Note to reader; for those who are able to juggle the necessities of SFR investing while understanding the math and financing behind this asset class, the SFR asset sector is still a great area to invest.
‘We’re So Early On In Single-Family Rentals Being An Institutional Asset Class’: Residential Investment Firm Claims ‘We’re In An Aggregation Mode’
A slew of indicators shows the single-family rental market is booming. And according to some, it’s just beginning to launch.
“We’re so early on in single-family rentals being an Institutional asset class. We see tremendous value in what we would consider scattered-site single-family homes,” The Peak Group CEO Ryan Bowers said. The Peak Group recently sat down with Benzinga to discuss the investment trend. Peak is an alternative investment platform dedicated to single-family rental properties.
The growth is driven by several factors, with a significant driver being younger buyers and families deciding to rent instead of own, leading to higher rental prices. According to a trends report from Arbor Realty Trust, 43% of GenZers want to rent single-family homes after they graduate from college.
As a result, the single-family rental (SFR) market is gaining increased interest and capital from large institutional investors. According to real estate software and advisory services company Altus Group Ltd., this trend has contributed to a stark change in SFR investment, moving away from mom-and-pop landlords to institutional investors like Peak.
“Today, only about 5% of single-family rental homes are owned by institutional groups. Smaller investors, like mom and pops, own the remaining homes. We’re in an aggregation mode right now. In 10 years, that number is going to be more like 20 to 30% in my forecast,” Peak Chief Investment Officer Joe Ollis said.
Limited existing home inventory coupled with high mortgage interest rates has prospective home buyers looking for rentals to achieve their lifestyle goals. Renting is now a popular option among single-person households, growing families and downsizing baby boomers and millennials. Bowers says that what the market is seeing is being fueled by a psychological shift in buyers.
“In the ’60s and ’70s, the middle-class buyer wanted a white picket fence and to stay there for 30 years. Now, especially with our largest demographic of millennials and their ability to move, they live where they want to live, and having a nice home doesn’t necessarily have to be tied to owning that home,” he said. “We’re seeing a psychological change in the difference between being forced to be a renter and choosing to be a renter.”
See the full interview here:
These trends have also contributed to the rise of build-for-rent (BFR) properties, which present more opportunity for portfolio-level investors because they are easier to underwrite, have a low cost of capital and are more efficient to operate. According to Altus Group, in 2020, developers were on track to reach 55,000 to 60,000 new rental housing construction starts, compared to 40,000 in 2019 and a range of just 15,000 to 20,000 a few years before. Now rental housing construction is expected to be the fastest-growing market segment, with an expectation of over 100,000 BFR homes to be built in each of the next three years.
“We (Peak Group) see tremendous value in what we would consider scattered-site single-family units would just be your traditional homes and neighborhoods that are rental properties,” Bowers said. “We are finding tremendous value in our build-for-rent arm, where we develop and build our own communities.
Link to original article here.
20 thoughts on “Institutions aggressively buying single-family rentals”
I’ve been thinking a lot about all your comments regarding sfr investment and some of the example calculations like cap rate you have referred to. But in a rising interest rate environment how do you reconcile the changing risk/reward? For example if I can scrounge up 150k my bank will give me 4% interest on that essentially risk free or 500/mo. If I try to get a house around here I’ll have to get a loan and the offset of rent to mortgage is likely less than 500/mo plus extra risk. Am I being short sighted or would you use a different method to calculate the sfr investment in these situations?
Send me an email with all the specifics and let me work on it, including geographic area, loan amount, taxes, probable rent, upfront costs, etc.
Keep in mind that where we invest is not necessarily where we would live. Most of the properties I own I would never call home. But someone else who holds down a good job does and that’s what matters.
Give me the details and I’ll take a look.
Chris could you post the specifics when ya get done, use Jerimiahs example as a possible article? From my calculations it will take me ten years to break even on any scenario I go with.
Here’s an example of private lenders. They can get you money in three weeks, and the loan is solely based on the property’s income. They financed a prior loan for me. I received this email yesterday.
This is Geary with Dominion Financial Services. For a limited time we are offering a 6.99% DSCR rate for 30-Year fixed Loans and better. If you would like a quote or would like this rate please respond back to this email. Please hurry on this because this may not last past the holiday season! Act quickly for a quote before our queue gets too swamped.
If you are ready to submit a property please see below.
New Purchase Questionnaire
Dominion Financial Services
NMLS # 898795
32 South Street
Baltimore, MD 21202
The real reasons why housing demand is so high is never mentioned. The great alt-media non sequitur; they complain about open borders, yet utterly fail to make the connection between that and housing costs. The best asset sector only continues to look good, yet all are screaming of collapse.
This article is another PC whitewash.
This Is The Real Reason Housing Is Unaffordable, Expert Says
Jeff & Erica – Special Guest Nurse Anne –
Hospitals Are Nearly Full, and the sick are exhibiting personality changes and disorders.
