What cities are the Hedge funds buying in ?

121 Replies

Are Hedge funds buying in your city... should investors be following them and buying along side the Hedge funds with the hope of getting swept up in the anticipation of capital growth based on supply demand?  Or are they wrecking it for locals and other investors by creating a frenzy and escalation in wholesale prices...

They are still buying here.  I haven't seen any deals on the mls in a couple of years.  You can basically see when they came in by looking at the case Schiller index for atl.  Definitely a frenzy here. 

watching,  they are paying some crazy prices.

@Cal C.  

  would it not be good to get caught up in the Euphoria.

One of my guys I fund is beating them to the punch.. we fund their deals because they can pull the trigger faster.. then we resell to the Hedges...

I think investing in areas heavy with hedge activity if you can get some deals is a wise move

@Jerry Padilla  

  might be a great topic but no real interest from the BP readers.. I think the investors though might want to follow along where there is hedge fund activity.. These are big brain guys and if they are in a market they are there for a reason.. At least we hope they are smarter than we are !!

@Jay Hinrichs  -  You have more of a national outlook.... where are you seeing hedge funds buy?

My banker in Milwaukee left to go work at a hedge fund, I am having lunch with him soon and want to see if he was hired to do Milwaukee or other cities.  

Brie Schmidt, Real Estate Agent in Wisconsin (#57846-90) and Illinois (#471.018287)

@Brie Schmidt  

From what I know Hedge funds are active in.

Atlanta

Tampa

Orlando

Birmingham

Now there can be mini hedge funds also  that are not on the level of a Blackstone or Colony Capital etc etc and these companies could be in other markets. I was hoping there would be some interest from the readers and we could learn were there is current hedge fund activity and were the Hedge funds stopped buying... ( like here in PDX they stopped 18 months ago)

love to here more insight on this topic, very interesting

I have an associate partnered with a hedge fund in KC they have pretty much slowing down. It was high volume last couple of years. But they are still going at it buying in designated areas. 

@Jerry Padilla  

  They started in Earnest when Warren Buffet came out with his famous quote

" (If I could buy SFR homes in the US I would buy 300,000 of them)"

Blackstone has bought a lot of them I think in the 30 to 40 thousand door range.

We had a group of 50 homes we owned in Atlanta and we sold to a small unknown ( at least to me) Hedge fund out of Carmel IN. 18 months ago... It was a very nice transaction for us at the time. Being an old dog I do like to take profit when I can.

@Veronica Paez  

  That is a good point.. when the hedge funds first came in they were shot gunning it from what I could see.. then they started to refine and define what they would buy.. IE had to be 1980 or newer.. had to be 3 and 2... had to be certain zip codes..

Some wanted to buy them at auction and take them through the process. Others ( like the group we sold too) Wanted them already rehabbed and tenanted..

One group I have personal knowledge of did want them rehabbed and tenanted. but this year made a 180 on that and they want them rehabbed but they want to place the tenant.

As some have gotten bigger holdings they have switched from for hire PM to bringing PM in house.

So just like us investors they were figuring it out over time.

To my Knowledge markets they did not buy in were

Detroit  or anything MI  and anything Ohio...

If they did not buy in Chicago I think they really missed the boat I for one like that market

There would never be a good reason to follow the big boys.  They buy cause they can and will pay far more than they should in many case. They are simply filling out a reit in many cases and some properties cash flow and some don't. They just want the exposure in a given area to complete diversification. Now within that hedge fund space you have all types.....the big boys and smaller player. Just don't think for a second because its a fund buying its a good thing. I work the market space and watch these funds make bad moves upon bad moves. My advice is to do your own thing. They are not part of the system. They are market driven and not emotional. They will take money when they have it but will dump dogs and takes losses when better opportunities arise. 

@Jay C.  

  Have you seen Hedge funds exit.. I have not seen that yet..

And when they first started I did experience personally. the wholesale courthouse steps prices in the counties we worked in and around Atlanta literally double in 90 days.. that's when we quit buying and then sold out.

My thought at the time and I have mentioned this many times is that the next wave of great deals could very well be Hedge funds figuring out that Herding thousands of SFR's is much harder than they thought do not cash flow like they thought and it could be a good buying opportunity If they decided to mark them way down to liquidate them..

@Jay Hinrichs

These hedge fund properties are run professionally. I wouldn't hold my breath for any great deals on the premise they are going to exit.  What they do do is manage these properties just like an equities. It doesn't matter if they are performing well or poorly if something better comes along they will exit. They are far more disciplined at making money then your average real estate investor. I also think that they own so many properties they may pool sale them at one point to another investor. I don't see them piecing them out.

Interesting insight - thank you all.

@Jay C.  

  based on those comments then would it not be good to be investing side by side in the same areas they are as they will hold up values.. and one may actually sell to them and make a profit.. I do know they can be methodical with on market properties and we do beat them to the punch and then flip to them..in certain markets.

@Jay Hinrichs

I guess my end of the day comment is to ignore them. They don't make.. break or set the market. The big boys will do irrational things the average investor will gain nothing from. Its just what your have said. You can beat them at anything they do and that's right. Another takeaway to understand is they have a different agenda. At times its just to park excess cash. Your average investor doesn't have that problem.

Originally posted by @Jay Hinrichs :

@Brie Schmidt  

From what I know Hedge funds are active in.

Atlanta

Tampa

Orlando

Birmingham

Now there can be mini hedge funds also  that are not on the level of a Blackstone or Colony Capital etc etc and these companies could be in other markets. I was hoping there would be some interest from the readers and we could learn were there is current hedge fund activity and were the Hedge funds stopped buying... ( like here in PDX they stopped 18 months ago)

 Starting this thread on a Friday night undoubtedly hurt your response rate, especially since it is valentines day/Presidents' Day weekend.  I'd bet you'd get more response if we revisit this on Tuesday morning.  

Originally posted by @Jay Hinrichs :

@Cal C. 

  would it not be good to get caught up in the Euphoria.

One of my guys I fund is beating them to the punch.. we fund their deals because they can pull the trigger faster.. then we resell to the Hedges...

I think investing in areas heavy with hedge activity if you can get some deals is a wise move

 Long story short I'm not into wholesaling myself and I haven't successfully worked with any wholesalers.   I have sold one flip and one rental to hedge funds thank you Carol Scott, @j Scott 's wife.  

I have yet to see a 'hedge fund buyer' remotely worth our time in San Antonio. We really deal best with the individual CA cash buyers with 500k. 

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