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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

#71

Post by ianai »

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?

I’m more talking about renting an apartment vs owning a house. They’re fundamentally different goods/services but their dollar value tends to be closer than they should be. Renting a house shouldn’t be profitable or should be only slightly due to selling one very heterogeneous good.

Apartments generally suck compared to owning a house. You’re literally paying to have a manager over you. You’ve probably got stairs to lug everything up/down. You’ve got neighbors above you making you listen to their crap - and if their apartment floods because they did something dumb or just a freak occurrence, you’re flooding too. Etc etc. but it makes sense for that to be profitable when a complex can operate with economies of scale.

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

#72

Post by dano »

The fees to the buyer on the sale of a $1.1m house are about $60,000 including broker fees of 5%, transfer, title, and many other fees. Fix that, attract buyers, and charge the seller $20k and you've got a heck of a good business.

My recent experience in selling a property is that no buyers could find the property and contact me until I hired an agent. Listing it FSBO resulted in calls from agents, not buyers. Every agent had a horse in their stable that they wouldn't share with me unless I paid them a commission.

Figure out how to make it emotionally and legally safe for buyers to acquire property without an agent and I think that would help. All to often we think we need representation, which is expensive, when we actually don't.

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

#73

Post by r_smart »

ianai wrote: post #71
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?

I’m more talking about renting an apartment vs owning a house. They’re fundamentally different goods/services but their dollar value tends to be closer than they should be. Renting a house shouldn’t be profitable or should be only slightly due to selling one very heterogeneous good. Apartments generally suck compared to owning a house. You’re literally paying to have a manager over you. You’ve probably got stairs to…

>Renting a house shouldn’t be profitable

If I can't make money by renting you my house, why would I incur the risk of letting you live in it and potentially damage the property rather than have it just sit empty? Why would I want to deal with the hassle of making sure things are up to code? If all I can do is break even until I eventually sell it, then why not just invest my money elsewhere?

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

#74

Post by Nadya »

r_smart wrote: post #73
ianai wrote: post #71

Earlier quoted context omitted.

I’m more talking about renting an apartment vs owning a house. They’re fundamentally different goods/services but their dollar value tends to be closer than they should be. Renting a house shouldn’t be profitable or should be only slightly due to selling one very heterogeneous good. Apartments generally suck compared to owning a house. You’re literally paying to have a manager over you. You’ve probably got stairs to…

>Renting a house shouldn’t be profitable If I can't make money by renting you my house, why would I incur the risk of letting you live in it and potentially damage the property rather than have it just sit empty? Why would I want to deal with the hassle of making sure things are up to code? If all I can do is break even until I eventually sell it, then why not just invest my money elsewhere?

I think that is precisely for the reason. To prevent people from purchasing housing they don't need so that houses would be more affordable for people to purchase and live in. Rather than paying a premium to live in a house someone else owns but doesn't plan on living in.

Houses would be incredibly cheap if there were no incentive for wealthy individuals to own multiple properties when they could invest their money elsewhere. The price of houses would have to be affordable enough for people to actually purchase them over choosing to live in an apartment complex.

Apartment complexes can house more individuals in a small space - so if it incentives to build houses change to building more apartments that isn't necessarily a bad thing when trying to house people...

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

#75

Post by michaelscott »

dragonwriter wrote: post #70
michaelscott wrote: post #42

Earlier quoted context omitted.

The rent you charge is for providing a domicile, I as a renter couldn't (and shouldn't) care whether this is enough to deal with repairs, especially since you as owner are certainly not repairing things every single month. If the rent is more than the mortgage why would I rent? Beyond potential credit problems (which can generally be solved within a matter of months barring egregious exceptions) and maybe conveyancin…

> If the rent is more than the mortgage why would I rent? Because the you don't have the savings for the downpayment to qualify for the mortgage with the payment at issue. Because property ownership cones with more expenses than just he mortgage, many of which remaining with the owner in most leases. Because no one is selling single units of the type you want at the time, but someone is renting them out. Because you'…

As with conveyancing or transfer fees, a downpayment can be negotiated into a mortgage loan. Extra expenses should remain with the owner, since it is their asset. Everything else you've mentioned would be a corner case at best and not applicable to the average person looking for somewhere to keep the rain off their heads.

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

#76

Post by michaelscott »

ghaff wrote: post #49
michaelscott wrote: post #42

Earlier quoted context omitted.

The rent you charge is for providing a domicile, I as a renter couldn't (and shouldn't) care whether this is enough to deal with repairs, especially since you as owner are certainly not repairing things every single month. If the rent is more than the mortgage why would I rent? Beyond potential credit problems (which can generally be solved within a matter of months barring egregious exceptions) and maybe conveyancin…

>If the rent is more than the mortgage why would I rent? Because owning a property involves putting money down, maintaining, being exposed to market value fluctuations, etc. on a very expensive and relatively non-liquid asset. Sure, buying would mostly have been the right financial decision in the Bay area at least over the past decade for most people. But, especially if I don't want to deal with home ownership, can…

Of course in certain conditions it is preferable to rent (haven't laid down roots, still building the beginning of a career etc), but as a purely financial decision for a regular, long term domicile it doesn't make sense to pay a premium to not "deal with home ownership". It's not like running a business.

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

#77

Post by michaelscott »

r_smart wrote: post #63
michaelscott wrote: post #45

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. A property investment, like any investment asset, is a bundle of risks as well as rewards. Yes, you as the owner take on the risk of things like market crashes, insurance and repairs but…

Right, and you price the rent based on that risk profile. A price that is absolutely going to be higher than the mortgage, unless as another commenter pointed out, there are incentives & tax breaks that cover the cost you would otherwise bear.

The risk profile is carried by the asset owner, not the person making use of the asset. I buy equities, fixed income assets and bonds based on my risk profile, not someone else's.

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

#78

Post by stephengillie »

acct1771 wrote: post #40
stephengillie wrote: post #34

Earlier quoted context omitted.

> 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.

Is that market large enough in America to hit a critical mass?

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

#79

Post by delinka »

anoncoward111 wrote: post #60
voicedYoda wrote: post #36

Earlier quoted context omitted.

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

I don't understand the warning here. The LLC is registered with the state, the owner of the LLC is registered with the state, the LLC is the property owner of record with the local/regional government.

Can you explain what you're warning about?

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

#80

Post by r_smart »

michaelscott wrote: post #77
r_smart wrote: post #63

Earlier quoted context omitted.

Right, and you price the rent based on that risk profile. A price that is absolutely going to be higher than the mortgage, unless as another commenter pointed out, there are incentives & tax breaks that cover the cost you would otherwise bear.

The risk profile is carried by the asset owner, not the person making use of the asset. I buy equities, fixed income assets and bonds based on my risk profile, not someone else's.

Riiiigggghhhhtttt....and at a selling price determined how?
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