This is such a sick way to make money, with money. http://www.streetaut...-fortune-460463
"The Blackstone Group (NYSE: BX), the biggest player in the new REO [real estate owned] to rental market, has spent $2.5 billion in the last year purchasing 16,000 homes, a number that amounts to over $100 million per week.
The suits take over
You want a smart financial strategy?
Look at Blackstone. One of the houses it bought -- probably much like the others -- was bought for $90,000. It has a mortgage on it of $200,000. The former owners are still living in it. Instead of a mortgage, they're now paying rent. Now they're serfs.
Do the math. If they bought the house in 2005, they probably had a 6% mortgage. Six percent of $200,000 is $12,000. Add in another, say, $3,000 in amortization and charges... and they probably had a monthly payment of about $1,250.
Now the suits take over. Thanks to the conniving of other suits at the Fed, they are able to borrow 30-year money for about 3.5%. Let's add another $10,000 to their purchase price (closing, taxes and maintenance) to make the math easier.
That gives them a monthly capital cost of less than $300 per month. And because these guys have big hearts as well as big wallets, they reduce the renter's monthly payment to only $1,000.
Everybody comes out ahead. The former homeowners don't have to move. They save money each month. And Blackstone -- which may have only about $10,000 of its own money in the deal -- earns (are you ready for this?) as much as $6,000, net, per year. That's about a 60% rate of return on its cash.
But wait. It gets better. Because Blackstone is not counting on a real bull market in housing. Nope, the geniuses at Blackstone are making a big bet on interest rates.
At no extra cost, they have gotten a free "put option" on the bond market. That's right: They're short the bond market in a major way. When bond prices finally fall (perhaps this process has already begun), Blackstone is going to get another big jackpot.
And this payoff is practically guaranteed. Blackstone's got its money-printing friends at the Fed to make sure it happens."