Post: #1

This is one of those grim stories that shows how fucked most of us are in the USA now.

So the big banks and hedgies are buying up a lot of small properties in your neighborhoods. The plan is to bundle the properties and rent them out. The rentals will be done by hired management companies who will be kept on strict margins to maximize yield, so minimal maintenance. Obviously Section 8 will be given preference over the working person, because it's a government guaranteed check. If you are a neighbor or the police, good luck at finding anyone responsible to respond to your complaints about the nuisance of disorder at that property - the "owner" will be a Cayman Islands company.

Second nightmare is that the rent yield on these bundles of properties will be securitized in a similar way subprime mortgage yields were - CDOs, Collateralized Debt Obligations. Then the CDOs will be sold in a highly-leveraged way, banks and other investors will borrow from the Fed and other banks for almost free to buy tons of the the CDOs. Along with credit-default swaps, which will also be sold in a highly-leveraged way. It will be another house of cards which will all come crashing down when Taniqua Johnson at 23 Maple St. in Cincinnati loses her school bus driver job and can't pay her rent, causing a domino effect.

Third nightmare is that if Wall Street sells these CDOs to the "Muppets" these hedgies will bid up the price of small properties around the world to create more of these CDOs and less people will be able to: (1) buy their own home and (2) have a small business by owning and renting out a couple of small properties. Another ladder up for the middle class will be destroyed, and we will be living in a truly literal rentier society.

You can be sure that if it all collapses, it will be blamed on Taniqua Johnson not paying her rent, too, just like the last financial crisis was blamed on the ghetto.

Wall Street's frightening plan to become America's landlord

Post: #2

This has been a Wall Street boogie man since the S&L crisis in the 80's. (they had securitized debt obligations back then as well)

Renting a bunch of single family homes is an operational nightmare.
And if you throw section 8 in that bitch?

Most white bread land lords are split on Section 8 renters
- the money is steady
- the damage to the dwelling is also steady

WIA

Post: #3

Just ensure you have liberal zoning policies.

They can buy the neighbourhood... just go build a new neighbourhood.

Post: #4

Think developers have been going with Section 42 over section 8 on this. Section 42 targets the working poor instead of destitute and the tax credits on it allow builders/owners to have a higher end profit margin (no taxes).

Post: #5

(01-30-2014 06:51 AM)WestIndianArchie Wrote:  This has been a Wall Street boogie man since the S&L crisis in the 80's. (they had securitized debt obligations back then as well)

True, but the Fed was not printing money and giving it to the banks then, now they are frantically looking for substantial things to invest in. That's why I think this could take off now.

(01-30-2014 06:51 AM)WestIndianArchie Wrote:  Renting a bunch of single family homes is an operational nightmare.
And if you throw section 8 in that bitch?

Most white bread land lords are split on Section 8 renters
- the money is steady
- the damage to the dwelling is also steady

WIA

True, the best tenant is a good family with Section 8 and some kind of job. You are always having problems otherwise with non-payment of rent or destruction of premises.

Post: #6

You have to be crazy to rent to section 8 tenants.

Post: #7

1) I doubt Wall St will tempt fate and drive into securitized assets again quite as quickly. Especially the rating agencies will be far more careful in rating everything triple AAA. In addition, buying up property would be good for the housing market. I can easily see how more rental properties and professional real estate investors could be an improvement over the previous situation where everyone was acting like mini PE investors. More rental properties is good for labor mobility, which we will be needing a lot of the coming decade given the need for economic readjustment.

2) How well capitalized is Wall St these days? In Europe banks are still desperately trying to get ready to meet Basel III requirements, which is costing a lot of money and almost certainly retarding any recovery.

That said, they still have a powerful incentive to create a train-wreck, since the politicians are telling banks to use rating agencies to determine their own capital requirements. This is clearly dangerous. It's like a schoolchild paying the school teacher to grade his home-work assignment, and the child knows with better grades he gets a higher allowance from his parents.

Post: #8

It wouldn't surprise me one bit.Bankers are right up there with politicians when it comes to shady.

Post: #9

They were here and bought what they wanted, they have their own agents I hung out with a few of them and they told me they buy up in certain areas only so many houses then leave.

Post: #10

(01-30-2014 09:10 AM)bacon Wrote:  



You have to be crazy to rent to section 8 tenants.

Yeah but when the Gov check was showing up on time every month he thought he had it made and probably bragged about it.

Rent to section 8ers: Bulletproof house! Block, terazzo or tile. Cheap reliable appliances.

Post: #11

(01-30-2014 09:46 AM)ElJefe Wrote:  . . . . In addition, buying up property would be good for the housing market. I can easily see how more rental properties and professional real estate investors could be an improvement over the previous situation where everyone was acting like mini PE investors. More rental properties is good for labor mobility, which we will be needing a lot of the coming decade given the need for economic readjustment. . . . .

Nah, I don't see massive consolidation of the housing market under a few big financiers and a corresponding decline in home ownership as a good thing.

(01-30-2014 10:34 AM)el mechanico Wrote:  

(01-30-2014 09:10 AM)bacon Wrote:  You have to be crazy to rent to section 8 tenants.

Yeah but when the Gov check was showing up on time every month he thought he had it made and probably bragged about it.

