patrick.net

I be loving me some unregulated free market capitalism. The economy will collapse if we allow govt. interference.lol

Anyone opposed to this is a friend to Stalin and an admirer of Karl Marx.

HEY YOU says

I be loving me some unregulated free market capitalism. The economy will collapse if we allow govt. interference.lol

It sure didn't take them long to return to this, I bet it's ran by the same people who brought us the Financial Scam 1.0... the derivatives market.

They will gladly sell you promises in the future for your cash today.

It's a sucker's bet for investors. Rental income is shaky, even worse when it's managed by a soulless corporation that tenants feel no loyalty to whatsoever. They'll game the system, jerk the property managers around, and trash the place before they get finally kicked out. Even if this only happens 10% of the time, the investor has to eat the loss averaged in, and that loss will outweigh the gains from the properties with good tenants. Which will also have expenses when things break, roofs need redone, etc etc.
People who play the landlord game well, or simply get lucky with one or two properties make the rental income thing look easy. But it's not.
I've watched my dad go through it with the six-plex he owns. It's constantly needing attention, repairs, and he has to deal with tenants who seemed great on move-in day, but won't make steady payments without threats and evictions. I can't imagine that a fund trading in this would do well.

Blackstone and others didn't enter the market to become landlords. Yeah, they may want little investors to think the rental business is the best investment ever, but they came into the market as a flip. They knew they could get a discount buying in bulk from Obama's Fannie Mae. It reduces inventory while making the market appear to be rebounding. They keep that inventory off the market knowing they can make prices go higher. After their manipulation they bundle up their junk and sell it to stupid investors. Once they get their cash back from the investors dying to buy in, they move on to the next flip.

Does anybody really think the hedge fund that bought Albertson's grocery stores wanted to be in the food business? No. They bought in for the property values. Sears was bought for the same reason. Burger King was bought and flipped a few times already in the last decade. No matter how they hype about the prospects of the junk they buy, they are only thinking about how to package that junk into a higher selling price.

The discussions about tenants, future rents, etc, really don't matter regarding these funds buying in large quantities. They are cashing out. Even if they only get 50% of their money back from these derivatives, they will mortgage the properties for 50% of face value and get the rest of their money. Then these rentals become the problem of the banks and people buying the bonds/derivatives.

Yeah. It's gonna work out great. Numbers of scale and whatnot....

http://www.zerohedge.com/news/2013-08-01/scramble-exit-housing-market-peaks-american-homes-4-rent-ipo-pricing-44-discount

APOCALYPSEFUCK is Shostakovich says

Real capitalists would securitize used car loans and sell the investment instruments to orphanage trusts.

I used to work in the sub prime auto loan division at a bank. They do occasionally securitize and sell the loans.

APOCALYPSEFUCK is Shostakovich says

Real capitalists would securitize used car loans and sell the investment instruments to orphanage trusts.

How about securitizing fantasy football entry fees?

APOCALYPSEFUCK is Shostakovich says

Real capitalists would securitize used car loans and sell the investment instruments to orphanage trusts.

No you have it backwards real capitalists would securitize and package orphans to sell as investment instruments

zzyzzx says

I used to work in the sub prime auto loan division at a bank. They do occasionally securitize and sell the loans.

Geebus. I wonder what they won't package up and sell as Triple AAA investment products.

Goran_K says

zzyzzx says

I used to work in the sub prime auto loan division at a bank. They do occasionally securitize and sell the loans.

Geebus. I wonder what they won't package up and sell as Triple AAA investment products.

Homeless people should be securitized, that way they can be given a tax shelter to live under!

Goran_K says

zzyzzx says

I used to work in the sub prime auto loan division at a bank. They do occasionally securitize and sell the loans.

Geebus. I wonder what they won't package up and sell as Triple AAA investment products.

They should. Unlike rental bonds these at least have collateral.

What about payment plans for LCD TVs? Have we scraped the bottom of the barrel yet?

The rentals will be sold with special financing. It makes more sense to have fully secured loans rather than rental income.