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Owners Could See The Writing On The Wall

A report from CNBC on New York. “New leases for Manhattan apartments plunged by 71% in April, and vacancies soared as the rental market froze amid the coronavirus pandemic and more residents left the city, according to a new report. The vacancy rate climbed to its highest level in 14 years. ‘People leaving the city is definitely part of it,’ said Jonathan Miller, CEO of real estate appraiser Miller Samuel.”

The Miami Herald in Florida. “An undisclosed buyer from New York City bought an 11,544-square-foot unit for $11 million at the 62-story One Thousand Museum on Friday, said Karen Elmir, luxury real estate advisor with the Brickell-based Elmir Group, a Cevera Group brokerage firm. The unit was listed for $16 million. but closed after a 31% price reduction. ‘The luxury market is doing well. Wealthy buyers are taking advantage of the market for price negotiations,’ she said.”

“The unit sold below a recent comparable sale. The New York buyer dropped about $952 per square foot — well below the $1,810 per square foot price soccer star David Beckham paid for his 11,046-square-foot penthouse in One Thousand Museum in late March.”

From Colorado Public Radio. “Tim Rhodes and his family operate six properties with 400 rental units in total in Colorado Springs. This has been his primary income for more than 20 years. Two months into the pandemic, he said he’s already lost about 12 percent of his typical revenue. ‘I have lost sleep over thinking about my family, my business, and people that depend on me for their livelihoods,’ he said. ‘It’s definitely stressful.'”

“Jennie Rodgers is the Denver market leader for Enterprise Community Partners, a nonprofit designed to encourage affordable housing development. She is worried that without intervention, it’s only a matter of time before things get worse. ‘We could see foreclosures on many multifamily properties,’ Rodgers said. ‘Depending on when landlords have purchased their property and their debt, those properties could go into foreclosure.'”

From Multi-Family Biz. “Four Mile Capital, a privately-held real estate investment firm based in Louisville, CO, has acquired the Avalon Springs Apartments, a 141-unit multifamily community in Louisville, KY. Avalon Springs, built in 2018 and currently 99% leased, sits on almost 18 acres of land. ‘We were therefore able to create value right out of the gate by buying below replacement cost,’ said Andrew Jumbeck, VP of Acquisitions for FMC.”

From St Louis Today on Missouri. “This is where T.E.H. Realty purchased the first of 12 large apartment complexes in the St. Louis region. And five years later, Springwood Apartments is one of the first of the properties headed to auction. Colliers International recently listed Springwood as a ‘Significant Value-Add Opportunity’ that will have an opening online bid of $350,000 on June 8. It was a market that T.E.H. Realty dove into across the Midwest. But after becoming one of the largest providers of low-income housing in the St. Louis area, the firm became mired in foreclosure, receivership and bankruptcy cases.”

From Bisnow on California. “Investors looking to snag distressed apartments and multifamily properties across Southern California during the coronavirus pandemic may have to wait a bit longer or go somewhere else. ‘There’s a perception out there that if I jump into the market today, I’m magically going to pay 20% less. That is not an unrealistic desire to want to do that,’ Universe Holdings CEO and Chairman Henry Manoucheri said.”

“‘The fact is, there’s been very few transactions done since [the pandemic], and the adjustments I’ve seen is about a 5% number. The 20% number is not out there yet. There is still a huge disparity,’ he said. ‘Any seller used to the pricing four months ago is not going to sell unless they are really, really motivated.'”

The San Francisco Chronicle in California. “In 2005, the owners of 2820 Scott Street bought the hundred-year-old property with the goal of turning it from a 30-room boarding house back into a single-family mansion. The multiyear renovation required an almost complete rebuild. In fact, the size could sometimes be a deterrent when showing it to buyers, according to listing agent Olivia Hsu Decker. ‘Some buyers used to complain that 2820 Scott has far more space than they would ever need,’ she said.”

“The home has been on and off the market several times since 2016, at anywhere from $29.5 million to $27.5 million in 2019. They had a $25 million offer in escrow at the end of last year that fell through, she said, through no fault of the property. In the spring, when shelter-in-place restrictions went into effect, Decker said her owners could see the writing on the wall and quickly agreed to a price cut, chopping the price by a whopping $6.5 million to $21 million.”

From WFAA in Texas. “Southlake-based Bloomfield Homes is building and selling homes in more than 40 residential communities throughout North Texas. That development on South Hampton Road will have 286 houses priced from the high $200s to the low $400s, said Don Dykstra, chairman of Bloomfield Homes. Q: What are the negatives? A: The negative is we’re seeing cancellations due to job loss and to general buyer nervousness. It’s still a very fluid market, but there’s a lot of business being done.”

The Mail Tribune in Oregon. “Residential home sales dropped 26% in April compared to the same month last year as COVID-19 impacted the local real estate market, according to the Rogue Valley Association of Realtors. ‘The 26% shows a distinct turn. What we don’t know yet is if we will see a May decline. My gut feeling is yes,’” said Colin Mullane, spokesperson for the association. Buyers will be testing the market to see whether sellers will come down, said Mullane. ‘Buyers will be looking to low-ball, but supply isn’t supporting the market,’ said Mullane.”

From KTNV in Nevada. “Las Vegas Realtors President Thomas Blanchard says there’s been a small dip in housing prices, and says not to hesitate if you’re looking to buy. ‘Whether it goes down on the short term, it’s eventually going to rise up on the long term,’ says Blanchard.”

“If you’re wondering how apartment rents are doing, the Nevada State Apartment Association (NVSAA) says those prices have started to drop, as well. ‘With stay-at-home orders in effect since mid-March and many local residents dealing with layoffs and pay cuts, the economic engine that fuels housing momentum has stalled,’ says Susy Vasquez, NVSAA Executive Director. ‘We expect to see more dramatic changes to these statistics in the coming months.'”

