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January 23, 2014 - 1:04 am

jayhinrichs wrote:

Freckle,

what blackstone is doing is a departure from buying SFR's by the thousands then packaging up the lease payments to sell as securities.

this is a different traunch for them this is true third party lending on their part.. they are lending funds that they raise through funds on wall st.. then create mortage backed securites and then they make the up fornt points and spreads plus mangement fee's on the fund.

Yes that's their model for the property rental play (at the moment), however, their end goal usually spins out to a repackaged portfolio that along with a few other big players is made to look like the ducks guts and sold at way over val to a desperate market looking for yield.

The reality is that Blackstone has a poor performing portfolio by PI standards. 50% vacancy rate and a large percentage of what is let has numerous problems. These guys have the smarts and resources to make the market believe what they have is worth buying when in fact it's a dogs breakfast by any stretch. It's what Wall St does I'm afraid.

Their lending arm seems to me to be another lever to juice the market in their favor. What's the bet they'll start to package up tranches of properties next to flog off to the many dumb investors who think they've missed the bus.

Blackstone have a knack of dressing up old mutton as lamb, screwing a good margin out of it along the way before flogging an exhausted asset to the avid investor.

Watching 'Wolf of Wall Street'  at the moment.. insane stuff ..

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January 23, 2014 - 1:03 am

I luved the bit right at the end when he's in Auckland to give a sales spiel to the masses who all think they're the next legend in sales….

He asks, "sell me this pen". Not one of them has a clue and the camera pans across the room and you can see it's another bunch of suckers being mugged while thinking they're on the road to success.

Reminds me a lot of property seminars.

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January 23, 2014 - 12:59 am

engelorumora wrote:

Leo is fricken awesome.

Probably the best I've ever seen him… legend.

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January 23, 2014 - 12:58 am

engelorumora wrote:

China going belly up and all manufacturing jobs to return to the USA?

Thanks

Aggh Grasshopper… still much to learn.

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January 22, 2014 - 9:15 pm

Jeez China is starting to get downright scary to say the least..

The $23 Trillion Credit Bubble In China Is Starting To Collapse – What Next?

one of the reasons I moved back to NZ was;

• the economy was improving
• it's still mainly a food (agricultural) based economy and demand is growing regardless of economic factors
• it's small (4+ million) and that means we get to sell to a 7 Billion global market
• politicians are less detestable and some of the least corrupted in the world. We rank 3rd globally in the corruption stakes
• moderate climate, not too cold or too hot
• we are far enough away from everything to be unaffected by most things like pollution, illegal immigration etc
• quality of life is considerably better than AU
• we have things that scare other people away (earthquakes)
• wilderness
• low population density

and many other little things that make life here that much easier if things do go belly up.

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January 22, 2014 - 8:37 pm

The latest update on hot Chinese money indicates as much as a staggering $4 trillion has left China since 2000. if you think it's all parked in a Caribbean bank vault you're delusional….

China's Epic Offshore Wealth Revealed: How Chinese Oligarchs Quietly Parked Up To $4 Trillion In The Caribbean

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January 22, 2014 - 7:28 pm

Ask the agents.. we rented in Sydney that way. Agents marketed and did all the paper week for a letting fee and then handed over management to the owner. Worked well for us.

They may want more than the going rate for this service but ask around.

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January 22, 2014 - 2:03 am

I  hear ya!

God's sake don't tell Nigel. He's still still pumping Brissy central… undervalued was his opinion if I remember correctly.

The bust has been here for a while but most don't realise it. A bust is part of a process that takes time. When a car hits the wall when was the crash? At impact or was is somewhere back in the past that the process originated?

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January 21, 2014 - 10:38 pm

Beware… Richard and Jamie may be busy but that is more than likely due to successful businesses rather than what the market is doing.

Key point of that article and I'm no fan of industry MSM hype..

“… ANZ expects that Australia will experience below-trend growth over the next 12-18 months.”

