[sudoaza]

It's called monopoly, there is no infinite offer "people will spend whatever it takes to get a roof over their heads. Cities are not infinitely sprawlable, so it's possible to corner the market on places to live in them. Eventually, the parasites will devour the hosts and leave the cities empty shells (ahem, Venice), but by then the money-launderers have sold up and moved on."

[sjjshzvuiajhz]

Are you saying the old landlords were just being nice, changing less than they could, and the new oligarchs are suddenly charging market rate?

[Retric]

No, oligarchy provides market power similar to that of a monopoly. Also, if you’re renting 100 properties letting 20% sit idle might be with it. I’d your renting 1-2 properties then you don’t have the fine grained control.

[sjjshzvuiajhz]

See my response to child comment - this is a story about the landlords diversifying globally, not merging together.

[Retric]

Not nessisarily relevant if the same management companies are running these rentals for large numbers of investors.

“25 money laundry clients, all with about $3 million (after you & your washing cut) they need to invest. $75 mil? Let’s buy 6 dingbats and put them in an REIT. Which hires a management team” This means that specific team is managing property for a hypothetical group of 25 people.

The second part “If the REIT buys a building for an inflated price, and they’re getting clean money monthly? They can just sit on it until someone legit comes along, having convinced a bank to make them a very large mortgage on an inflated price.” In other words they don’t care that much about cash flows the way somone leveraged to the hilt would.

That said these numbers completely ignore leverage, that 75 million investment could easily own 200+ million in property.

[pixl97]

> changing less than they could,

Possibly, with the event of modern high speed communications pricing is much more transparent. Also, the theory is there were far more landlords in the past and the market is condensing on a much smaller number of them.

[sjjshzvuiajhz]

I’m really skeptical of this - my mental model is that when a city is initially settled and developed, large tracts of land are owned by people who end up becoming the local “old money” families who may truly have been monopolists. Over time they sell off chunks to “foreign investors” (who might come from the next town over or across the globe) which diversifies ownership.