Investing in Real Estate: Key Differences
There are two types of people in this game.
The first type is the house flippers.
Only those who hold a property for less than three months are considered house flippers. Strictly speaking, these are the connected insiders from back when the system was flawed. Or, they are distributors. They've already bought the property and paid for it, but haven't transferred the title yet. Then, within a few months, they mark up the price, find someone to take over, and the new buyer signs directly with the developer as a primary purchase.
The second type is the lenders.
Whether they hold for one or two years, or for seven or eight, what are they doing? They are lending money. In other words, you're earning the return on lending.
A city needs capital for development, so it asks the land for money. The demand for housing is constant, but the people who want it might not have the cash right now. If they can't get a full cash loan, or don't have a down payment, what do they do? They wait. But if the city can't wait for these people to save up for a down payment, what does it need? It needs a group of people to step up and take those houses first. The city needs to get its funds upfront. As for whether the people who move in now are the final residents, that's something you can sort out privately after a few years through a secondary transaction.
Essentially, what are these people earning when they buy early, hold for a few years, and then sell? They're earning interest—the interest on borrowing from the city to fund its development.
What determines their average annualized profit? The social interest rate. If the average borrowing cost in society is 7-8%, then their expected annualized return is 7-8%. If the average borrowing cost is 2-3%, then they lower their expectations to 2-3%.
There are only three types of houses.
The first type is the unoccupied ones.
The location is wrong. Even if I gave it to you for free, you couldn't live there because you need to make money and go to work. These are所谓 "fake" houses.
The second type is the ones where people live, but the residents always want to move out. These are所谓的 "inferior" houses.
The third type is the ones where, regardless of whether anyone is currently living there, many people want to move in. These are所谓的 "good" houses.
Once you categorize houses into these three types, you'll realize that the market where house flippers can survive shrinks to just the third type. Because they need clients, and clients only want the third type.
Then, in the modeling and trading sectors, you analyze the data: buyer intent for each district, seller intent for secondhand homes in each district, and the exit intent of potential investors in areas with undelivered new constructions. How many people are in this area? What is their purchasing power—俗称 how much they can scrape together even if they have to stand on tiptoes? What are they willing to buy? How many inferior houses are there? How many good houses are there? Then you execute the actual trades.
In any game, there are always some professional players who are extremely clear-headed. They know exactly what game they're playing, what money they're aiming to make, and why they deserve to earn it. It's all crystal clear in their minds.
If you think making money is easy, it's because the people earning that easy money don't bother with you at all. When you know nothing, everything looks simple.
The underlying logic of wealth is the mastery of data, just as the underlying logic of power is the mastery of human nature.