The End of "Mom & Pop" Real Estate Investing?

I’ve noticed a scary trend that’s picking up major steam lately …

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From The Wall Street Journal, October 3rd: “Private-Equity Giant Blackstone’s $1 Billion Bet on Foreclosed Family Homes” …


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From The Tampa Bay Times, September 22nd: Wall Street behemoth plans to spend $1 billion on Tampa Bay’s hobbled housing market …

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Also from The Wall Street Journal: “Big Funds Get Into the Landlord Game”

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From U.S. News & World Report: “High-Profile Institutional Investors Commit Money to Buying Foreclosed Homes”

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And from HousingWire:

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What do you think about this trend of big funds crowding out smaller “mom & pop” investors? Has this hit your town yet?

Leave a comment below.

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130 Responses. Leave Yours Below!

  1. Jay says:

    Wholesaling to them is pretty fun. They are too bulky and stupid to get the best deals. I wholesale to them…it’s great. They pay cash…close quick….nice little rips. Over and over.

  2. DARRYL411 says:

    Thank you, Preston, for keeping us up to date on REI Industry changes like this!

    I agree that it should be very profitable to contract with these hedge funds, mega-investors, and banks to provide TURNKEY property management and REHAB services and the like…

  3. Phil Hewett says:

    So how can the individual RE investor compete with the same bastards who created the mess to begin with? The banks are selling their REO tapes bulk to their investment banking side (and their buddies who run the hedge funds, REITs, and wall street), and giving them top bid at foreclosure auctions. Sounds like the US housing market of the 1920′s and 30′s is about to be repeated.. The banks and large corporations owned the bulk of the housing, and ran them like slum lords…unless you were rich, you were forced to rent from you employer. The end of the amerikan dream of home ownership is upon us!

  4. Melodie says:

    Mark…am looking for that book, The Monster….do you have more details? All I could find was one by Michael Hudson? Is that the one?

    And to Preston…what is your solution to beating this?
    Thanks~

  5. paul hernandez says:

    P, I JUST RETRED AFTER 31 YEARS AS A POLICE SERGEANT AM INTERESTED IN GETTING INTO FORECLOSURESWAITING FOR UR COURSE I CAN BE UR MAN IN MIAMI LETS DO IT SGT PAUL HERNANDEZ RETRED LETS CORNER THE LATIN MARKET

  6. Shawn Pearson says:

    WHAT!!! You just convinced me to drop very hard-earned dollars on your REO program, then I find out you are pessimistic about the REO market! Why would you do this? Ugh, I am having a hard enough time as it is, without you making it harder by causing me to use up precious cash on a program you and your subscribers indicate is in a market where it is very hard to make money.

    Based on things you have written, I decided to save enough to sign up for one of your programs (chose the REO program), in order to make enough to invest in silver and gold. I am a Veteran, on disability, so money is tight. I am nearly 50 now, so time is not on my side either.

    I try hard to keep a positive attitude, but this is downright painful.

  7. Tom says:

    I admire you Preston, I met you at the FreedomSoft event in San Diego Jan. 2011, even had a few coctails with you at the hotel lobby bar. I wish I could be under your wing in this business because it’s not going very well. If you would be so generous to take me under your wing, my biggest asset is time, I wouldn’t disappoint you.

  8. tom says:

    I admire you Preston, I met you at the FreedomSoft event in San Diego Jan. 2011, even had a few coctails with you at the hotel lobby bar. I wish I could be under your wing in this business because it’s not going very well. If you would be so generous to take me under your wing, my biggest asset is time, I wouldn’t disappoint you.

  9. tom says:

    I believe that ANY entity should be allowed to fail (not get bailed out by the govt) no matter how big they are because that’s how lessons are learned and it’s what makes the free enterprise even stronger in the future!! Just m opinion but what do I know, Journey (with Steve Perry) is still my all-time favorite band.

  10. tom says:

    Brian, it’s more like a transfer of debt, not wealth.

  11. tom says:

    Somebody PLEASE explain to me why California is (and has been for years) a lock for Democrats when the State is in the worst financial shape in its history and is not likely to get any better by following the Dems policies that have put them there??????

  12. Karl says:

    Hey Preston, I can tell you with certainty that this is happening as I have attended 2 courthouse auctions and I have spoke with several hedge fund buyers, who are there in groups making bids and buying as many houses as they possibly can!! It certainly does push out the small investor as they have much deeper pockets to buy!!

  13. Mike says:

    This has been going down long before the real estate bubble busted. It just like anything reported in the press too soon old news.
    Keep investing and leverage these cash behemoths. This was you can still out maneuver most gigantic fund groups and make a boat load of cash!

  14. RAY H THOMAS says:

    IT IS A REAL SHAME THAT THE LIBERALS HAS TAKEN OVER AMERICA. WE ARE ON OUR WAY DOWN AND ONLY GOD CAN BRING US OUR OF THIS MESS. PRAY AMERICA. OBAMA IS A EVIL PERSON.

  15. Ana says:

    “David and Goliath” come to mind.. and I know who won that fight.
    I have no worries, continue to know what I should know, and continue forward…

  16. Brian says:

    Huge transfer of wealth going on and nothing is immune.

  17. Mark says:

    I am amazed at what is going on in this beloved country of ours, we are witnessing the fleecing of America like never before. Not one Banker or Wall Street Guru, has been punished for the worst financial calapse in history. The callous manner in which they have destroyed so many families, and their sanctuaries, as if to be all done by design. There is a book called ” The Monster” by David ????, whereby their plan is laid out in regard to the wealth transfer, which is well underway, we should all read it , you will be in awe! I beleive it is stated in the Constitution of the United States by our very wise Forefathers, to beware of the Banks, as they are the devil.

    In regard to the Wall Street Guru’s and Investment funds, purchasing single homes for large profits, after creating this malay, on so many good families. We must remember that “what goes around comes around”. My wife and I have been Landlords and R.E. Invester’s for 22 years, and they don’t have a clue, as to what is comming from renting single families. The renters will eat them alive, and Wall Street won’t play in this sandbox for long. The slightest tick on their bottom line, and they are “off like dirty underware”. With an attrition rate of 1.6 new housing units required every year to keep up with the population growth, there is still plenty for all to go around.

    So I will lighten the mood with a pertainant joke at this time of elections.

