How Dare You Say Hedge Funds Are Buying Up Homes?

I am essentially a new broker. At the time of this writing I have one closing under my belt, and 3 potentials in the works. I’m still watching the market like a hawk, and have participated in several investment opportunities. In doing so, I have noticed quite a bit of trumpeting regarding the purchase of single family homes by “hedge funds”. Representatives across the political spectrum are claiming to save us all from “hedge funds” who want to “buy up all the existing homes”, and create unnecessary shortages. Supposedly this would increase demand artificially.

For More Info: https://www.cnbc.com/2023/02/21/how-wall-street-bought-single-family-homes-and-put-them-up-for-rent.html

The thing is… Hedge funds are not necessarily suited to make these types of purchases. They operate by way of quick transactions, usually hoping for a market downturn. Individual investors can deposit and withdraw from hedge funds almost at will, so the money they use is not tied up. Private equity firms, however, often represent the long term investor. People and companies pool their money, to invest in and sometimes MANAGE… a business or property (like renting it out). They are perfectly suited to take advantage of real estate market changes. By owning a piece of the market, they are also dictating trends.

So as usual, this leaves the savvy investor with a moral dilemma: Do you fight against it, or do you profit from it? I’ll leave that decision up to you. I won’t even delve into the campaign contributions aspect of this or how people are being reassured in a misleading fashion. I will say that the amount of acquisitions by private equity is reportedly as high as 44%. If you are finding it difficult to locate that perfect place, this could be why. Working my way through all this… it makes sense that I would become the agent who watches the market from an investor’s standpoint.

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