Posted on 05/30/2013 10:36:04 AM PDT by blam
Looks Like The 'Smart Money' Is Already Exiting The Housing Trade
Tyler Durden, Zero Hedge
May 30, 2013, 12:06 PM
Last September, one of the original institutional investors in the housing-to-rent strategy, multi-billion hedge fund Och-Ziff called it quits on the landlord business. The reason: "the New York-based hedge fund is looking to sell now because the returns it is generating from rental income are less than expected and it is looking to take advantage of a recent rebound in home prices in northern California." As a reminder, the REO-to-Rental subsidized investment program, which led to an epic surge in demand for multi-family housing, i.e., rental, units was, together with offshore investors parking their cash in the US for safekeeping (taking advantage of the NAR's anti-money laundering check exemptions) and the big banks Foreclosure Stuffing, the key reason for the recent, stimulus-fueled and quite transitory bounce in house prices in assorted markets.
Still, OZ's exit of the business did not spook too many of the other remaining investors who simply had no better investment options, and in a world of POMO and FOMO, they saw no choice but to become ever bigger landlords.
Today, another one of the original "big boys" has called it curtains: "We just don’t see the returns there that are adequate to incentivize us to continue to invest", according to the CEO Bruce Rose of Carrington, one of the first investors to use deep institutional pockets (in this case a $450 million investment from OakTree) and BTFHousingD.
Rose's assessment of the market? "There’s a lot of -- bluntly -- stupid money that jumped into the trade without any infrastructure, without any real capabilities and a kind of build-it-as-you-go mentality that we think is somewhat irresponsible."
(snip)
(Excerpt) Read more at zerohedge.com ...
Bloomberg wants to destroy the economy there.
Real Estate will plummet.
New York will become Detroit Mark II if Bloomberg sticks around.
The smart money is making “reverse mortgages” expecting to have full title to a home purchased at the LOW of real estate values and sell at higher price in 5-10 years. Making 30% on a 150,000 home is not that hard and is so easy it hurts me to think about what a hustle this is...winner again big banks. Loser...”the children” oh yea, the sellers right now - “greatest generation” lol
All of this was a continuation of the bankster-DC Ponzi Scheme: Banks owned a lot of houses because of defaults and they had to get out. Fed bankrolls housing buyers via QE purchases of mortgage-backed securities, which caused mortgage rates to plummet. Obama administration pushed the REIT house-buying binge as well. All of this allowed the banksters to get out and more favorable prices in order to protect their failing institutions. Hedge funds like Och-Ziff were the next greater fool, but they aren’t the greatest fool since they too have at least some financial acumen.
Greatest fool will, once again, be small private retail home-buyers, who will purchase from the selling REITS, only to have the Fed, the Obama administration, and the banksters pull the rug out from under them. Sell your house and rent while you still can get out.
How many times are you going to make me jump out my window this week?!
Yep.
As expected.
Thanks for this.
Most of the greatest generation are DEAD. They were born roughly between 1900 and 1920.
Maybe you are thinking of my generation, what I call the "selfish generation," the boomers.
After a Long Rally, It’s Time to Get Choosier With REITs
http://online.wsj.com/article/SB10000872396390444097904577536822808102072.html
yet were able to enjoy the roaring post war economy and got great union jobs with defined pensions and health care and have taken advantage of the greatest disparity in SS/medicare of any group of people EVER or ever will be
.... that always vote democratic and always vote to tax the children and grandchildren more
so they can get to Florida or the casino more often.......this is a pretty selfish group of people..
..but granted, my "boomer" generation is a big disappointment as well...
Or the forgotten generation
Bet your chickens are getting tired of it!
“The reason: “the New York-based hedge fund is looking to sell now because the returns it is generating from rental income are less than expected”
A question I have had from the start is who the heck were they thinking was going to rent these homes? All of the tens of millions out of work and dropping off of the unemployment rolls? They MUST have identified a market before they got in...? Coincidentally I have been looking for a whole house to rent (3 bedroom) since 2010 and there is nothing out there that isn’t filthy and tiny for under 2300.00 per mo. There has been no drop in rents asked in all this time. Nice “market”.
LOL!
M4L
Bet your chickens are getting tired of it!
I’m making 8% return on my rentals that were bought with cash not counting depreciation deduction.
I’m sure not bailing!
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