Ask HN: Which startups are working on solving the housing crisis/urbanization? - philippnagel
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brudgers
Housing and other real-estate development projects require much more money
than moves around the startup ecosystem and such projects don't offer the sort
of returns that those investors typically seek. Throw a billion dollars at an
active urban real-estate market and maybe it moves a little and maybe it
provides a low teens internal rate of return. There aren't unicorns in real-
estate. It's a place where pension funds and insurance companies park assets
for the term of fifteen and thirty year mortgages by backing project types
with track records, e.g. Class A office space.

To put it another way, adding a 1000 rental units in a place like San
Francisco at an affordable $200,000 each (as if it were possible) requires two
hundred million dollars in funding and would take four or five years for
acquisition, entitlement, construction and occupancy under the best of
circumstances. Rent them out at $3000 per month and the income is $36,000,000
a year. After ten years or so, assuming that the market doesn't go south,
there's the potential for a pretty good return...but those just ain't startup
numbers and venture capital timelines.

And that's just a few units in one local market. At scale the amount of
capital required is vast.

~~~
austinjp
I often lazily wonder who builds all the office space in large cities. I'd
realised it was megacorps who are in it for the long haul, didn't think of it
as backing pensions and similar assets.

I wonder if a property startup might be possible in countries where property
is far, far cheaper. Micro-loans, divided and pooled investments, that sort of
thing. Particularly if funders from comparatively wealthy nations want to
invest in "business with a conscience" type startups. In the charity sector,
even.

The returns might not be large, but that's not what all startups are about.
For the more cynical, there may be off-shoring and tax benefits.

~~~
Maultasche
Yep, I've worked at a pension fund, and they find lots of ways to diversify
their investments. In addition to the usual stocks and bonds, they invest in
real estate all over the US, owning a number of commercial high rise buildings
in cities around the country.

They have the money to finance these big building projects, and it the rent
they generate usually provides them with steady returns over the long term.

I hadn't heard of them investing in residential properties, but it wouldn't
surprise me if they owned some.