From Forbes. “The real estate industry is filled with its share of ups and downs. In an unstable market, property values may plummet without a moment’s notice. While we’re not facing the same kind of issues we met a decade ago, today’s plunges in the market can be worrying for a real estate investor buyer. Members of Forbes Real Estate Council look at the vital considerations you should make before investing in a real estate property during unstable market conditions.”

“‘Price your uncertainty. Make assumptions as to worst-case scenarios for bad debt (delinquencies) and vacancy. Then adjust the price until the deal works for you. For example, a worst-case scenario is 40% of delinquencies and 25% vacancy. With a $5 million price cut, returns are 7% cash-on-cash. You have to be ready to take a risk here, and be prepared to get low or no returns in the short term.’ – Ellie Perlman, Blue Lake Capital LLC.”

“‘Market upheaval will inevitably create market opportunity. Motivated sellers will reveal themselves and having an ear to the ground, so to speak, will allow these opportunities to be present.’ – Jeff Brown, Tahoe Mountain Realty.”

From Reuters. “Japan’s SoftBank Group Corp reported a stunning $18 billion loss at its giant Vision Fund, pushing Masayoshi Son’s conglomerate to a record loss and highlighting the deepening crisis at its portfolio companies from the global downturn. The disastrous 1.9 trillion yen ($18 billion) operating shortfall at the Saudi-backed Vision Fund, including losses of almost $10 billion at office-sharing firm WeWork and ride- hailing app Uber Technologies Inc alone, left SoftBank with its worst annual loss of 1.4 trillion yen.”

“‘The coronavirus is an unprecedented crisis,’ a notably downbeat Son told an earnings presentation, comparing it to the Great Depression. Appearing far more subdued than usual, Son said some of his tech unicorns had fallen ‘into the valley of the coronavirus.’ ‘I believe some of them will fly over the valley,’ he added, standing beside a slide depicting cartoon unicorns dropping into a hole as a lone winged unicorn escaped to the other side.”

“The crisis has pushed the Vision Fund’s portfolio underwater, with its $75 billion investment in 88 startups worth $69.6 billion at the end of March. The $100 billion fund had already delivered two consecutive quarters of losses before being upended by the outbreak. SoftBank provided scant detail on which companies saw writedowns but offered a sector breakdown showing investments in construction and real estate were worth less than half of cost price, with flagship transportation investments also underwater.”

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This Post Has 141 Comments

  1. ‘The disastrous 1.9 trillion yen ($18 billion) operating shortfall at the Saudi-backed Vision Fund’

    Is that a lot?

    ‘standing beside a slide depicting cartoon unicorns dropping into a hole as a lone winged unicorn escaped to the other side’

    Well that’s not a good visual.

    ‘investments in construction and real estate were worth less than half of cost price’

    There’s that half again.

    ‘with flagship transportation investments also underwater’

    Self driving, flying cars?

    1. From Reuters. “Japan’s SoftBank Group Corp reported a stunning $18 billion loss at its giant Vision Fund, pushing Masayoshi Son’s conglomerate to a record loss and highlighting the deepening crisis at its portfolio companies from the global downturn.”

      “Son said some of his tech unicorns had fallen ‘into the valley of the coronavirus.’ ‘I believe some of them will fly over the valley,’ he added, standing beside a slide depicting cartoon unicorns dropping into a hole as a lone winged unicorn escaped to the other side.”

      The Charge of the Light Brigade
      By Alfred, Lord Tennyson
      I
      Half a league, half a league,
      Half a league onward,
      All in the valley of Death
      Rode the six hundred.
      “Forward, the Light Brigade!
      Charge for the guns!” he said.
      Into the valley of Death
      Rode the six hundred.

      II
      “Forward, the Light Brigade!”
      Was there a man dismayed?
      Not though the soldier knew
      Someone had blundered.
      Theirs not to make reply,
      Theirs not to reason why,
      Theirs but to do and die.
      Into the valley of Death
      Rode the six hundred.

      III
      Cannon to right of them,
      Cannon to left of them,
      Cannon in front of them
      Volleyed and thundered;
      Stormed at with shot and shell,
      Boldly they rode and well,
      Into the jaws of Death,
      Into the mouth of hell
      Rode the six hundred.

      IV
      Flashed all their sabres bare,
      Flashed as they turned in air
      Sabring the gunners there,
      Charging an army, while
      All the world wondered.
      Plunged in the battery-smoke
      Right through the line they broke;
      Cossack and Russian
      Reeled from the sabre stroke
      Shattered and sundered.
      Then they rode back, but not
      Not the six hundred.

      V
      Cannon to right of them,
      Cannon to left of them,
      Cannon behind them
      Volleyed and thundered;
      Stormed at with shot and shell,
      While horse and hero fell.
      They that had fought so well
      Came through the jaws of Death,
      Back from the mouth of hell,
      All that was left of them,
      Left of six hundred.

      VI
      When can their glory fade?
      O the wild charge they made!
      All the world wondered.
      Honour the charge they made!
      Honour the Light Brigade,
      Noble six hundred!

    2. ‘Uber Technologies Inc. is cutting several thousand additional jobs, closing more than three dozen offices and re-evaluating big bets in areas ranging from freight to self-driving technology as Chief Executive Dara Khosrowshahi attempts to steer the ride-hailing giant through the coronavirus pandemic. Mr. Khosrowshahi announced the plans in an email to staff Monday, less than two weeks after the company said it would eliminate about 3,700 jobs and planned to save more than $1 billion in fixed costs. Monday’s decision to close 45 offices and lay off some additional 3,000 people means Uber is shedding roughly a quarter of its workforce in under a month. Drivers aren’t classified as employees, so they aren’t included.’

      ‘Stay-at-home orders have ravaged Uber’s core ride-hailing business, which accounted for three-quarters of the company’s revenue before the pandemic struck. Uber’s rides business was down 80% year-over-year in April.’

