Investment firm buying Tampa-area homes and renting them out (Miami: balloon payment, real estate)

[the awesomee]

Is this good or bad for the bay area and our housing market? Opinions?


[link below]


http://www.abcactionnews.com/dpp/news/region_tampa/investment-firm-buying-tampa-area-homes-and-renting-them-out

[gulfer]

Would I want the vacant foreclosed homes in my neighborhood sold and have someone living in them, YES. Would I want to have a group of homes in my neighborhood rented out to different families every other year, NO. It can impact many others than just the owner depending on what kind of tennants are there.

Thank you for posting the story!

The hardest part is that when a family wants to buy the property to live in and establish a 'HOME', they are getting priced out by these investment firms. The firms come in and pay cash, sometimes even at a lower price then what a buyers that wants to live there offered. It is competitive, decisions have to be made quickly, and it brings a lot of stress for that buyer.

I wonder what will happen to these investors after prices rise because of less available homes. Will they continue renting out the house at a higher price or will they sell the home and cash in before moving on to the next money making venture.

[DUNNDFRNT]

Originally Posted by the awesomee

Is this good or bad for the bay area and our housing market? Opinions?


[link below]


http://www.abcactionnews.com/dpp/news/region_tampa/investment-firm-buying-tampa-area-homes-and-renting-them-out

It depends where you stand, I think if you live in a place which already had high demand and low inventory, then you are largely unaffected or may be benefit from increasing property values. I tend to think that the investment firm would not touch properties 500k and up, the increase tax revenue would also improve the city's financial bottom line. In the bigger picture, I do not like a future where we become a nation of renters, much like places such as Japan, where corporations own the apartment buildings as part of their investment portfolio, society becomes a sort of fiefdom.

[thession]

Better keep reading...the story has changed. It looks like they want non fixer uppers which we all know are few and far between in this market.
Blackstone to buy $1 billion worth of Tampa Bay homes for rentals - Tampa Bay Times

[the awesomee]

Originally Posted by thession

Better keep reading...the story has changed. It looks like they want non fixer uppers which we all know are few and far between in this market.
Blackstone to buy $1 billion worth of Tampa Bay homes for rentals - Tampa Bay Times

so what happens if they box regular buyers out of our own market?

[thession]

No crystal ball here...I'm sure it will hurt all those involved in Real estate. I do know that rental units take a good amount of time and upkeep. Their ROI is poor. Now I have an investor who is purchasing homes and putting very little money into them and reselling them by carrying back the mortgage via balloon payments. This seems to be working for them.

[chi_tino]

I've seen a number of "pitches" from investors that are trying to make money in real estate, and every single one of them is a dog. Many of the models neglect basics such as the true cost of carry and apparently use "hope" as a variable that will somehow turn the numbers in their favor. I don't invest based on hope.

Even if they are not accepting new money, I would love to see the long-term financial models and assumptions from someone who claims to be making double-digit returns in real estate. You can get these kinds of returns from borrowing cheap and buying leveraged municipal bonds. Why would I want to get 4 am phone calls about leaky toilets for little-to-no return?

Blackstone's cost-of-debt is near zero percent, so they can accept much lower returns than you or I.

[gulfer]

What will be a big concern is the rental rates. I don't think, I know you can't, use 1% across the board. I looked at a couple rentals for a fellow City Data poster in Pasco County that were for less than 2K per month. These houses could easily have been 230K for the one and closer to 300K for the other. A 300,000 dollar home will NEVER rent for 3K per month here. People will, AND SHOULD, just walk into a new home builder and pay less than 2K per month for a new one they can call there own.

The one thing about the Tampa area is the availability of Land. We have a lot of areas that could be developed if things go crazy on rental rates and you can be sure people will be watching. This is not Miami, San Diego, LA, etc...

I find it facsinating that they are looking at buying SO MANY! But if they are going to purchase 15,000 homes at 150,000 a property that comes to 2.25 Billion dollars. You already can't find a home in relatively decent condition for less than 100K without having multiple offers. What I find scary, is these people have CASH money and that could make it very difficult for buyers who will have to pay more to try and get a place. CRONY CAPITALISM ... STINKS!!

[DUNNDFRNT]

That story was debunked the next day, the billion dollars figure is across the nation, not the tampa area.

[chi_tino]

1. They are buying these homes across the United States, not just in one area. They have already stated that they may be spending a few "tens of millions" in the area at the most. The real estate agent who "broke the story" was actually hired by Blackstone to make the purchases and keep this under wraps. He was immediately fired and could be subject to a lawsuit for damages. Like a typical realtor who loves getting free publicity, the fool got the contract and immediately called the Tampa Bay Times to brag about his confidential client. His career is toast.

So much for staying under the radar...

2. Blackstone's money comes from pension funds, municipalities, individual investors, insurance companies and banks looking to invest money for their clients. YOU can invest in Blackstone as a company or as a part of one of their funds. They will be paying market prices for the properties, so I am not sure how this is construed as "crony capitalism". That's a loaded term that can usually be replaced by the phrase "they have more money than I do and my envy makes me angry".

"Crony capitalism" would be if the government is giving away properties at below-market prices in a non-economic manner. Kind of like what they do when they provide below-market financing for poor credit risks through government agencies and programs like FHA and the CRA.