As with Land Lease Communities, Institutional Investors are Replacing Mom & Pop Operations in Home Rentals

Homes-For-Rent sign  creditAccording to the U. S. Census Bureau, home ownership fell to 63.4 percent in Q2, the lowest rate since 1967. Concurrently, renter-occupied units rose by two million from the previous year.

MHProNews has been informed by bloomberg that BlackRock Inc., the world’s largest money manager, is jumping in to the rental market fray by financing investors who buy single-family homes through a network of partners. It will also fund renovations of homes that will then be rented.

The rental market has mushroomed due to the lingering effects of the real estate collapse that make it difficult for many Americans to buy a home. RealtyTrac reports since 2007, investors who have purchased 10 or more homes a year have spent $110 billion to acquire 620,000 properties, a significant chunk of the 14 million rental homes across the country in only eight years.

Cerberus Capital Management, Blackstone Group LP and Colonial Capital have been financing smaller landlords and bundling the loans into bonds.

The market could certainly bear to have more entrants,” said Ryan McBride, chief operating officer at Colony American Finance LLC, an affiliate of Colony Capital. “This is a largely untapped opportunity in a huge potential market.

With interest rates on the loans ranging from 5.25 to 6.5 percent, Alex Sifakis of JWB Real Estate Capital in Jacksonville, Florida has borrowed $13 million to finance some of his 430 rental homes, and said he will need $30 million more a eyar to acquire more rental units. “More competition drives rates down,” Sifakis said. “The more people that are in market, the more I can leverage them against each other.

Similar to ownership of manufactured home communities, mom-and-pop landlords have long dominated the rental home industry. But by accessing public markets, bank-arranged credit lines and bonds to finance purchases, institutional landlords have spent $25 billion just since 2012 buying single-family homes to rent.

In 2014 Blackstone and private equity firm KKR & Co. acquired a majority stake in Home Partners of America, Inc. The company allows tenants to select a home they would like to buy, lets them live in it for up to five years as a rental with the option to buy. Blackstone’s Invitation Home keeps the homes for the long term with the option to sell them in bulk or one at a time. ##

(Photo credit: homes-for-rent)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J. Silver to Daily Business News-MHProNews.

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