EXACTLY! I was thinking about this exact question today. Its diabolical, inhumane, and kinda genius. When the market melts down ... and it will melt down, yhere is no way to know the damage by asset class. HOWEVER, if u want to park billions in an asset class that will guarantee you a net annual positive return, residential real-estate is it. Think of it ... as the bond and stock markets disintegrate no asset class will be safe, but if u can park a few billion in houses, the value may fluctuate, but u will in the aggregate, receive rents, like a coupon rate. Its gonna be somewhere around 3-5% Annual after admin costs.
Its basically turning residential properties into “bonds”.
Not exactly....
Those 3% down government backed home loans are a problem. They add no additional value - only drive up the cost of housing.
So the reason that they work is because they are traded and traded and traded through mortgage backed securities and derivatives.
Residential real estate is in for a reckoning. I just wanted to give you my two-cents. Michael Burry likes property with fresh water rights. That's a two-pronged bet - one on the land and one on the water - and I like it better.
BlackRock is not taking out mortgages. The real-estate is nothing more than a 15, 20, 30 year “bond” to them. As long as they are earning better than the US treasuries rates, they are good. They couldn't care less about prices, they can easily manipulate the market prices by creating a lumber, copper, whatever Shortage.
EXACTLY! I was thinking about this exact question today. Its diabolical, inhumane, and kinda genius. When the market melts down ... and it will melt down, yhere is no way to know the damage by asset class. HOWEVER, if u want to park billions in an asset class that will guarantee you a net annual positive return, residential real-estate is it. Think of it ... as the bond and stock markets disintegrate no asset class will be safe, but if u can park a few billion in houses, the value may fluctuate, but u will in the aggregate, receive rents, like a coupon rate. Its gonna be somewhere around 3-5% Annual after admin costs.
Its basically turning residential properties into “bonds”.
Not exactly.... Those 3% down government backed home loans are a problem. They add no additional value - only drive up the cost of housing.
So the reason that they work is because they are traded and traded and traded through mortgage backed securities and derivatives.
Residential real estate is in for a reckoning. I just wanted to give you my two-cents. Michael Burry likes property with fresh water rights. That's a two-pronged bet - one on the land and one on the water - and I like it better.
BlackRock is not taking out mortgages. The real-estate is nothing more than a 15, 20, 30 year “bond” to them. As long as they are earning better than the US treasuries rates, they are good. They couldn't care less about prices, they can easily manipulate the market prices by creating a lumber, copper, whatever Shortage.