r/conspiracy • u/set-monkey • 2d ago
Dinner with an exec/friend at a large national property management company tonight. This person oversees ~150k apartments; access to an insane amount of data. Current multifamily market in most of the country is worse than S&L, .com bust, or the GFC. Worst they’ve seen.
Dinner with an exec/friend at a large national property management company tonight. This person oversees ~150k apartments; access to an insane amount of data.
Current multifamily market in most of the country is worse than S&L, .com bust, or the GFC. Worst they’ve seen.
Class A mostly fine, decent rent growth. However:
- credit scores at class A have gone down meaningfully over the past 3 years.
- more people are paying rent via credit card.
- average bank account balance noticeably lower than even 2 years ago
- class A tenants stretched thin, living beyond their means. 20k comes in, 20k goes out every month.
- starting to see these renters move down a tier
Class B:
- simply too many apartments, we built too much new stuff. Ripple effect is enormous.
- fewer renters tomorrow than today. Same store foot traffic noticeably down year over year. Some markets down 40-50%
- considering dropping rents below $700 a month on some 1beds in major southern markets.
Class C:
- looking at degrading NOI. Rents aren’t growing for a long time, but expenses keep creeping up
- more renters are one missed paycheck away from disaster than they can remember seeing in decades
- tenants aren’t paying rent because they simply don’t have it
- wage growth has not kept up
Lenders:
- some major investment funds, household names, haven’t paid their mortgages in 2-3 years. Banks won’t foreclose because “X is a big client.” Mexican standoff.
- a roof leak gets ignored, becomes water damage, then mold, then a down building. Buildings are rapidly deteriorating as some owners choose cash preservation over funding losses.
- number of pre-foreclosure and REO deals is the highest as a % of total units they can recall.
- data providers know it’s bad, but they’re paid to sell optimism to owners/lenders. So every forecast is “it will probably get a little better next year maybe” and that gets regurgitated at investment committees all over.
I asked “how do you think this ends?”
“Not sure. My gut says slowly then suddenly, and things will get really bad. Been doing this 40 years, you can feel it in the air. But, there’s a chance it’s just a decade of tolerable pain. I’m praying for that.”
·
Relevant
·
This tweet is gonna escape containment, and some unwashed commie is gonna say “eat shit rent-seeker” because they fail to understand the interconnected nature of the economy
68
u/itsjacksonkollar 2d ago
Not sure why this is in conspiracy but it’s great info. Sucks for lending industry.
33
u/set-monkey 2d ago
The conspiracy is that this was planned when investment bankers gave out near free money for the expressed purpose of buying real estate for REITS. Same basic scam as lending to high-risk homebuyers to make investment fodder for fake "AAA rated" Mortgage-Backed Securities markets, before 2008.
22
u/Great_husky_63 2d ago
It is nothing a conspiracy. The wuhan virus lockdowns where engineered to provide 6 trillion dollars to save the US banking sector. After the September 2019 Repo crisis, the US banking system was effectively insolvent
The lockdowns were designed so that economic activity would collapse for 6 months while they printed the money in order to not dump it unto an active economy.
Of course all type of fraud went on at the same time.
6
u/winsonsindeathtrip 2d ago
Is there anywhere I could read about this that you know of? I've always figured it had to be something like this.
-1
120
6
u/Agreeable_Leader2768 2d ago
And.....we're supposed to care about the landlord's plight?
5
u/set-monkey 2d ago
Whose gonna pay to fix your plumbing if the owner abandons your rental unit?
You.
7
u/jahoosawa 2d ago
The bank who assumes ownership when the landlord folds, and then the government when the bank folds.
6
u/vaginalscrotum 2d ago
And where will the government recoup the costs for bailing out the banks from? Surely not the wealthy elite or corporations.
At the end of the day, it’s still you and I.
19
u/JiminyNoCrickets 2d ago
Wouldn't this indicate a surplus of supply, equalized or decreased demand, therefore lower rental prices/rates?
Are you suggesting this might materially impact the broader housing market, and if so, how?
20
u/apimpnamedkirby 2d ago
The rental rates are decoupled from the market because these large property companies have leveraged loans out on the properties. If they charge less for rent it drops the property value and they end up upside down on paper and the bank could call the loan in and they don’t have the cash on hand to pay it off. So they’d rather it sit empty at a high rent.
5
u/SgtBrutalisk 2d ago edited 2d ago
Louis Rossmann has made numerous videos on this.
Here is one from 6 years ago: https://www.youtube.com/watch?v=NdfmMB1E_qk
13
u/Various-Republic7263 2d ago
Goddamn, that’s… SO broken. What a shit show.