      “We’re seeing some signs of a recovery, but it comes off of a deep hole, with limited visibility as to its speed and shape,” Mr. Khosrowshahi said in his note to employees. The company’s food-delivery arm, Uber Eats, has been a bright spot during the crisis, but “the business today doesn’t come close to covering our expenses,” he added.’

      https://www.wsj.com/articles/uber-cuts-3-000-more-jobs-shuts-45-offices-in-coronavirus-crunch-11589814608

      ‘re-evaluating big bets in areas ranging from freight to self-driving technology’

      Looks like those Jetson cars aren’t coming anytime soon.

      1. To me, the whole AV thing looks much like robotics in manufacturing did in about 40 years ago — long on futuristic promises, short on any of the actually coming to any sort of fruition. They did get part of the way there eventually, but nowhere near anything approaching the initial hype.

        It was a big deal here, because those robots were going to steal all of the automotive rank and file jobs, until they didn’t.

        1. Well, let’s just say I have experience in automation.
          My take: automated machines can make a lot of sense (e.g. automated wire bonders for semiconductor, automated pick and place for PCB).
          Fully automated, “lights out” manufacturing, OTOH, is normally a disaster.

          4. Such as detecting pedestrians in the roadway while driving?

            Elon seems to think Teslas do that quite well. BTW, weren’t we supposed to have a robotaxi fleet by now?

      2. Looks like those Jetson cars aren’t coming anytime soon.

        I still remember those proof of concept self driving semis rolling down the road. They even had one run here: from the Budweiser plant in Ft. Collins to Denver. Never heard any follow up after that. I’m guessing that there was a laundry list of issues found, which of course was not shared with the public.

        https://money.cnn.com/2016/10/25/technology/otto-budweiser-self-driving-truck/

        Before the trip even began, two tow trucks drove the route to make sure no vehicles were parked on the highway.

        The driverless tractor-trailer was sandwiched between four Colorado state patrol cars and three vehicles from Otto. In one patrol car sat the executive director of Colorado’s department of transportation, Shailen Bhatt.

        …

        Otto and Anheuser-Busch did not pinpoint when they see the technology being used regularly and without police convoys. They’ll need to receive regulatory approval too. In Colorado, it’s a gray area, according to Bhatt.

        This was four years ago. AFAIK, there has been no regulatory approval yet/

      3. “Looks like those Jetson cars aren’t coming anytime soon.”

        Nor electric. Not until their cost and operating expenses are less than an internal combustion vehicle…. which means the electrics have to fall about $15k per car.

          2. The overall cost of an electric car is 38% higher than a traditional vehicle.

            There nothing to take personal. It is what it is.

          3. industry is moving

            We could afford to do a lot of impractical and uneconomic things as long as the free and easy credit expansion was in full swing. The free money dinosaurs might have entered a mass extinction event is the last couple of months. Maybe not. We’ll see.

    3. ‘investments in construction and real estate were worth less than half of cost price’

      There’s that half again.

      That’s a painful bitter pill for a whole bunch of suckers to swallow.

  2. ‘There’s a perception out there that if I jump into the market today, I’m magically going to pay 20% less. That is not an unrealistic desire to want to do that… The fact is, there’s been very few transactions done since [the pandemic], and the adjustments I’ve seen is about a 5% number. The 20% number is not out there yet. There is still a huge disparity…Any seller used to the pricing four months ago is not going to sell unless they are really, really motivated’

    Got it Henry, wait til you guys are starving and approach the lender.

  3. ‘Avalon Springs, built in 2018 and currently 99% leased, sits on almost 18 acres of land. ‘We were therefore able to create value right out of the gate by buying below replacement cost’

    Two years old and sold for a loss.

  4. ‘The New York buyer dropped about $952 per square foot — well below the $1,810 per square foot price soccer star David Beckham paid for his 11,046-square-foot penthouse in One Thousand Museum in late March’

    Half again! Since March.

  5. Remember: Bad news for the real economy is music to a stock HODLer’$ ears.

    Dow 40,000 is close at hand. Buy stocks now, or get priced out forever!

    2. “Dow 40,000 is close at hand. Buy stocks now, or get priced out forever!”

      – Once the Fed starts buying stocks (legal or not), I can see some ridiculous price for the DJIA. I didn’t say value, I said price. Kind of like ridiculous house prices today! 🙂

      – Recall that stock markets reflect the valuation of Companies based on earnings (long-term valuations), and hopium (short-term investor sentiment). Right now it’s definitely running on hopium: 1) We’re going to see a “V”-shaped recovery (or “U”, or “W”, but not “L”), and 2) The Fed put is alive and well; the Fed’s got your back (never mind that it’s all with magical monopoly money).

      “In the short run, the market is a voting machine, but in the long run, it is a weighing machine.” – Benjamin Graham

      – Color me skeptical. Best of luck trading. Cheers!

    3. The Tell
      ‘Rich Dad, Poor Dad’ Robert Kiyosaki: ‘Prepare for the worst’ by stashing cash in these 3 investments
      Published: May 18, 2020 at 9:51 a.m. ET
      By Shawn Langlois

      “Pray for the best — prepare for the worst,” says “Rich Dad, Poor Dad’ author Robert Kiyosaki, who laid out in a tweet over the weekend how he suggests doing just that:…

      therealkiyosaki
      ✔
      @theRealKiyosaki

      ECONOMY dying. FED incompetent. Next BAILOUT trillions in pensions. HOPE fading. Bought more gold silver Bitcoin. GOLD @$1700. Predict $3000 in 1 year. Silver @ $17. Predict $40 in 5 years. Bitcoin @$9800. Predict $75000 in 3 years. PRAY for the BEST-PREPARE for the WORST.
      7:04 AM – May 16, 2020

      The gloomy assessment is in line with what he’s been saying for a while. Clearly, he’s bullish on the safe haven draw of gold (GC00, -1.34%) and silver (SI00, 2.05%) as the coronavirus continues to ravage the economy, but it’s bitcoin (BTCUSD, -1.21%) he sees as having the most potential.

      His rosy outlook on bitcoin isn’t new, though the price target seems to be. In a podcast last month, Kiyosaki cheered the cryptocurrency as a bet against the status quo.
      …

      1. PREPARE for the WORST

        I don’t think Bobby has a very vivid imagination about what might be coming.

