The Rise of the Bankster Landlord

[AthenaAwakened]

Did you know that the biggest landlord in the US is a hedge fund and that Wall Street is using rental properties to back derivatives the same way they used mortgage properties (and sent the global economy into freefall)?

 

[Togo]

Mortage backed derivatives are very big at the moment. It's largely because property is a more attractive investment than shares.

 

[Alcoholic Actuary]

Mortage backed derivatives are very big at the moment. It's largely because property is a more attractive investment than shares.

Is that really true? I might agree with you in Southern California, but I think you can earn a double digit return in equities over the next few years, whereas real estate is still a renters market.

This is exactly what Blackstone is banking on. The real estate is an extremely long term play for them (30+ years I believe), and they are securitizing rent payments. If you think mortgage backed securities was vulnerable, imagine the risk inherent in rent backed securities - roughly the same payment stream, except in this case you lose nothing in default.

I agree that the result might be troubling, but who else has the wherewithal to stay with real estate for 40 years? As people move toward renting for the short term, fund managers have an easy time swooping in and buying up real estate for the long haul and renting it out.

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