patrick.net

Investors would probably want the good tenants to stay even if this whole thing blows up and they have to foreclose on the funds. The numbers assumptions are quite optimistic; I wonder how much safety margin they have. Perhaps the management fees are too high, as per usual for the Wall Street firms. Initially such bonds will do well, then after a few years, they may well blow up due to more and more garbage mixed into the sausage as those funds run out of good houses and good tenants.

I agree.

"NEW YORK (TheStreet) -- The decline in mortgage activity in the United States continued in January and big banks, including Wells Fargo (WFC) and JPMorgan Chase (JPM) are responding by lowering their underwriting standards. "

And the cycle of nonsense continues........................

And...what makes them a positive 'cash' flow with 'rent'; the rent has to make up for repairs, taxes, insurance, maintenance, management fees to run the properties. It is NOT a Positive Cash Flow until what they paid for each property is exceeded by the income; until that date/time; it is a negative investment.

So if investors do not get a 'return' on their investment, they will 'sell' and then the holder of the investment has to pay; meaning a possible 'fire sale' of homes.

And also, these so-called "cash" purchases were made with 'credit/borrowed funds', thus the same problem all over again, just different protocols as the crash of 2008...

retire59 says

And...what makes them a positive 'cash' flow with 'rent'; the rent has to make up for repairs, taxes, insurance, maintenance, management fees to run the properties. It is NOT a Positive Cash Flow until what they paid for each property is exceeded by the income; until that date/time; it is a negative investment.

So if investors do not get a 'return' on their investment, they will 'sell' and then the holder of the investment has to pay; meaning a possible 'fire sale' of homes.

And also, these so-called "cash" purchases were made with 'credit/borrowed funds', thus the same problem all over again, just different protocols as the crash of 2008...

It is true that houses generally depreciate just like most other material items.

retire59 says

And also, these so-called "cash" purchases were made with 'credit/borrowed funds', thus the same problem all over again, just different protocols as the crash of 2008...

Right, all that's needed is for Blackstone and others to walk away when things go south. Look at what Blackrock and Tishman Speyer did with Stuyvesant Town.