What happens when private equity buys homes in your neighborhood
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The circular incentive here is left unsaid. If a house is an investment, you and every other homeowner has an incentive to keep supply low and demand high. This ultimately drives votes, lobbying, and policies that prevent houses being built. Otherwise you end up with falling rents and stagnating property prices, like in Austin.
https://www.apartmentlist.com/research/cooling-rent-growth-d...
I hope we can get to a point where this idea eventually dies. I'm shocked that 2008 didn't wake people up in this regard, but I guess the supply shortage made real estate a pretty rational place to invest for a while.
It's only really used to justify the humungous loan payments you're willing to take on.
I'd happily take a $1 house if it was guaranteed to never change in value; but it also served my needs.
It's moderately fun to try to figure out what a "healthy" home market would look like - probably something similar to cars; "used" houses should sell for significantly and noticeably less than "new" ones (all things considered). But location and constraints often invert this - the new houses are so far away that they sell for less than the old ones in more favorable locations.
The scary thing is that ONCE you are metrically fuckton in debt, you become exceptionally concerned with the valuations, because once it trends to level or goes under, you're stuck!
The reason why the bay is unhealthy is they don't allow you to put something on the land that matches the value of that land. People who want to spend millions on a house should be getting a mansion not a small house. People who buy a small house should get it on a lot not worth much money. I'm not sure of a good number, but something like only 1/3rd of the value should be the lot, 2/3rd the structure. This is right for most people, but there is nothing wrong with wanting a mansion in an area of tiny houses, or a tiny house on a massive lot if that is how you want to live (if a farm lets count the house separate from the rest of the farm buildings - not that this is possible but ...)
One particularly memorable instance to me was an old couple, the store had a ceiling two floors high with an 8 shaped cast iron balustrade wrapped around it. I want to say they sold puzzles, postcards and mostly wooden toys but technically that was what they had in stock, they didn't sell much of anything. If they sold 3 postcards and 2 puzzles per day it was enough to buy food. Food was really cheap.
The store was empty most of the day, if customers arrived they switched some of the lights on from behind the counter. If a wave of tourists arrived the place lit up brightly like a xmas tree. They sold the single key chain and one post card and went back to their living room on the other side of the door behind the counter. It was a magical place with many items aged into antiques on the shelve.
The old couple eventually died and the place was sold for many millions, stripped down and modernized for millions followed by a parade of over priced tourist traps that went bankrupt one by one.
Everyone working there has to pay for housing too! The rare place to live that becomes available would also be far away enough that you need a car, a long drive 2x per day and places to park it. Then you need to work hard, there need to be at least two shifts, you need to sell lots of things with very large margins.
The difference is much larger than people imagine. A bad day use to be one post card for some potatoes. Today's postcard is 1/100 the production cost, sold for 6 times more but the revenue isn't enough for one employee to park their car.
For just 6 employees at 1500 pp plus say 6000 for the store you end up with 15 000 just for housing everyone (not counting the 80 year olds such store has no use for)
One way to stop that, is ensuring the line doesn’t go up. That has some pretty nasty side effects in other ways though.
When the line stops or starts to go down, then bad things happen. People can’t sell and move without losing a ton of money. People go bankrupt, etc, etc.
Only because many millions bought risky investments since they were told it was basically risk free. Normally things getting cheaper is a good thing, but we tricked people into thinking that housing being expensive is good for them.
Most people take crazy risks to buy the most/nicest house they can get a loan for because where you live is a huge factor for a number of other things in people’s lives.
If people will give them loans for more than they can afford, many people will still do it. So easy credit? Housing market goes up. Tough credit? Housing market goes down. All things considered anyway. Eventually.
Owners have a very, very strong incentive to stop it from going down, so unless they have to move, the market can stay locked up for a long time.
One thing we can do to drive down property prices without driving people out of their homes is to tax the ever-loving-bejebus out of second (or more) Single family homes, for individuals and corporations. Make it progressively worse the more SFM's corporations hold.
An example would be to tax a second home and onward at (land tax)^(10nn) where n is the number of total homes you have. The point is to make it financially absurd to own a second home, let alone 20.
This is only one particular point on a multi-prong approach.
Removing the ability of Private equity to eat up all the local contractors to make a little mini-monopoly is also something that 100% needs to be done.