There are storm clouds brewing on the horizon so be aware of what is driving markets. It's not any kind of positive economic news because there is none. It's almost soley driven by foreign hot money flows. The RBA isn't holding rates down and considering lowering them further because things are all honky dory. China is in a world of hurt and that affects AU significantly. There is nothing in their future that bodes well for the AU economy over the next 5 years at least.

So ignore market hype, look and understand what is really going on and invest with that in mind. If things struggle you won't get cleaned out and if they're better than expected you could do well. IE hope for the best but plan for the worst.

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January 21, 2014 - 9:56 pm

jayhinrichs wrote:

Now here is the other question why do you think blackstone is going into the debt side of this when they just bought 200k homes in the US… Well because being the bank in the long run makes more money than owning the asset.. And a heck of a lot easier.. these guys are sharp and know which side of the RE equation they should be on… thats my opinion being the bank in the US rental market is sOooo much less stress than being the land lord and handling all the drama that comes with tenants.

All spelling errors are intentional  this website is wonky on my puter an spell check does not work

JLH

Blackstone have always been in the 'debt' business. Their business model is to buy assets (at almost any price) restructure the debt then flog off that asset to the 'greater fool' side of the market. They don't work alone. Often in conjunction with other very powerful entities like Duetch Bank GSB, JPM, etc etc. They are so powerful as a syndicate that they simply revalue these dodgey assets and then IPO or flog them back to the market. Think Hilton Hotels (a dog if ever I saw one) and a few tech companies that escape me at the moment.

Anyone jumping into bed with Blackstone should understand that they are more than likely being setup as the greater fool. Unless you are a powerful financial entity you are not on their side of the game.

The GFC should have taught many the real lessons of commerce. Holding hands with Wall St is a dangerous game.

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January 21, 2014 - 12:55 am

You might want to look at Dereks model and have a chat to him. I wouldn't put all my eggs in one basket but it allows you to spread your risk by investing in his model as well as others or your own.

Derek

New Perth JV project coming – high profits & rent returns http://bit.ly/15h2HQF

W: http://www.eosproperty.com.au E: [email protected] T: 1300 558 114

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January 21, 2014 - 12:43 am

kong71286 wrote:

, and if you can get 10-20 properties that's $450-900 of passive income per week! Cheers, David

It will be anything but passive.

You're making the common mistake of looking at this from an investor perspective. You have to look at this from a businiess angle and model it accordingly. IE develop a business plan and see where it takes you. If you can't make it work at a business level then it's probably a poor investment.

Tip: set it up as a business (P/L). Much easier to sell if you can get it to work. There's a dude in the US doing it out of Atlanta. Works  over there but that's a different kettle of fish although some aspects of his model would fit in AU and some aspects would lend themselves to a bit of reshaping to make an AU model more compelling.

Tip 2: Can it scale up to a point branding becomes a strength. Think F1 Motels. That helps drive a market and shifts mindsets towards this style of living. For example you may find their resistance to this model initially but growing your base reduces this friction. This kind of service experience is everything.

Tip 3: There's already casual room rentals systems for travelers etc like easyroommate.com and www.couchsurfing.org. Their models will have aspects that can be copied into your model.

Have fun

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January 19, 2014 - 11:47 pm

The kind of graph you don't want to see. When the insiders start shedding their stocks and options you kinda get the feeling things aren't quite as good as the MSM would have us believe..

Meanwhile BoA is readying for the next round of Chinese defaults..

Bank of America Is Actively Preparing For The Chinese January 31 Trust Default

Personally I'll be amazed if things don't come seriously unstuck in China this year. Followed soon after by the rest of the world would be a good guess.

As Michael Pettis, Jim Chanos, Zero Hedge (numerous times),  George Soros, Barclays, and now BofAML have explained… Simply put –

    "There is an unresolved self-contradiction in China’s current policies: restarting the furnaces also reignites exponential debt growth, which cannot be sustained for much longer than a couple of years."

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January 18, 2014 - 7:44 pm

Your priorities are arse about face. You're looking at location then growth. You would be better served putting location at the bottom of your priority list. You go where the best growth is expected full stop not restrict yourself to just a few locations and try and pic the best. You go where ever your search takes you. When you find growth potential that's your location and right now that could be anywhere.

