Why are you buying?
For anyone either working at a RE company (REPE, Family office, REIT, small shop) or even buying for yourself, what specific factors convince your investment committee to buy properties in today's environment?
How do you make money in the 9th inning of even extra innings of a cycle? When the acquisition guys make their decision to buy a property, how do they justify and what metric do they look at? Do the numbers just make sense so it is worth buying regardless of the late cycle we are in?
Anyways, to conclude, if anyone can share the mentality at your firms and what the executive management think of the period we are in with prices at all time highs depending on the market.
How do you tackle this problem? Is there even any value add deals to chase after? Is development too risky today? Buying in different markets? Thanks.
Nothing in California Multifamily. The threat of Costa Hawkins getting repealed is killing potential developments and acquisitions everywhere. I've talked to a handful of brokers who said they are starting to see significant restraint from institutions and equity groups until the political dust clears. Scary times in California.
I was reading in the WSJ the other day that 0 apartment units have been built (except for gov't units) in Venezuela in the 58 years since they started enforcing rent control laws. I'm preaching to the choir I'm sure, but rent control is only good for a select few people; it's horrible for society.
"Rent control" units are built with tax payer money (or tax subsidies) every year, yes, not by free private sector capital. Rent control has been a complete and utter failure in every place it's been tried. NYC and San Francisco come to mind as places that thought rent control could supplant the laws of supply and demand, but have ended up in housing affordability crises. The Section 8 slums all over the country are just a step above a banana republic--I would know because I used to work in the Section 8/LIHTC business right out of college, and a key part of my job was site inspections.
Rent control (in any of its forms--rent control laws, LIHTC, Section 8, public housing, etc.) is NEVER beneficial to society, just for the record.
Yes, I remember you despite your name change, you were the guy alleging that most of the people living in Section 8 housing are driving Mercedes and BMWs and keeping the whole "welfare queen" myth alive.
I'm also not entirely sure why you are singling out subsidized housing as being the only type built with taxpayer money. As of 2005, over 50% of home realized a tax savings on the mortgage interest tax deduction, but you obviously are unwilling to call that out as the subsidy it is. Free private capital has rarely built or achieved anything at all; to take NYC (a market I know and you referenced), free private capital has barely built anything in the last few decades. Only a vanishingly small amount of rental product is produced anymore that doesn't benefit from a tax abatement, and until very recently the same went for condominiums.
And knowing your views on poverty, governmental responsibility, and all that, I won't even bother to argue with you about what constitutes "beneficial to society"; it's very obvious you view social benefit through the exclusive lens of what gives you personally the biggest return on the smallest outlay.
At the end of the day its a cost/benefit analysis. Funding affordable housing now means not having to deal with having all your shit taken from you later; capitalism unbounded by government restraint (which has never existed, capitalism requires government intervention to succeed) is always met with pushback from the very people it tries to turn into commodities. It's why the periods of human history in which capitalist values have been most in the ascendant, were simultaneously the most corrupt and followed by swings in the other direction.
Here we go...
When you can't defeat the arguments, go after the individual. Also, when personally attacking, completely misrepresent what the individual said. For example, when somone says "a lot" you say "most."
For someone who has stalked (and misrepresented) a comment of mine going back 5 years(?) it's amazing that you've failed to stalk the dozens of times I've specifically called out the mortgage interest deduction as being completely counterproductive. It's genuinely amazing.
Right.
Right, and NYC suffers among the most severe affordable housing crises on Earth. Because you know rent control is intellectually indefensible, you're kind getting off topic from rent control, but yeah, the gov't shouldn't be subsidizing the real estate industry because the law of supply and demand is immutable, and subsidizing an industry simply shifts costs, which is why housing, healthcare, and higher ed costs are snowballing out of control.
Again, attack the individual when you can't defeat the arguments. I'm a monster because I believe that the gov't distorting the market actually doesn't help people it's intended to. I'm Hitler.
I have no idea what you're talking about, and I don't think you do either.
So nothing about rent control? Ok.
Not sure what you mean by rent controlled apartments are built every year but I'm assuming you are referring to affordable/BMR which is a totally different animal. I am curious how, other than the tenants who live in existing rent controlled units, you think that rent control is beneficial to society or economies as a whole?
Roughly 40 of the 41 economists in the link below tend to hold the view that rent control is bad. The institutions these economists are at not exactly right wing think tanks either...
http://www.igmchicago.org/surveys/rent-control
What are you talking about? I literally run a mission-driven business on the side that builds affordable, middle-class homes. I've built 10 houses for 10 families. With one exception, I've never made more than $30,000/unit. How many homes have you built?
As an aside, the last 3 homes were sold to a disabled veteran; a school teacher; and a retired single woman. I'm a MONSTER!
I agree. And economics and history teach us that the exact worst way to support this mission is to implement rent control laws, implement inclusionary zoning, and building and subsidizing public housing and LIHTC homes. These solutions only create affordable housing for a few people while literally taking affordable housing away from others. NYC and San Francisco (and California, in general) prove that your affordable housing model doesn't work. On the other hand, Tokyo and Houstion prove that my market-driven model works by creating abundant housing options for a lot of people.