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Deutsche Bank (DB) is leading a wave of big banks ramping up exposure to single-family housing...

Deutsche Bank (DB) is leading a wave of big banks ramping up exposure to single-family housing by extending credit to Wall Street firms so they can buy up homes to turn them into rentals. The bank reportedly just lent another $1.5B to Blackstone (BX) after an earlier $2.1B line got used up. Wayne Hughes' American Homes 4 Rent has as much as a $1B line from Wells Fargo (WFC), and SilverBay Realty (SBY) just inked a $200M facility from Bank of America (BAC) and JPMorgan (JPM).
Comments (21)
  • youngman442002
    , contributor
    Comments (5131) | Send Message
     
    This will end up being a bad investment....I don´t think its going to work out
    17 Jun 2013, 10:18 AM Reply Like
  • flemsnopes
    , contributor
    Comments (124) | Send Message
     
    Apparently, there's more than one way to create a bubble.
    17 Jun 2013, 12:08 PM Reply Like
  • WZT
    , contributor
    Comments (71) | Send Message
     
    As an investor like many of you we have to think in the borrowers shoes. BoA is not in a position to take on risk that is not well thought out. Now if they can invest in the rental properties and subrogate the financial risk to another party I will agree that it could be another financial sham.
    17 Jun 2013, 11:04 PM Reply Like
  • 7736151
    , contributor
    Comments (75) | Send Message
     
    This is great news, this will push house prices up creating a wealth effect on the economy , helping homeowners under water, finally that QE money is finding its way to main street. All we need to get back on track and grow our way out of recession is to absorb all that overcapacity from the real estate crisis.
    17 Jun 2013, 11:29 PM Reply Like
  • EGalindo
    , contributor
    Comments (91) | Send Message
     
    There is still a massive shadow and zombie inventory on the market, we still have more lawsuits being revealed and serious title problems with many properties. I wouldn't get out the cheerleading pom poms just yet.
    18 Jun 2013, 08:54 AM Reply Like
  • gwynfryn
    , contributor
    Comments (4839) | Send Message
     
    77, if you are right, then many of those who get above water, after a long submergence, may well decide they've had enough of ownership, and will sell up. It's a tough call as to whether this will burst the "wealth effect" bubble you refer to, or boost it, by encouraging more big money operators to invest in rental property. Maybe it'll be a little of both, but long term, it's the unemployment situation that will decide the outcome, and that is not looking good!
    19 Jun 2013, 07:17 AM Reply Like
  • 7736151
    , contributor
    Comments (75) | Send Message
     
    Dear gwynfryn, the reason I believe that all the houses sold by homeowners under water will be bought as they come to the market is that during 2009-2012 4 trillion usd were invested in comodities and bonds from emerging countries all that cash is coming back to América as we speak, you can see that by looking at the devaluation of currencies and bonds in emerging markets, where is that money going to be invested? Bonds no way as interest rates will go up, stocks perhaps, but if you are a fixed income investor the only way to get a decent ROI is to invest in real estate is through these funds, just look at the rental prices they are nearly 2% of the price of the property, and these high rental prices are going to push more people to get a mortgage That is cheaper than they monthly rent (even with rising rates). And when housing is strong again all the sectors of the economy will start to do better and hire more people, I am a true believer of the US recovery, is not going to be Swift but is happening slowly but surerly.
    19 Jun 2013, 12:10 PM Reply Like
  • gwynfryn
    , contributor
    Comments (4839) | Send Message
     
    Oh gosh; nobody ever called me "Dear", before! I'm bemused by the way you think that 2% is high; the small semi detached I inherited (at least half of; some doubt about the validity of the Deed) in the UK would now be bringing in 6.6% (£500 a month, which is about the amount of benefit I'm having to scrape by on, 1000 Km away), if my millionaire brother wasn't busy trying to turn it into a derelict. Family, eh?

     

    I expect you are right about bonds (never really understood them) but you confirm my view, because that returning money you mention, doesn't belong to the average Joe, and as we keep going though these booms and busts, more and more of the money gets concentrated in fewer hands, which is not good! There are only so many homes a billionaire can keep track of...
    20 Jun 2013, 09:18 AM Reply Like
  • 7736151
    , contributor
    Comments (75) | Send Message
     
    Sorry I believe I am misunderstanding you is it 6.6% per month or per year?, if it is 6.6% a month that is awesome, if you don't mind me asking is that a normal return for a property in the UK (North, south, london specific) or is that return above average?
    20 Jun 2013, 10:38 AM Reply Like
  • EGalindo
    , contributor
    Comments (91) | Send Message
     
    http://bit.ly/11pOzDO

     

    http://bloom.bg/11pOzDQ

     

    http://on.11alive.com/...

     

    Seems that part of the recovery is betting on foreign investors to buy up the foreclosed properties, while we allow the middle class to carry the tax burdens that this will entail.