    ” Did you hear that the President woke up this morning, and he was white from the shoulders up? The Presidents aids approached him, and stated that they need to get him to the Hospital. So, his aids put a hoodie on him, so no one would get a photo. They arrived at the emergency room, the Doc, took on look at him, and Stated “I know what is wrong with you”. The Doc, went out back and mixed up some medicine, and gave it to the President, ” drink this down, and you will be a new man”. So the President, drank the potion, and began to gasp. He then asked the Doc, ” what is in this, it tastes like (S—-) crap ? The Doc responded ” Your right, your a quart low “.

    Good Night, and Good Luck.

  18. Michael says:

    Preston,
    When I read the article back several months ago that the government was going to bundle up hundreds of properties and sell them as a block, I knew the little guy was going to get screwed. B of A was in the lead. They bought Countrywide just for that reason, “negotiated” with the government, and got to keep all of those properties. They foreclosed on people’s homes, then turned them into renters.

  19. steve says:

    Anthony J. Russo
    Your strategy sounds interesting,
    How can I find out more?

  20. Rosanna says:

    I already told you before but i guess i will tell you again; just do your best. You have plenty of people working with you why worry? They might be your rival in real estate business but you have money too. You can do business anywhere right? And makes more profit more than you can imagine… Your very wise man i have faith in you! Donald Trumph never worry any rival in business why can you? Your the king in real Estate business. You got the crown of bieng good doing it…Real estate business is everywhere … You can do it not just in Tampa always remember that! Perhaps the price right now was getting higher and higher because of it, Then make more profit somewhere else….

  21. Faye says:

    Thank you for allowing God to flow.
    You are on the pulse of what is going on.
    Thank you sharing.
    Love you

  22. David Christy says:

    We all know this has been coming for quite sometime…So my question is WHAT ARE WE SUPPOSED TO DO ABOUT IT???????

  23. Morris says:

    I am a friend of my mom, an intelligent woman. Who tells me to follow God and be an excellent Christian if I can. I am just an average Joe but I believe the words you think and speak today determine your outcome. So be positive. My sound advice for me is to get any job that will pay the bills and forget about social security doing all the work to take care of me and my mental disabilities. I am fairly normal and I will succeed if I learn to keep working in life, keep learning and keep myself in tip top shape. God Bless You, other than that I am not sure what to do since the economy….is down. It just doesn’t support the little guy or the middle class. I like voting for Barack because he claims to be Christian and he supports a better economy. Maybe voting Democrat is the only way to get society back to normal since Romney has an attractive plan but it won’t put money in our pocket for people who read and learn slower than most people. I am just a guy caught up in a fantasy world and I would like to make it reality but I have a lot of concerns with money and health and security and safety. I don’t know how to do anything that pays bills in the job market but my step sister thinks I should work at McDonald’s since I should take whatever I can get. I am a sensitive guy who recovers slowly to change and exercise and just about everything else. Maybe something will work out when I find the right job through bright.com and hope I can make enough money to buy a vehicle and other things I need and want. I just have to wait until my special love gift comes with lots of cash. I believe I can do all things through Christ who strengthens me and keep clean, whole and safe. I am looking for an angel so I better keep on losing the weight and look for a better shape. Yes, I can. A man is justified by faith apart from the deeds of the law. I am sure glad to be in the house of the Lord and a born-again Christian.

  24. Jody Wood says:

    It is scary to think about. The big company with all of their financial resources are taking over lots of America from political votes and now to housing. Please let us know how the little guy can remain relevant in the grand scheme of everything.

  25. John Everett says:

    Very interesting article my friend, I live in Las Vegas, which is ground zero for the foreclosure housing debacle, we have seen a immediate rise in large hedge funds coming to town and attempting to purchase blocks of properties, every realtor, broker and entrepreneur would love to buy or sell these blocks to these particular type of funds. Nine times out of 10 it is nothing more than a large wasted time. We have sold to large packages in the last eight months, and they actually weren’t that large 3 to 4,000,000. The amount of red tape and hoops that need to be jumped through in order to purchase large amounts of property are astronomical compared to the Army of mom-and-pop investors out there doing the deal. But at some of your readers have made some very interesting comments as to some of the opportunity that will arise from some large players entering this arena. Rehab, property management and then on the backend actually acquisitions and possibly some wholesaling. Very interesting my friend, but don’t anyone get discouraged from this article as these big boys are in the business of making money but know very little about actual foreclosed real estate acquisitions, management rehabs and resales. Looking forward to your next comment Preston, talk to you all later

  26. Len Madsen says:

    I knew it had to happen. There is too much money to be made buying property for less than it is worth. The banks are the real culprate. If you have bought any property from banks that own them you know what a headache it is. They waist, your time, being enept at handling the transaction. Many of my friends have given up trying. Maybe their was a reason they seemed so bad at handling the sale. I bourht a few of them, but I had patiences, and let them fumble there way through it. I was thinking how foolish they were. Dumb as a fox I think. They set up this ruse to start a business an at the same time scare away much of there competition. Man am I mad I am not a banker. But what is to be done other than anarchy. Humm not a bad idea.

  27. michael says:

    Why are you wasting our time with the question Mr. Ely, like your hurting from this astonishing new and upsetting evidence?

  28. Cliff says:

    Not sure how to respond to this. I spent the money to join Preston’s Real Estate program but have not yet participated. Have been very sick, diagnosed terminal in 91’ and now with both legs amputated, am learning to walk again with the new prosthetics. The problems with the doctors discussing my imminent death in 91’ have been over come. Soon I hope to be back to work and can begin rebuilding my future.

  29. James Ward says:

    Perhaps all of Preston’s people should get together and become a force they have to deal with.

  30. OK, we know. This is a rehash from last month and nothing’s gotten better. I don’t fight the REO market any more than I fight the auction big dogs on the courthouse steps. I work to save the homeowner during PRE-foreclosure; the banks still get more money from short sale than REO and the smaller and more local the bank the better for the community.

    So Preston: what WAS the magic solution?

  31. Dave I. says:

    Preston,

    I can’t hate on these guys!! My plan was to get hedge funding and do the same (but not rentals)!

    But really, they are more into the long term, and we are wholesalers so telling me that a bunch of billionaires want to buy rentals just means I have a lot buyers to choose from.

    now if they start changing laws in their favor- and laws that prevent me from flipping, then you know what all I can do i re-write my contracts so that I don’t violate any laws. They can’t stop us boss….

