[quote=SK in CV]
Historically, the term “hedge fund” has meant an investment group that played with other people’s money. They “hedge” their bets. They buy in a method that gives them most of the profits, but caps their losses.
These kinds of hedge funds haven’t been buying up real estate in droves. Much more traditional private equity funds have been. And they’ve been paying cash. Mostly all cash. And in doing so, they can’t be over-leveraged.
Someone suggested that these funds will eventually leverage their RE holdings. Not unlikely. But as a practical matter, they can’t do it cheaply with secured debt, because they cant get a single loan secured by thousands of properties. They would have to jump through similar hoops that small investors go through, financing each property individually. If it’s unsecured debt, then every penny of their asset value is at risk, and they have leverage, but no “hedge”.
I see no scenario where anything short of a catastrophic change in RE prices where PE investors could add to the catastrophe. They can’t create it. I’d certainly be open to suggestions of how it could happen. I just don’t see it.[/quote]
I don’t know I see articles like this Hedge fund Blackstone buying $100 million per week.
Will it effect North County Coastal San Diego. Probably not. We haven’t seen much activity through the traditional channels. It would only be the case if they did some kind of bulk transaction that didn’t hit the court room steps. Probably the only way to know would be if there’s some kind of prominent management company in the North County Coastal rental market that has a large share of the rentals on the market.
