[quote=CA renter]Now, in addition to this possible (likely?) reduced demand, most funds who are investing in SFH real estate have disposition plans for these assets in 5-7 years. Not only that, but many of the current RE investment funds have multi-year lock-up periods. What happens when investors in these funds decide to redeem their funds? What if this coincides with time that the funds plan to sell off these properties? What happens if interest rates are higher and investment returns on lower than had been anticipated with these funds (which is what I’ve been saying for some time)? What if the economy *still* hasn’t picked up for Joe Sixpack when all of this comes about?
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Investors in these funds have no option to redeem their interests. They are at the mercy of the sponsors. If their returns are lower, then their returns are lower, there are no guaranteed returns. (At least not in any of the 1/2 a dozen prospectuses that I’ve seen.) If the economy hasn’t picked up in 5-7 years, then the investors probably made lousy investments. They’ll sell at market value, but they’re not fools. If they have sufficient inventory to materially affect any local market, then they’ll put them on the market slowly so that they get market prices without reducing the market prices. They have absolutely no incentive to do anything else.
