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The American Dream on Sale and SFH REITS

By SFace follow SFace   2010 Dec 16, 1:16am 2,380 views   4 comments   watch   nsfw   quote   share    


One of the giants in the finance world I admire is Bill Ackman from Pershing Square. They made several billion buying General Growth properties (GGP) around a buck in early 2009 and me and my family made a small fortune piggybacking his investment as well. In any case, here is a relevant housing investment case I find interesting and like to share.

http://cache.dealbreaker.com/uploads/2010/12/Pershing-Sq.-pres-on-housing-11-3-10.pdf

Below is the bulletpoint in case you don't have time to review in full.

We Believe We’ve Identified an Investment with:
􀁦 A low valuation
􀁦 Forced sellers with a large number of distressed transactions
􀁦 Extremely attractive financing available
􀁦 Favorable long-term supply dynamics
􀁦 Favorable long-term demand dynamics
􀁦 Out-of-favor

These guys are thinking about investing in SFH, an investment class that is currently not pursued and as Pershing indictated, a tremendous value. "Low valuation, high current yield and long-term appreciation potential make SFHRPs an intelligent investment for institutional investors." Their estimate is if 1% of private wealth fund is allocated here, it would absorb the entire for sale inventory.

Of course, most regulars know my position in these things, Thoughts

#housing

1   Â¥   ignore (3)   2010 Dec 16, 1:50am     ↓ dislike (1)   quote   flag        

Why don't they just invest in harvesting atmospheric oxygen to depletion and then selling it to the plebes?

Same fucking thing.

This is predatory capitalism at its finest -- not creating any new wealth, just capturing it.

http://en.wikipedia.org/wiki/Progress_and_Poverty

2   FortWayne   ignore (4)   2010 Dec 16, 2:57am     ↓ dislike (1)   quote   flag        

I looked at the document, it has a lot of incorrect data. Especially around SFH expenses and ownership. Their numbers do not add up. Looks more like a sales pitch document someone would give to a VC in hopes to get funding for an idea. (I've prepared a few in my life) But the data is incorrect still.

And last but not least, if it was such an awesome deal.... banks wouldn't be trying to sell it off. Banks run this country, if it was an investment they would be holding onto it. Why wouldn't google just build 100,000 houses and hold on to them if it was such a sweet deal? Answer is simple, it is not.

I do know that SFH housing is very predatory, I don't need this article to tell me that. I can see it on late night tv when some schmo comes out and tells people to look for distressed retirees in misfortune who will give up their houses for lower than price, etc... but it's not the same as buying up ballooned liabilities.

3   pkennedy   ignore (0)   2012 Dec 17, 3:37am     ↓ dislike (0)   quote   flag        

Any publically traded SFH reits?

4   RealEstateIsBetterThanStocks   ignore (0)   2012 Dec 17, 4:03am     ↓ dislike (0)   quote   flag        

E-man says

National Housing Affordability Index is at all time high. Even higher than the mid 90's.

but but but but according to Shiller-Case chart prices are still too high?!?!?


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