Dallas-Fort Worth-based investor ILE plans to expand its portfolio by at least 1,000 single family rentals by the end of the year, even as home prices rise in the area.
ILE, which currently owns about 6,000 homes across the U.S. and 450 homes in Texas alone, is looking to expand more into the Texas market, the Dallas Business Journal reported.
Dan Brady, vice president of acquisitions for ILE, said this is an interesting time to buy homes due to rapidly rising interest rates, skyrocketing home prices, housing supply shortages, shifting demand and inflation.
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In the Dallas-Fort Worth area, the median home sale price jumped to $490,000 in May, about a 20 percent increase from last year and one of the highest in the nation. While buyer demand has gone up in recent months, low inventory has driven up home prices dramatically across DFW and other metros.
“This market pivoted in about 10 business days, based on the Fed (raising interest rates),” Brady said in the interview with the Dallas Business Journal. “It was an incredible pivot in a very short period of time.”
ILE is a private company founded in 2020 with a home base in Plano and plans to move to Addison soon. The company invests on behalf of individuals, families, trusts and institutions, as well as public and private funds, according to the publication.
ILE specializes in identifying the best rental neighborhoods, acquiring the right homes, as well as renovating, leasing and managing assets and tenants to deliver current income and capital appreciation for their investors.
Brady said the company takes a yield-driven approach to acquisitions based on the rent they can charge tenants after the firm buys a house and rehabs fixer-uppers.
“What we can pay for a home is 100% based on where we underwrite rents,” he said.
“We don’t look forward. We don’t look for stabilization. We base everything on current rents. If the rents justify the acquisition of the asset, we make the offer.”
Many of ILE’s DFW homes are located in Mesquite, Garland, Rockwall and Rowlett, areas where houses are typically not priced above the company’s target range, according to CEO Mahesh Shetty. On average, ILE homes rent for about $1,500 to $2,200.
According to CoreLogic, on a national scale single-family rents had their 13th straight month of record-breaking annual gains with prices in April up 14 percent year over year, This was more than double the April 2021 increase and more than six times that of April 2020. https://www.corelogic.com/intelligence/april-jump-in-us-rent-price-growth-puts-pressure-on-inflation-corelogic-reports/
Rents in Dallas-Fort Worth mostly mirrored the national reports, according to the publication, with rents up 14.4 percent in April year over year for an average of $2,075 per month.
[Dallas Business Journal] — James Bell