The fastest way to remove 'your home is an investment to be reaped later' mentality is to limit the total sale price based on the last sale price (IE: only increasing the price of actually investment into the property, and legally allowing any sale price far below the estimated property value) which mostly removes all of the incentive of buying a house 'for investment'. That's extreme and would have downstream consequences, we still want to (financially) incentive people to improve their living conditions.
It's also extremely hard to build a home! Regulations and zoning laws aside, America lost a fair bit of knowledge after we practically stopped building homes after the 2008 collapse. There's no silver bullet solutions. No company is going to solve the immensely complicated task of building a home in a warehouse to reduce production costs via automation: that's a pipe dream sold to venture capitalists.
Any real solution would have consequences that would hurt some folks. Still: doing nothing hurts everyone (except for an extremely small subset of already wealthy individuals and corps) far more.
Homes should be for 'living in': not to 'make a living from'.
> Removing the ability of Private equity to eat up all the local contractors to make a little mini-monopoly is also something that 100% needs to be done.
There is no need because private equity has not done that, and there is not current reason to think they will. If they ever to get a monopoly then we need to do something about it, but right now there is no sign they are. Plenty of little builders exist who are competitive with the large builders in both price and quality. There are also enough large builders to be competitive even without the small builders.
It does make the assumption that it's bad to buy twenty houses and live in only one while also opposing more housing contraction.
'Abolish rent' is still a good read.
As far as private equity... look closer: it is happening.
https://fieldrocket.us/private-equity-companies-are-buying-t...
https://www.marketplace.org/story/2024/10/24/private-equity-...
There is EVERY reason to think that they would do this, besides the data showing that they are. The MO is to find an area, buy up all the local tiny contractors, and set prices higher and higher until those contractors finally fail, then sell off any and all assets for a profit.
I am also making the assumption that you haven't tried or researched building a home in the last few years, based on your comment.
That is a goal that makes sense. However that goal has been around for a long time and nobody has been successful, and it is unlikely this current round will be. They can't buy up enough small players to make it work.
Anybody can write a book that sounds good. I've read enough to not trust them. I need more authority than just someone wrote a book that ignores any factor that isn't convenient to their opinion. Note that I have not read that book, and yet I'm 100% confident that they did that - it is a pattern repeated far too often.
We just don't have the data to track that. KKR, Blackstone, and Bain Capital, all buy up small time contractors, as well as real estate. They absolutely have the money to bully their way using that strategy. We don't know for sure if that's what they are doing or not... but as you agree: That goal makes sense.
> Anybody can write a book that sounds good.
Not everyone can write a book both sound and logical, agreed. That is to say, a well researched book is rare indeed.
It is biased, yes: it is very anti-landlord. It views a landlord as inherently extractive, and makes the case for that viewpoint.
To say that the book is not worth reading is also incorrect. It has some fantastic insights unrelated to its anti-landlord bias and it is an interesting read.
And yes: you shouldn't just trust what you read. Ever.
Regardless of it's flaws, I still recommend it as a read.
* Taxing non-owner-occupied single-family residences at higher rates (incentivizes sales)
* Removing or barring the traditional zoning/approvals boards beyond a rubber-stamp for developments that meet safety codes (incentivizes building)
* Taxing the capital gains of home sales without ability to roll over (disincentivizes housing as an investment strategy)
* Mandating housing as a human right (myriad of knock-on effects for decades after)
* Barring no-fault evictions of tenants (helps renters save to buy a home)
* National rent control (helps renters save, incentivizes construction since growth must now be achieved through volume, not price hikes)
* Public Housing (a la Singapore’s model, where we can place a down payment on a home or condo with a gov-backed loan to the developer, but with restrictions on sales/residency requirements)
* Prohibition of algorithmic pricing (flattens rent increases)
* Mandating longer leases (to help renters predict housing costs for longer periods)
* Allowing renters to “buy” their apartments and convert into a condo (reduces apartment vacancies, allows more renters to build equity and control housing costs)
* Price controls on rent increases or sale prices, especially for First-Time Buyers (e.g., 20% margin on a home’s cost for sale by builder but with a gov-backed loan, or restricting rent increases to local COLA or a 20% margin, whichever is lesser)
We have so many more options, and nobody wants to try anything because it’ll tank housing values across the board. The longer we wait to pop this metaphorical bubble, the worse it’s going to hurt, for longer.
