Chinese Investments In US Commercial Property Soar By 500%, How can I get me some of that?

Question

Is there a way to link up with Chinese investors here on BP? Hoping Brandon will chime in here...

Investors from multi-billion dollar hedge funds to individuals buying as few as 10 properties have acquired more than 1 million homes across the U.S. in the past three years, transforming a mom-and-pop business into one of Wall Street's hottest investments. As we noted here, Blackstone Group LP alone has acquired more than 40,000 properties in 14 cities to become the largest single-family landlord in the country. As Bloomberg notes, the new landlords are transforming the way Americans live and accumulate wealth. But while Wall Street is becoming America's largest residential landlord, it appears China wants to get paid for commercial properties... and Detroit.

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Chris Martin · Answer

@Justin B. Homework assignment for you. Find all the Asian-sounding names or corporations in all the Reg-D filings related to SFR investments in wall street hedge funds (or REITs) like Blackstone, AH4R, etc. Have you seen any? LOL!!

So "Wall Street is becoming America's largest residential landlord." And with apartment REITs they weren't already?

For other analysis, see also: http://www.biggerpockets.com/forums/88/topics/110262-thinking-of-an-investment-in-a-hedge-fund

Daniel Gura · Answer

Amit

have you ever been to Detroit?

Amit M. · Answer

Blackstone and other funds that brought discounted SFHs' en mass is one thing; Chinese 'buying up' Detroit is entirely different. 1- is that really true?  (Source). Is it via organized funds, or just rich Chinese individuals speculating?  If it's the latter, you can easily do the same thing- there are lots of dirt cheap props now in Detroit- have at it!

Now, if there is some concerted efforts by foreigners to buy up Detroit, that is interesting, but a huge gamble IMO. I still think much Detroit RE will be worthless 10 years from now. But probably core areas that are getting back on their feet could make a comeback. But I doubt that apply to the entire city- it's a huge place landmass wise.

Any Detroiters have opinions on this?

Account Closed · Answer

@Justin B.,

Justin B. · Answer

I wrote this partly in jest, but seriously its amazing to see the Chinese coming in and buying up our property with our depreciated dollars.

Wasn't sure if anyone had any experiences with the Chinese when it came to real estate investing, I find it kinda fascinating and to see if anyone will see this as a variable to be planned for in the future.

Eric Black · Answer

Hi Justin,

This is just my opinion here. I would be extremely cautious of where you choose to invest your money if you choose to invest in this type of fund, regardless if it's in China or here in the U.S.

Before you make this type of investment ask yourself these questions?

How does a fund manage 40,000 properties? True, they are not managing the actual properties themselves, but how does the fund keep up with maintenance and tenant issues? Chances are, they don't. They leave everything in the hands of the property management company, and we all know how many bad property management companies there are out there.

What type of due diligence has the fund done on each of these 40,000 properties? Chances are, none. They just bought a pool of properties from the bank because they got them for cheap. Do the properties make money every month? These funds are not buying properties for cash flow, they are buying these properties for appreciation. Just because the fund owns 40,000 units doesn't mean 40,000 units are making the fund money every month.

Are you willing to just hand over your money to someone and hope that the person investing it has a clue as to what they are doing? A rule of investing that I have learned from a well-known investor is "Thou shalt maintain control".

Again, I am not saying that these funds and people who invest in them have not made money. However, you have to understand the risks and know that most of these funds are investing purely on speculation. If that is your investing model then more power to ya.

Best of luck!

Chinese Investments In US Commercial Property Soar By 500%, How can I get me some of that?

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