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Question of the year: How do I find and connect with Hedge Funds that are buying in my area???

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Jerry Kisasonak

Real Estate Investor from Mc Keesport, Pennsylvania

Jan 10 '13, 10:36 AM


Well here we go folks... Wall Street is moving in! This is likely the beginning of the next big run-up in real estate, and we're all looking to ride it up and capitalize on the irrational exhuberance that's sure to come. [b]How do I find and connect with the hedge funds who are buying up property in my area?



Mike Carr

Wholesaler from Newark, Delaware

Jan 10 '13, 10:51 AM


I was wondering the same thing. In for answers.



J Scott Moderator Donor

Real Estate Investor from Ellicott City, Maryland

Jan 10 '13, 10:56 AM
1 vote


In our case, they seem to be finding us. Between actual hedge funds and groups of out-of-state investors who are providing POF of tens of millions of dollars (so we know they are buying in bulk), we have found about a dozen buyers over the past couple months who are desperate for property in our area. We've sold to several of them (they're very easy to deal with), and one of them has already bought multiple properties from us, and wants more.

All just by listing the properties on the MLS. Most of these funds/buyers have local agents who represent them and look for deals for them.

So, my best recommendation is to list the property on the MLS. If the deal is good and their are bulk buyers looking for properties in your area, they'll call you.

Actually, they'll call your agent, which is another reason I recommend you get your real estate license -- no reason to risk your agent getting the contacts and not passing them on.


Edited Jan 10 2013, 11:09 by J Scott


Medium_lishproplogoJ Scott, Lish Properties, LLC
E-Mail: [email protected]
Website: http://www.123flip.com
CHECK OUT MY BIGGERPOCKETS BOOKS: http://www.biggerpockets.com/flippingbook


Robert Adams Donor

Real Estate Investor from Las Vegas, Nevada

Jan 10 '13, 10:59 AM


I have a close friend that I consider my brother who manages one here in Las Vegas. If you are interested in learning more about it please let me know.



Medium_rothwell_gornt_logo_smallRobert Adams, The Adams Team at Rothwell Gornt Co.
E-Mail: [email protected]
Telephone: 702-349-9175
Website: http://www.LVrealestateHELP.com
Broker (Las Vegas NV) (Massachusetts) & (Rhode Island) MArealestateHELP.com RIrealestateHELP.com


Marc Bodinger

New York City, New York

Jan 10 '13, 11:08 AM


I am definitely looking forward to hearing answers on this topic because hedge funds and private equity are on a shopping spree when it comes to SFRs. The other day I saw a subsidiary of Berkshire Hathaway purchased a real estate firm so look for them to be big buyers in the near future.



Jerry Kisasonak

Real Estate Investor from Mc Keesport, Pennsylvania

Jan 10 '13, 12:32 PM


@J Scott Good to connect again my friend.

What types of properties do you see them going after? If I was to assume, I would say they are going after turnkey rentals... but we all know what assuming can sometimes do.
I'm starting to think that now's the time to offload my portfolio of SFD's and move up into multi-units.



Account Closed

Real Estate Investor from Central Valley, California

Jan 10 '13, 01:19 PM


I have a 1996 3/2 in rehab that will be ready to list next week. It's the price, type of unit and in an area where at least one of the funds I know has bought several others. I'm fully expecting at least one offer from a fund or out of area investor group. I would think it would be difficult to work with them directly. They need their agents and/or due diligence teams to do all the work vetting properties, so they may well have systems in place that prevent them from working with sellers, even if they could get a better deal by doing so.

Jerry: have you looked at the sales data for your area? Do you know if they are buying there?



Jerry Kisasonak

Real Estate Investor from Mc Keesport, Pennsylvania

Jan 10 '13, 01:26 PM


K. Marie Poe I haven't pulled that data. Can you direct me how to do that? I have MLS access, but not sure exactly how to pull it.



Account Closed

Real Estate Investor from Central Valley, California

Jan 10 '13, 01:31 PM


@J Scott Since you have seen more than one purchase, have you made any conclusions about rent to value ratios? I assuming they are buying turn-key from you. Yor area has lower rents for similarly priced units than my farms. So I'm curious if it's primarily a house banking for appreciation play and secondarily a rental cash flow play?



Account Closed

Real Estate Investor from Central Valley, California

Jan 10 '13, 01:46 PM


Originally posted by Jerry Kisasonak:
K. Marie Poe I haven't pulled that data. Can you direct me how to do that? I have MLS access, but not sure exactly how to pull it.

I don't have MLS access (other than the public one) and probably wouldn't know how to use it if I did. This might not help you as it might not be relevant to data available in your area, but I look at the index of all the deeds transferring property each week. If I see a fund name or investor entity more than once, I look at all the records for their entity. I have access to data that tells me what they bought and how much they paid. I also look at buyer info for all nearby comps when buying or selling property and have done that for years. The repeat names start to show up there as well. This doesn't work to identify buyers using separate land trust entities named after the properties, but the investor groups I watch all buy in LLC entities.

