How to Profit from Rising Rents: Build Apartments | Hacker News Reader

How to Profit from Rising Rents: Build Apartments

wsj.com

37 pointsprostoalex28 comments

How to profit from rising rents even more if you already own apartments: Prevent new apartments from being built

Buy land in the good places and sit on it until the land and property has gone stratospheric. Aim to never increase supply to the level the market needs to maintain prices; instead constantly force up asset prices forever until you essentially have two classes of people, renters and owners. Keep splitting the housing into smaller and smaller units, make the renters share housing, constantly increase prices at more than the rate of inflation. Only sell newly created housing at a huge premium above market rate.

Buy more land and more property. Rinse repeat.

Also https://www.ted.com/talks/thomas_piketty_new_thoughts_on_cap...

Thanks for this beautiful comment. I especially liked this part "Keep splitting the housing into smaller and smaller units, make the renters share housing, constantly increase prices at more than the rate of inflation"

This has been my exact experience in Manhattan, where a 3 Bed apartment got converted into 5 Bed. After we refused to pay additional rent. Interestingly in Mumbai my apartment building (a Co-op where we own) decided to demolish / rebuild and reduce the playground associated with the building. This allowed us to raze the 6 storey building built in 1960 into a 12 storied one. As a result, we now have an apartment in the same co-op with equivalent sq. footage and were paid additional money plus rent while the building was being rebuilt. Since it was a Co-op we could shop around for a developer who offered us the best deal. The current building will at least sustain till another 50 years. I have never found this happening in US. Since either the building did not have enough free space to expand upon adjacent to them or restriction on height increase.

This is bad advice.

Unless you own a significant fraction of the market, you'd make way more developing the second property than sitting on it.

You wouldn't make more if at the same time everyone started developing properties... If we build enough properties to meet demand the price goes down which means there is never any incentive to do this. I'm saying scarcity is a very effective model for increasing prices.

I mean in London you need a special mortgage when buying new build housing because usually the price you pay is far in excess of the market value - you can literally make a 20% loss if you sold it in the first year or two! Of course as we all know housing always goes up in value and that's built in to the price!!

It feels as though you could build a huge number of houses in London but it never comes close to matching the required supply. In every other industry you would assume everyone should have a car and everyone should have a tv or computer, but within reason, everyone who wants to should be able to live in New York or London? We think that is insane.

Don't forget to instill a sense of ingratitude into the renter class for disliking their falling quality of life.

Point out to them that poorer people around the world are experiencing an incline in living standards, so they should be thankful for the opportunity to work for less and less since there's still someone worse off!

Sounds good, in a complete vacuum. This ignores basic economic realities. But of course, these sorts of actions become far easier when the cost of capital is essentially zero.

I'm saying where is the economic incentive to build enough new housing to reduce or maintain current prices.

>>> This ignores basic economic realities

Maybe you can see a time where in San Fran or New York or London there will be enough housing built to simply maintain the current price? I can't though...

Oh yeah, feudalism!

How to profit even more: sell them to someone who is going to tear them down and build a skyscraper.

This works for a while, until there is enough inventory to meet demand and then (gasp!) rents become affordable.

Assuming you build the place efficiently, you should still be able to make a profit, but that's the trick. A lot of developers right now are building luxury apartments with granite and fancy fixtures which look great now but will need to be replaced in a few years when they get worn out from mistreatment and don't look so good anymore or worse yet aren't in fashion anymore.

Except in places like SF where the victims themselves band together to maintain low inventory so they can justify their rent and eviction controls. And all because a minority of long-term residents live at below market rates and raise the hopes of the newbies that one day they too can be of the "renter gentry(tm)."

Absolutely (although you got the motivation a bit wrong). The renters who are against new housing are doing it solely out of lack of intelligence/education -- they don't understand that more housing means poor people can rent more housing, even if everything that gets built is a luxury apartment, since eventually equilibrium will be reached.

The owners who are against growth, who are the majority of those against growth, are doing it simply to prop up their real estate prices.

I'm probably one of the rare homeowners who is for more housing. I think my house is ridiculously overpriced and should cost 1/2 as much, and would if they would allow people to build. I don't care though because I bought my house to live in, not to retire with.

Are you proposing to build more land?

No one has commented yet to instead start your company where rent is still cheap.

Speaking of cheap rent, I'm in São Carlos for a few days and it seems awesome for startups. I'm considering moving here.

Off topic: actually, I'm here due to a thread about the city you started on HN some months ago! I have some more questions about how São Carlos has worked out for you - if you'd be free to meet and discuss, please email me (I can't find yours anywhere unfortunately):

charles dot offenbacher at gmail dot com

In most cities that have rising rents (like SF), government intervention actually prevents new apartments from being built.

Can we not post anything with paywalls or just give the non-paywall link.

This makes it inaccessible for most HN users.

Please see https://news.ycombinator.com/item?id=10920832 and the announcement linked from there.

This comes up every now and then, and the moderators' response so far was to focus on the content. Because of country restrictions, IP restrictions, publisher's cookie policies, monthly free article quotas, per-article exemptions, corporate (or personal) subscriptions and availability of the article through Google search (or "web" link) it's hard to say what percentage of HN readership can see the contents.

The worst that can happen is that articles from a heavily paywalled site (ft.com, nature.com, theinformation.com) don't seem to get upvoted much, meanwhile articles from not so restrictive sources (wsj.com, nytimes.com) do make it to the front page occasionally, so I'm assuming a good portion of those votes come from readers actually capable of reading the full contents.

With the NYT, I can just hit CTRL-SHIFT-N and get around the paywall. With the WSJ, not so much- the directions given in this thread don't even seem to work.

>This comes up every now and then, and the moderators' response so far was to focus on the content.

The problem with this methodology is that if one cannot see the content, it cannot be focused on.

Just click on the web link right under the title (within Hacker News).

If I do that, I'm brought to a Google search where TFA is result #1 and this HN post is #2. If I click on #1, I hit the paywall. Is this not what is supposed to happen?

The point of the Google search is to take advantage of Google's "First Click Free"[1]. Quoting: "A user coming from the domain [.google.] must be able to see a minimum of 3 articles per day."

1: https://support.google.com/news/publisher/answer/40543?hl=en...

I get this too, because I refuse to send referer(sic) headers and have disabled them in my browser settings. To use the 'one weird trick' of doing a Google search, you need to send the referer info saying you came from a Google search link.

Try checking your browser's privacy settings, or test using a site like this: https://www.darklaunch.com/tools/test-referer

Works for me to bypass the paywall.

This debate has been played out in a number of previous discussions, and it was decided that paywalled articles were okay. It was further found that the paywall was not a proper subject of discussion.

I did not take a view at the time, but thought you should know.

Reply on news.ycombinator.com