I met a family/group of friends/peers who were flipping houses (a lot of people diss flippers, but they are actually doing a better service to society than "I have 8 units" style rent seekers). So these guys would buy a house and then fix it up themselves (they started as contractors before it started getting hard to find stable work), and then sell it. They were reinvesting the profits so that they can get up to the point where they were doing three at a time. I was listening to him tell me their story for the longest time, and I thought "that's pretty cool", because they were keeping it fairly lean. Fast forward to the end of the story and he tells me that they are about to start buying "units" to rent them out. This was just like seven weeks ago. I told him "I think there is a possible scenario where the rental market goes completely belly up in the next year", and then I started talking to him about how Airbnb was reporting drops in revenue, and how I had even anecdotally discovered that this was happening. They were entirely uninterested in hearing what I had to say about that, like telling somebody to get up from a blackjack table or something, it was amazing. It was as if I was attempting to burst the only balloon they had, because they were seeing gold bars. Nobody is ever happy sticking with what they are good at; everybody follows the Peter Principle and elevates themselves to their own level of incompetency.
Exactly. There's a couple that my wife knows well that owns a whole bunch of houses that they bought so cheap from a long time ago, I'm talking like less than $50,000 for houses that are now worth $250,000+, and for them it's like this huge financial Boone, but all of the other people that I know who have gotten into this are exactly how you described, over-leveraged and soon to be completely unprofitable. I think I may have mentioned this already when we met the lady a couple months ago, but one of the Airbnb rentals that we were considering staying in for a couple months; she was desperate to have a stay, to the point of offering to rent it for almost half the price that it was listed for. We were talking to her about how she got into this and she said that she purchased her first house using money that her mom gave her, and then she took out a line of credit against that house when it got some equity and purchased the next one and then she ended up in a situation where she had like four houses I think and ended up having to sell two of them to stay afloat and now I'm guessing she is going to be selling another, since it wasn't rented for at least two months in a row.
I met a family/group of friends/peers who were flipping houses (a lot of people diss flippers, but they are actually doing a better service to society than "I have 8 units" style rent seekers). So these guys would buy a house and then fix it up themselves (they started as contractors before it started getting hard to find stable work), and then sell it. They were reinvesting the profits so that they can get up to the point where they were doing three at a time. I was listening to him tell me their story for the longest time, and I thought "that's pretty cool", because they were keeping it fairly lean. Fast forward to the end of the story and he tells me that they are about to start buying "units" to rent them out. This was just like seven weeks ago. I told him "I think there is a possible scenario where the rental market goes completely belly up in the next year", and then I started talking to him about how Airbnb was reporting drops in revenue, and how I had even anecdotally discovered that this was happening. They were entirely uninterested in hearing what I had to say about that, like telling somebody to get up from a blackjack table or something, it was amazing. It was as if I was attempting to burst the only balloon they had, because they were seeing gold bars. Nobody is ever happy sticking with what they are good at; everybody follows the Peter Principle and elevates themselves to their own level of incompetency.
Exactly. There's a couple that my wife knows well that owns a whole bunch of houses that they bought so cheap from a long time ago, I'm talking like less than $50,000 for houses that are now worth $250,000+, and for them it's like this huge financial Boone, but all of the other people that I know who have gotten into this are exactly how you described, over-leveraged and soon to be completely unprofitable. I think I may have mentioned this already when we met the lady a couple months ago, but one of the Airbnb rentals that we were considering staying in for a couple months; she was desperate to have a stay, to the point of offering to rent it for almost half the price that it was listed for. We were talking to her about how she got into this and she said that she purchased her first house using money that her mom gave her, and then she took out a line of credit against that house when it got some equity and purchased the next one and then she ended up in a situation where she had like four houses I think and ended up having to sell two of them to stay afloat and now I'm guessing she is going to be selling another, since it wasn't rented for at least two months in a row.