  32. JB says:

    That’s scary stuff. Did they buy your course? lol

  33. Paul Wright says:

    I have asked you to remove me from your mailing list Please do so now

  34. the Bankers own us all, and they have the gold so they get to follow the golden rule that he who owns the gold makes the rules.

  35. Gina says:

    This is very disappointing, but I’m not surprised. This is such a blow to the small investors. Preston, what is our next move? I know you’ve got something up your sleeve!

  36. Pete says:

    Preston and crew,

    Noticed this is an Oct 8, 2012 posting. Any solutions, other than invest in gold?

  37. Ken says:

    Colony bought 8 of the 54 in Denver area this week. They do that almost every week. I say we wholesale to them and make a bunch of dough. Most of their buying is just at the auction so we can be an additional source. These companies will overbuy, undermanage, and find greener grass later. Then they will want to liquidate all this stuff to move to the next big thing. There will be a big mess to clean up later and we will definitely clean up. It is going to be awesome. Take advantage of it now and later.

  38. Mathew Yates says:

    Time to start a property management company and contact the big boys. Also, time to team up with General Contractors and take a cut off the profits. These REOs will need work to get them back on the rental markets.

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  40. Linda says:

    This is very disturbing, but certainly not surprising. Can’t wait to hear what Preston has to tell us next.

  41. Tom B says:

    Preston will lead us to the counter punch that help us reach the promise land of real estate investing, thanks in advance Preston, TB

  42. Brad Meyer says:

    Yes it has hit Sacramento CA hard. we have less than 2 weeks for days on market.and they are even taking the short sales too. i have been asked to find properties and wholesale them to these buyer. They are doing buy and holds. The cash flow is good on these properties.
    thanks Brad Meyer
    http://www.fbnbrad ” The go to Guy”

  43. quave says:

    people have to realize that the mom and pop investors were taken out by fannie and freddie before any of this shit ever happened. Those of you who do short sales first was deed restrictions then fraudulent claims. REO’s deed restrictions mixed with how much profit you can make. its all BS.

  44. Ethan says:

    Here is one part of the answer for Everyone. This is from someone whom I have much faith in.

    Come to me, all who labor and are heavy laden, and I will give you rest. (Matthew 11:28 ESV)

    For the word of the cross is folly to those who are perishing, but to us who are being saved it is the power of God. (1 Corinthians 1:18 ESV)

    Keep your life free from love of money, and be content with what you have, for he has said, “I will never leave you nor forsake you.” (Hebrews 13:5 ESV)

  45. Mary says:

    I’ve seen this in my work in S.California. I had an REO tape for all of CA. I was able to cherry pick homes for my investors. I had put in offers and sent in POF for my investors. 2 days later I get notified that San Diego County is no longer available, but the rest of CA was – I had a couple clients that had wanted San Diego – so we found others on the list from Orange County. Again, 2 days later I get a call – that the whole list – 6 pages w/30 homes on each page – had been pulled by the bank. They were no longer accepting discounted offers, only asking price. Found out later a hedge fund bought the whole list at $0.80 on the dollar!! Who can compete with that? I lost a ton of income to those guys in one week!

  46. Carla says:

    Banks have always been greedy and getting rich with our money…What is the next step we need to take to keep making money

  47. Fred Ridsdale says:

    This is bad….. How is this not ILLEGAL??????? Not too mention what they will do to the rental market, the same crooks that created the housing meltdown, its like having the fox guard the henhouse. I thought the government was supposed to prevent monopolies like this taking over. These institutions are the same one`s, that write the rules & approve or disapprove of mortgages. This is another move by the “haves”, to screw the “have nots”

  48. Jimbo Slice says:

    Ill be adding them to my buyers list, thanks!

  49. Preston Ely says:

    Listen everyone … I’ve known this was coming for a while, and I’ve got a way to beat these guys at their own game. Stand by. Ill have more for you next week.

  50. Steve says:

    Remember it was Wall Street that got us into the forclosure mess in the first place!

  51. Antonio says:

    This is not right, we may be the little guy, but we should be able to get our fair share of the pie also. We can’t let the big guys come in and take away, if any foreclosures are left. Then, they will get first dibs on the shadow inventory also. We need to do something.

  52. Chuck says:

    Wow! This same company purchase the company (A REIT commercial property management co) I worked for many years in 2006. As a result I was laid-off

  53. Peter says:

    Everything goes in cycles….. Just think back to the last big down turn in the RE market…when the Resolution Trust was created…. some people made a fortune!
    The question we have to ask ourselves is…. how should was adjust our strategies?

  54. sam says:

    This is not fair I don’t like this! No different than what BOA proposed at one time or something similar. But then, I agree with tyler lets flip them some contracts! Lol….

  55. people that learn about adverse posession will be the ones that get to get the most out of our forclosure market, just get in there and they have to take you to evict you needs an owners signature. if none is availiable, they can’t remove you, and so as long as you pay the tax, for 6 years you get to file a claim to title. this is real law people. don’t be homeless, find a home and move into it, the worst they can do is make you homeless again.

  56. Every thing must change. Change is only a bad thing when you are not flexible enough to move with the change. We just need to adapt and find the answers and solutions for the new path ahead. If you know change is coming you can prepare for it.

  57. Ron Rose says:

    A home has been more than the average Americans roof over their head.
    It has been: 1. The security blanket.
    2. The only real equity most people had in retirement.
    3. the security for loans to start new business
    4. The security to send children to school.
    5. the security when short term economic problems show up.

    Homeownership has done more for personal peace of mind than any other thing.

    Private property is the secret of our way of life. Karl Marx stated that when no property is private and all property is in the hands of the proletariate as a group you have arrived at 100% pure communism.

  58. Ron Rose says:

    What would be the results if a major bank wholesaled a block of home loans or the house to fund A and thien bought a major interest in fund A.
    Wouldn’t all they wrote down be at least partially regained. Maybe even more than they wrote down if Benanke keeps devaluing the US dollar.

  59. Herman says:

    Each month the Federal Reserve is buying $40 billion worth of real estate mortgages. All mortgages will eventually be owned by the Federal Reserve.
    The remaining foreclosed homes will be owned by these large investment firms. It is their intention to take away private individual property ownership.
    This is a large part of Agenda 21. We will all wake up one morning and realize we are not in Kansas anymore.

