Landlord Inc

[Moretorque]

In case anyone is interested, here is the prospectus for AMH:

http://www.sec.gov/Archives/edgar/data/ ... d424b4.htm

Their average rent is $16,284 at a 97% occupancy rate. Their average cost of buying and fixing up a property is $173,327. So their cap rate is:

0.97 * 16,284 / 173,327 = 0.09

A 9% cap rate is quite good.

I am somewhat concerned about their structure, in particular, I don't understand the role of American Homes 4 Rent, LLC. And I am especially concerned about "Advisory fees" on their cash flow statement. It is explained but I don't understand the explanation and I can't tell if this will go away or not. This is critical because this would eat up most of the profit. I hope their earnings release on Tuesday clears this up.

If they were a simple REIT with a 9% cap rate selling at close to book value, I think that would be a great buy. I just need to clear up the issues I mentioned.

Look if you invest in a well connected company and you are favored by the credit monopoly they will just shower you with a bailout if you need cash and your enemy competition can just be bankrupted at the push of a button by the FEDERAL RESERVE if they desire.

Go look at the bailout #'s Bernard Sanders had a look at when he had the first independent look at the FEDS counterfeiting operation, people still do not get it.

[Jester]

The process of building a house is so much more efficient today { like everything else} to the point to where you walk up to a wall and punch your fist through it like a piece of cardboard, I live in a house made in 1929, come punch one of my walls and you will break your fuc king hand.
Why do prices keep going up and up when everything is so much easier to make today because how much more efficient the industrial process has come, this be one stupid mother fuc ker. 20 years!

1929:

Haha, real cute. An outhouse. Of course back in the 1920's that's probably all you had in Orange County.

Come to Glendale and I will show you whole neighborhoods of houses built like a rock between 1920 and 1940. Stylish, solid, built to last.

[Jester]

When my older brothers went to Uni in the 80s, renting a room in a house close to the campus cost ~$10. By the time I was there in the 90s, renting the same room cost ~$60 and now it would cost ~$140. Sure there has been some increase in wages and welfare over the same period, but nowhere near as much. I don't see why there is this resistance to admitting the obvious truth that people are being screwed worse and worse by the banksters as time goes on.

?_? Where did you guys rent rooms for $10-$60/month? In 1983, we paid $500/month to rent a small 2 bed condo in Lakewood, and that was a "cheap" rental.

Pretty sure Cornfed was referring to weekly rents for an individual room.

Read carefully.

[Jester]

I live in Southern CA, probably one of the worst hit areas of the housing boom and bust cycles. At the peak of the recent housing bubble, a typical new mortgage payment was $2,447/month. In 2012 it declined to $983/month, a 59% drop. When it's cheaper to buy than to rent, cash-flow investors like myself start buying.

Noone is buying homes with thousand dollar payments in Southern Cali.

LOL

Maybe the graph is factoring in refis, because that has been a busier market. But refis have nothing to do with the discussion.

[Moretorque]

The process of building a house is so much more efficient today { like everything else} to the point to where you walk up to a wall and punch your fist through it like a piece of cardboard, I live in a house made in 1929, come punch one of my walls and you will break your fuc king hand.
Why do prices keep going up and up when everything is so much easier to make today because how much more efficient the industrial process has come, this be one stupid mother fuc ker. 20 years!

1929:

Haha, real cute. An outhouse. Of course back in the 1920's that's probably all you had in Orange County.

Come to Glendale and I will show you whole neighborhoods of houses built like a rock between 1920 and 1940. Stylish, solid, built to last.

I know he is a real Fn joke, look at the quality of build a 100 years ago compared to today. I have talked to builders who tell me the new homes they build start falling apart under warranty because the materials today are a joke and there are practically no descent craftsmen left.

[momopi]

Noone is buying homes with thousand dollar payments in Southern Cali.
LOL
Maybe the graph is factoring in refis, because that has been a busier market. But refis have nothing to do with the discussion.

I bought investment properties with 25% down and 30 year fixed rate loans. Older 2 bed SFR's priced around $100k-$150k in Southern parts of Riverside County. My mortgage is $480-$600'ish there. If you want details just PM me.



P.S. I went to Fullerton College, est. 1913 in Fullerton, OC. The red line used to run by the school back then. There area was an important train station/hub and the oranges grown locally were boxed and shipped there.

[momopi]

I'm not going to deal with it in any fashion, the information is out there and Daa herd be taking an IQ test. The majority rule and if Daa herd be dis stupid than let the creditors have it.

So, in other words, you do... nothing?

I'd much rather do nothing than play their con game, and definitely the joke is on us.

If you were to believe that the "system" is a con and will fall or crash and burn, shouldn't you at least be a prepper?

I'd suggest Backwoods Magazine, there's a lot of good tips in there from other preppers.

[Jester]

Noone is buying homes with thousand dollar payments in Southern Cali.
LOL
Maybe the graph is factoring in refis, because that has been a busier market. But refis have nothing to do with the discussion.

