All Forum Posts by: David S.

@Spencer Cornelia all good points. What scares me is the likelihood of our nation being zero-bound in respect to interest rates for the foreseeable future. Why? Because that’s the only thing that caused Blackrock to seek returns in such an unusual market in the first place. Sure they only own about 1% of the rental housing market, but that was done in what, 5-7 years by just one entity? If their formula is successful others will dive in and eventually they will drive returns down to that of other assets. 

The reason I feel interest rates are sure to be zero-bound is because this nation has 20 trillion in debt and counting. The only way this can be managed long term is through a mix of extremely low interest rates (I have no problem using 5/1 arms) and inflation. But that unfortunately means that corporate entities will come into this market in search of yield, and obviously it’s working for Blackrock if they’re buying homes by the thousands yet.

@Anthony Dooley agreed with exception of the argument that every dollar cornered is a dollar created, that’s simply not true. For the most part, there’s a finite amount of resources in the economy at any given time, we’re all fighting for those resources. Over the long term wealth is created, yes, but for the most part, if you rent to a tenant today, that’s one less person competing for the rest of the housing supply today which puts negative pressure on rents for other landlords. We’re a very small piece of the creation of wealth in that sense; it’s more of a trickle up effect. 

@Joe Villeneuve I find you to be a convincing debater. I do hope you and others are absolutely correct regards the philanthropy of those who achieve such success. I’ve never perceived it as such though perhaps I’ve simply seen too many outrageous homes, products, etc. I admit it’s easy to get the impression that’s just how people behave when they have an excess of income. Again, just to clarify, I have no problem with the person putting the wealth to good use, even if that means they have 500 and counting, so long it’s not a game of “look at me! And I can even get more!” 

Honestly, there’s few things I respect more than a person who’s wealthy of whom you’d never know it, so long they’re out doing something to help others.

Nonetheless, I do still find it a curious state of mind when I see those who want to help the investor community and subsequently try and dominate their local markets. What better way to help the next guy by calling enough enough? Personally that would be my mentality but maybe my mentality will indeed prevent me from ever coming to that point in the first place for lack of that level of drive. 

@Michael S. Completely irrelevant. I shouldn’t have to get legalistic in disclaiming everything as “in an apples to apples scenario”. That’s why statistics are so often of little use to society; they get twisted for benefit of argument when that only corrupts the underlying data and purposely so. Ceteris parabus people, please! 

@Anthony Dooley I actually agree with most of what you say there. For me it’s not a matter of wealth. I have drive and that might very well make me wealthy some day, but at a certain point there’s family, poor, widows, etc. If I own a public company and the valuation goes nuts, that’s one thing; I’m responsible for those employees and an creating a lot of jobs. To me real estate investing is different. There’s no patents and significant operating differences; anybody with a decent head on their shoulders can do it and a lot more would if it wasn’t hyper competitive the way it is. Not everybody starts a Google or other large business entity however.

I’m looking at this from the perspective of actively working to just get one more house constantly, all the while you’re sitting on 200 of them, paying off your mortgages, realizing appreciation. The wealth is already growing organically and that’s great, but why then expend your time acquiring more and more actively? For every dollar you actively corner somebody else out there will have to find an alternate way of making it, more than likely somebody who could use it a lot more than you can in that instance. Chances are that person ends up in the rat race, the same one so many of us seem so happy to escape through real estate. Here we are sharing ideas and helping each other. Seems a contradiction to me. 

@Joe Villeneuve Why is that greed? I suppose it doesn’t necessarily have to be greed but what else is it if one already has every necessity  in life financially covered 3x over if not many times more? It’s true that some may give most of it away but we all know that’s the exception, not the rule. Is it a high/fix? Seems if you’ve done it hundreds of times already that might just wear off eventually and move on to other interests? No? It’s not like they even see the property... they buy it, rent it, and they see their balance sheer increase a little. If that’s a person’s main satisfaction in life, then yes, I would deem that a form of greed, most certainly. What is greed if not that? I just want one more... just one more. Greed doesn’t have to be manifested in distasteful manner to be greed. 

No no, I understand that there’s only so many who want to be a landlord, the “20,500 families” is just to point out the magnitude of this one outfit in the marketplace. Most of us will read articles on the decline of the middle class and we cringe to read of it, yet this is a good example of somthing that makes matters worse in that regard. Many of us like the concept of “support small business”. But how many people are on these forums mentioning how few deals there are and how they can’t get the numbers to work? If the Blackrocks of the world are buying 82k properties in a matter of five years or so, we all know they’re overpaying for these homes merely because they can and because they drive intense effieciencies in management. That pushes all of us out of the market to an extent, and that hurts the middle class in a real way. Same holds for those with 500 plus units; they buy sight unseen, often tie up a contract just to lay claim to it while they do further research. I know I can do the same, but that doesnt make it a tasteful practice. 

I just feel such numbers and inevitable practices bring little good to society. 

I’m sorry, but if that were my house I’d get in and draw a gun, plain and simple. Would wait till they left first... they gotta get food. Sometimes we have to do what’s morally right regardless of the legalities. I’d do my homework and consider how I could make it his word against mine if things went south legally, at that point it’d come down to the known facts of “my home vs intruder” rather than the convoluted facts of there being a squatter in my home. 

If you can’t beat em join em. There’s nothing wrong with you standing for what’s right.

@Aaron K. I know that invitation is public rather than private, still, all that is in the end of the day is a vehicle for mass wealth redistribution. Very few truly reap the benefits of such an outfit as far as the underlying operations go. Sure the stock may do well but unless they’re an MLP they’re just buying more and more homes and fattening the books. And sure it creates jobs, but there’s that rat race again opposed to “financial freedom”.

Perhaps I have an inner socialist I’m not aware of, but I have to ask the community, when is enough enough as it pertains to number of units owned?

How often they ask on the podcasts “where are you going from here?” And the answer is something like “oh, we plan to have 500 doors” or 1500, or whatever. To me that qualifies as greed if I’m speaking honestly. Why on earth would you want so many units!? I can see it if they’re lower income apartments and/or you’re syndicating, bit that’s not what I’m talkig about here.

Another case in point; Invitation homes. 82,000 units they own and rent! Ridiculous. 

The world would be a better place (I’d argue) if so many weren’t trying to commoditize or hoard everything. Honestly, that’s 20,500 families who could otherwise gain substantial financial stability through owning four rental properties each. I hate the concept of “fairness” and all that is embodied by socialism, but at some point this sort of behavior shoud fall under antitrust laws and be illegal. At some point I’d think that there’s a reasonable (high) standard of living and anything beyond that is just sheer excess. It’s as if we as a society don’t want a solid middle class. Why not step aside at some point and let the next guy have a little easier time of it? Seems the right mentality. 

Is it just me???