Why does it feel like Goldman Sachs is Slurping our Homes


IS IT JUST ME or are institutional investors also raiding your city? Here I loosely define ‘institutional investors’ as ‘organized money’,  something backed by a well oiled capital machinery.  Because it sure don’t look like cash from under their pillow.

My emotional progression about all of this (not in the least, random):

  • Damn, those guys are smart.
  • Since when did institutional money become this nimble?
  • Aren’t they supposed to be at least a year and a half behind than the rest of us ‘smart, flexible, daily-market-statistics-in-the-field-guys?’
  • Crap, they’re getting the best deals in the courthouse steps.
  • Wait, are all three of these men colluding in this auction?
  • Son of a gun… Won’t even answer a simple question.  I knew it!
  • This insane demand could actually help my market reach a bottom.
  • Note to self: Act like this is going to continue. Compete. I need to find money now. Get cash-flow producing properties.  I can’t afford to wait for them to be right and allow them to slurp up all the good deals (They’re not going to stop.  They’re obviously unafraid of the dreaded shadow inventory).

I wasn’t planning on seriously investing ’til winter. I can understand why some of you are thinking that I’m just being emotionally competitive (and I am) swayed by a random, big wave that might not even be there tomorrow.  And that I should stick to the plan.

You may be right. If it was 2009.

But folks, this is our fifth year in  real estate market decline.  If you count when the charts officially fell over the cliff, we are in year seven (July 2005).  The eighth year since builder stocks started losing it’s mojo.

Yes I have a sense of urgency; and I would, oh, would I have loved to have this eureka internally instead of being shoved in my face (our months supply of inventory is now counted by days. Days!).

It’s hardly a Reno thing…

Investors Aim to Buy Homes by the Thousands

“..the company, which has bought about 1,200 homes since 2008 — and is now buying five to seven a day…”

“..large investors are salivating at the opportunity to buy perhaps thousands of homes at deep discounts and fill them with tenants…”

“..This year, Waypoint signed a $400 million deal with GI Partners, a private equity firm in Silicon Valley. Gary Beasley, Waypoint’s managing director, says the company plans to buy 10,000 to 15,000 more homes by the end of next year..”


Here’s…. the motive:

“But the new investors believe the rental income can deliver returns well above those offered by Treasury securities or stock dividends..”

I don’t have a heart warming ending to this, no David slaying Goliath feel good quote.  But this I know:  We have at hand a foreign but extremely competent competition.  Something that I haven’t seen the last ten years.  We need not abandon our fight plan, but we sure need to adjust to this behemoth in front of us.

About Author

Fascinated with business models more than super models. Joe is a real estate blogger from Northern NV (based in Reno) stalking the Reno- Lake Tahoe Real Estate market since 2007. He is most at ease (and peaceful) when at home spending time with his beautiful wife Anna and their two kids. (And watching the 2011 2013 NBA Playoffs.)


  1. Nice post Joe! I really liked the flow of the article.

    BTW – I completely feel your pain. My market is getting saturated with out of town folks who have deeper pockets than I do. It looks like the cat is out of the bag.

    I have no choice but to roll-up the sleeves and get in the game.


    • AG,

      Roll our sleeves, it is! If anything it’s teaching me to really think…..where to get funds, cash flow, buffer money.

      And when they saturate markets, esp. smaller cities, it really doesn’t take a lot of ‘institutional investors’ to do it. Five is a lot, if they are buying homes on a consistent basis. And if you add the sky rocketing demand from average investors and first time home buyers (under $200k)….you end up with DSI (days supply of inventory.)

  2. Perfectly written, razor sharp observations.
    We’ve been feeling similar pains in Japan, with Chinese and Korean “gen y” private money arriving by the boatload and purchasing all decent return propertes on the market at any given time, forcing us to step up our game or lose the best deals.
    Part of the excitement of the whole game, ain’t it? 😉

    • Ziv,

      Been seeing a similar trend in the SouthEast. I still have a lot of friends and family from the Philippines…and the demand is insane (started in 2006-07). Unsustainable, in my opinion. I’m not sure if that’s the case in Japan. But money is flowing uncontrollably in Asia, it’s no secret by now (after struggling Euro, U.S. past four years).

      What I’m afraid of is when it stops….when confidence gets tripped by change of leadership, over-optimism (already happening), or lying by release of economic stats (e.g., Greece.)

      Stumble upon an article, Paul Krugman dissects what happened in the Asia Financial Crisis in ’97 (I was there.) Good read for anybody interested: http://web.mit.edu/krugman/www/DISINTER.html

      Which reminds me, this should be my next article here..

  3. Joe, I’m not looking for warm & fuzzy… but ya’ gotta’ tell me there is a Plan B, right? When the institutional raiders sail into town and have deep enough pockets to pay retail at the foreclosure sale… every house, every day… how do you compete with THAT? Especially if they might just be secretly armed with taxpayer dollars?

    • David,

      My Plan B has been to be as aggressive as I can be — even with leveraging, albeit not more than 25%, using other people’s money. If I didn’t see this ‘raiders’ in the picture I don’t think I’d do this as right now.

      “Especially if they might just be secretly armed with taxpayer dollars?”

      Yeah, that’s a possibility alright…

  4. Very interesting article, Joe, thank you! I appreciate these efforts by these wise men at mapping out a future understanding of these events as they pan out but, to be honest, I feel they’re over-analyzing to death, and with very little practical, implementable results for us “little folk” on the ground. If, like a vast majority still seem to insist, you’re in the business of trying to speculate on the growth/diminishing of capital value etc, these formulas may be valuable, however.
    Fortunately for us in Japan, the average Joe (;)) still doesn’t understand why anyone would want to own more than the house they live in, so we’ve got a fair way to go before we’re oversaturdated with demand in rural /distant-metro Japan as we are in the large cities.
    Plus, when they do buy, the Japanese favour (as in anything really) new properties. Our older, 20-30 year micro-units aren’t in very high demand (which is not helping their non-existent capital gain, but we’re in it for the cashflow only, and that’s doing just fine).
    Certainly, Japan’s insane debt isn’t helping it’s prospects in the near future, but when things go down, there’s no better time to purchase more, etc (as it always goes).

  5. Great article Joe. Same thing in Indianapolis. Institutional investors have literally turned some housing additions in rental home complexes. The sad part is they have run the prices up on anyone else trying to buy a home, often paying cash slightly above market.

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