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Private equity and Wall Street Planning Their Exit from the Rental Business?

by Dr. Housing Bubble, WealthWire:

The whispers about private equity exiting the rental market are now out in the open.  A few reports are highlighting that some private equity investors are testing the waters for an exit via IPOs.  Some have asked why it is necessary for these investors to hold onto properties for a few years before exiting.  One of the main reasons is for valuation purposes given that it takes a few years to gather enough workable data on say a block of 1,000 homes and their overall vacancy rates, rental rates, and expense ratios.  This would be important if this pool of homes were to be converted into an income stream for investors.  Yet many are now looking to exit given how hot the stock market is.  You want to sell into momentum.  A few other key points include rents falling in places like Las Vegas where investor demand has been incredibly high.  Is the hot money planning an exit?

Rental prices

Many of the projections that I have seen assumed that rental prices would continue to move up between 3 and 5 percent on an annual basis in many locations.  Yet this assumption is being put to the test in many markets as employment growth is still weak and wage growth is nearly nonexistent:

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2 comments to Private equity and Wall Street Planning Their Exit from the Rental Business?

  • Frank Zak

    Listing prices are up 25% in Las Vegas
    year over year.

    Rent rates are near stable. As property prices go
    up so will rents eventually.

    Selling real estate right now is the worst
    possible decision.

    Los Angeles is up 34% on listings prices y o y.

    Its very difficult to find anything to
    buy as multiple offers make buying frustrating.

    Lots of people waiting to buy when it cools down
    whom cannot even enter now.

    The great housing shortage has begun.

    • Glitter 1

      “The great housing shortage has begun.”
      Until the ~10 million properties currently held off the market by banks are released onto the market.It’s all a mirage until the next market crash and subsequent wave of unemployment.

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