Globalists buying up private property (while 0bidenomics stresses peoples financial situations), what could go wrong?
Reminds me of American Homes for Rent. I think it was started by the guy out of Texas that started Public Storage. Post-housing crisis they bought a bunch of houses all over the country. My multi-inspector company ended up doing about 300 houses for them one year… nice boost is revenue and much appreciated after starving through the bursting bubble.
They’re called institutional investors and they’re driving up housing prices and driving down the demand for home inspectors.
Exactly, and sadly, many renters could care less about the property. My HOA last year passed by-laws forbidding these companies or anyone buying homes in the neighborhood with the intent of renting them.
I got lucky. I have 4 single family homes and 2 commercial buildings I own and rent out and my tenants are wonderful. In each case, none want to be homeowners or commercial building owners.
Those “by-laws” wouldn’t stand up in court though. Especially against a corporate entity with high dollar lawyers. If it was a metro district, then there would be a fighting chance, but a simple HOA, nope…
First time for me, I recently saw a single family home, new construction neighborhood that was rental only. During the last run-up, 33% of the homes sold in the Metro Atlanta area were bought by investors. There is legislation intended to cut this back but I do not know that status of the bill.
If these investors are buying houses at prices that private investors will not match, then they do so at an elevated market risk. And, if they are buying those houses without getting a home inspection, then they are also taking on that proven risk. It might take a few years to shake out, but institutional investors cannot sprinkle magic dust and make these good investments. The next big drop in home prices or rents and at least some of the these funds will go belly-up.
Not according to the article below.
IMO the HOAs around here have more power that many wish they had in some instances, I know when my dad sold his last house he had to have a letter from the HOA in order for the sale to move forward. Different states have different laws on the issue.
To homeowners, rental restrictions seem unfair because they inhibit the unrestricted use of the property. But courts across the United States continue to uphold these restrictions for legitimate purposes or when they support the association’s best interests. For instance, an HOA might want to limit the number of renters in the community because renters are less likely to take care of the property, which can result in lower curb appeal and property values.
I agree, and you would think Zillow would know better.
That article did not explain why Zillow lost money. Doing a bit of research I found the answer:
Zillow admitted its home-buying model was flawed, and it bought too many homes at too high a price. Zillow CEO Richard Barton said the proprietary algorithm the company developed to buy and sell houses caused it to overbid, and Zillow ended up with thousands of homes worth less than what they paid for them.
I think Zillow was just trying to game the market using their market position and low transaction fees, without really doing the hard work it takes to be a successful flipper. They reportedly lost about $25,000 on average per house selling them off in bulk to other companies. I would bet my hat that their algorithm was poor at assessing the house condition, something that a proper home inspection would likely have mitigated. My understanding is that they were doing home inspections and repairs as part of the process (bet is was mostly cosmetic), plus charged the seller exorbitant fees (7.5%), but still lost money.
It would be nice to see our government do something right for once, like step in and stop these companies. There has to be a line drawn to differentiate general capitalism and damaging the housing market.
The last time the government got involved in the housing market we ended up with a massive sub-prime mortgage bubble and bust. Just have some patience; the market will correct itself.
Our industry shouldn’t care if it is a good market or a bad market, all we care about is number of transactions. So disruption is our friend.
That’s a good point. My question in response is: Wouldn’t we prefer a good market with excited buyers who aren’t going into the transaction already in a negative mindset because of the holistic buying situation? In my previous careers, clients who aren’t already upset by something out of your control are less likely to be upset by the information you provide to them, regardless that you’re there just to observe, describe, and report. I’m loving this school, the forums, and the wealth of information I’m receiving for my membership!