patrick.net
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Patrick is looking for seed funding for housing site
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2017 Jul 10, 8:15pm 17,720 views 86 comments
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Patrick
2017 Jul 13, 11:20am
Hmmm, maybe just a really simple site that gives the value for any address based on rental rates in the area? I like it, and used to do that with my rent vs buy calculator.
So retail buyers could get that price and compare it to the full retail price they are being asked to pay.
And landlords would have a quick source of data to know the probability that any purchase would make sense from a cash flow perspective.
The difficulty would be in getting detailed rental rates by location, number of bedrooms, etc, which is dominated by Craigslist, and they do not gladly share the data that the public gave them for free. But it's not an insurmountable problem.
The business could be to give away a few fair-price estimates for free per IP address, and charge a fee for more usage.
That's called Zillow, although their "zestimate" is based on a proprietary algorithm.
Patrick
2017 Jul 13, 3:22pm
That's called Zillow, although their "zestimate" is based on a proprietary algorithm.
I'm talking about something other than comps.
I propose giving a house value based on rental equivalence, ie, what price would be breakeven price for a landlord?
Strategist
2017 Jul 13, 6:12pm
That's called Zillow, although their "zestimate" is based on a proprietary algorithm.
I'm talking about something other than comps.
I propose giving a house value based on rental equivalence, ie, what price would be breakeven price for a landlord?
I don't think those who intend to live in the home would be interested in that number. Buyers are mostly interested in the payments. Besides, breakeven is a function of the down payment.
A lot of old people, and many first time home buyers have no idea about comps. The old are always getting conned by unscrupulous realtors.
Which is why you invest in an hour of a real estate attornies time.
Strategist
2017 Jul 13, 8:00pm
A lot of old people, and many first time home buyers have no idea about comps. The old are always getting conned by unscrupulous realtors.
Which is why you invest in an hour of a real estate attornies time.
OK, I agree with you. But an elderly person would have no reason to consult an attorney if they fully trust the realtor who is taking them for a ride.
Last month a home came for sale close to where we live. I had met the elderly lady who owned it. Her home sold in one day, and I immediately told my wife that "Ann" was taken for a ride. Granted the home was small, very old, and needed major renovations, but the price of $745K was bizarre.
What could have been done to stop this abuse?
I'm talking about something other than comps.
I propose giving a house value based on rental equivalence, ie, what price would be breakeven price for a landlord?
How do you know that the Zillow number is based on comps only? Do you know, or are you guessing?
Again, rental equivalence is not the only way to value real estate. That number does not represent "fair price" in a lot of cases.
Edit: To use another example in this case. Do you think that a landlord would potentially charge different rents for the exact same property, if:
- the property was bought for 100% cash
- the property was bought for 20% down, rest financed 30yr fixed
- the property was bought for 20% down, rest financed - any kind of ARM
- the property was bought for 0% down, interest only mortgage with a PMI
- the property was inherited by the landlord, making their cost essentially zero.
Patrick
2017 Jul 13, 8:13pm
The rent that a landlord can actually get is unrelated to what the landlord wants.
Strategist
2017 Jul 13, 8:18pm
How do you know that the Zillow number is based on comps only? Do you know, or are you guessing?
Again, rental equivalence is not the only way to value real estate. That number does not represent "fair price" in a lot of cases.
Zillow only estimates the value of homes based on comps. What Patrick proposes is a different animal. This is where I disagree with Patrick.
The market is only interested in the fair value of homes, and nothing else. Investors will evaluate if the Return On Investment is appropriate for that particular home, based on rents, location and condition of that property.
Patrick, there is no single formula for what you propose to do because every location, property type, and condition is different.
Strategist
2017 Jul 13, 8:20pm
The rent that a landlord can actually get is unrelated to what the landlord wants.
The same would apply to the price of the property a landlord may want.
The rent that a landlord can actually get is unrelated to what the landlord wants.
True....but...the question still stands. What the landlard can "get" is again based on gobblygook CMAs and comps on other rentals. Nothing stops a landlord from asking below market rent based on the conditions I listed.