I bought investment properties with 25% down and 30 year fixed rate loans. Older 2 bed SFR's priced around $100k-$150k in Southern parts of Riverside County. My mortgage is $480-$600'ish there. If you want details just PM me.

+1. Point taken by Momopi.

I totally forgot those godforsaken, parched, sunbaked places existed. But then that's the point of investing, isn't it? Buy what's out of favor / out of mind.

Well done.



(still not buying the graph, though....)

[momopi]

+1. Point taken by Momopi.
I totally forgot those godforsaken, parched, sunbaked places existed. But then that's the point of investing, isn't it? Buy what's out of favor / out of mind.
Well done.
(still not buying the graph, though....)

The graph is from Jan 2012, and the $983/month figure is a median. So there are of course many properties with higher, and lower monthly payments. In Irvine, Cerritos, or Arcadia, the number is likely much higher. In parts of Riverside County, likely much lower. In Downey, Bellflower, Norwalk, etc., the number are much closer. However prices have gone up this year. I think last year you could buy fixer upper SFR's in Sacramento for $60K and rent it for $800/mo, but it's too far for me.

In Riverside County you have parched, sunbaked places, lakeside places (Lake Elisnore, Canyon Lake), agricultural/farm areas, winery regions, etc. Temecula has a couple dozen wineries along Rancho California Rd and nearby areas. Unfortunately their wines are um... mediocre. I looked into exporting their wine in the past and was surprised to find ice wine, since grapes don't freeze here. "Grapes imported from Washington State", I was told. Gee um, how to explain the "Terroir" on that one. On the up side, late harvest sweet wines are great here, since we're nice and sunny.





(Depending on the season, vineyards can look nice and green, or dead.)

[Moretorque]

I'm not going to deal with it in any fashion, the information is out there and Daa herd be taking an IQ test. The majority rule and if Daa herd be dis stupid than let the creditors have it.

So, in other words, you do... nothing?

I'd much rather do nothing than play their con game, and definitely the joke is on us.

If you were to believe that the "system" is a con and will fall or crash and burn, shouldn't you at least be a prepper?

I'd suggest Backwoods Magazine, there's a lot of good tips in there from other preppers.

I was smart and realized not to bring anybody here so for me it really does not matter.

[momopi]

I was smart and realized not to bring anybody here so for me it really does not matter.

Not even for yourself? What would you do in event of major disaster, when local market shelves are empty?

[Moretorque]

I was smart and realized not to bring anybody here so for me it really does not matter.

Not even for yourself? What would you do in event of major disaster, when local market shelves are empty?

Nobody gets out of here alive!

[momopi]

I was smart and realized not to bring anybody here so for me it really does not matter.

Not even for yourself? What would you do in event of major disaster, when local market shelves are empty?

Nobody gets out of here alive!

Some might, if they're prepared. Though I'd suggest longer-lasting shelf-stable foods than those in the photo above.

http://www.mountainhouse.com/category/MHCDL.html

[Moretorque]

I was smart and realized not to bring anybody here so for me it really does not matter.

Not even for yourself? What would you do in event of major disaster, when local market shelves are empty?

Nobody gets out of here alive!

Some might, if they're prepared. Though I'd suggest longer-lasting shelf-stable foods than those in the photo above.

http://www.mountainhouse.com/category/MHCDL.html

No you'll just last a little longer, I'd eat all that sh it in a few days.

[fschmidt]

I listened to American Homes 4 Rent first earnings call. There were questions from JP Morgan, Goldman Sachs, and other banks. I didn't hear any questions from Moretorque, momopi, and the HA members. Oh well.

Here is my financial analysis of their recently released financial results.

http://finance.yahoo.com/news/american- ... 00873.html

The average property costs $171,519 (all costs). The average yearly rent is $16,374 with a 97% occupancy rate. So the cap rate is:

16,374 * 0.97 / 171,519 = 0.0926 = 9.26%

For the last 3 months, their rent revenue was $17,585K. They reported net operating income of $10,726. To get a fairer number, I subtract admin expenses of $811K to get $9,915K. So profit as a percentage of gross revenue is:

9,915 / 17,585 = 0.564 = 56.4%

So their profit as a percentage of assets should be:

0.0926 * 0.564 = 0.0522 = 5.22%

They currently have $3,400M worth of houses. Note that book value is meaningless since houses are depreciated while actually going up in value. Also it is hard to figure out cash and debt. Yahoo says $519M cash and no debt, but I don't know where they got this from, so I will ignore it. Just based on the houses, the profit when things mature should be:

3,400 * .0522 = $177.5M profit

In a REIT, this should basically all be paid out. Healthy REITs are paying 3.2% dividends. So the market cap of AMH should be:

177.5M / .032 = $5,547M

Their actual market cap is $2,870M which is 52% of what it should be. In other words, the stock is massively undervalued.

Again, I am a computer programmer with no background in finance, accounting, or investing. If anyone can see anything wrong with my logic here, please let me know. I will run this by a few people and if no one sees a problem, I will buy.