Are We Playing Musical Chairs With Our RE Investments?

[John Thedford]

My friend just got his flip under contract. He made a great buy at 120K, put about 15K into rehab, and now has it under contract with a hedge fund in the mid 170K range. I tried to convince him to hold as a rental and get about 1300/month rent. At mid 170K purchase price, I don't see the hedge fund making more than 3% or so return. Investors are paying CRAZY money IMO. I cannot see any decent returns at some of their purchase prices. I suspect we are playing musical chairs and somebody is going to be left without a seat:)