  60. Richard says:

    I own a small business online mostly but I wanted to get back into the RE Investment Game (made over a million the last time I did it but broke a cardinal rule, know your market and the law, did not pay attention in the area I was in and lost my shirt). After the RE Market crashed and burned big time here in Washington I figured it was time to get back in but I needed to learn some new rules of the game, now Wall Street is getting into the game? Now that puts a damper on things, I can see whats going to happen. Not just investors its going to hurt first time home buyers as well who want to buy a home for themselves and their families (didn’t you guys who are moaning about how its going to hurt the RE Investors and the Mom and Pop business think about average Joe?). I just saw an article about this the other day in the Newspaper, seeing that the economy is the way it is, most people can not afford homes, and with banks not lending money out even if you have picture perfect credit (A guy was trying to purchase a house, he had a credit rating well over 800, the banks would not loan him the money, so he bought it anyways, paid cash for it out of his own pocket) But I digress, because people can not afford to get into homes they have no choice but to rent, rentals are on the rise because of this and Wall Street and their cronies are pushing not only the Mom and Pop RE Investors out of the picture but also pushing Joe Citizen out of the picture as well who wants to buy a home for his or her family. Its not just us that Wall Street is hurting its everyone. What ever happen to the pursuit of happiness.
    I work at a 7-Eleven part time with an average of 27 hours a week, my pay is $9.15 per hour (in some States that is a lot of money, here in Washington that is 10 cents above minimum wage). So I can not really afford much. I get Food Stamps to supplement my income so I can at least buy food for my wife and 11 year old son (I am 54), my online business is not pulling in much at all, my income from my paycheck pays my overhead if any. I get Section 8 here where I live which helps a bit on my rent (I live in an Apartment), I want to get back into RE Investments because I know I can make the money, but I need money to do that (even on a no down deal, it will be hard to pull through without some kind of funds), I get State Medical which is great for my little guy but ain’t worth shit when it comes to me or my wife, my wife needs new dentures and the State won’t pay for them, I need new glasses and the only thing the State will pay for is to have my eyes checked out but won’t pay for new glasses (which don’t make sense, I need to be able to read in order to work and if I can not read then I can not work, but I don’t want to get State Cash Assistance because in order to do that they will make me go out and look for work, and its back to what I said in order to work, need to read). I have older TriFocals which works ok, but what will happen later when my vision gets worse (I hate getting old). Its just a catch 22 in my situation. I need money (lots of it) and I want to get a house for my family, but with what is going on I won’t be able to. The housing market up here is already inflated, I saw a house by my sons school and its up for sale, the owner wants $250,000.00 for it hell the house ain’t worth that, its lucky to be a 2 bedroom 1 (maybe 1 1/2) bath with an small in-law cottage, no room in the back yard to speak of, mostly concrete, small front yard and HE’S asking $250,000.00, that should tell you that the market here is over inflated and after the RE crash, houses ain’t going down by much even on Forclosures, and Wall Stree is already hitting here as well, they are buying in bulk before forclosures hit the bank steps. So how can I, who have no money to speak of, with really bad credit (my credit score is at 520) can even come close to getting back into the game let alone buy my own home? Hell I can not even afford the courses in order to learn how to play the game by the new rules and now we have a new set of rules? I can not do put my family through that, and that is what Wall Street is hoping for? So what is the propose plan of stopping this, if we can?

  61. Karen says:

    I was just getting involved in foreclosures and becoming very excited about it. Since my own industry (commercial photography) has been decimated, it seemed to be a valid hope for survival and even prosperity again. And now this…
    I was wondering why I couldn’t find anything lately in New York, my home State. Now having read this, I know why. Why do they have to mess up EVERYthing?
    This is not good. It is very frightening indeed.

  62. DALTON HUMPHREY says:

    It is time to stand up and be counted contact your congress man. There should be laws enacted to stop any bank or investment group from owning and renting large numbers of homes if for no other reason to stop price fixing of rents. One more law want matter we have one for eveyrthing else.

  63. William says:

    Buy physical Gold & Silver & you take away the power of the banks, federal reserve & government & become a sovereign entity dependant on any government or corporation. Honest money will prevail.

  64. Why be surprised? That IS the market. When a nation’s central goverment teams up with the giant of capitalism, it’s decried fascism. When it turns to the working man, it’s decried as socialism. When it favors the middle class and small business, it’s decried by both. This is capitalism at its best; capitalism at its best can survive under fascism, communism, utopianism, socialism, state-ism, unstate-ism. it works best in an educated democracy with a federal/state/local partnership, a government and a voting public that is actively engaged in community development, an educated leadership that understands its twin role of cop and advocate. Like a barrel-board acrobat in the circus with all the balls and plates in the air. At the moment, we score a C minus on every count, every one of us, in and out of government, in and out of business, in and out of work. Not a failure, just not very good at it. So those who have the best mix of smarts, ferocity, self-entitlement and system feast on the herd.

    I suggest you find another waterhole. Help people. Show BofA they’ll make more money stopping the foreclosure.

  65. Levy says:

    Crazy! R we dommed here?

  66. tony says:

    Lets take over control of our govenment and make them stop f-=-us. How? pay next years taxes into an escrow account send the irs a copy of the deposit slip to prove you paid it and it will be released when they do what is required of them ie stop these money hungry assholes from scewing us. Then tax them on thier profits of over one million at 95% lets bring them DOWN.

  67. Tom says:

    Take a step back. Look at all that has happened in the past 30 + years. The agenda is simple. Bring America down from the inside. A good majority do not know they are part of bringing America down. Two words, ‘organized greed’ under control by a few = a different end result than one anticipated. Our only hope is to go to Congress. And may I say we need a third party. These two ‘PARTIES’ can not be trusted, and we know Wallstreet can not be trusted with any more of our childrens, childrens, childrens futire.

    Look back, when was the last time you went to your local Mom & Pop store.
    The kids today don’t even know what the term ‘Mom & Pop’ means.

    Remmeber that movie… with the line…’.I’M MAD AS HELL AND NOT GOING TO TAKE IT ANYMORE’.
    Easy to say……..but what the heck are we going to do about it? Any and all ideas will have to come from ‘We The People’.
    I thank you for the info and I certainly will let others know.