There's an old saying; "the world's your oyster".

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January 17, 2014 - 9:07 pm

jmsrachel wrote:

I can't see self serve check out lasting. It makes shoplifting so easy it's not funny.

It's still in its early stages Joe. Theft is a problem regardless of check out system. Product tagging will advance this system and make theft even more difficult. These labels are all RFID (radio frequency identification)

The average shrinkage rate in the supermarket and grocery sector was 2.54 % of total annual sales in 2011. That is a lot for an industry that has an average sales margin of only 3%. It is in fact the highest, or let us rather say the worst, score of all retail sectors.

In the supermarket and grocery sector the causes of shrinkage are estimated to be:

• internal theft 44%,
• shoplifting 33.3%,
• administration and paperwork errors 9.9%
• and vendor fraud 6.3%.

The rest is believed to come from credit card, internet, refund frauds etc.

Technology is moving anti theft systems into an end-to-end supply chain approach. We are nearing a time when individual items will be tagged, labeled or chipped at source and then tracked through out the system from producer/manufacturer to consumer.

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January 17, 2014 - 8:13 pm

engelorumora wrote:

hahaha "Grasshopper" lollol

Ill start calling you Granps then lollol

Thanks mate

I think the correct term is 'master'…

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January 17, 2014 - 7:58 pm

jmsrachel wrote:

My first thought was this thing has put many people out of work.

Yep. We take for granted a lot of the things that are being automated. When grocery stores started with self serve check outs it was a fiasco as people grappled with the complexity of working the touch screens and methods employed to prevent theft. That was over a year ago now and that system was 10 years in the planning if I remember correctly. It simply took time for the hardware and software to mature to a point that made it attractive. Throw in a big motivator like falling margins and you can see the pressures big stores are under to continually grow their business. Today these automated check outs work fairly smoothly. The next iteration you won't even have to touch your stuff. it will simply have proximity tags (much like dogs and cats). You walk through a scanner wave your paywave card as you go through and its done just like that.

Current technology let alone new technology has the potential to replace 50% of the work force… who thinks that's not going to happen? So where do those 50% find a job??

A high priority goal of business is to eliminate the need for workers through technology period.

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January 17, 2014 - 7:38 pm

engelorumora wrote:

.

Everyone seems to be out and about spending money of clothes, food, etc…

Doesn't look like the world is ending lol

Because you're looking at the wrong things. Talk to small business owners and young families. You'll get a whole different picture. Go to the food banks and talk to the professionals (lawyers, accountants, managers, technicians etc etc) who 12 months ago had an $80k job and now can't get one. Talk to college grads and see who can't get a job other than sweeping floors or flipping burgers..

the signs are everywhere..

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January 17, 2014 - 7:30 pm

Robots and automation are threats to job creation but that has been the case for some decades now. The latest threat is on demand production at the consumers location either at a personal level or for more sophisticated items at a local hub level.

think 3D printing…or as its being called – additive manufacturing (AM)

.

Researchers at Oxford just published an analysis assessing what jobs might be computerized in the future. Their conclusion: a staggering 47% of the US workforce, spanning a range of career types. There are vigorous debates about outsourcing, but increasingly, computerization may grow as a factor affecting employment conditions.

• The distribution of BLS 2010 occupational employment over the probability of
• computerisation, along with the share in low, medium and high probability categories. Note
• that the total area under all curves is equal to total US employment.

In The Man in the White Suit, Alec Guinness invents a suit that never has to be cleaned or replaced. London’s tailors and dry cleaners angrily chase him down in the street  to destroy his invention. They are relieved when the suit finally starts to unravel, since the fiber’s design is flawed. Productivity improvements are great things, but there might be a point at which too much power shifts to capital over labor. Anyway, when you think about a career, remember that in some professions, eventually a computer might be able to do it too, or reduce the economic value of you doing it (e.g., the impact of the internet on print journalism).

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January 17, 2014 - 7:48 am

It's all down hill from here..