     

    Seriously, it is time to remember that we are supposed to be communities!
    20 Jun 2013, 02:10 PM Reply Like
  • gwynfryn
    , contributor
    Comments (4839) | Send Message
     
    Sorry, 77, I assumed you meant per annum. How about showing the numbers you get the 2% from?

     

    The location is North East Wales, overlooking Liverpool bay, a nice enough rural area to bring your food (errr, no, I meant kids) up in, but hardly a hot bed of industry... The house should be bringing in £500, at a market value of @£100k (but which has mysteriously dropped @ £20k below market, in the time it's been in my brother's "care"). I hope that clears things up?
    21 Jun 2013, 08:49 AM Reply Like
  • gwynfryn
    , contributor
    Comments (4839) | Send Message
     
    That would be nice EG, but that time is over; check some history books and note the similarities with conditions in the Roman Empire (western bit) in the century before the collapse. Most empires ended that way, due to the ever increasing greed and dysfunctionality of the ruling elite, who have become so powerful, they start to think themselves invulnerable, and so become more and more irresponsible as a consequence! I'm afraid there's only one way for us now, and that is down...
    21 Jun 2013, 08:54 AM Reply Like
  • randalld1
    , contributor
    Comments (3) | Send Message
     
    The property market's much needed correction has been interrupted by QE and "investors" buying up properties thereby reducing supply and artificially raising prices. This will come to a bad end and the correction in housing prices will restart as the credit bubble deflates and with it stock prices and the wealth effect sink.
    18 Jun 2013, 01:09 AM Reply Like
  • gwynfryn
    , contributor
    Comments (4839) | Send Message
     
    That's how I see it too, ran; this perpetual QE will end in tears...
    19 Jun 2013, 07:18 AM Reply Like
  • Alandtat
    , contributor
    Comments (43) | Send Message
     
    I just finished remodeling one house (duplex) that I bought in a great area for a great price and it is now rented out at 2.5 times my (MTI payment). Appraised value is 100% more than I bought it for (I did have to put quite a bit to fix it). I wish I could tap into DB resources so that I can buy 5 more and do it full time as opposed to after work hours. In the absence of it I just have to patiently save more money.
    18 Jun 2013, 01:43 AM Reply Like
  • gwynfryn
    , contributor
    Comments (4839) | Send Message
     
    It's a slow process isn't it, Al, but a very sound prospect, as once you've got two or three extra houses/flats under your belt, you'll have the option of selling one (usually the one you have as your main address, for tax reasons, or at least that's how it's best done over here) should the need arise/the price become right! Best of all, you'll always have somewhere to live.

     

    Oh, did you guess? Yes, it's part of my plan for the future, if I ever get out of my current hole (and I'm really looking forward to growing my own fruit and veggies).
    19 Jun 2013, 07:24 AM Reply Like
  • CassandraSees
    , contributor
    Comments (395) | Send Message
     
    This move could result in a number of jobs as well - - These homes are all scattered rather than being concentrated in an apartment complex - - You are going to have to hire a team of people for maintenance, rent collecting, the usual court actions for nonpaying renters, and a fleet of vehicles to get the employees where you need them, unless you subcontract the work out to local trades people - - And finally a trustworthy manager to keep an eye on the whole shebang - - I suppose that is good for the economy as well
    18 Jun 2013, 07:56 AM Reply Like
  • EGalindo
    , contributor
    Comments (91) | Send Message
     
    You realize that many of these investors are from overseas?
    18 Jun 2013, 10:23 AM Reply Like
  • 7736151
    , contributor
    Comments (75) | Send Message
     
    And what is wrong with this, we should be grateful that America is still an attractive place for investors to put their cash to work, European governments like spain and ireland will be killing to get this cash coming to their countries.
    19 Jun 2013, 12:17 PM Reply Like
  • EGalindo
    , contributor
    Comments (91) | Send Message
     
    I don't have a problem if they live here, but not living here and having control of land creates problems. That is my concern. In Los Angeles there is a skyscraper owned by foreign investors, they might have purchased it at the wrong time. I do not know. They asked to much for rental space and soon the occupants that were there began to move out. Investors had no concept of what demographic properties rented for, they just wanted to increase their revenue. Advisors told them they were asking too much. They did not live here, they did not have 1st hand experience. They defaulted on their balance and allowed this huge building to go unattended. How do you fix that?
    20 Jun 2013, 02:16 PM Reply Like
  • 7736151
    , contributor
    Comments (75) | Send Message
     
    No foreign investor would ever consider the US as their place of residence because they would have to pay a 30% capital gains tax, that is one of the main reasons for foreign investors to bring their money to this country low taxation on their capital gains, otherwise that cash would go to other countries to boost their economies. America is the land of capitalism you cannot make difficult the free movement of labour and capital, how can we ask foreign governments to open up their markets to american products and services if we don't do what we preach?. With regards to foreign investors being out of touch with local markets well we don't have to fix anything that is the beauty of a free market economy the market will always readjust itself in the case you mentioned tennants moved out and the investors got belly-up.
    20 Jun 2013, 06:18 PM Reply Like
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