    O U T

    P.S. Chances are this was also done in Europe. Maybe with our laws and Congress, a petiton could be initiated and sent to Congress to prevent any further progress until a study was done.
    Our only Hope.

  68. Margaret says:

    I’m in Texas and have noticed a decline in Reo’s coming on the market (within the last month). I’m not an experienced invester but have seen a dramatic difference between last year and this year – in both acquisition pricing and availability.

  69. liza says:

    I am a realtor in riverside county. Let me tell you that I have seen and been thrown out of the market by the big investors buying up the properties in my area.
    One investor I have are from wyoming they ot millions of dollares and they told me they will buy everything I list as a realtor. Now I can make as much fast money that I want… but let me tell. About th saddness I have seen.. the fha buyers..the families that put in an offer with fha or va financin..they are not geting their offers accepted……..it is sad.they won’t be able to buy for their future..this is realiy…but true..I’m a 26 yr in the business realtor and I have to pay bills and eat..I need fast no bullshit loans…appraisals..termite inspections..contingencies…from lenders..I need and have accepted offers from large cash investors…. reality…my 2 cents woth..

  70. alisa says:

    I don’t like it!! I finally figured out what I want to do after child rearing; and now I am wondering if I should forget about the news, and go full steam ahead – or find something else to put my energy into. My original plan was to do a few wholesales, flips, and then hold one. Now If I want to hold one, there will be a lot of competition on the rental market, making it VERY soft.
    I am wondering where the opportunities will be, and how to build long term wealth now.

    I would love for wall street to go home, but that’s not going to happen, at least until the stock market comes back. Hence they will probably screw up the housing market a second time as well, when they begin pulling out all their money from the real estate market.
    And, if Romney is elected, most likely wall street will gain even more powers.
    More wall street, more big money, taking over more mom and pop industries.

    ~ RINO – Alisa

  71. Jeff Smith says:

    Preston,
    This is a scarey artical, that the small investor may be cut out. It’s kinda like the big box stores hearting the small mom and pop stores. If things get to hard maybe we as the smaller investror’s will need to start our own fund some how, to do the same but sell back to our self’s the small investor’s at a slight profit of coures, to grow the funds. I’ll leave this idea to you guru’s to mastermind.
    Jeff Smith( Reo Rock Star Student)

  72. John Hooker says:

    One word. Crazy!

  73. Julia Fendrick says:

    The big hedge funds are already in Riverside and other areas of Los Angeles County. How can we compete?

  74. Mike Meno says:

    Not a surprise that Fannie Mae would be involved in this. As the line says, “transferring wealth to the wealthiest.” And this after screwing up the whole affordable home stupidity.

    This does not dampen my determination to be successful in my real estate investing business, just as there are other small businesses that cannot directly compete with large corporations but are started every day.

  75. Andy says:

    I’m not sure

  76. Eric says:

    Preston,

    A special interest take over of Main Street? This is indeed a scary trend for many reasons. The “funds” are buying up all the rental property that they can and they are, for all intents and purposes, already partnered with the government. If they buy enough real estate, they will have an interest in edging out smaller investors. They have virtually unlimited funding and will use that funding to influence laws that favor them over small investors. We have seen this in virtually every other industry, just look a agriculture. Big agriculture does this all the time. They push through ridiculous legislation that hurts small farmers and makes no sense. I talked to a local dairy farmer who uses no chemicals or hormones. He was actually being sued by corporate dairy because they said since he was local and self sustaining, thus he had an unfair advantage! Unbelievable right? Or Monsanto trying to make it law that farmers use their GMO seeds while simultaneous trying to make organic food ILLEGAL. (Food Health and Safety Act – written by Monsanto’s army of attorneys.) Well I can see the same thing happening with real estate once they have enough of an interest in real property. They will write the laws that benefit their interests and screw the rest of us over. Further as the once clipping you posted stated: “there is no upper limit, we can spend as much as we want, if we’ve determined that we want that house, we are going to be there, no matter what it takes.” It reminds me of the back in the day at the auction, when someone was really determined they would end up overpaying and savvy investors lost deals. Also these idiots sometimes would know who the players were and bid on deals just because we did, and they overpay. So if a fund gets in there and does the same thing, no chance. Overpaying also creates a false market value if done thousands of times over. We all know these guys like to create and then burst bubbles. The vary people who caused the market collapse waited for real estate investors to bring the market back over the last 4 years and now they are going to benefit from their irresponsible and likely intentional practices which directly led to the housing crisis in the first place. Moreover, they are offering 25% returns? I offer 20-25% returns on turnkey deals. Now I have to compete with Walmart? I offer LESS on private money! So they may end up scooping up many of our would be and existing private lenders with their big promises of high returns and marketing power. These folks aren’t seasoned real estate investors, nor are they local, but they do have the money to employ local people. To whom will they turn for advice since local competing investors are unlikely to help? Who else hates real estate investors? The worst folks in the business. I am going to make a lot of people mad, but who are the worst folks in the business, Realtors. Ouch, yea I said it. They will happily work with these companies and happily let them overpay for deals. (They work on commission.) And they will use big management companies, which any real estate investor knows they suck at keeping properties up and bring down the values of neighboring properties. And once the REOs dry up and they figure out how to do it, they will be marketing to private sellers like we do! And you know better than anybody that with the power of good marketing they can be the big guy and appear to be the little guy, so we don’t really have that advantage. However, I have an abundance outlook, scarcity is not my concern here. It is the power and control that this may afford. The biggest interest in these funds likely belongs to those who seek to keep the establishment in place. Again, when these people have a big enough interest in any industry or market, they send their armies of lobbyists to Washington, buy elections for their puppets in both parties and pass legislation that benefits them as opposed to the majority of us. I don’t like this at all. I don’t mind competition if we are all playing the game by the same rules, but we all know that titan corporations and funds have their own set of rules or they make up and change the rules as they please. I don’t like this as an investor, nor do I like it as a entrepreneur (thankfully I am into more than just real estate.), nor do I like it as a freedom loving American! Thoughts?

  77. john says:

    Any ideas on how to stop them?

  78. This area primarily has Real Estate companies and banks that kind of keep the big guys at bay. But this is something to think about in the future. The Bull gobbles up the cash- cow!

