[quote=livinincali][quote=bearishgurl]
IF there is a RE bubble in the coming years with “investor actors,” it can’t crash. WHY? If one pays cash, how can they “crash?” A “cash buyer” doesn’t HAVE to sell unless it suits them. If values should decline again, these “investor-actors” will just continue to hold and rent these many thousands of properties out, which is 75% of the reason they are being bought up today. Meanwhile their REIT investors will have nice monthly or quarterly returns on their “investments.” :=]
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I don’t think we’re in a bubble with regards to real estate, but I’d be willing to bet a lot of that hedge fund investor cash is really some kind of leverage debt. That’s what hedge funds do, they leverage investment dollars in order to produce better returns. Some investor in real estate is bound to over leverage them self and get in trouble. It always happens. The only question will be are they big enough to have an impact or not. In San Diego maybe not, Las Vegas or Phoenix it certainly seems possible.
The thing to worry about is when these investors decide to exit. They are going to liquidate quickly and there isn’t going to be any emotional attachment. They aren’t going to care if their bulk selling drive prices down in your hood. They just care if they can get their investment out and into something else that looks more appealing. They’ll even take a loss if it means they can chase the next hot money investment.
It’s going to suck if you have to compete with them when you want to sell.[/quote]
I wouldn’t worry too much about these “hedge fund investors”. Most of the hedge funds I’ve invested in have had minimum accredited net worth levels of $1 to $2 million+ (besides your primary home).
What is going on this go around is much different vs. the last bubble when banks/lenders were giving anyone with a heartbeat a loan to buy/refinance.
The last go around I personally knew many people that were buying multiple houses with the banks money. This time around, I know many people that are buying multiple properties with their OWN money (many of them paying cash).
Last time many people were buying to flip. This time many people are buying and holding for cash flow via rentals. I’m certainly not saying the market won’t/can’t go down again. Because things move in cycles and it certainly can. But people shouldn’t confuse what happened then vs. what is going on now.
