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re: Homebuilders cancelling contracts to sell for more on market
Posted on 3/29/22 at 1:22 pm to hubreb
Posted on 3/29/22 at 1:22 pm to hubreb
quote:
- the rental property funds are not hedge fund strategies, but rather low income / libor enhanced plus type returns...biggest buyers are short duration buyers
How long is the short duration? Do you expect them to start selling the moment the market turns?
quote:
the PMs don't own significant amounts of anything with regards to managers like Black Rock - they manage nearly 10 trillion
They own enough of it that they fight like tooth and nail to keep carried interest from being ordinary income. They also know (correctly) that real estate is a GREAT investment strategy to grown wealth. Aren't many of them paid fees based upon assets under management?
Posted on 3/29/22 at 2:28 pm to LSUFanHouston
quote:
How long is the short duration? Do you expect them to start selling the moment the market turns?
short duration is not how long you own, but the interest rate sensitivity - they are able to buy the homes slightly above market value because they fund at what was libor + a spread between 140 and 200bps - much cheaper than what funding cost were for the average home buyer a few years back...the buyers of the securitization or fund are earning much more than they could on ordinary high quality adjustable rate assets
quote:
They own enough of it that they fight like tooth and nail to keep carried interest from being ordinary income. They also know (correctly) that real estate is a GREAT investment strategy to grown wealth. Aren't many of them paid fees based upon assets under management?
any this case, the fees are built into the beginning of the transaction - there is not enough spread or excess return in these transactions like you would have in a private equity trade with a 4-5 year horizon.
they only started investing in single family residential real estate when they numbers made since, REITS have been investing in apartments and commercial real estate for ages - nothing new
lots of managers are paid fees based off of assets under mgmt - it incentive's good management - if they perform well others will invest
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