OUT OF HOUSE & HOME
By Jim Macklin
Secure Document Research
Well, it has become official, Wall St. is now actively orchestrating the coup d’état. Major firms like Blackrock are setting up shop throughout major metropolitan areas of the U.S. with boots on the ground in an attempt to own and rent/lease properties back to the very souls from whom they stole in the last several years.
Pouring cash assets into the Net Lease Real Estate Investment Trusts seems like a sound business idea, except for one thing…the concept of owning real estate at this time for long term investment purposes does not align with the 20 year long term run-up of property values.
Remember this fact, the investment firms that are playing God with other people’s money don’t really care about the ROI for their investors, all they care about is selling positions or shares or certificates to the investment de jour. So if you invest $100 million in REIT’s but the long term projections for increased valuations of your portfolio have already reached the anticipated high, you are literally putting your money into a pool that pays you back for the use of the money, minus the fees in and out. Not to mention the fact that there is no possible way to project what a given administration’s policies will be in even 5 years. Tax treatments can, and often do, change.
The enticement of these exotic investment vehicles is admittedly inviting, but I always look at the common sense approach and factor in all possible undue influences. The foreclosure crisis has spawned a renewed interest in what makes the wheel go ’round, and I for one will not throw my money into a pit that makes promises of long term percentages, but simply does not factor in the obvious financial impact of a market that has, and will again, rise and fall at the whimsy of the Fed.
Individual investors beware, the “deal” that you are cutting in the back rooms of the servicing platforms’ asset management team may not be what you think…long term. We are not at the bottom of the market by a long shot. Once jobs and new housing starts come into line, then and only then will I consider real estate a solid investment. Until then, I will continue to meticulously monitor what the trends and statistics show through the elephant tracks of Wall St.
I invite those at Wall St. to continue to buy up these foreclosure properties at frenetic rates, you will be forced to heel when your own system turns on you and you will either have to sell assets at another rock bottom level, or hold your teeth and hope that new housing starts don’t outpace your intentional land grab. Renters are plentiful, but not for long. Of course, what do I know? These guys have been orchestrating the greatest money schemes since the beginning of modern finance…perhaps I’m the fool looking through the glass.
At the end of the day, I would recommend careful and strategic purchasing, looking into the title issues with a fine tooth comb. Make doubly sure that there are no “exceptions to 3rd party, off-record transaction” named in your title policy (this is common and could result in losses due to investor claims). And do not assume that the property even meets the criteria known as “fair market value”. This is a term that is used as a battering ram when in a lot of instances, it does not characterize a property based on the criteria and protocols established by the OCC (Office of the Comptroller of the Currency) and the OTS (Office of Thrift Supervision).