“Buy to rent” has been one of my favorite topics to write about as of late, since the creation of this “asset class,” combined with the total madness that follows from money printing, has once again created a major housing bubble in many markets in these United States. In recent months, I’ve noted how some of the earliest participants in this market have pulled back. Most notably Och Ziff, but now Carrington as well.
The signs are everywhere that this market is not only overheated, but downright filled with insanity, and as Carrington’s head Bruce Rose states “stupid money.” Las Vegas is a prime example of this, where 8% of single family homes are vacant, yet new construction permits are up 50%. More from Bloomberg:
Hedge fund manager Bruce Rose was among the first investors to coax institutional money into the mom and pop business of single-family home rentals, raising $450 million last year from Oaktree Capital Group LLC.
Now, with house prices climbing at the fastest pace in seven years and investors swamping the rental market, Rose says it no longer makes sense to be a buyer.
“We just don’t see the returns there that are adequate to incentivize us to continue to invest,” Rose, 55, chief executive officer of Carrington Holding Co. LLC, said in an interview at his Aliso Viejo, California office. “There’s a lot of — bluntly — stupid money that jumped into the trade without any infrastructure, without any real capabilities and a kind of build-it-as-you-go mentality that we think is somewhat irresponsible.”
No joke, I actually heard an ad on local Boulder radio that explained how you could “get in” on buy to rent schemes.
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