        What comes after the collapse of the biggest credit expansion in history, more and bigger speculative asset bubbles?

        1. How can you even suggest that anything has collapsed when the stock market is up by over 3%, just today!?

          1. However…

            Fortunately for HODLers, the prospect for the Fed to ever withdraw its extraordinary accommodation seems quite doubtful.

            The Tell
            Howard Marks
            Published: May 18, 2020 at 12:00 p.m. ET
            By Sunny Oh
            ‘If the Fed were to recede, we would all take over as buyers, but I don’t think at these levels,’ says Marks
            …

          3. Lil’ Sis is making bank on the BA stock she picked up on the cheap after Uncle Warren threw it under the bus.

            “Known as a proponent of buying when markets give into fear, Marks added to his holdings of corporate bonds in mid-March when investors panicked over how businesses would make interest payments when cash flows narrowed to a trickle, but stopped once the Fed’s interventions allowed embattled companies like cruise line Royal Caribbean (RCL, 17.25%) and aircraft manufacturer Boeing Inc. (BA, 13.20%) to sell bonds.”

          4. stock market is up by over 3%, just today!?

            I’ll grant you the euphoria of the moment. I don’t follow that casino day to day, but it has just gone sideways if you look at the last 5 weeks.

            I think some teeth have been knocked off the gears of the magic perpetual growth machine.

          5. I guess the FED has proven they can levitate the stock market and drive it to whatever level they want. Wonderful. Unfortunately, they can’t print jobs or paychecks.

          6. Unfortunately, they can’t print jobs or paychecks.

            Who needs those? We’ll just flip houses to each other!

    4. Morgan Stanley Mike conveniently forgot a few details about the 2007-2009 financial crisis:

      1) It started with the onset of recession in December 2007, and the market didn’t bottom out until March 2009. By a comparable timing, the current crisis wouldn’t end until June 2021, and Jay Powell has suggested that might be optimistic.

      2) The stock market bottomed out last time at about 50% off peak, 15 months after the onset of recession.

      3) Market participants this time around face the added uncertainty about the very early implementation of massive Quantitative Easing, within weeks of the onset of crisis instead of fifteen months in as of March 2009. There seems to be a great deal of certainty among a critical mass of bulls that the Fed successfully engineered a market bottom in March and that stocks can only go up from here.

      4) So far this recession looks much worse than the 2007-2009 episode, but a coronavirus vaccine or a successful economic reopening under the herd immunity plan could lead to the hoped-for V-shaped recovery much sooner.

      Whatever happens from here should be interesting!

      2. Whatever happens from here should be interesting!

        Maybe this biggest everything bubble in history isn’t yet topped out, and can mushroom to something even our wildest imaginations couldn’t fathom. Perhaps DOW 100,000, with $150,000 pickup trucks and median house prices of a million + for even the poorest of towns; a credit orgy that would make even the piggy-est of the pigmen blush.

        1. At the end of the day, one pigman will HODL all the houses in the country at a minimum “value” of $100 bn per house, and the rest of us poverty class members will either rent from him or live in the street. Monopoly game over…

          2. all the houses

            Fortunately, people everywhere in the world have always been able to build their own houses out of whatever materials are available, wood, stone, metal, grass, clay, empty wine bottles, canvas, blocks of ice…

          4. Don’t worry, the housing apocalypse scenario was just meant to point out the absurdity of the mania. I don’t really see things getting that out of hand. For one thing, who wants to be stuck with all of those HODLing costs, particularly if there are no greater fools left to whom you can sell for a higher price? There’s already plenty of stuck HODLers out there who wish they had never set foot in the loan officer’s lair.

    6. Did your FOMO tempt you to join today’s bull stampede?

      Traders Now Fear Missing Out More Than the Virus
      The price action is as disconnected from the news flow as I’ve ever seen it, so expect the unexpected.
      By JAMES “REV SHARK” DEPORRE
      May 18, 2020 | 04:22 PM EDT

      The indexes jumped higher Monday with the S&P 500 and Dow Jones hitting their highest levels since March 6. What was most notable about the action — other than the huge gains — was the steadiness of the advance. There was hardly a down tick all day and the indexes finished with just a little minor selling into the close.

      Breadth was extremely lopsided at around six gainers for every decliner and the number of new 12-month highs rose to nearly 200. There was some rotational action under the surface as the “stay at home” plays stumbled while money chased some of the value plays that have been laggards lately.

      There were three main reasons for the strength today. First were comments by Fed Chair Jerome Powell, that the Fed had as much ammunition as needed, second was growing optimism about the reopening of the economy, and third was news of some promising Covid-19 treatments.

      Those three facts, combined with skeptical market participants with too much idle cash created a rush to add long exposure. The fear of missing out was palpable, as so many folks have remained cautious due to fears that the market has not fully discounted the economic problems that lie ahead.
      …

      1. Finance
        Stock market
        The Fed’s economists are worried that stock prices are inflated—and they are right
        By Shawn Tully
        May 18, 2020 12:36 PM PDT

        The Fed rang an alarm for investors: Equities just got a lot more expensive, so that unless the U.S. stages a quick, extraordinary, V-for-victory recovery, you risk losing lots of money in these frothy markets. The Fed’s being too mild. The raging run-up makes equities way overpriced regardless of the how long the economy takes to rebound.

        In its biannual Financial Stability Report published Friday, May 15, the Federal Reserve provided two notes of caution on where asset prices stand now and where they could be headed. The first holds that buying real estate, equities, or other investments on hopes that the pandemic will be short-lived could prove a bad bet. “Asset prices remain vulnerable to significant declines should the pandemic worsen, the economic fallout prove more severe, or financial system strains reemerge,” wrote the central bank’s economists.
        …

  6. ‘Tim Rhodes and his family operate six properties with 400 rental units in total in Colorado Springs. This has been his primary income for more than 20 years. Two months into the pandemic, he said he’s already lost about 12 percent of his typical revenue. ‘I have lost sleep over thinking about my family, my business, and people that depend on me for their livelihoods…It’s definitely stressful’

    First, if you owned these airboxes for 20 years you should have them paid off Tim. Oh but you refinanced the cash out, right?

