Economy

Royal Sloan 09

(406 posts) Thu Mar 22, 2012, 10:21 PM Mar 2012

The Wall Street gold rush in foreclosed homes

Just keeps getting better, only in the USA.

NEW YORK (Reuters) - Dan Magder recently gave up a top job with private equity firm Lone Star Funds to strike out on his own and become a landlord.

He's joining a growing list of big and small investors who see fat profits to be made in renting out foreclosed homes, especially now the U.S. government is moving ahead with a trial project to sell big pools of single-family homes that Fannie Mae currently owns in some of the hardest-hit housing markets.

Investors seeking higher yields are drawn to foreclosures because the rental market is red hot. But the heated competition for foreclosed homes is reminiscent of the frothy expectations that seem to accompany each new Wall Street investing craze.

http://www.reuters.com/article/2012/03/21/us-usa-foreclosures-investors-idUSBRE82J12M20120321

Just amazing, take this quote from the story;
"This is actually moving the underlying physical assets, or homes, to the top 1 percent," says L. Randall Wray, a professor of economics at the University of Missouri-Kansas City and a senior scholar with Bard College's Levy Economics Institute.

5 replies

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Highlight:

The Wall Street gold rush in foreclosed homes (Original Post) Royal Sloan 09 Mar 2012 OP

Parasitic scum should be jailed, not rewarded n/t eridani Mar 2012 #1

Who are they going to rent these houses to? Hugin Mar 2012 #2

You have to read between the lines. girl gone mad Mar 2012 #3

They want to securitize the rentals...good god dixiegrrrrl Mar 2012 #4

To enable this new money-grab for the 1% our Congress has bipartisanly agreed to help by mother earth Mar 2012 #5

eridani

(51,907 posts)

1. Parasitic scum should be jailed, not rewarded n/t

Reply to Royal Sloan 09 (Original post)

Fri Mar 23, 2012, 01:42 AM

Mar 2012

Hugin

(33,201 posts)

2. Who are they going to rent these houses to?

Reply to Royal Sloan 09 (Original post)

Fri Mar 23, 2012, 05:22 AM

Mar 2012

Each other? The phrase "red hot" in there makes me leery... I wouldn't touch this with a ten foot pole. It's a wannabe bubble in the making.

girl gone mad

(20,634 posts)

3. You have to read between the lines.

Reply to Hugin (Reply #2)

Fri Mar 23, 2012, 06:04 AM

Mar 2012

Carrington claims that without using leverage or borrowed money it can generate an annual yield of 7 percent from rental income alone. Its long-term strategy is to package the fund into a publicly traded real estate investment trust.

This isn't merely a scheme to collect rents. It's also a scheme to bilk investors using other people's (+taxpayer) money. These private equity moguls won't be left holding the bag.

dixiegrrrrl

(60,010 posts)

4. They want to securitize the rentals...good god

Reply to girl gone mad (Reply #3)

Fri Mar 23, 2012, 09:07 AM

Mar 2012

"package the fund into a publicly traded real estate investment trust."

Wonder if they will sell the same "packages" to more than one trust, like the banks did with the MBS?
Wonder if anyone is still stupid enough to buy any of these newly packaged REITs.

These new "investors" don't seem too worried about lack of legally documented titles.

mother earth

(6,002 posts)

5. To enable this new money-grab for the 1% our Congress has bipartisanly agreed to help by

Reply to Royal Sloan 09 (Original post)

Sat Mar 24, 2012, 09:05 PM

Mar 2012

establishing what they are calling a "Jobs Act" which will further deregulate and enable these new so called "investments" for Wall St. to peddle...what a timely development. Congress is shameless, they sell this BS as some kind of win for the jobless...a sham that goes unnoticed...until TSHTF a little further down the road. They know what's coming, but they've got theirs don't they.

These bastards need to be ousted.

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