  79. William Roll says:

    Yes this has even hit small towns like mine, What is our next step?

  80. julian says:

    Preston

    What do we do about this? They are coming in and taking all the deals at bulk pricing.

  81. Raymond says:

    Do you think the government is finding another way to make huge profits from its own U.S citizens? What are your plans if this comes in affect with your business and the others that are involved?

  82. Suzie says:

    We knew this was coming .. Time to go back to
    Marketing preforeclosures and beat them to the punch!

  83. hey Preston: don’t know about hedge fund buying in our small community. how ever the foreclosed owners will received up to $ 850.00 as a settlement from the banks. they have to file by Jan. 18th 2013
    thanks for the articles.
    Anthony Dostie in Albany Oregon

  84. Pete says:

    So. How do we get around this problem? I knew this was happening. I’ve been trying to think of a new battle strategy for investing in the Rel Estate market.

  85. Fred says:

    I think that it kind of stinks , I am in position where we could loose our home if we do not do some now . at 62 my income hase been atacked by the econmy .

  86. donnie says:

    fear not, fore these are just the beginning of sorrows, but the end is not yet.

  87. Hey Preston! This is a trend I noticed several months ago and then began to notice more articles about as time went on. I’ve cautioned the local investment club and my own fellow brokers that this trend was only going to grow in the future. We’ve seen a sharp reduction in foreclosure properties coming on market or even going to the county auctions. There are several bank-owned properties that are just sitting in neighborhoods that aren’t listed. My suspicion is that they’ll be sold off in bundles like the ones described in this article. For local investors, that has meant spending more time knocking on doors and sending out mailers in an effort to find some of these properties before they go to foreclosure. It also requires more creative purchasing methods to make these deals work. Would love to hear ideas from other investors on how to respond to this growing trend.

  88. Jack Cupelli says:

    OK I have been looking @ R.E. & have a nice position in GGP & HHC ! I live in New York about 1 1/2 hours north of NYC. The taxes on my own home have gone from 4,000 Total in 1995 to 16,000 this year! I feel like I have been taken advantage of just because I own real estate in this state!

  89. george says:

    It shows that the re investors are doing the right thing and if I had several billion I would be doing the same. Those with money have more options and people that can bring those with money together profit as well. If I wasn’t buying I’d be in a group like they are creating to loan out my money at 25% who wouldn’t. All we can do as investors is keep plugging away until we make it. They know they can buy and hold and sell discounted later if they can’t get full price and still make a killing.
    I don’t have the pulse of big investment firms so I’m not sure about this area, however I’m sure it will happen if it’s not happening now.

  90. michael says:

    As a brand new investor this does concern me very much. I was talking to a friend of mine just yesterday about the feasibility of buying REO’s directly from the banks before they hit the MLS.
    It seems as though the large equity firms have an unfair advantage in dealing directly with the banks.
    But lets not forget we are account holders at these banks so we should demand that a percentage of
    REO’s should be set aside for the mom and pop investor to profit from. This is a scary proposition because if the private equity firms control the rental market it.s like them controling the water supply
    you have to have it and it greatly minimizes fair market competition. MAKE SOME NOISE. Remember the squeaky wheel gets the grease.

  91. Ric says:

    No more opportunities for the average joe in America. Wall Street continuies to destory the middle class in America. It started with the stock market crash in 1987 destorying millions of Americans’ retirements by fleecing their investment holdings including their retirement accounts. Next came the internet bubble with fake companies promoted by Wall Street to average American investors again fleecing their investment accounts leaving little if not all of their savings. But Wall Street was not finished. Millions of Americans still had equity in their homes so Wall Street planned a way to remove that equity from them, succeded, then the foreclosure pandimic removed them from their homes. Some Mom and Pop operators tried to buy these houses, place some of those families back into those houses, make a few bucks along the way and now Wall Street wants to suck out the last wealth opportunity in America today. Sounds as if Wall Street wants to turn middle-class Americans into either slaves of corporations or destorying the middle class altogether causing us to become a third-world country bring with its third-world wages and more profit and opportunities for Wall Street companies.

  92. Stephen Hutchinson says:

    I have seen ads from large wholesalers offering blocks of properties .They say they have direct contact with asset managers at the banks. They also are saying that it has to be a package deal
    with no cherry picking. This makes it difficult ,even for long time established investors, to get some of
    those properties at a great price. I understand this kind of investing is being done but dont know of anything the little guy can do about it

  93. Mad Patriot says:

    This shouldn’t surprise. Walls Street is controlled by the international banksters, the criminals who own and control the money supply, the private corporation federal reserve banks; the ones who created the foreclosure conspiracy so they could benefit from it. Call it what it really is, a false flag fraud engineered to generate profit for the banksters and their cronies.

    Similar to the President and Congress passing billions of dollars to “green energy” companies that are now out of business, where’s the money? Oh and those same companies just happened to also be huge financial contributors to the political campaigns who gave the money. Fraud at the highest levels, corruption beyond comprehension and a criminal justice and judicial system that benefits financially from all the fraud so it’s protected from any prosecution.

    http://www.infowars.com

  94. Leon Z says:

    First Wall Street created the problem. Now their going to create another
    Problem. Watch ,these rentals will become a nightmare.
    Vacancies, repairs, and sloppy tenant screening.
    It’s starting in Ft.lauderdale now.

  95. Dave Wolfe says:

    I live in Cape Coral, FL. It’s like a ghost-town in the making, with brand new houses standing empty all over town, A house down the block from us sold for 310,000 in ’05 was sold for 59,900 in ’10…If anybody had any equity in their houses before the crash, (which was everybody, due to the hugely inflated prices), they lost it after the crash, due market corrections. This article should come as no surprise to anyone, since it’s always been those with financial resources that cause the crisis, then come in like heroic firefighters to put the solutions on the table(and scoop up real properties at bargain prices to profit twice, at both ends of the ‘cycle’), all the while putting taxpayers on the hook for the “toxic assets” that were a result of their own creation. When you create a false demand for housing(Greenspan, Clinton, Frank, and Dodd, et al) by forcing banks to make bad loans (Community Re-Investment Act), you artificially drive up prices to ridiculous levels. It’s become patently clear to me that there would be no “Mom-andPop” anything anymore, let alone realtors, which is a shame, because those that operate on a local level are best suited to serve their respective communities, not big conglomerates. Although G.W. Bush took the blame for what happened, the wheels were set in motion way before he came to D.C., and I feel there was little he could do about it….what a shame…

  96. Dan Davidson says:

    I have been watching and reading your emails to me. I am amazed a whats going on with real estate, I would like to buy a home for myself but have a small delimma; My wife and myself both have good credit 725 and 727 score’s; the banks denied us a loan because I am the holder of my kids student loans, which they will pay them-self’s; so that made our dedt to income ratio off a bit. We definitly can make the payment, but would like to get into a home instead of renting as were doing now at $850 month. Thanks Dan

  97. Keith says:

    There are still plenty of REOs available in my area, suburban Chicago, but prices are going up. There is no such thing as a good or bad RE market, it is just constantly changing. To be successful, you need to constantly adapt.