Rent control is a deeply counterproductive policy that reduces housing supply and lowers housing quality, with the benefits accruing overwhelmingly to already-wealthy households that can make the most of rent control regulations. https://www.nmhc.org/news/articles/the-high-cost-of-rent-con...
We already do that in the form of homestead tax credit. This just discourages renters though and so I oppose it. If you come up with a way to ensure that if the house is rented the renters pay the lower rate (get a tax rebate?) I'm for it.
> Mandating housing as a human right (myriad of knock-on effects for decades after)
I have no idea how you do that in practice. There are many choices, but everything I've seen as serious unintended consequences that end up being worse.
> National rent control (helps renters save, incentivizes construction since growth must now be achieved through volume, not price hikes)
Unintended consequences get you. Every rent control I've seen disincentivizes construction since you can't be sure of a profit.
https://en.wikipedia.org/wiki/Century_Initiative#Connections...
A house falling in value is still a great investment for many, but it is a very different type of investment from what most people mean by investment. By owning a house you have a place to live for the same price even as inflation increases you income. By owning a house you have a place to live after it is paid for when you are retired and have a much smaller income (even if you have more money you have more time to enjoy/spend that money when you are not working 40 hours per week) - retirement savings are limited and houses are a great place to store money that doesn't falling into traditional accounts. These are great things to have long term, but none of them are about the increase in value. The house you live in is an investment in future rent, but you should only think of the value in terms of paying for your nursing home if/when you need one (even then you should have long term care insurance despite all the fraud and near-fraud in this area)
The idea that rents fall and property values stagnate is short term thinking. Over any 5 year period is can be true, but over 10+ years inflation tends to catch up. Unless you are buying in a very rural area nobody wants to live in - Austin doesn't qualify. Sure prices will fall, but builders have a lot of fixed costs and so that limits supply and in turn ensures prices will need to go up as population expands, or just the old houses start wearing out (houses last for a long time with maintenance, but eventually)
I'm not blindly advocating everybody buy a house. Buying vs renting is a complex question, and many people have proven they can do well in life with both. You need to make your own decisions based on your life situation. If you buy be careful not to think of your house in terms of any other investments you make - it needs very different accounting.
Do you really believe everyone thinks this way? No one I know who owns a home bought it for investment. They bought it so their family has a place to live that is theirs.
The American Dream™ centers heavily around home ownership and the government subsidizes it by allowing mortgage interest deductions and underwriting zero-down loans. Getting a mortgage and building equity is the only feasible path to wealth for working-class people who don't have money lying around to invest or the financial literacy to start doing so [1]. Contrast this with reality: in the market I live in it's actually around 20% cheaper to rent on average (presumably because California caps property tax increases). For 30 year mortgages in a sideways market you generally have to make payments for 5 years before you can break even when you sell. On top of that houses are non-fungible, illiquid assets that require maintenance and are subject to black swan events like termites, natural disasters, and destructive tenants that might not be covered by insurance. On a rational basis they are mediocre investments but our culture has conditioned people to think this way because it's their only hope for a nest egg. One might also recall what happened circa 2008 when banks encouraged the house-poor to leverage themselves to the hilt via various home equity loans to the delight of sports car and big screen TV manufacturers.
I don't think this is a healthy state of affairs but these are the breaks.
[1] I didn't gain a solid understanding of personal finance until after I'd already bought a house with nothing more than several thousand dollars in my checking account - stumbling across Bogleheads via the web saved me.
> Austin, TX presents the clearest example of this trend. From 2021 to 2023, an average of 9.9 multifamily units were permitted for every 1,000 existing residents in the Austin metro, by far the highest rate among the nation’s 50 largest metros. As these new units have gradually reached completion, the median rent in the Austin metro has fallen by 7.3 percent over the past year, which also ranks first among the top 50 metros.
Now builders won't accept a loss (in general), so that does limit how low end they can go. However the other half of this is that most people moving to something high end just freed up something lower end for someone who can't afford luxury. (most people cannot afford a second home and even those who could afford it want to spend their money on something else. There are also a small number of junk houses that are so worthless they end up destroyed, but this isn't common)
Even those who do own a house are often helped by things that lower value in some way. Many have a kid they want to move out and be successful in life and this means they gain more from lower values then raising values (which is paper money anyway since they would have to sell to see it - most are not). Many want to put an addition on the house and the same laws that prevent building also prevent their addition.