I'm nerdy like that.



J Scott Moderator Donor

Real Estate Investor from Ellicott City, Maryland

Jan 10 '13, 01:54 PM


Originally posted by K. Marie Poe:
J Scott Since you have seen more than one purchase, have you made any conclusions about rent to value ratios?

The first couple seemed be using the 1% rule almost exclusively. All they cared about was 1% and that the house had an attached garage.

For the last few, they seem to have some complex formulas. Perhaps not complex at all, but my wife and I weren't able to find any rhyme or reason between the offers the same two groups made on multiple houses...so as far as I'm concerned, it was complex... :)

Also, those last few groups all were offering at prices that would have given them more than 1%...closer to 1.3% or 1.4%, depending on property.

And all properties were turn key, so I don't believe they had repairs factored into their numbers.



Medium_lishproplogoJ Scott, Lish Properties, LLC
E-Mail: [email protected]
Website: http://www.123flip.com
CHECK OUT MY BIGGERPOCKETS BOOKS: http://www.biggerpockets.com/flippingbook


Jerry Kisasonak

Real Estate Investor from Mc Keesport, Pennsylvania

Jan 10 '13, 02:15 PM


I'm curious to see how they are going to manage them. Warren Buffett was staying away for that very reason... although he seems to be working his way around it.



Account Closed

Real Estate Investor from Central Valley, California

Jan 10 '13, 02:16 PM


@J Scott Thanks for the additional info. I may have underestimated rents in your area. Can your buyers get $1350 for a $135K house?



J Scott Moderator Donor

Real Estate Investor from Ellicott City, Maryland

Jan 10 '13, 02:44 PM


Originally posted by K. Marie Poe:
J Scott Thanks for the additional info. I may have underestimated rents in your area. Can your buyers get $1350 for a $135K house?

All of the deals we've sold to these big guys have been houses owned by two other investors -- we have two good investor friends that we stage, list and sell all their houses for them, but they often buy in areas that are more upscale than where we are.

They routinely (meaning several times per year) sell houses in the $120-160K range that will generate 1%+ in rent. Though two have been in our area -- sold for $95K and $115K -- so those big guys are buying in the lower price range as well.

There are plenty of distressed properties in my area that will rent for 1.5%+ after rehab, but the big guys don't seem very interested in doing the work themselves.

We're getting ready to start renovations on House #39 (from my blog), and before we start, we're going to have several of these bulk buyers give us an idea of what they'd pay for the house -- that will help us determine if we want to do a rental level renovation (and sell to one of them) or a retail renovation and just list it retail.

Should be interesting to see where the numbers come in.



Medium_lishproplogoJ Scott, Lish Properties, LLC
E-Mail: [email protected]
Website: http://www.123flip.com
CHECK OUT MY BIGGERPOCKETS BOOKS: http://www.biggerpockets.com/flippingbook


Chris Clothier Donor

Real Estate Investor from memphis, Tennessee

Jan 10 '13, 03:15 PM


I think @J Scott gives some great advice above because the best way for a Hedge fund to find you or know that you are even in business and offering something they want is to be "visible". I will tell you that there seems to be very little rhyme and very little reason to some of the purchasing formulas, methods or long-term plans with some of the funds we are aware of in our areas. We have so far not needed to sell to any Hedge funds and those we've met with have recognized that we are not a good fit mostly because our long-term plan does not fit their long-term plan. We have also seen several change their strategies after operating in our market for about 6-9 months and it is our belief that they are changing because they are not making money on the properties they originally purchased due to poor oversight on repairs, lack of repairs (deferring maintenance) and poor management.

Sorry for the long ramble. To the original question I would recommend doing what J Scott said and consider any other way to make your self and your company or properties visible to them.

Chris



Medium_new_mi_logoChris Clothier, Memphis Invest, GP
Telephone: 901-212-9647
Website: http://www.memphisinvest.com
www.MemphisInvest.com 1(877)-773-9998 Chris D Clothier


Tim Breems

Real Estate Investor from Palos Heights, Illinois

Jan 10 '13, 03:39 PM
2 votes


Here are some methods I have used to find and connect with the funds buying in my area, Chicago:

1. Search your County Recorder’s website to find properties they have recently purchased
- Do a “name” search of the funds you know are actively buying. You should be able to find the addresses or PIN numbers of the homes from the deeds.
- Some of the major funds buying right now include: Blackstone (aka THR, aka Invitation Homes), American Homes 4 Rent (AH4R), Colony Capital, Waypoint Capital, etc.

2. Use the MLS to find the buyer’s agents (aka selling agents) they are using
- Once you have identified some of the homes they bought, use the MLS to find the closed listings. The name & contact info for the buyer’s agent should be there.

