Growing SFR crisis being created by Hedge Funds?

Question

What do you think?  Is this going to end badly?  I think the answer could be yes...problem is, no one knows exactly who it is going to end badly for!

http://www.biggerpockets.com/blogs/789/blog_posts/27023-is-there-a-growing-single-family-rental-hedge-fund-crisis-maybe

I want to hear what others here on BP think about these numbers and the findings of the study.  I posted the above article on my BP blog and would love to read your thoughts on this.

Steve Babiak · Answer

I liked that blog post.  Some good raw data and stats for us to think about.

My question is a bit off the topic and sort of rhetorical: Is this a form of market manipulation by the hedge funds, as people sometimes consider the oil speculators guilty of doing?

Michael Lauther · Answer

Chris Clothier I liked your article and it seems to elicit more questions than  answers. I am most curious about where these funds are purchasing Single family rental property. I find that neighborhoods that are a large Percent rentals are not those desired by those who want to own. As for those who rent, if and when they are ready to buy, they will look to get out of that neighborhood and upgrade. I do not think the corporate mentality seen in the management of  apartment buildings will work well for single family units. If the cash flow is not what they expected these funds will be forced to sell to individual investors at a discounted price. If on the other hand  these funds participate in community outreach rehabilitating communities, they could experience profitable growth and increasing ROI. This would require a longer term vision than in my experience, our corporate culture would allow.