #46

Earlier quoted context omitted.

Who's "they"? This article seems to mostly be about OpenDoor offering to buy homes not in need of major repair and turn around and sell them in 90 days, all while collecting smaller-percentage fees that traditional sellers would. I'm not sure this model is as crazy as you're making it sound. > “The vast majority of investors who hear about it initially think it’s a bad idea,” said Stephen Kim, an analyst at Evercore…

Gotta deal with the lemon issue though. You make one mistake buying, and you have a quarter-million-dollar problem. Takes a lot of transaction fees to recover from that?

Sure, but how is this different from the problem faced by, like, CarMax? If your volume is large enough it doesn't matter.

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

#53

Post by karambahh »

r_smart wrote: post #11
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. How am I supposed to rent you a house if the rent you pay is less than the mortgage I have on the house? How do I build a pool of money to use for repairing the things that inevitably break?

Depending on the local regulations, you can turn a (long term) profit while a rent inferior to the mortgage repayments.

Can't get on the specifics as it varies country to country and even local regulations but as anecdotal evidence, I'm currently looking at a property in my hometown, with a mortgage of 80k€ (cost of mortgage 7k€, 10 years). This property would rent at 4000€/y, resulting in a yearly loss of roughly 4000€ (you read that right).

With local incentives and tax shelters, I would still net 18k€ in gain over 10 years. On a 80k€ property, that's a 21% ROI....

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

#54

Post by ghaff »

alistairSH wrote: post #26
lr4444lr wrote: post #15

Earlier quoted context omitted.

Don't sell short what those companies did for buyers: they freed them from the gatekeeper of a broker. No disrespect to brokers - they're great for sellers and I happily used one - but the analytics and search and sheer awareness of what was on the market they offered to the home buyer was revolutionary IMHO.

Agreed. While Redfin, Realtor.com, etc didn't cut a realtor out of my RE transactions (1 purchase a decade ago, then 1 sale + 1 purchase last year), they did do a good job showing me what was on the market. And not just at a single point in time (when I was actively shopping), but over years, so I could see neighborhoods that were smaller or had less turnover. While actively searching, the often gave me a heads up as…

Everything from Zillow to online property listings to Google StreetView to just the Web generally probably makes it hugely easier to get a feel for the market, find properties, and scout locations than when I bought my house. But, based on friends who have bought and sold relatively recently, I'm not sure the process of actually making a purchase is much easier or cheaper and that's where the stress really lies. (Well, that and just inflated property values in locations many consider prime.)

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

#55

Post by JoeAltmaier »

emodendroket wrote: post #52
JoeAltmaier wrote: post #50

Earlier quoted context omitted.

Gotta deal with the lemon issue though. You make one mistake buying, and you have a quarter-million-dollar problem. Takes a lot of transaction fees to recover from that?

Sure, but how is this different from the problem faced by, like, CarMax? If your volume is large enough it doesn't matter.

All about the rate of mistakes - even a negligible error rate means millions lost a year.

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

#56

Post by ghaff »

dnomad wrote: post #39
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…

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 mod…

It takes a certain mindset on the part of the renter as well. You sort of have to have minimal physical stuff and be OK with moving into a largely standardized serviced apartment. In other words, the apartment is somewhere you drop your stuff and sleep in. It's not "your" place.

There are corporate apartments in the US but these are usually oriented toward people who have their own place but have to spend a lot of time at some different location for a period of time. I don't know the level of service such places typically have.

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

#57

Post by arkades »

emodendroket wrote: post #47
arkades wrote: post #29

Earlier quoted context omitted.

You don't need an "honest" attorney to get that number. It's normal for RE attorneys to get a flat-ish fee, and RE agents to pull a percentage. And RE attorneys usually make And all paperwork and contracts are ultimately done by the lawyer. I have honest to goodness no idea why you involved a realtor at all if you were selling it by yourself. Their only job is to attract prospective buyers (read as: list your house o…

> And all paperwork and contracts are ultimately done by the lawyer. I have honest to goodness no idea why you involved a realtor at all if you were selling it by yourself. Their only job is to attract prospective buyers (read as: list your house on the MLS). Also handle things like showings, no?

True. And showings.

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

#58

Post by emodendroket »

JoeAltmaier wrote: post #55
emodendroket wrote: post #52

Earlier quoted context omitted.

Sure, but how is this different from the problem faced by, like, CarMax? If your volume is large enough it doesn't matter.

All about the rate of mistakes - even a negligible error rate means millions lost a year.

It's likely that they'll make money just on flipping the houses in many cases and even in the lemon case it will not be a total loss. Even in the very worst case, where the house absolutely cannot be salvaged, the lot is worth something (I think the lot is around half the value of my property, for instance). If the house just needs more extensive repair than expected that's a smaller loss.

From the perspective you're talking about, the risk to an individual buyer of missing some serious issue in an inspection is far greater than it would be to a company buying up homes left and right, and they've minimized this risk by focusing on a relatively specific slice of the market (newish houses with no serious known issues and with a value of $250-500k).

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

#59

Post by baybal2 »

baybal2 wrote: post #10
ianai wrote: post #6

Earlier quoted context omitted.

I don’t think they’d have to worry. That business model clashes with the individualism I’ve experienced in the west. Their whole apartment option sounds viable though. They’d have some success here but they’d have to pick their markets well. Certainly, let us not forget a rich RE boy lives in the White House right now.

FYI Ziroom had whole apartment rentals for many years now

They were a "bachelor dorm" company for just 1 year of their existence, and whole apartments along with "co-livings" are now their main business

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

#60

Post by anoncoward111 »

voicedYoda wrote: post #36
anoncoward111 wrote: post #33

Earlier quoted context omitted.

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

Nice house hacking! Just be sure that you can quickly and easily prove that you as a personal entity still have ownership over the deed to the property, which is owned by your sole-partner LLC or etc
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