  98. Bobby says:

    The end of real estate investing is here. Thanks to the very same people we support and vote for. I’m sure Bain Capital is also in there gobbling up a billion or 2 in foreclosed Homes.

  99. Bryan says:

    This is true in my area in Los Angeles CA so what’s the solution for Pop?
    As investors we need to change our strategy from making offers on REOs
    To dealing directly with motivated sellers. Maybe these big dogs might even want to buy
    Property from Mom and Pop. What do you think?

  100. Sarah says:

    I don’t like the idea that this is happening. It effectively pushes the small investors like myself out of the market or to the side and yes I have witnessed this happening in my own neighborhood. One of my relatives was in the market recently too rent a house and ended up renting a 3/2 single family home from a mortgage company. That was my first time hearing of this and I asked the question then when did mortgage companies go into the business of renting out properties they owned.

    I also recently inquired about a property in my neighborhood, a 5/3 single family home, from a property manager handling a property for a mortgage company that is shown listed as the owners. The house had not hit the market yet and had been recently foreclosed and aquired by the mortgage company. The property manager promised to let me know when the mortgage company puts the property on the market but I have been witnessing the activity on the house and they are doing a lot of work to the property, from roof work to inside work. they are replacing kitchen cabinets, re-doing floors, fixing walls and painting. They have also began landscaping. So, I’m almost positive the property will more than likely be rented. They are putting to much work into the property, not something a mortgage company normally does if they were planning to unload it to investors.

    The property manager has told me that he has three houses in my neighborhood that he is working on for this mortgage company.

  101. Carrie says:

    Sounds like it is time to start buying stock in these companies. No matter the real estate market, there is always money to be made. One must just get more creative and not over react.

  102. Polycarp says:

    This is really hard to swallow, but I know its true. In this area it hasn’t hit yet but its coming. This just means that if we are going to do something it has to be now. I longer we wait, the more at risk our future ventures may become.

  103. Jr says:

    Not good they will destroy it with lack of ability to manage these properties

  104. Herb Alm says:

    I’m willing to bet that that same ppl who own these banks that were in hot water, and were than saved by the government, are the same ppl investing money in these hedge funds & investment firms.

  105. Just like any good thing in America, it can only go on being good for the small business for a short while. If Big Brother doesn’t wreck it, a corporation with unlimited funds will. Hey don’t worry, someone with deeper pockets is always around the corner…

  106. gary says:

    This is happening in areas here in the Midwest as well , large funds are shopping for large batches of homes and mom and pop operations can only run around finding scraps and off market deals . We work with Private Lenders and are building our own ( much smaller scale ) of funding capitol to secure deals . for info on what we are doing to combat the trend ck out http://www.IndianaPremierProperties.com and join us .
    GW

  107. Well, ya gotta have kinda expected it to happen eventually. It’s like mom telling the kids to clean up after their own mess. Time to get out of real estate and into something fresh, like making cell phone apps. Or, maybe not.

    D’ya ever hear the song ‘Big Money’ by Rush? Well that tells the tale.

    See them a comin from afar http://www.youtube.com/watch?v=qEbRFc8O0QA best played in a mansion style mega powered surround sound system.

    http://www.lyricsfreak.com/r/rush/the+big+money_20120019.html

  108. Nakia Turner says:

    I would like to know how I can get connected to a big firm or over seas investor. Why this is messed up, so what can we do about it Preston? Thank you & God bless you!

  109. Cynthia says:

    Hello Preston,

    Thank you for keeping us up to date on what is going on in the Industry. To say the least it is scary, I am strugling to find enough money to hopefully do my first deal, and now it seems like a herd of rhinos have gotten loose and destroying the land,

    This kind of takeover is going to make it harder for the every day people to survive, I can see rental market moving out of reach of a lot of families. However; I am depending on people like yourself
    Preston who have lived both sides of the fence and really care about the little people like myself
    and , above all, who love the Lord to lead us out of this dark cloud that is in our way.

    Sounds like I am making you a Moses? I feel you are up to the challenge, even though you might not know it yet. I am old and scared reading the news about these billion dollar takeover which will make life harder than before, but there is always a loop hole, lets find it and, with God’s mercey we will overcome.

    Cynthia

  110. Zene Johnson says:

    Why should this surprise anyone. We have been hearing for some time about the blocks of properties being sold. Hardly a “mom and pop” operation.

  111. debbie owens says:

    wow preston this is the first time i have been presented with your get to know me area. i am so impressed. i also love music and my dad(that passed away 3 weeks before i was born) was also a musician and recorded his own records. i did not know you lived in florida, it must be nice there i have only seen pictures from there. anyway i know i have bent your ear enough but there is one burning question i have for you and actually i would love to ask all these millionaie people out there. if you are already so successful why do you want to make more money. alot of the different people i see on the web that are rich beyond their wildest dreams always say they need more money. I DO NOT UNDERSTAND WHY THEY NEED MORE MONEY it is not likely that any of them will ever go broke, not that most of them even know what it is like to be poor. we are so poor that i can not even afford to get the medications i am supposed to but i do make sure that my husband has his pills every day. he has had 4 heart attacks in 3 days and he was only 56 at the time, now he is 61, has been a mechanic for about 40 years now and can not work anymore because his heart will not take it. anyways sorry for the e-mail again i was just so blown away by your accomplishments as a musician, author, gym owner and all the rest you do for people. maybe you could put us on your list of accomplishments. JUST JOKING

  112. D. Whitney Quinn says:

    We have definitely come up against this in Southern California in almost every market we’ve invested in from San Bernardino, Riverside, Lancaster, Palmdale.