    Second, here we see again NPR bewailing the fate of RE gamblers and greedy landlords. So progressive. Somehow they point to apartment foreclosures with higher rents (of course) when the exact opposite is true.

    ‘Colliers International recently listed Springwood as a ‘Significant Value-Add Opportunity’ that will have an opening online bid of $350,000 on June 8’

    1. First, if you owned these airboxes for 20 years you should have them paid off Tim. Oh but you refinanced the cash out, right?

      It sure seems like that would be the case. Plus, he probably raised the rent that much (12%) over the past 2-3 years? Why could he afford to pay the bills then, but not now, if his costs remained basically the same?

      I remember when playing the landlord game was about generating monthly cash flow: keep your costs as low as possible to maximize the net cash. And pay off the loans ASAP. Then when you could you’d sell them and live off the interest, 100% worry free.

      Now it’s about appreciation and cashing out. Say he was able to cash out 50K from each rental. That’s 20 million smackeroos. Now he can have mansions with servants, Bentleys, vacation homes, etc. Lifestyles of the rich and famous! And best of all, he doesn’t have to pay any income tax on it!

      Of course, netting a lousy $100/mo per unit, which would net $40K a month (subject to taxation) just wasn’t good enough, was it? He had to have it all now.

      1. Great summation, In Colorado. I saved to to my notes. It really encapsulates the social/cultural change that monkeying around with housing prices and interest rates has wrought over the years. Thanks.

    2. ‘Tim Rhodes and his family operate six properties with 400 rental units in total in Colorado Springs.”

      Now that’s what I call depreciation. 20 painful years of depreciation.

      Easily in the millions in losses to depreciation.

    3. “Second, here we see again NPR bewailing the fate of RE gamblers and greedy landlords. So progressive.”

      Unsurprisingly, given the National Association of Realtors is a major contributor…

  7. ‘New leases for Manhattan apartments plunged by 71% in April, and vacancies soared as the rental market froze amid the coronavirus pandemic and more residents left the city, according to a new report. The vacancy rate climbed to its highest level in 14 years’

    Not to worry, NYC only has $33 billions in brand spanking new shadow inventory.

    1. Do you have to pay NYS or NYC income taxes if you (officially) work in Manhattan and live in NJ or Conn?

      So here is the thing – once companies and white collar employees have learnt that they can work remotely, it is much safer to buy a house in a nice NY, NJ or Conn suburb and not a condo in a high proximity building.

      If you only have to come into the office once a week or once every 2, i can see you leaving your house at 5 AM and returning at 10PM for that 1 day. The rest of the week (or 2) there is a commute from the kitchen to the home office.

      [I think that i mentioned this finding in another thread a week ago. 2 major west coast high tech companies are now starting the discussion of senior and principal engineers only having to be present for major design reviews. So you can be 2-3 hours away from Silicon Valley or Seattle/Redmond – and have to travel in once every week or 2. This is a game changer]

      what if this happens to banking, insurance, wall street (other than the traders)?

      1. The rest of the week (or 2) there is a commute from the kitchen to the home office

        I did this for the last 15 years of my “working”. I was a six hour drive or 1 hour flight from the physical office. Could show up for a meeting anytime after 11AM and the travel costs, including one night in a nice hotel, were expensed. My housing costs were cut in half at least.

        I did not have to pay the local income tax for the place the HQ was. I paid the income tax for where my local office (home) was.

  8. Appearing far more subdued than usual, Son said some of his tech unicorns had fallen ‘into the valley of the coronavirus

    They’re still pushing the narrative that an office rental company and an illegal taxi company are “tech”. Meanwhile a 125 year old food delivery service, that has existed for 125 years, and is more efficient than any app based delivery system, isn’t lumped in with “tech”.

    https://www.bbc.com/future/article/20170114-the-125-year-old-network-that-keeps-mumbai-going

    “Dabbawalas deliver hundreds of thousands of meals on foot and by bike in one of India’s busiest cities every day. The new wave of food-delivery start-ups wants to know how they do it.”

    Amazing how they could do that without an app!

    Self driving, flying cars?

    I’ll give those who are working on self driving cars props for trying, at least that really is tech. But, as they are learning, it’s a lot harder than they thought it would be and probably won’t become sufficiently bullet proof for decades.

      1. There’s a reason why the kids with six figure salaries at FAANGs live in cramped apartments with roommates.

      2. Hardly, distributed all across the country, where land is ample, won’t drive up prices that much. The issue will become if they migrate to select “hotspots”.

        1. If this happens they are indeed going to migrate to select hotspots. No one who has a choice is going to choose to live in Fresno or Stockton.

      4. They’ll flock to all the usual vacation places – Tahoe, CO ski towns, Jackson Hole, etc.

    2. [i mention this slightly above in this thread]

      Hawaii or Tahiti are probably out … but you can find nicer towns within 2-3 hours drive/train – you can certainly do that once a week.

      [2 major west coast high tech companies are now starting the discussion of senior and principal engineers only having to be present for major design reviews. So you can be 2-3 hours away from Silicon Valley or Seattle/Redmond – and have to travel in once every week or 2. This is a game changer]

      1. to give the Seattle analogy

        I could live on Lopez island (if i liked the Puget sound lifestyle) or or i could live in Leavenworth (if i like the golf / mountain lifestyle) – and commute once a week into work. Eastside for Microsoft or Google or Downtown for Amazon, Facebook.

      2. 2 major west coast high tech companies are now starting the discussion

        I think that larger firms have been open to part time and even full time telecommuting for some time. It’s the smaller firms, who love to cram everyone into elbow to elbow, bench seating environments, who are less flexible. At least that has been my experience.

      3. [2 major west coast high tech companies are now starting the discussion of senior and principal engineers only having to be present for major design reviews ??

