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Housing Bubble 2.0


By NuttBoxer   Follow   Tue, 27 Nov 2012, 1:59am PST   851 views   11 comments
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We've been looking to buy in the San Diego area lately, and I've noticed a disturbing trend.

Large investment firms/banks are buying up tons of housing as a "rental investment". Apart from the logistics nightmare of an investment company trying to schedule a repair man for the busted water heater in house #235 of their portfolio(yes, I suppose they could hire a property manager), this is what I see coming:

Banks buy tons of housing/land as "rental investment".
Banks lose big, fleecing their investors.
Banks are bailed out by the central government.
Central government now owns huge chunks of private land.

Welcome to the United States of Socialism Comrades!

Comments 1-11 of 11     Last »

NuttBoxer   Tue, 27 Nov 2012, 2:08am PST   Share   Quote   Permalink   Like   Dislike     Comment 1

I believe it's a vehicle to turn private land over to central government control, and fleece the masses, again. Otherwise I agree, what's the point?

Have seen several articles about investment firms backed by big banks from Blackstone, to JP Morgan engaged in this form of "investment".

Kevin   Tue, 27 Nov 2012, 2:11am PST   Share   Quote   Permalink   Like   Dislike     Comment 2

The federal government already has more land than it wants.

Which firms are doing as you claim?

NuttBoxer   Tue, 27 Nov 2012, 2:18am PST   Share   Quote   Permalink   Like   Dislike     Comment 3

http://www.nytimes.com/2012/04/03/business/investors-are-looking-to-buy-homes-by-the-thousands.html?pagewanted=all&_r=0

The one for Blackstone is on Patrick.net

Control of land is one of the oldest forms of power. What central government do you know that doesn't want more power?

iwog   Tue, 27 Nov 2012, 2:28am PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 4

Rents greatly exceed the mortgage payment in many areas of California. For cash buyers, rents can earn a 3-10% return on investment after expenses and the income can be written off against the property resulting in capital gains income instead of ordinary income.

How is any of this a mystery?? It's what some of us have been saying on this board since 2008. The real mystery is why it took so long for the big money to flood in.

NuttBoxer   Tue, 27 Nov 2012, 2:31am PST   Share   Quote   Permalink   Like   Dislike     Comment 5

Referring again to banks/investment firms who are buying these properties by the hundreds, not individual or small business flippers.

FunTime   Tue, 27 Nov 2012, 10:41am PST   Share   Quote   Permalink   Like   Dislike     Comment 6

When Warren Buffet publicly declared he wanted to buy thousands of houses, I just understood that it was impossible. I've since thought, "They've figured out how to do it."

I, of course, haven't figured it out. I don't get invited to those parties.

http://www.cnbc.com/id/46538421/Warren_Buffett_on_CNBC_I_d_Buy_Up_A_Couple_Hundred_Thousand_Single_Family_Homes_If_I_Could

Ceffer   Tue, 27 Nov 2012, 10:58am PST   Share   Quote   Permalink   Like   Dislike     Comment 7

Probably more like the institutions identified a break even point. On the balance sheet, banks don't want their loan portfolios to reflect depreciated value, they would be on board. It would behoove to buy housing inventories en masse, rent them out, cause market prices to swell, and then try to sell as many as possible to ignorant rubes on an individual basis at the inflated values. Not much different from the Fed buying and selling bonds, or companies buying and selling their own stock.
That would be the incentive to become landlord for institutions that otherwise wouldn't do so, especially if the gov has given them some kind of assurance that they will get another bail if it doesn't work. As conspiracies go, pretty sweet waltzing between Wall Street and Washington.

ttsmyf   Wed, 28 Nov 2012, 1:32am PST   Share   Quote   Permalink   Like   Dislike     Comment 8

Of course, this content is very INSTRUCTIVE:
http://patrick.net/?p=1219038
It's OUT OF SIGHT status is testimony to "The big con infests America.".
SO, beware the representations of others, DO YOUR OWN THINKING.

bmwman91   Wed, 28 Nov 2012, 2:52am PST   Share   Quote   Permalink   Like   Dislike     Comment 9

Well shit, who knows. Maybe Blackstone will end up doing a good job of renting the houses out & treat renters decently.

For some reason I just can't see it happening, but you just never know.

BayArea   Wed, 28 Nov 2012, 3:17am PST   Share   Quote   Permalink   Like   Dislike     Comment 10

Large investment firms/banks are buying up tons of housing as a "rental investment".

It's not just SD but all over the country. Anyone's who has attempted to buy middle to low end real estate in the past 24 months has more than likely felt the fierce competition. And it's no longer who has the highest offer but banks want to close quickly and cash is king (I've been beat out on more than one property over the past year despite having the highest offer). Given the surge we've seen in 2012, I've actually backed off and standing on the sidelines since it's just not as attractive anymore to me as it was 12-24 months ago.

It's pretty sad for the middle to lower class since they don't have a chance in hell. This is a problem that the higher class doesn't face since the rent to buy ratios are too low in high end areas to attract investors (unless those investors are banking on equity return and not rental return, which is rare)

When real estate is bringing bigger ROI than the stock market, CDs, commodity investment, etc, you will see the big bucks head in that direction.

Want to buy a sub $400K house in CA that isn't a complete dump with 20% down and perfect credit? Sorry, you probably can't, at least not today.

Also, I notice you are from Chula Vista. I bought a Cobra Mustang there a couple years back from a military family who was in the midst of foreclosure. The guy indicated to me that every third house in that neighborhood was foreclosed. Place looked like a ghost town.

Call it Crazy   Wed, 28 Nov 2012, 3:29am PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 11

bmwman91 says

Well shit, who knows. Maybe Blackstone will end up doing a good job of renting the houses out & treat renters decently.

For some reason I just can't see it happening, but you just never know.

Sure, and I bet Blackstone will be upgrading all the fixtures, painting and making these places so nice for their tenants too.

My guess, these "investors" will do bare bones to the buildings and when they find out the "true" carrying costs of being a landlord, they will bail on these investments.

In the mean time, these rentals will help drag down property values in their respective neighborhoods and all home owners in the area will be affected by it.

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