My point being, there is no clear cut rent equivalence to a property's value. There's a subjective measure, but not unequivocal.
My point being, there is no clear cut rent equivalence to a property's value. There's a subjective measure, but not unequivocal.
Of course there is. People have been using the 1% rule forever. It's the standard rule of thumb for real estate investment. If you live in the insane places like bay area or dc it doesn't work, but for most of the country it works just fine.
Nothing is unequivocal.
But an elderly person would have no reason to consult an attorney if they fully trust the realtor who is taking them for a ride.
Last month a home came for sale close to where we live. I had met the elderly lady who owned it. Her home sold in one day, and I immediately told my wife that "Ann" was taken for a ride. Granted the home was small, very old, and needed major renovations, but the price of $745K was bizarre.
What could have been done to stop this abuse?
How can you determine the price was bizarre without having done a full inspection personally? I've seen many fine looking houses that needed huge amounts of money once you got into the guts. Bad foundation, structural rot, knob and tube wiring, mold, walls being pushed out from inadequate rafters, illegal remodel that needs to be brought up to code, bad chimney, screwed up plumbing, the list goes on and on.
or how do you know it wasn't a relative that set the price low for a quick sale? The realtor could have been unscrupulous or the house could have been falling down or many other possible things that determined the price. If you weren't part of the details of the selling process you have no idea if anyone was taken for a ride or not.
Get to the real issue.
Sexy Real Estate Agents Get Higher Prices
http://realtybiznews.com/sexy-real-estate-agents-sell-homes-for-more/98711643/
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Patrick.net had a glorious past during the great housing bubble as a voice calling into question the relentless propaganda of realtors. The site was featured on NPR, in the Wall Street Journal, and on Nightline. It accumulated almost 11,000 registered users and still has more than 10,000 incoming links (per https://moz.com/).
I would like to get funding to re-focus Patrick.net as a business explicitly to help buyers avoid the traps set for them by the real estate industry. The problem to solve is the unmet need for a community and source of data which is entirely on the side of the house buyer. All realtors, banks, and existing real estate sites have a large financial interest in getting the buyer to screw himself with as much mortgage debt as possible, as quickly as possible. Potential buyers are in pain because they do not know what to do and do not have any trustworthy source of advice aside from friends and family. Buyers are often young and unaware of realtors' predatory tactics.
The site would be dedicated to certain disruptive and controversial propositions:
* Real estate is rife with scams which need public exposure.
* Realtors work against their both buyers' and sellers' best interests. Realtors manipulate our laws, monopolize bidding data, and profit from their clients' mistakes.
* Every house has a fair value which can be calculated by knowing what it would rent for and a few other parameters.
* Renting is frequently financially better than buying.
The proposed business is a website consisting of these parts:
* A real estate forum where users can freely discuss their housing questions with other potential buyers.
* A collection of daily housing news links once again, with free email subscriptions (this was the most popular feature of the old Patrick.net).
* Data about real estate, such as how much all residential real estate actually sold for (not just the cherry-picked top retail prices), and how much buyers were actually bidding.
* Free FSBO listings.
Revenue will be a combination of:
* Fees for data streams useful to buyers, such as recent death, divorce, bankruptcies, and notices of default by area to find houses likely to come on the market soon.
* Fees for alerts of new property on the market which seems likely to be cash-flow positive for landlords (and thus also a safe purchase for one's own use).
* Advertising non-conflicting products and services, like rentals, investments, and home improvement. Advertising by realtors or other conflicted interests will never be allowed.
* Subscriptions to premium forum and news features.
There are more than four million houses bought in the US every year. Those buyers are a good sized audience, and it's an audience of people with jobs and money.
I'm looking for $1M in seed funding from accredited investors, for 20% equity, to be able to get office space and a couple of good programmers and marketers. I am willing to put $100K of my own money into this, to demonstrate skin in the game.
If you like the idea, please forward it to VC people or angel investors you may know. If you're an accredited investor, please email p@patrick.net directly.
If you don't like the idea, please say why in a polite way.