Cornering the Market in a Suburb

Has anyone ever attempted to corner the market in a particular suburb? By this I mean gain a controlling interest over a significant proportion of the houses? To take a shares analogy, when you get say 10% of a company you may have enough votes to get onto the board of directors.
I guess there are a couple of parts to my question:
1. What level of % ownership of a suburb would you need to get to exert an influence?
2. If you could corner the market (noting that virtually all historical attempts to corner a market have failed eg Hunts and silver), what could you do? For example, improve your own houses and possibly inspire others to do so, thus triggering a positive wave?
3. Has anyone actually achieved any significant level of ownership in a suburb?
I suppose I am looking at the benefits of focus versus diversification. And I should mention that this is not a theoretical question, it is something I am currently experimenting with.
 
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I imagine it would take an incredible amount of money. To corner the market you would need to buy virtually every property that came up for sale (since only 1-2% is sold each year) to do this you would have to push the prices up a lot if it is a desirable location.

Next problem is that in a given suburb only a certain percentage of people want to rent. Owning more rental properties in an area than there are potential tenants...

Third issue. A company owns a particular thing (usually a patent or brand), with a suburb there is always the one next door that is usually quite similar.

It may be possible to monopolize a particular section of a suburb, eg a small premium or even dodgy pocket. Best strategy would be to completely buy up a dodgy slum in a good location and gentrify. But to change a dodgy area you have to be able to "move on" all the riff-raff who are keeping values and character low.
 
To me that would be putting all one's eggs into the same basket.

I see far less benefit in buying many houses in one suburb to spreading them around the state and country.
 
You might be able to purchase whole suburbs in parts of California and Nevada.

Good luck finding (paying) tenants.
 
Not property but my mate cornered the taxi market in his local town. He owned 11 of the possible 12 for a while. That last one cost him a bit because the owner was on to him.
 
I know of a person who is doing this in Snowtown SA. I believe he owns about 20% of the town including the infamous former bank vault. He has a lot of influence when it comes to getting DAs through.
 
You might be able to purchase whole suburbs in parts of California and Nevada.

Why stop at one suburb?

With a median house price of $7500, you could become Duke of Detroit.

http://www.ritholtz.com/blog/2009/03/median-home-price-in-detroit-7500/

Problem is that 1000 people are leaving each month, so you'll need to set up an immigration agency and some colleges to get people into your oasis.

Set up a special economic zone where people are paid for 50% of the US minimum wage but they get a $10000 rent-to-buy deal where houses are paid off in 1 year (these are the houses just outside your enclave that you have options to purchase on).

Or sell houses to newcomers to pay for your estate to pay a $100k bond (called a house deposit) for which they would receive lifelong free education, health and super for as long as they live there. Parents worried about their kids college expenses might stump up the money as there's house and health as well.

Also tap into the market for lifestyle communes for people who like to live amongst like-minded, eg amish, orthodox muslims, hippies, Rosicrucians, new-agers, Trekkies, punks, Elvis fans, computer nerds, dope smokers, Swahili speakers, evangelicals, extreme libertines etc. Outsource policing and let them set their own rules based on their teaching and who can move in next door - essentially states within states, with people attracted from other cities as they can live with like minded.

People may embrace diversity in their younger years but when they get old they often retreat to the homogeneity of their own group (hence the huge demand for ethnic aged care). With an ageing population setting up like minded communities might be a growth industry, and anywhere where land and houses near established infrastructure are cheap is in with a chance.
 
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Focus versus diversification is one of the key issues here. As far as cost goes, this is a long-term plan whose speed is limited by available capital. In the early stages I think of it more in terms of building a creeping shareholding while keeping it under the major shareholder disclosure limit (10%?).

At 1% ownership in several suburbs I have noticed no significant external benefits, but plenty of internal ones. Ease of management, ability to utilise contractors on multiple properties in sequence, coordination for council green waste collections etc. Also acquisition is easier because you are already familiar with streets, areas and housing styles and floorplans.

The downside so far has been limited to some tenants talking with each other at the local shops and working out the common ownership (I hate that).

Future positives I can think of include pressure onto feral state housing tenants (moving on the unruly elements), encouraging local government to upgrade amenities, and lifting the median price by buying bottom-end housing and refurbishing them.

There are small suburbs out there with 400-500 houses in them. If you purchase a couple each year it doesnt take too long to build up a dominant position. Looking thorugh RP Data, it is rare for any individual to have more than 3-4 in a particular suburb. How hard would it be with a little planning and patience?
 
