What happens when a sub-market gets hot

Here’s one of the irritating things that happen when a neighborhood gets hot: Amateurs jump in.

Someone puts a good deal on the market.

Amateurs, seeing the kind of rents we get but not how much it costs to get them, bid the price up.

We lose the auction.

The amateur wins the auction but fumbles the subsequent execution, spending more than he expected, getting lower rents than he expected, etc.

Maybe the market bails him out with price increases or rent increases or both. Maybe not.

Either way, that’s an opportunity lost to us.

(Hat tip to J.P., with whom I just discussed the above.)