The more prices go up, the larger % of net worth for an individual a home consumes. If your entire net worth is wound up in your home because your home costs so much, your incentives are much higher to keep the price of your home from falling than if it was just a fraction of your net worth. Worse yet if you're in debt and you have to sell
The longer this problem goes on, it seems the harder it will be to rectify
Why and how did that ear worm infect so many people?
It's a story they want to believe.
The big bad out-of-town corporation is causing the housing crisis and not the complex web of dozens of factors: existing owners wanting to protect their largest asset, more people wanting to live in fewer places, inflation, tariffs on Canadian lumber, safety standards, etc.
Unfortunately, there are a ton of people who will deny that that factual, well-studied shortage exists, and will try to blame its effects on anything and everything else even tangentially related.
A desirable location will never have enough capacity. Regardless of how much building occurs. If you don’t believe me, look at NYC, Paris, etc, etc.
People move as close to a desirable location as they can afford. And often more.
Don’t get me wrong, rules set where and how bad the line is, but there is no realistic situation where everyone who wants to live in SF can, and can afford to, and it is anything like SF.
Anti-growth people will point to neighborhoods like Glen Park, NoPa and Noe as "SF" while forgetting most of the surface area of the city is empty neighborhoods like Parkside, Mt Davidson Manor, etc.
And because larger cities tend to also be more attractive (Tokyo is still growing, for instance), you’ll never have enough density to be ‘enough’ - aka where it’s cheap enough for everyone to live where they want.
You will have more people though.
There were two years during the pandemic when people moved out- because jobs let them - but people moved back and it has more than made up for it since.
Every major city in the world has seen significant population increases as mechanized farm work and fertilizers have removed the need for many farm workers, and economy activity has concentrated.
It’s been a consistent trend for almost 100 years.
Paris is cheaper than SF, even in the middle of downtown along the river, because they actually have consistent housing density throughout the city. Look at the arrondissements that are even 20 minutes out from downtown by subway and you can find apartments that people in SF and NYC would kill to have at that price. Paris will never be free to live in, but it's extremely obvious that they have avoided the worst of the US housing crisis by just actually building lots of housing.
> There are ~ 15 million unoccupied houses in the US
Unoccupied houses across the entire country don't matter. What matters is housing in the places that people live.
Which is why comparing against the rest of the country is valid. Just like comparing SF to Vacaville. Or South SF. Or Oakland.
There are definitely parts of Paris that your typical Parisian (or even atypical French citizen!) cannot afford to live, yes? And many, many live in Paris’s equivalent to Oakland. (Or NYC’s Harlem)
It could be better - but people also have this weird mental block where the only place they ‘can live’ is also the same place everyone else wants too, but they can’t afford it, and somehow it is everyone else’s problem to fix that for them.
Give businesses a reason to spread out a bit and not concentrate in these urban centers, and voila - all those ‘undesirable houses’ are all the sudden more desirable, and all those crazy zoning issues and nimby’s are not such an issue anymore. And the housing crisis mostly evaporates.
But since availability is also a proxy for competition for those jobs, it’s not like folks have too much incentive to make it easy eh?
Also the tariffs are new this year, housing costs have been a problem for much longer than just this year.
$90k for materials.
Around here a 1,400 square goes for $385k (half a house, but there you go).
So materials are somewhere around a quarter of the cost. Land + foundation + utilities is another quarter; the rest is labor and profit.
A duplex saves you some coin, but each additional house you stick on the side saves you less, and the desirability goes down. People don't like duplex/triplex/sixplex living.
I just built a house by myself, from the ground up, so I couldn’t let that lumber thing slide though as I literally just paid for all the materials myself and I know how little lumber costs compared to everything else.
This is largely what the Abundance agenda and YIMBY is all about... getting the left to stop throwing up NIMBY road blocks.
The problems with not enough investment in new houses are not limited strictly to blue states but blue states seem to have the largest problem with it. Democrats love regulation so much that states like MA and CA have erected so many zoning and building regulations that new homes have become incredibly difficult and slow to build.