We thought about it as where we are there is a fantastically positioned slum area. over the last 10 years we have had about 9 houses in there (sold 2).
The returns are pretty good and it has been rezoned now so that if we have 3 in a row we can put units on.
The only problem is the sheer frustration of dealing with these people! It is full of generational welfare, druggies, no-hopers etc. If you get a good tenant, they are usually hoping to use the cheapness as a stepping-stone to get money together and get out. In the last month we have had 3 of them to court.

Quite frankly I am over it, I would have to buy too many more to really make a difference and the stress of holding them is not worth it to me. Also a lot more maintenance as they are older hardyplank house ( there musn't have been many good builders in the 70's)

The area has about 500 houses all up, I think you would have to buy more than half to really make a difference, it's that bad.

But , don't let me put you off, your situation could well be different. Good luck. (sorry, feeling a bit whingey today)
 
Instead of a market, what about an undesirable street? That's a subsection of a market.

I'm looking at a street in Nowra where I just purchased an investment property in my super fund. It's only a small street - but is medium density living. I'm sure 10 savvy investors could go in there, buy up the stock and kick the riff raff out. :)
 
I'm looking at a street in Nowra
As a recent owner of an IP in Nowra I am very interest in your street name? Is it somewhere in the east where all those nice coloured front fences are located? Please do tell :>)
 
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I hadn't previously thought about this in a surburban context, but had thought about it in a street context. EG, if you owned say 5 houses in a row you could book a single demolisher appointment and chuck 20 townhouses on there... Monopoly style :cool:
 
If you want to do some research, google the name:

Judith and Fergus Wilson

They are a couple in the UK who have amased a 180 million pound "buy to let" property portfolio and it is all in the town of Ashford, Kent. By all accounts they have or did freeze alot of buyers out of the area and are not to popular with some people. Not sure how they have fared with the UK property slump. They apparently didnt believe in diversification in where they bought property. They seem to have done well buying all in the one area but it is a different market than ours.

They were a couple of high school teachers when they started out.
 
If you want to do some research, google the name:

Judith and Fergus Wilson

They are a couple in the UK who have amased a 180 million pound "buy to let" property portfolio and it is all in the town of Ashford, Kent. By all accounts they have or did freeze alot of buyers out of the area and are not to popular with some people. Not sure how they have fared with the UK property slump. They apparently didnt believe in diversification in where they bought property. They seem to have done well buying all in the one area but it is a different market than ours.

They were a couple of high school teachers when they started out.

fared about as well as anyone who did the same thing really badly
 
If you want to do some research, google the name:

Judith and Fergus Wilson

They are a couple in the UK who have amased a 180 million pound "buy to let" property portfolio and it is all in the town of Ashford, Kent. By all accounts they have or did freeze alot of buyers out of the area and are not to popular with some people. Not sure how they have fared with the UK property slump. They apparently didnt believe in diversification in where they bought property. They seem to have done well buying all in the one area but it is a different market than ours.

They were a couple of high school teachers when they started out.

Forgive my ignorance, how big of an area / town / etc is Ashford, Kent?
 
Along the same lines as buying the worst property in the best street, I can see the value in purchasing a number of properties in a single street.

The twist would be purchasing a number of properties and improve them to increase mean value of the street, the suburb would need to be average not low socio-economic however the street would adjoin a more desirable suburb.
 
Forgive my ignorance, how big of an area / town / etc is Ashford, Kent?

Ashford has a population of around 60000. It is next to the M20 motorway that goes into London, on the route from London to Dover (where you catch the ferrys to cross the channel), has the International Rail Station where the last stop to get on the Chunnel Train to go to France, and has just put in a high speed rail link to London reducing the comute time from around 80 mins to 35.

I dont think you can compare a town of 60000 in the UK to a town of that size here though. Over there, the next town is just up the road, not like in Ausrtalia where you probably have to travel for 30 mins at 100k to hit the next town.

From what Ive read about them (the Fergus's), they got to the stage where they would go to a developer who had maybe 10 houses under construction and would make an offer (at a reduced price) to the developer to buy all his stock. They bought what is typically first home buyer stock and it was hard for that demographic to get anything much in Ashford when they were in their heyday of buying. Its an interesting story to follow as I have been trying to do. I havnt been able to find out anything about how their property portfolio has gone in the UK property slump. Their story I think is a good one to follow as it probably has a few lessons in there about getting too .... hmm not sure if this is the right word, greedy? I want to see if their lack of diversification in area has been their downfall or contributed to it, if they have gone down.

Judith Wilson has a website, actually, and it is still up and running, although hasnt changed in the last 18 months or so. Still they must be paying their internet bill!
 
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