        You have a link for this or is it inside info ??

  10. “‘Significant Value-Add Opportunity’ that will have an opening online bid of $350,000 on June 8. It was a market that T.E.H. Realty dove into across the Midwest. But after becoming one of the largest providers of low-income housing in the St. Louis area, the firm became mired in foreclosure, receivership and bankruptcy cases.”

    A few years ago my dad lost his ability to manage his own finances due to an age-related cognitive disability. My mom is allergic to financial paperwork, so the burden of managing their small nest egg fell on the kids, and mainly me initially.

    When I started reviewing Dad’s asset summary, I came across this real estate investment trust-type investment that paid 6% interest, year-in, year-out, come rain or shine. After reading through a 2 inch stack of documents spread over two files, I pieced together that an old friend of Dad’s had lured him into making personal loans in amounts ranging from $5,000 to $10,000 over a fifteen year period to help fund a low-income housing scheme in St. Louis. The loans all ssid they would be paid back in five years, but every time they came due, the guy asked for more money, along with allowing the previous loan to continue. Over a decade and a half, Dad was in for over $100,000.

    This is a long story, and I can only speculate about the overall conclusion, but I will share the rest of what I know personally in a later post.

    1. “The loans all ssid they would be paid back in five years,…”

      Better statement: “The loan documents all indicated the loans would be repaid in five years…”

    2. I came across this real estate investment trust-type investment that paid 6% interest, year-in, year-out, come rain or shine

      Well, when everything else pays 2% or less, I can see how many get sucked into those schemes. Some might have decided to cut their losses when the first loan was not repaid.

      1. Ponzi scheme alarm bells went off in my mind when I realized the investment was paying 6% in perpetuity, even after the Fed took the risk free rate down towards 0%.

  12. ‘Take Joe Biden, who “unmasked” Mr. Flynn only a few days before leaving office as Vice President. Last week Mr. Biden told ABC that he knew “nothing about those moves to investigate Michael Flynn.” George Stephanopoulos reminded Mr. Biden that he attended a Jan. 5, 2017 Oval Office meeting when the FBI’s Flynn investigation was discussed. Mr. Biden replied that he’d misheard the question and admitted he was “aware that there was, that they’d asked for, an investigation. But that’s all I know about it.”

    ‘This was more straightforward than what Mr. Biden told MSNBC when he was asked about his “involvement in the investigation of Michael Flynn.” Mr. Biden replied: “I was never a part or had any knowledge of any criminal investigation into Flynn while I was in office.”

    https://www.wsj.com/articles/team-obamas-unmasking-dodge-11589746154?mod=opinion_lead_pos2

      1. ‘Oh, and buy guns and ammunition. Liberty always needs that backstop of an armed citizenry in case the electoral and judicial systems completely collapse.’

        I’ve been looking at these. Anyone have experience with them?

        https://hk-usa.com/hk-models/sp5/

        1. No but that’s a versatile piece of iron.

          I’d like to know if the sling is adjustable. Keeping one elbow locked against the tension imposed by the sling would sure help maintain control while you’re doing business in automatic.

          Nice rig.

        2. Looks great if a person wants to spend that kind of money. But I thought that in the USA with a short barrel like that it had to be a handgun and if you put any kind of stock on it to brace against the shoulder it immediately became illegal? I see people in California talking about how maybe they can make it legal if they put a barrel extension on it.

          1. Get a Ruge PC Carbine, cost you way less and it will use existing pistol mags. Or get an AR pistol. But please don’t shoot it at the range next to me. Loud AF.

            The ATF ruled on pistol braces, they are legal.

            “With respect to stabilizing braces, ATF has concluded that attaching the brace to a handgun as a forearm brace does not ‘make’ a short-barreled firearm because … it is not intended to be and cannot comfortably be fired from the shoulder.” The letter continues: “Therefore, an NFA firearm has not necessarily been made when the device is not re-configured for use as a shoulder stock — even if the attached firearm happens to be fired from the shoulder.”

            https://www.sigsauer.com/press-releases/atf-clarifies-ruling-pistol-stabilizing-braces/

          2. The ATF ruled on pistol braces, they are legal.

            Interesting. I wonder if the standard old MP5 collapsing stock you see in the SP5 pictures counts as a brace with the ATF? If so, a similar/cheaper imitator would seem like a nice home protection “handgun”.

          1. ESTL was already the Wild, Wild East when I was a college student nearby in the 1980s. Things haven’t changed much in the past 40 years.

        5. Havent used one but I’ve read theyre pricey. Might want to look at bullpups – some come in 300 blackout, ruin somebodys day for sure. Also tactical shotguns are quite the rage now.

          Definitely an end of empire feel to all of this.

        6. Haven’t heard of that before, but looks pretty trick. I’m going to pick up a .357 Sig Sauer soon.

        7. I’ve been looking at these.

          The MP5 is a 9mm weapon, good for a pistol, but it’s under powered for a carbine. Hence, HK produced the MP7 that uses the 4.6x30mm cartridge, which will penetrate most body armor and doors. The AK47 with a folding stock will give you nearly the same results for much cheaper.

      1. Wasn’t it a “plea deal”, under duress?

        I’ve been led to believe that’s how our so-called justice system works.

        If pleading guilty is a high crime if you’re not actually guilty, and you do it in collaboration with prosecutors, who know you’re not guilty, would they be co-conspirators? Don’t answer, It’s simply ridiculous.

        1. Didn’t say it was a crime to plead guilty. Just that he had a couple times. Apparently he didn’t think a pardon was forthcoming, despite the circumstances that are now coming to light.

          1. Didn’t say it was a crime

            So you didn’t hear it suggested that he should be prosecuted for perjury, for pleading guilty if that wasn’t the case? Then your point was what?

