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-- can't -- holdings was one of the early investors to pump money into the US rental housing market and now.
With home prices on the rise and more investors jump in in the hedge funds actually -- quits.
I'm -- landlord business that -- this is tells about a housing recovery.
Joining us now John Byrne CEO of John Burns real estate consulting John I'm glad you're here is that I think is a really interesting angle to this story that hedge funds.
That got in early are now starting -- pull out how come.
Well this isn't an investment for everybody first of all -- need to be real estate expert -- not all these funds are real estate experts and some groups aren't willing to play a big bet on home price appreciation and I think that's the right -- but some folks are just are willing to do it.
But critics say is that they're not getting the -- -- Price that they thought they were when they got in right.
Well that's right so if you think this is just an easy income property and it's a -- return from that and you're trying to earn a fifteen to 20% annual return with some of these hedge funds want.
This is not the investment for you unless you're willing to bet on home price appreciation and not everybody's going to bet on my personal view is that we have a lot of home price appreciation gone on.
And -- the Fed keeps rates where they are we're gonna see a lot more since it's getting harder and harder to buy cheap properties that's part of the problem for these hedge funds right.
Why it's such an almost obvious bad at this point that everybody's piling in and we're seeing mom and -- -- we're seeing flippers now on the market -- -- the only adult in the home for a couple months and and make a profit.
I you know I don't think you were in -- housing bubble yet because prices are out of line in relation to incomes but I think it's time to start the conversation to make sure we don't end up in another one.
You know -- the -- -- and you know you hate to say you know Joseph main street is in does that mean.
It's a bad it's bad and it's going to get to that point where there in too late the money's been made.
And they're behind -- ball.
Well that's credits at some point we're gonna have a recession or something that's gonna happen and they're gonna get stuck forever.
For right now they're getting it a pretty decent basis.
They're not getting mortgage financing at least from federally insured banks.
But you can see that starting to play out in the next couple years -- that is my view.
Since you want I guess about the hedge funds and whether or not they belong to the market to begin with but they did sort of set a floor on home prices didn't that.
-- that these guys and actually save that bad housing market they came in they cleaned up some neighborhoods.
-- they've done a huge social benefit at the same time they're going to make a great return for themselves.
OK so here -- what how you consulting your clients.
Where -- this housing market right now.
What we've been helping them pick the geography is around the country -- so early on it was Arizona then it was California Nevada.
Now it's Atlanta Florida the next game is the midwest and three and a half to 4% interest rates will cause rising home prices everywhere.
And then at some point you're gonna get the affordability is gonna get out of whack and that's when you wanna get out.
I've heard that more and more that thanks art loosening up their standards a little bit more and more people are available to get some money.
That will kind of set the ball rolling -- it.
It well and I don't think it's going to be the big banks that got find heavily this time around I think they're going to be conservative it's gonna be startup francs.
In other former exacts from sub prime companies are out there and they know how to play this scam and I think that's exactly who -- gonna see play this game all over again.
-- and it's deja Vu all over again you mentioned in north -- -- all where do we fall into this gonna feel like we're kind of behind April to an.
You know the northeast edited this as I said started -- though -- west -- down south and then has come up to the northeast and midwest so I think you're next good news had so.
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