Wall Street has more money than ever to buy single-family rentals

Investors increased home-buying last year for the first time since 2013

TRD New York /
Jul.July 09, 2018 08:22 AM

Jon Gray, Barry Sternlicht and single-family homes (Credit: Maxpixel)

Investors are raising billions of dollars from bond buyers, pension funds and even wealthy individuals for the single-family home rental market.

“We’re seeing a wider variety of investors coming into this asset class: sovereign-wealth funds, insurance companies, hedge funds, pensions, asset managers,” Sandeep Bordia, head of research and analytics for Amherst Capital Management LLC, told the Wall Street Journal.

Major investors last year bought more homes than in the previous year for the first time since 2013, when heavyweights like Blackstone Group and Starwood Capital Group pounced in the wake of the financial crisis to buy up foreclosed homes at rock-bottom prices.

Investors last year bought 29,000 homes, up 60 percent from the previous year, according to estimates from Amherst Holdings, which bought nearly 5,000 homes.

Some investors are now even starting to build their own homes in popular markets like Miami and Nashville, where supply is tight. They believe American families that traditionally bought a starter home and moved up will prefer to rent when that time comes.

“The American dream no longer includes homeownership,” said Jordan Kavana, chief executive of Transcendent Investment Management LLC, a company based in South Florida that has been purchasing rental homes. “You will earn your equity in other ways, not your home.”

The rising value of homes, too, has allowed investors to borrow against the properties to buy even more. American Homes 4 Rent, the country’s largest single-family home rental company, sold $500 million of unsecured debt in January. Invitation Homes last month raised $1.3 billion through the corporate bond market, the largest deal yet for the industry. [WSJ] – Rich Bockmann

 

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