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Meet Your New Landlords: Private Equity and Hedge Funds

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  • Description

    OwnAmerica CEO Greg Rand weighs in on the latest housing trends.

  • Duration 3:10
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A good thing Dennis.

Private equity and hedge funds are buying up single family homes in the twelve frenzy.

Greg -- of own America says this is the most significant housing trend in decades.

He joins us now to explain you know I'm and this is what we want right we watt.

Private companies buying houses why don't want that government interfere not exactly right the flip side though you know Blackstone is buying houses are they my new landlord.

What it could be it's it's a pretty big trend because talking about.

Billions of dollars right now and many billions more being raised to come into the single tell me rental market.

Never have before -- sold the upside of it is that what we need any sluggish marketplace needs more demands to create.

Upward pressure on prices we want to stabilize housing market.

When you have.

Billions of dollars of new -- never even tried to bicycle tell -- homes before that only means good things for stabilization.

But the risk is sometimes institutions in the housing market have a negative effect we've seen -- happen over the last ten years so stay.

Over saturate some cities they kid messed them up.

Great and there's a lot of risk for screw up here too as well.

But let's backtrack a little bit because part of the reason that these hedge funds are diving in themselves is.

Originally we thought is gonna happen to Fannie Mae and Freddie Mac to -- and there are some backlog they can do it.

That's right the the funds that have raised the capital had a plan to go and buy in bulk from Fannie Freddie of some of the big banks and because of various things including losses from the federal government and state governments the logjam of foreclosures is now -- not coming to market and so there.

Seeking alternative ways of assembling portfolios which is what we do with someone portfolios -- -- a -- assets for these funds that's actually good things if you have a Citi.

Because -- -- Las Vegas -- have a lot of foreclosure activity.

Too much housing was built not enough people -- live in them drove home prices down.

If Fannie Freddie and the banks sell all those properties now due to funds who then turn him over as rentals.

The same exact things -- -- -- -- great people there and so I institution going bad handing off to the opportunity to the next institution.

So when -- when you build a portfolio of properties all across the country you could spread out the risk geographically and that makes a big difference like.

Okay see you represented about three funds that are going out and buying single family -- -- so that's your time and I presumed spread your risk bright but are you also telling them like go higher like.

Construction managers because you're you're buying up properties that have been totally just Simpson case has been tried.

It's interesting one of the things that we recommend is don't buy the stuff that needs rehab.

Not there are plenty of globally single -- homes out there that a sitting on the market that represents fantastic investments in cities.

The because -- the down downward trend in pricing over the last five years and the upward pressure on rental rates because of all these new rental households.

There are cities across this country that were never able to generated positive cash flow on the rents that now -- I had to run quickly though -- Rents are -- to up aren't we did hit a -- look at bush and I don't wanna read anymore and then this could backfire.

I don't think backfire but I think week we could see an over supply of rentals which could then diverse that trend which should be good for -- -- right right but it means that -- the investors have to be.

Cautious yeah how their applications are -- and how much they're buying -- -- that's great stuff.

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