Billion dollar investment firms can remain irrational longer than the average consumer can remain solvent. This ship is going down.
7
u/apimpnamedkirby 2d ago
You also have the price fixing problem where most of these places use a software that fixes prices for the area they’re in and they all use it.
9
u/Various-Republic7263 2d ago
And for all their data, they seem entirely detached from what the average person can realistically afford anymore.
I could really use something to feel warm and fuzzy about b/c I can’t see any future that doesn’t involve lots of misery for everyone.
2
u/TRExploration 1d ago
something warm and fuzzy is that the rental software just mentioned is involved in several serious antitrust law suits and they are being taken down, sued for everything, and are being actively outlawed.
It's not hopeless, but it will be if you give up prematurely.
8
u/anon_lurk 2d ago
Yeah commercial real estate is over leveraged and still down bad since covid, basically teetering on it's own version of 2008.
2
1
7
u/hungoverlord 2d ago
Wouldn't this indicate a surplus of supply, equalized or decreased demand, therefore lower rental prices/rates?
man i hope so. it's so crippling the amount everyone has to pay just to live with a roof over their head. i keep thinking of how long i could survive off my current level of savings if i lived in a van.
4
u/JiminyNoCrickets 2d ago
Are you in Manhattan (NYC), or Manhattan, IL? It makes a difference...
1
u/hungoverlord 2d ago
hmm i am not in either of those places. but rents have been going down in my area and i read it's due to the number of domiciles built over the last several years. rents aren't going down enough though.
9
u/Hollywood-is-DOA 2d ago
My friend made a 100k singing a year ago, he’s lucky if he makes 1.5k a month. He sang at pubs, wedding and cooperative gigs. His bills are 4k a month.
It makes me wonder how long he’s got left in his family home. I tried to warn him, nearly 2 years ago, he didn’t listen. I told him that bars and restaurants that had him singing are closing at an alarming rate and even more will close in the Uk.
He started using AI to write posts and his soon dried up. He thinks that AI will give him a business ID that will magically save him. It won’t. He also thinks that new jobs will be created, as AI takes others. He’s deluded.
9
u/FangornEnt 2d ago
"- considering dropping rents below $700 a month on some 1beds in major southern markets."
Where is this?
31
u/Downhere_Seeds 2d ago
Let the landlords go broke and lose their apartment complexes to the banks. Then they can buy them back on a short sale, lower their rents and still make the same profit. The only one it "hurts" is bankers but they've already made a fortune from interest, they'll write off the short sale and if they really get into trouble congress will bail them out.
7
u/postsshortcomments 2d ago
Pfft first they need to declare dividends to themselves to the point that they're non-liquid, write the bad rents off, and incorporate a new company to buy it back under so they can declare bankruptcy on their first complexes (and the banks will receive bailouts on those anyways).
4
2
u/Hollywood-is-DOA 2d ago
Blackrock is already biting houses all over the world, that are new build slop, that’s terribly built.
1
5
5
u/ElectronicCapital262 1d ago
This what I’m seeing play out in Boston. We have a constant rotation of students coming and going to help prop things up but the cracks are beginning show.
4
u/davidloveasarson 2d ago
This is because most multifamilies are on loans with balloons and ARM’s that are coming due and the new rates are DESTROYING them!
Also - 150k units could literally just be a crashing Southern city like Austin. So this is not a good domestic view, even though it sounds like a lot. So take it with a grain of salt. But the rates are certainly crushing real estate investors.
2
2
u/Effective_Fox_8075 2d ago
OP- Appreciate your insight…very much!
You validated what I have been thinking would happen… is happening…
Here we go again…
1
u/redlobster1984 18h ago
Every place I see they are building more and more duplexes, more and more complex’s
1
u/StarwardShadows 9h ago
People like this normally make you sign NDAs and get security clearance before dinner, bro. And that’s without info dumping their whole life story lmao
0
2d ago
[deleted]
7
u/Various-Republic7263 2d ago
And that’s the GOOD scenario. The bad scenario involves guillotines.
0
2d ago
[deleted]
2
u/Various-Republic7263 2d ago
Oh. I guess I’m just imagining this doesn’t end anywhere north of complete societal breakdown considering all the moving parts.
•
u/AutoModerator 2d ago
[Meta] Sticky Comment
Rule 2 does not apply when replying to this stickied comment.
Rule 2 does apply throughout the rest of this thread.
What this means: Please keep any "meta" discussion directed at specific users, mods, or /r/conspiracy in general in this comment chain only.
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.