Sven Damen @damensven.bsky.social · 05/02/2025Idiosyncratic risk also cannot explain it. There doesn't seem to be enough idiosyncratic risk at the landlord portfolio level to generate the observed return premium (unless risk aversion were >250). No differential mortgage default risk either. 100
Sven Damen @damensven.bsky.social · 05/02/2025We favor a limits to arbitrage explanation: * large landlords don't want to enter this space for reputational reasons and maybe diseconomies of scale * smaller landlords have strong local bias and face binding equity capital constraints that prevent them to scale up 110
Sven Damen @damensven.bsky.social · 05/02/2025* and low-income renters cannot afford to buy their property (even if it were for sale) We see strong market segmentation: low-rent properties in NL & BE are owned by unincorporated (P) landlords with 10-50 properties. Corporate investors (B) invest in high-end rentals instead. 100