      2. The prosecutors hid exculpatory evidence and concocted purported crimes. I suggest you stop watching MSM, using their talking points, and read Sidney Powell’s Open Memorandum to Barack Obama in full, but a few keys excerpts here.

        https://sidneypowell.com/media/open-memorandum-to-barack-obama/

        “Applying the Rule of Law, after declining McCabe’s perjury prosecution, required the Justice Department to dismiss the prosecution of General Flynn who was not warned, not under oath, had no counsel, and whose statements were not only not recorded, but were created as false by FBI agents who falsified the 302. ” (IIRC, the original 302 is still MIA).

        “Fifth, there is precedent for guilty pleas being vacated. Your alumni Weissmann and Ruemmler are no strangers to such reversals. At least two guilty pleas they coerced by threats against defendants in Houston had to be thrown out—again for reasons like those here. The defendants “got off scot-free” because—like General Flynn—your alumni had concocted the charges and terrorized the defendants into pleading guilty to “offenses” that were not crimes. ”

        “Sixth, should further edification be necessary, see Why Innocent People Plead Guilty, written in 2014 by federal Judge Jed Rakoff (a Clinton appointee). Abusive prosecutors force innocent people to plead guilty with painful frequency. The Mueller special counsel operation led by Andrew Weissmann and Weissmann “wannabes” specializes in prosecutorial terrorist tactics repulsive to everything “justice” is supposed to mean. These tactics are designed to intimidate their targets into pleading guilty—while punishing them and their families with the process itself and financial ruin.”

        “Most important, General Flynn was honest with the FBI agents. They knew he was—and briefed that to McCabe and others three different times. At McCabe’s directions, Agent Strzok and McCabe’s “Special Counsel” Lisa Page, altered the 302 to create statements Weissmann, Mueller, Van Grack, and Zainab Ahmad could assert were false. Only the FBI agents lied—and falsified documents. The crimes are theirs alone.”

        “General Flynn did not even know he was the subject of an investigation—and in truth, he was not. The only crimes here were by your alumni in the FBI, White House, intelligence community, and Justice Department.”

        1. after declining McCabe’s perjury prosecution

          Why waste resources prosecuting perjury if McCabe will get caught up in Durham’s investigation? Likewise, why waste resources pursuing Obama and Biden in Durham’s investigation if there’s something bigger we don’t know about yet? If the administration gets one bite at the apple in the public’s eye, they’d best go for the case with the most evidence and most severe penalty. One blow versus a thousand cuts. Food for thought.

  13. Mr. Biden replied: “I was never a part or had any knowledge of any criminal investigation into Flynn while I was in office.”

    – Senility is a feature, not a bug! 🙂

    1. https://www.washingtonexaminer.com/news/joe-biden-still-hasnt-said-what-he-knew-about-the-fbi-counterintelligence-investigation-into-flynn

      “’By adding the qualifier ‘criminal’ to describe the type of investigation, Biden is denying any knowledge of something that did not exist, and he is avoiding answering for the counterintelligence investigation that actually did exist,’ Trump campaign deputy director of communications Matt Wolking said. ‘Why?’”

      1. ‘criminal’ to describe the type of investigation,

        Was the investigation itself criminal?

        1. No, and that’s how they side-stepped due process/evidence etc. It was about foreign surveillance – spying. Except there wasn’t any going on, except the US government spying, and from what I understand these clowns had our allies spying in the US too.

          1. Barr Says U.S. Attorney’s Probe Won’t Likely Lead to Investigation of Obama, Biden

            “As to President Obama and Vice President Biden, whatever their level of involvement, based on the information I have today, I don’t expect Mr. Durham’s work will lead to a criminal investigation of either man,” Mr. Barr said in response to a reporter question during a press conference called to discuss updates to the investigation of a shooting at a military base last year in Pensacola, Fla. “Our concern over potential criminality is focused on others.”

            ‘Mr. Barr didn’t provide details on exactly what or whom Mr. Durham was investigating, but he expressed concern generally about a trend to “gin up allegations of criminality by one’s political opponents based on the flimsiest of legal theories.”

            ‘But Mr. Barr said, as he has in the past, that Mr. Trump was the victim of a yearslong “utterly false Russian collusion narrative” and that standards at the Justice Department were abused to reach a particular result. “We can’t allow this to ever happen again,” he said.’

            https://www.wsj.com/articles/barr-says-probe-wont-likely-lead-to-investigation-of-obama-biden-11589818134?tesla=y

          2. “We can’t allow this to ever happen again,” he said.’

            Hey Mr. Barr, if you’re not going to hold anyone accountable, allowing this to happen again is exactly what you’re doing.

          3. Barr Says U.S. Attorney’s Probe Won’t Likely Lead to Investigation of Obama, Biden

            Because the swamp is too deep and stinky.

  15. How is this for a Black Swan. New York City’s rent regulations rely for their legal justification on a “housing emergency,” defined in state law as a vacancy rate below 5.0%. The official vacancy rate is based on the city’ Housing and Vacancy Survey, which the city pays the Census Bureau to conduct every three years.

    https://www.census.gov/programs-surveys/nychvs.html

    The last one was in 2017. But the last time the three year cycle fell on a decennial Census year, it was put off one year to 1991. So that would be 2021. Just in time for all those new apartment buildings under construction to be finished, after a summer (this one) in which new college graduates couldn’t afford to move to NYC.

    That could be interesting. Of course The Donald is going to want to declare half the city vacant anyway if he could cook the Census books, but NY Dems are no better.

  16. Zillow Shares Rise as Real Estate Services Firm Again Flips Homes in Some Markets
    TheStreet.comMay 18, 2020, 6:11 AM PDT

    Zillow shares jumped on Monday as the online real-estate platform and brokerage edged back into the business of flipping homes. The stock rose 3% to $50.23 at last check, as Zillow said it once again would make cash offers on homes in four markets: Phoenix and Tucson, Ariz., and Raleigh and Charlotte, N.C. The restart comes nearly two months after Zillow paused its Zillow Offers program as coronavirus infections and deaths began to mount across the country.

    1. Zillow Shares Rise as Real Estate Services Firm Again Flips Homes in Some Markets

      Until companies like this cease to exist, we have not bottomed.