We struggle to even build apartment size condos in suburban MA that cost less than $1.1-1.5M per unit. We are rapidly heading towards new houses being $2M+ in lots of parts of the state. By the time a developer manages to buy a lot and go through all the red tape, possibly tear down an old house, go through environmental review, etc.. they can't make any money unless they build a $2M+ house. Any lot that doesn't have an old house on it in the eastern part of the state will have a long list of environmental gotchas a developer will have to fight through, possibly for years before they can even start building anything.
Housing construction is so far behind the demand that who owns the existing houses has little to do with it.
PE and Corporate landlords own more property in left leaning markets because Blue policies have made it more profitable to do so. The more new construction is slowed, the more valuable the rental properties become. Some of these companies won't want to go near red states where construction is easy. The property values and rents are just not high enough.
Zero interest rate certainly made it much more possible; buying a $500k house and having nearly no holding costs, and worst case scenario selling it for $500k is way different than buying the same $500k house, paying $2k a month in carrying costs (interest alone) and then having to sell it for $450k? That hurts, and hurts hard.
That is why Zillow got out of the business even when rates were near zero, doing that due diligence is something they were not prepared to do since it requires humans to do work. (even if it is just taking pictures for the AI, to look at)
But once word got out "sell your shithole to Zillow, they don't even check" of course EVERY shithole went to them.
Tragedy of the Venture Capitalists or something.
Why would anyone sane live near a black neighborhood?
The opening paragraph is also a laugh. "Daniel Erb became a corporate landlord kind of by accident." Yeah he was an investment banker who decided he wanted to invest in real estate so he decided to call his cousin at BlackRock- woopsie! what a weird accident!
I've dabbled with RE investments and hang out with those clubs. It's highly likely the origin of those mailings/texts is from an average person like you and me (most of whom have a full time job earning less than most SW engineers). They are doing RE as a side business, and are paying a service to send out those mailers/texts.
They're looking for distressed homeowners (e.g. people who are about to lose the house due to unpaid property taxes, etc).
They've been doing this for decades, but the easier availability of data due to the Internet, as well as the growth of online services, has made it much more accessible to the average Joe. It requires very little capital to send out those mailers/texts.
If you're getting more of these now than 20 years ago, it's because RE investing has become a lot more democratized/accessible.
> I'm not sure if I'd count a person who can buy enough investment properties to justify using a mass-texting service an "average person like me"
If your average HN reader can't believe an average person can buy investment properties, then likely most Americans won't :-)
Anyone can set up a company in a few minutes. And then pay someone to design a professional looking mailer.
There are RE bootcamps/gurus that walk you through the whole process (which LLC to set up, in what state, which online service to use to make those mailers, which data broker to get the mailing addresses from, etc).
BTW, don't pay for those bootcamps. They are anywhere from 10-100x overpriced.
Enough means "1 or 2". So yes, many average people can.
They'll often put, say, $50K down and that's it.
Here's how it works.[1] Homeowner has a house that has some significant flaw that's so bad no bank will mortgage it. This means the homeowner cannot sell via traditional methods. It will cost, say, $100K to repair the house and bring it up to market standards, but homeowner doesn't want to spend the money. He may already be ready to move (this may be a second house - or an inherited house, etc).
His only option is to sell for cash. The house is currently worth $250K, but market rates are $450K.
Wealthy non-RE investors won't buy his house - they want a house ready to move in to.
So what does the "average person like you" do? He gets a hard money loan. A private lender gives him $300K. $250K is to buy the house, and $50K is to help with the repairs. The average guy also puts in $50K of his own. At the end of 6 months, the house is all fixed up, and now worth $450K. He sells the house, and pays back the loan, and makes a decent profit.
Alternatively, he gets a mortgage on the house, pays back the private lender, and rents the house out.
What's in it for the lender? A very high interest rate. Back when mortgage rates were 4%, private lenders charged 12%. While this sounds scary high, the average guy plans to be done with everything in 6 months, so it's only 6 months of high interest.
What's in it for the "average guy"? Well, he just got a house, right? Also, what happens if things go south (e.g. runs out of money because he misestimated repair costs)? He loses the interest and his $50K, and that's it. The private lender gets ownership of the house, but cannot go after his assets.
So if you can save up $50K, you can get a house. The real hard work is to identify the right property (i.e. one that can't be sold easily).
Everyone I know who's done this earns less than a SW engineer. Some people are blue collar workers.
