All Forum Posts by: Corey Dutton

---" It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change." - Charles Darwin ---

Thanks for that insight Patrick L. with regard to what Blackstone has created in your corner of the market. I know many real estate investors in CA that are getting squeezed out but I also know many experienced flippers in CA that are doing quite well. I think it's all about adapting as you said. In Utah we are not as affected by the movements of the private equity funds as in other areas of the U.S.

Scott W., good point. That's been a popular topic among those that have criticized hedge funds for entering the prop mgmt business.

Thanks Sam Craven for the positive perspective!

If you are a real estate investor who buys single family homes, you should sit up and pay attention. This newly announced deal will affect the future of your real estate business and could even put you OUT of business.

Blackstone, the largest real estate private equity fund, just consummated a
$2.1 B loan via Deutsche Bank AG. Blackstone has already invested over $3 B into the purchase of single family homes since 2012 for use as rental properties. This new loan will allow the group to take down another $2 B of inventory over the next 2 years.

Particularly in the Southern California, Las Vegas, and Phoenix markets, Blackstone has created what many are calling an “artificial mini-bubble.” With so many buyers coming off the sidelines in 2012, combined with representatives of hedge funds bidding up properties to above asking prices, it’s no wonder that prices are continuing to rise in those markets.

Known to many real estate investors in California as “the Dark Side of the Force,” Blackstone may all but eliminate any opportunity for the small real estate investor to make money in 2013 and 2014. One Blackstone representative said to a real estate investor friend of mine in California that they were going to put, “all of the little guys out of business.”

Are you a real estate investor who buys single family homes in one of the markets that Blackstone will be targeting over the next few years? Because this information has not been disclosed or readily available, I suggest doing your homework and making sure you aren’t one of those who become a victim of Blackstone, the new “Darth Vader” of the real estate market.

Source: http://nreionline.com/single-family-housing/blackstone-secures-21b-loan-home-purchases

Thanks for all of the great comments on this topic. It's great hearing from all of you....

Great feedback! Glad that others are feeling how I'm feeling about the status quo right now

It is clear that the plan worked of the big banks for the release of new REO inventory in the first quarter of 2013. This has kept prices propped up in most U.S. markets and has also kept the ‘feeding frenzy' going among R.E. investors looking for flips. Particularly in California, the feeding frenzy is at record levels among regular home buyers and R.E. Investors.

But is the smart money on the sidelines for the moment? I think so. With the low quality deals I’ve been seeing in recent months, it’s no question that banks have deliberately held back inventory. I feel some of my repeat borrowers who do 10-12 flips a year are coming to me with lower and lower quality deals with less and less of a margin for them to make a profit.

Are you seeing the same thing in your market? Lower quality deals and slimmer profit margins?

Do you also believe it’s because of the plan of the big banks to starve the market and artificially drive up prices in Q1? Please share your opinion on this topic and what is happening in your corner of the real estate market. I’m curious what you have to say.

Again, just to reiterate, there's a huge difference between getting a 'quote' or 'rate and term' from a lender and keeping several lenders going simultaneously all the way to the closing table making all of them do a large amount of work only to find out the borrower is closing with another lender for 1/2 point less as a loan fee or something crazy. I think a lot of real estate investors do this kind of thing to make sure they have multiple options for financing. This post is to show what it's like for the lenders on the other side of the table. Again, I think the moral of the story is, 'Do unto others as you would have them do unto you.' Be honest and your lenders will appreciate it.

As Juan Carlos said, you'll risk getting blacklisted or you'll pay an upfront fee the next time to keep you honest.

Ryan Richard go Aggies! NOT! Hook em'!

Lynn M. - no because it's a hard money loan there is no appraisal fee, inspection fee, admin fee. This woman didn't pay a dime. This is one of the reason that legit lenders charge upfront fees. A $150 upfront fee may seem trivial but it works wonders to keep borrowers honest.