Rent to section 8ers: Bulletproof house! Block, terazzo or tile. Cheap reliable appliances.

It's even tougher to rent to non-section 8: they don't pay, lose their job, make your life hell and withhold rent for minor shit.

Post: #12

Quote:make your life hell and withhold rent for minor shit.

I fuck them up real good. Fuck them!

Post: #13

(01-30-2014 12:33 PM)el mechanico Wrote:  

Quote:make your life hell and withhold rent for minor shit.

I fuck them up real good. Fuck them!

I had some ideas along that line, but that was from my ex bitching about someone she rented to in a property she got in the divorce settlement.
So her complaints were like music to my ears, because I knew and she knew I would have solved the problem in a day.

Post: #14

(01-30-2014 09:10 AM)bacon Wrote:  



You have to be crazy to rent to section 8 tenants.

This video has convinced me that only part of humanity evolved passed the ape development stage.

Post: #15

(01-30-2014 09:46 AM)ElJefe Wrote:  1) I doubt Wall St will tempt fate and drive into securitized assets again quite as quickly.

They were offering (and selling) Mortgage Backed Securities pretty soon after the '08 crisis, but Wall Street promised much better vetting of the borrowers.

An MBS is one of those inherently flawed products, that people know about the flaw, but just don't believe it will happen again. (arguably all securities have this defect...)

"what, nationwide decrease in real estate prices? Unpossible, because real estate markets are local....and besides, no more 620 FICO scores in this pool, No more NINJA loans, and it's geographically diverse, plus we have more data...and ..."

I wonder of Credit Default Swaps and other hedging instruments are priced appropriately this time?

Anybody on the Street care to chime in?

WIA

Post: #16

News of this royally pisses me off.

Wall Street and finances job in general is to direct capital to where it needs it most. This whole stagnation of the economy has the hustlers of the Street directing capital towards wobbly house o' cards. It's gambling at its finest and the people it fleeces are the small time folks who just want to live and get by.

Nothing would make me happier than to watch Goldie Sachs and the three Bros collapse. I have a sour eye on high finance and it is high time someone go in and make it one of the most boring non lucrative career options available. The way banking was supposed to be.

Post: #17

(Delete)

Post: #18

(01-31-2014 09:15 AM)WestCoast Wrote:  (Delete)

I know you work in finance. I have family members in finance too. Trust me, it's a hard opinion and stance to take.

Post: #19

^ no I just don't want to waste my time again.

No point in arguing with people who 1) could never get a job on the street (or even an interview for hat matter) and 2) vilify the rich.

Replace "Wall Street crooks" with "wealthy entrepreneur" and suddenly you will see what is going on.

It seems that many here enjoy fear mongering, villifying rich people and giving opinions based on zero real life knowledge on the subject.
All three do not deserve my time.

Post: #20

(01-31-2014 09:43 AM)WestCoast Wrote:  ^ no I just don't want to waste my time again.

No point in arguing with people who 1) could never get a job on the street and 2) vilify the rich.

Replace "Wall Street crooks" with "wealthy entrepreneur" and suddenly you will see what is going on.

PM sent

Post: #21

(01-31-2014 08:57 AM)frenchie Wrote:  Wall Street and finances job in general is to direct capital to where it needs it most.

That's they theory.

However, their incentives (i.e. pay packet) isn't related to where it is needed most, it is related to volume, the size of the loan.

If they can sell a bigger loan, the better, that's why it is a sales role, not a technical role where 'it is needed most'

Post: #22

^ that is not their job LOL.

Yep I give up. This is officially my last finance related post I am cutting myself off.

This will be great news for the anti Wall Street and doom and gloom guys waiting for the world to cater lol.

Some people.

I have foolishly wasted my time on several hundred posts trying to make people understand how to make money and all I see is a bunch of nonsense and ridiculous theories. Go back 1.5 years in the archive and people were still predicting doom and the market is up over 30-40% since then.

It's laughable that people want Wall Street to collapse, when people like me can take your white collar job with a single résumé drop. Hell once you get high enough you don't even interview lol.

Anyway have fun hating and hoping for a collapse.

Post: #23

Yeah yeah.

Market up is up 30%, Bernanke printing 80 billion per month has nothing to do with that, it's all 'talent'.

Criticism of non-performers isn't being a doom merchant.

Post: #24

^ you had access to the same news. Why didn't you invest then lol!

No winning these days good luck brothers!

Post: #25

You keep projecting your exceptionalism, same as your response about inflation, as if you have insight that none of us have,

Lolzlzlzlzlzzl!!

(Is that the right place for it?)

There is a difference to my reaction to news, public information, (strong-form efficiency they call it yeah?) and my rational response to it... and what I believe is the best outcome.

I happen to invest all I have in assets, I also live in cowboy territory far away from ASIC (Australian SEC) monitoring, and the Australian government has given tax breaks, rebates and handouts around 30% of GDP over 5 years to ensure we didn't have our housing bubble burst.

Many of us acted on the news.. Lolzlzozlzozlzlz!

It..Is..Not..That..Hard.

I can, and do, still win at that game.

The game is rigged, the game is killing the economy, but I'm not saying that because I'm personally losing at the game.