Another model: The homeowner is in a bad financial situation and has not have been paying property taxes. Now the county is threatening to take away his house because he owes $20K in taxes. There are only a few weeks left for the deadline.
The investor contacts the owner and says "Hey, let me pay the $20K you owe, and sell me the house for $30K. If you can sell the house for more to someone else, go for it. But if not, here's my number."
If the owner could have sold it for higher, he likely would have already. Both ways he's losing the house, but this way he gets money.
Again, such properties are hard to find.
[1] This is just one model. There are others.
If I was to try to do the same I'd pay a higher rate, and have to put a lot of money down. However once you do it a few times the banks realizes you know how to run this type of business and so is willing to lend you money to do it. (which is to say if you want to get into it you almost have to live in the first 2-3 houses while you fix it up, but after that you can just buy something with their money to fix up)
Totally different category. The people you know are not getting private loans, but regular bank loans (backed by Freddie Mac, etc). Those houses likely are regular houses banks are willing to mortgage (i.e. free of serious defects).
They are basically just buying regular houses to rent/invest. Requires a lot more money, and is a lot less lucrative.
I'm talking about houses that banks are not willing to touch in their current condition.
> If the bank forecloses on a house and their inspection decides it is in bad shape the bank will call this person first and it will never go on the market. (they have a list of people who do this work - different people specialize in different problems)
Yes - once you make connections with banks, brokers, etc, you'll get on the list of people to call first :-)
Nothing wrong with what you're saying - just a different category of RE investors. My guess is the people you're referring to aren't sending out those mailers.
> If I was to try to do the same I'd pay a higher rate, and have to put a lot of money down. However once you do it a few times the banks realizes you know how to run this type of business and so is willing to lend you money to do it. (which is to say if you want to get into it you almost have to live in the first 2-3 houses while you fix it up, but after that you can just buy something with their money to fix up)
Same idea with the category I'm talking about. It'll be hard to get the first hard money loan, but once you've successfully exited an investment this way, other private lenders are more likely to trust you and give you favorable terms.
> Banks will touch any house in current condition (Freddie Mac may not!),
I was speaking of regular mortgage loans. Yes - there are other loan types.
If they're not willing to touch them in their current condition, it seems strange that they loan me $300k with that house as collateral. If I can't make the renovation work financially, they're stuck with a shitbox, potentially one that I've done more harm than good to.
Private lenders != Bank loans. And as another commenter clarified, when I said "bank loan" I meant the usual mortgage loans.
https://lenderkit.com/blog/what-is-private-lending-and-how-i...
"What is private lending?
Private lending is a financial avenue where borrowers get loans from private lenders — individuals or businesses instead of borrowing funds from a bank or a credit union."
> If I can't make the renovation work financially, they're stuck with a shitbox, potentially one that I've done more harm than good to.
Yes, and ...?
Lending is always risky. That's why private lenders have very high interest rates. The private lender will assess how likely you are to succeed. They generally know RE fairly well, so they'll want your analysis on the worth of the house, and how you made the estimates on repairs. If they think you're way off, they'll just tell you why and not fund the deal.
And they'll want to know what you're losing. If you're a blue collar person and are willing to put $50-75K of your own money into the enterprise, they know you have skin in the game.
I appreciate the questions/counterpoints. Just keep in mind you're not arguing with someone who is merely arguing from a theoretical vantage point :-)
It’s honestly possible that people would be better off putting their money into a diversified investment fund that includes a spread portfolio of housing among other assets, so they can benefit from that growth. If your 401K includes Blackrock assets, you’re still benefitting from overall housing market growth, without that being tied up in also being the building you live in.
The big win buying a house historically represents – for those for whom it works out – is of course that you can buy a house with borrowed money on a fixed rate, pay off the loan over 30 years, and pocket the appreciation in the asset over the loan value. That’s an amazing deal if you’re lucky enough to buy and sell the right house at the right time and get your loan at the right interest rate. But it definitely doesn’t work out for everyone.
And yes I know they don't own that many houses relatively speaking, right now, but I personally don't see any upside to allowing the practice at all.
This propaganda is not the whole truth. Renting almost always means you live in a smaller/cheaper place (or perhaps in a more expensive place but you don't own a car) after maintenance costs are accounted for. People who take that different and invest it well end up just as rich as people who invest in houses - it isn't hard to find investments that have a much better long-term returns than real estate.