  17. “…said Karen Elmir, luxury real estate advisor…”

    “…The unit was listed for $16 million. but closed after a 31% price reduction. The luxury market is doing well. …”

    So Karen Elmir, if a 31% haircut means ‘the luxury market is doing well’, then hold on to your shorts, ’cause when the 50%, 60% haircuts come that will mean that ‘the luxury market is doing *really really really* well’.

    I am sure you just can’t wait.

  18. https://getpocket.com/explore/item/the-crash-that-failed

    The US housing bubble was pumped up by subprime mortgage derivatives that allowed lenders to sell off high-risk loans homeowners were unlikely to pay back. These were invented on Wall Street beginning in the 1980s, accepted by US regulators, and disseminated like financial toxins globally. And this raises a further irony. The crisis was thought by many Europeans to have shaken American financial hegemony and the dominant status of the US dollar. Tooze begins his tale at the annual convening of the UN General Assembly in New York on September 23, 2008, a week after the collapse of Lehman Brothers. “One after another, the speakers at the UN connected the crisis to the question of global governance and ultimately to America’s position as the dominant world power,” he writes. French president Nicolas Sarkozy poured scorn on the Americans: “It’s a multipolar world now.” Yet as Tooze explains, the collapse reinforced the financial supremacy of Washington and New York. “Far from withering away,” he writes, “the Fed’s response gave an entirely new dimension to the global dollar.”

    1. ‘was pumped up by subprime mortgage derivatives’

      95%+ of the defaults last decade were prime. Like Ben Franklin said 6 months after the revolution: so many falsehoods have been put down that the future won’t know what really happened in the war.

  20. “New leases for Manhattan apartments plunged by 71% in April, and vacancies soared as the rental market froze amid the coronavirus pandemic and more residents left the city, according to a new report.

    Is that a lot?

  21. ‘I have lost sleep over thinking about my family, my business, and people that depend on me for their livelihoods,’ he said. ‘It’s definitely stressful.’”

    Apartment rents in Colorado Springs were completely out of whack with median incomes even before COVID. Maybe you should be losing sleep over that, Tim.

    1. I want my small LLC landlord to stay in business, they treat their long term tenants well.

      Airbnb parasites OTOH can eat a sh*t sandwich full of broken glass.

    2. Apartment rents in Colorado Springs were completely out of whack with median incomes even before COVID.

      I think that is basically true everywhere these days.

  22. “Jennie Rodgers is the Denver market leader for Enterprise Community Partners, a nonprofit designed to encourage affordable housing development. She is worried that without intervention, it’s only a matter of time before things get worse.

    I smell a Democrat patronage and graft racket.

    1. Enterprise Community Partners

      From wikipedia:

      Enterprise Community Partners, formerly The Enterprise Foundation, is a national nonprofit organization that brings together nationwide know-how, partners, policy leadership and investment to multiply the impact of local affordable housing

      Yup, sounds like a group that takes in lots of grants, produces lots of useless papers and studies and gets absolutely nothing useful done.

  23. “In 2005, the owners of 2820 Scott Street bought the hundred-year-old property with the goal of turning it from a 30-room boarding house back into a single-family mansion.

    Seems like a better business model in our oligarch-looted, COVID ravaged economy would’ve been to turn it back into a boarding house.

  24. “Japan’s SoftBank Group Corp reported a stunning $18 billion loss at its giant Vision Fund, pushing Masayoshi Son’s conglomerate to a record loss and highlighting the deepening crisis at its portfolio companies from the global downturn.

    It was only Yellen bux. Easy come, easy go.

    1. It would make more sense for the radical left to simply wrest control of the Democratic Party from the corrupt old guard corporate Democrats

      They wanted to, but Bernie won’t play hardball for them. So they got rolled again. Maybe AOC can be their girl next time.

    1. Agreed, he’s just butt hurt because his ox was being gored. Never heard a peep out of him when other corporations said buh bye to the fools gold state because they were mistreated.

      1. He’s pissed and rightly so. The best part of his tweets is watching all the Musk fanbois lose their sh%t on sites like Reddit. I couldn’t care less about Tesla or Musk or his politics but I always hated the Cult of Genius Musk. Now the curtain has been torn back and butt hurt is very entertaining.

        1. “Cult of Genius Musk”

          A member thereof used to be a regular poster here…

    1. After reading this, I somehow feel less mask averse.

      ‘“I thought it was maybe the government trying something, and it was kind of like they threw it out there to kinda distract us,” said Hitchens.

      On Facebook, Hitchens said he believed the pandemic was “blown out of proportion” and said he was putting his faith in God.

      “I’d get up in the morning and pray and trust in God for his protection, and I’d just leave it at that. There were all these masks and gloves. I thought it looks like a hysteria,” Hitchens explained.

      Now, Hitchens and his wife are in the hospital after contracting the virus.

      “I don’t want to see anyone go through what I went through,” Hitchens said. “This wasn’t some scare tactic that anybody was using. It wasn’t some made-up thing. This was a real virus you gotta take seriously.”’

      1. “After reading this, I somehow feel less mask averse.”

        Are you 100 lbs. overweight too?

        Latest evidence on obesity and COVID-19

        May 6, 2020

        Early data seems to suggest that people with obesity are more likely to become severely ill due to COVID-19, the disease caused by the novel coronavirus.

        An increasing number of reports have linked obesity to coronavirus mortality, and the Centers for Disease Control and Prevention (CDC) now list severe obesity as a risk factor for severe COVID-19. The CDC define severe obesity as having a body mass index (BMI) of 40 or above.

        https://www.medicalnewstoday.com/articles/latest-evidence-on-obesity-and-covid-19

      1. The fatpocalypse will claim far more victims over the years than any virus. We just aren’t allowed to discuss it in “polite company”. When the bulk of the obese and morbidly obese hit their 50’s the consequences will be there for all to see.

        1. Not just the obese, but the heavy drinkers. I’m starting to see the effects in some of my friends. Their bodies are jacked up. Sad.

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