Should you invest in a property group that manages TikTok houses? Well, in the 2010s, would you have invested in a property group that managed all the houses where the Jersey Shore franchise was filmed? It's essentially the same proposition, different decade.
This is not a TikTok partnership
Social media platforms are vast, mysteriously run, and infamously fickle in deciding who and what their algorithms will favor: Just ask any Vine celebrity from the year 2015. Just because someone has a million followers or a blue checkmark doesn't mean a social platform gives them preferential treatment or cares about their business ventures.
Therefore, when I receive news about any potential opportunities with TikTok or any other party houses, the first thing I feel like reminding potential investors is: You know you're not actually partnering in a venture with TikTok, right? You're partnering with entrepreneurs who know how to parlay other young people's ephemeral fame and glory into actual monetary gains. Or they think they do. Which brings us to West of Hudson Properties.
Social media houses: Nonstop content; chasing bigger, better brand deals
What to know about all social media houses, not just TikTok houses but also YouTube and gamer houses (and Vine before Twitter (NYSE: TWTR) pulled the plug on it), is this: Neither the platform nor the individual residents are paying the mortgage. Typically, and definitely here, it's a management company -- in this case, a Hoboken-based property management company recently acquired by a Chinese-backed, Las Vegas-based corporation called Tongji Healthcare (OTCMKTS: TONJ).
A social media mansion typically is occupied by up-and-coming social media stars as part of a management company's compensation package for filming and posting content every single day. Whether it's dances or pranks or makeup tutorials or hookups or fights, anything good is captured and posted. And typically, the pranks, fights, tantrums, and sexy moments get the most clicks.
The point of managing an influencer house is usually to manage the influencers -- to get a cut of the brand and media deals these influencers are expected to pull in from their combined exposure. But West of Hudson has a different revenue stream in mind, based on investors believing in the increased value via exposure to a global audience.
This newly formed property management company wants investors to buy into the idea real estate is made more valuable and marketable because of its association with young social media celebrities who live and livestream there. And the value inherent in this is difficult to quantify: Did the homes where Jersey Shore was filmed see an instant jump in value through people viewing the umpteen drunken parties, hookups, and fights that took place in them? Likely not. But on the other hand, you have Jennie Garth house flipping to a million-dollar tune on HGTV.
What price to put on global visibility?
At the moment, TikTok houses in general are infuriating their neighbors, violating COVID-19 restrictions, and drawing the wrath of LA's mayor. But this (apart from the COVID-19 twist) is what young, wild celebrities have always done. And in many cases, it has raised the profile of the home -- sometimes the entire neighborhood.
Without a doubt, global publicity makes a property more visible and more of a must-visit for fans. In that sense, investing in West of Hudson is simply betting that yes, this sort of global platform is the best way to promote a spec house that only a few people in the world could afford but millions would pay $25 to see on a tour.