3. Go to your county’s Sheriff/Foreclosure auctions
- Funds are buying up everything at the Sheriff sales in my area. If someone there is buying an unusually large number of homes, they are likely bidding for one of the major funds.

4. Go to the fund’s website and look for a local office or phone number.
- Do a google search of the fund’s name. Some have websites setup where they list their rentals. They are also opening up local offices across the nation.

Here in the Chicagoland area funds have been buying pretty much anything under $250,000 in huge volume. They are buying: REOs, auction properties, short sales, estate sales, conventional sales, etc.



Wayne Woodson

Real Estate Investor from Nashville, Tennessee

Jan 10 '13, 04:56 PM


Originally posted by Tim Breems:
Here are some methods I have used to find and connect with the funds buying in my area, Chicago:

1. Search your County Recorder’s website to find properties they have recently purchased
- Do a “name” search of the funds you know are actively buying. You should be able to find the addresses or PIN numbers of the homes from the deeds.
- Some of the major funds buying right now include: Blackstone (aka THR, aka Invitation Homes), American Homes 4 Rent (AH4R), Colony Capital, Waypoint Capital, etc.

2. Use the MLS to find the buyer’s agents (aka selling agents) they are using
- Once you have identified some of the homes they bought, use the MLS to find the closed listings. The name & contact info for the buyer’s agent should be there.

3. Go to your county’s Sheriff/Foreclosure auctions
- Funds are buying up everything at the Sheriff sales in my area. If someone there is buying an unusually large number of homes, they are likely bidding for one of the major funds.

4. Go to the fund’s website and look for a local office or phone number.
- Do a google search of the fund’s name. Some have websites setup where they list their rentals. They are also opening up local offices across the nation.

Here in the Chicagoland area funds have been buying pretty much anything under $250,000 in huge volume. They are buying: REOs, auction properties, short sales, estate sales, conventional sales, etc.

Thanks for this post, i'm taking notes as we speak!



Jerry Kisasonak

Real Estate Investor from Mc Keesport, Pennsylvania

Jan 10 '13, 08:08 PM


@Chris Clothier For the most part you answered my question about how they are going to manage all these properties, which was a formidable concern that Warren Buffett expressed. Your answer basically was - "They don't know. They haven't figured that part out yet."



Brian Burke Verified

Real Estate Investor from Santa Rosa, California

Jan 10 '13, 11:28 PM


@Mark Bodinger, Berkshire bought Hendricks & Partners, which is a Multifamily brokerage. Don't expect to see them buying houses any time soon, or ever, within this merger.

@Jerry Kisasonak, you get in touch with these groups by finding the local real estate agents that are representing them. They have gone out to each market and identified a few agents to be their "buyers agents" and scout for property. For me, it was pretty easy to find them because they found me. It started by noticing who was writing offers for them on my flips, then it progressed to getting phone calls from them asking to buy anything and everything I have.

Call a couple of REO agents in your area and ask them who is writing offers on their listings. Chances are they will be well aware of who the players are. I wouldn't bother trying to call the hedge funds directly, unless you own a large portfolio of homes you want to sell, they won't want to talk to you...they'll direct you to talk to their agent if you can get them on the phone at all.

Everything that I buy that makes sense to hold as a rental, I hold. Everything that doesn't make sense to hold as a rental, I flip. What's funny is that about 30% of my flip inventory over the last few months has been bought by hedge funds. They don't make sense to hold at my wholesale price, so how they make any sense at all at my retail price is beyond comprehension. Essentially, these groups are going long on RE valuation, not seeking yield.

I wouldn't worry about spending a lot of time looking for them. In several months, institutional acquisition of single-family will be a distant memory, shelved in the dust next to the hula hoop and Rubicks Cube. It's a great strategy when done right, but I for one will likely be done acquiring in volume within 18 to 24 months. I suspect others will do the same.



Medium_praxisBrian Burke, Praxis Capital, LLC
E-Mail: [email protected]
Website: http://www.PraxCap.com


J Scott Moderator Donor

Real Estate Investor from Ellicott City, Maryland

Jan 11 '13, 07:36 AM


Originally posted by Chris Clothier:
We have also seen several change their strategies after operating in our market for about 6-9 months and it is our belief that they are changing because they are not making money on the properties they originally purchased due to poor oversight on repairs, lack of repairs (deferring maintenance) and poor management.

This would explain why we were seeing groups using the 1% rule last summer and are now using more convoluted formulas that are resulting in lower offers. They likely weren't making any money at 1% and finally figured it out.



Medium_lishproplogoJ Scott, Lish Properties, LLC
E-Mail: [email protected]
Website: http://www.123flip.com
CHECK OUT MY BIGGERPOCKETS BOOKS: http://www.biggerpockets.com/flippingbook


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