    Rehabbing has become next to impossible because we can’t buy he properties for the price these big funds can. We’ve been literally pushed out.

    Next frontier? duplexes, triplexes, multi-family as the big guys have not taken an interest in this so far. So that is where we are concentrating- properties with positive cash flow, obviously 1% rule – which is difficult in lot of markets in California. But this seems to be the only place the litlle guy can make a buck. Our local REO club- called Sam’s club in Beverly Hills says it’s time to buy and hold multi-family, but we don’t have that kind of capital. So our strategy to get there is buy and sell multi-family until we get the capital to buy and hold.

    Finding investors who would loan money on properties without looking at the credit of the buyers would be gold.

    Best,
    D. Whitney Quinn

  113. Chuck says:

    The rich get richer and the small time investor will be pushed out of the market! It’s the same old story, Wall Street against Main Street; And who wins that game, guess who!!

  114. Korsherla says:

    Yes it has hit my town,an I think it is really not a gud thing,coz this leaves da small investors without much opportunities,an a very few options.

  115. debbie owens says:

    sorry if i spelled your name wrong. you asked me what i think of the flipping homes for big money. well here is what i have to comment on this matter. first i do not live in the states. second where in gods name do you think i would get the money to do this with, i have not robbed any banks lately and really do not plan on it any time soon. third if i save up for long enough i could afford free lol thought you would get a kick out of that one. but seriously we have NO MONEY to invest in anything and that is why i try from morning til night to find free survey sites to try and make some money. now to quote dr, phil – and how is that working for you, well it is not. i am so frustrated filling site questionaires, being taken to a site where they say sorry we have no surveys for you if that was the reason for contacting me WTF, sorry for my language. i have even been sent to sites that clain to have thousands of different sites that they guaranty you will make money from. you might say, yeah that is another way to go but there is one big problem with that too. first i already belong to most of the sites and am not making anything more than a quarter or so and the second thing is the kicker I HAVE NO MONEY TO BUY THEIR LISTS SO I AM SCREWED. if you know of anyone out there in your circle of friends and associates that could help me, although i do not know why you or anyone else would help me. heck you do not even know me except for the fact that i am in a wheelchair, can not walk and am a virtual captive audience to my computer that is on in front of me from morning til night. sorry for bending your ear (as the old saying goes) but i am frustrated and although my legs do not work anymore there is NOTHING WRONG WITH MY HANDS OR HEAD, i am a very smart person that is very honest(maybe that is my problem, i will not lie to someone to get ahead) but i am hardworking and would do nearly anything to try and get some more money for my husband of 32 years. oh and i might as well tell you i have already been scammed by one company out there. they sounded so nice and i gave them my credit card number. guess what happened next, yeah you are right, within 1 hour four different companies that i had not even heard of had made charges to my card and i was supposed to pay this. i need money now, not more charges to my card that i can not afford to pay for. anyway thanks for the e-mail and nice to talk with you again. thank you for listening

  116. Robert Chambers says:

    It is because the big banks are contracting on the money, putting money into fewer hands, that we have this problem in the first place.
    Now the bankers see a way to make huge interest rates on their money…… Real Estate. And they are going to squeeze the little guy out.

    Go watch this video called Money Masters. It explains the money changers and how they are destroying the economy.

    http://www.youtube.com/watch?v=EeIM-4hJO44

  117. It appears that if you have lots of money or a huge capital from investment income, you can do more than the average Joe in real estate. It is a smart business move but at the same time a greedy move. However, the business ambition that has been demonstrated by some Wall Street investors does not intimidate me or my goals. I believe that there will always be enough wealth to go around in real estate. You have to be smart about everything you do and always have the right team in place; God, a lawyer, an accountant, a good sound mind and your personal support team (your family), With this you can’t fail.

  118. Looks like it is time to beat them to it! Has not started happening out here in my county in Ohio. We will defeat them, lets GO! WALLSTREET HAS DONE ENOUGH DAMAGE!

  119. As you have always been a believer in the abundance mentality, so am I. I’m also a big fan of marketing directly to homeowners and have not chased REOs for a while, so I am not so worried about this. Great post.

  120. Phil Hewett says:

    Some of this going on in Collier and Lee counties. With government assistance, home ownership and equity is being diverted to FOG (friends of government) on wall street. The guy who wants to own his own home, especially first time buyers, will be pushed out and have to rent from these slum lords, and the local RE investor can’t compete with the FOGs. Yet another government handout to the banks (they control the REITs and hedge funds through their ‘investment banking’ side).

  121. It’s time for the small time investors to get together and form our own hedge fund company to compete against the wallstreet giants.

  122. I think it’s time then to fight fire with fire, the small investors need to get together and form our own hedge fund wall street company.

  123. Alan Stolarczyk says:

    Sad part is this is a capitalist Country and these guys get paid to sniff out ways to cash flow. They can wait out the hard tomes and sell when it gets good.
    They are the Walmart’s, Home Depots, Targets.etc… It’s hard enough out here, but we will survive!

  124. Tyler says:

    Lets flip them some contracts!

  125. Michael Dempsey says:

    I do not like what I am reading. The mom and pop companies should not have to compete with big companies. I think we (the people) are slowly giving to much control to the government and big companies are coming in and taking over. I hope the government will put a stop to this practice of putting mom and pop companies out of business. We need the small companies that is what makes this country a great place to live.

  126. George Stroud says:

    Small Investors Unite! It’s time for individual investors to band together with large, local investor groups.

  127. Anthony J. Russo says:

    Yep… I’ve been watching this one coming too.

    While there’s no guarantee the larger financial institutions won’t fuck up this play too, I’m not sure small real estate entrepreneurs – who do a few deals a month or less – can do other than slip into niches that the big institutions can’t fit into.

    Maybe more real estate ‘solopreneurs’ might want to join me in what I’ve been doing almost exclusively since 2005 – controlling single family pretty houses and selling them quickly for nice 5-figure profits. It’s a nice, clean business – basically marketing leveraged paper transactions – that no institution can box me out of.

  128. phil says:

    Will make it easer for the goverment to acquaire the propertys !!! scary

  129. Gabe says:

    were these properties stolen by big banks

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