This is an email I just received from a condo manager at one of my multicultural properties in PG County, MD. Just normal routine stuff, and we wonder why we need government?
Teenagers are being let into the building by someone at 14200 XXXXXXXX Ln. They arrive between 12PM and 2PM and are in the building now. I am calling the police.
The board and management are working together to find who’s letting them in. We believe we have narrowed it down to a few units.
Homeowners and residents, please speak with your children and ask them if they are doing it. The cleaning lady has caught so many kids and they continue to leave a mess in the building stairwells and she is getting sick of cleaning the mess of others.
They are smoking cigarettes, eating and spilling food/drinks and urinating in the hallways.
I have instructed her to take photos and send them to me. I’m attaching them here for your reference.
This is taking place DAILY. It will not go away until they are caught and identified and we could end up losing a great cleaning lady due to this act not being stopped. The stairwells will only get worse and one of these days one of these kids will not stomp out their cigarette as they should and we will be in huge trouble.
Please report any incidents immediately.
Wow. Just wow. That is crazy. Nobody is parenting anymore. These kids are raising themselves. And not very well, it sounds. That’s why we have the nanny state. But nanny is over indulgent. Sell, sell, sell that unit (and any others like it) before it burns down. Meanwhile make sure your insurance policy is up to date!!! Dear God, I’m glad I left Philadelphia for the sticks long ago.
CJ, in thinking more about the letter describing chaos in your condo complex, I thought about a book by a Catholic apologist from Philadelphia (who went to the same graduate school I did – Temple University – in North Philadelphia, a war zone). I just ordered this book, called the Slaughter of Cities, by E. Michael Jones. (Disclaimer: I don’t share in all of the author’s views, and I also don’t believe all the rumors against him. This man has been banned just about everywhere because he’s not PC.) His claim in this book is that the moral degeneracy was the result of government intervention (social engineering) in the 1950’s -60’s to break up white ethnic neighborhoods (of European decent), that were usually centered around their own form of moral authority (Parish) and thus didn’t need government assistance. Racial tension and white flight was the result of this social engineering. Jones also talks about the impact on housing, contrasting the cities with the suburbs. His statement you would agree with: “You should be able to live with people like you.” This is not just a Catholic thing, this is about how we all have been disempowered by social engineering. It’s all interesting food for thought if you stay with it.
Book on his website:
Podcast on the book I have listened to:
I wonder if the Mexican and Latin American drug cartels will accept CBDCs 🤪🤣🤪🤣. The CIA still has work to do and it needs the US $100 bill.
There’s a lot of planning that goes into making a global Reserve currency. The globalists need the dollar to demoralize and drug up their citizens. The US dollar is still king in that regard.
The Golden Age of Cocaine Is Happening Right Now
The biggest cocaine boom in history has its origins outside towns like La Dorada, Colombia. Here, a few miles down a rutted track through the Amazon, cattle ranches and fish farms give way to endless fields of coca, the pale green shrub used for making the drug.
Apart from a few schoolteachers and occasional raids by the armed forces, the Colombian state barely exists beyond this point. To travel here, outsiders need permission from a much-feared drug cartel known as the Comandos de la Frontera, whose henchmen in military green T-shirts patrol the lanes in trucks and on motorbikes.
This region, Putumayo province, is a key supplier of the unprecedented surge in cocaine production. While fans of the hit Netflix series Narcos may have the impression that the era of Pablo Escobar’s Medellin Cartel in the 1980s and 1990s was the heyday of the cocaine trade, in fact, a much bigger boom is going on right now.
“We’re living in the golden age of cocaine,” said Toby Muse, the author of the 2020 book Kilo: Inside the Deadliest Cocaine Cartels, who has been reporting on the Colombian drug trade for more than two decades. “Cocaine is reaching corners of the planet that have never seen it before, because there is so much of the drug.”
Underlying that boom is a massive growth in acreage, as well as higher productivity on coca farms — trends driven by shifting political dynamics in the region as well as rising demand. The illicit industry now produces about 2,000 tons of cocaine per year, almost double the amount being made a decade ago, according to the UN Office on Drugs and Crime. Satellite photos show that the amount of Colombian land planted with coca rose to a record of more than 200,000 hectares (500,000 acres) last year, more than five times what it was when Escobar was gunned down in 1993.
This is simply tragic. There is one less illegal non-English speaking potential thief creating tenant demand. What a tragedy! We landlords need all the “migrants” we can get. These illegals can receive as much public assistance as someone making 80k in gross income. So much tenant demand! No collapses coming as the massive waves of immigrants destroys the lives of the average wage earner, but most are unable to make any connections. Landlords are cleaning up!
Second migrant commits suicide in NYC-run shelter as border crisis rages
A second migrant who arrived in New York City from the southern border and was living in a city-run shelter has committed suicide, city officials told The Post.
The only collapse I’m seeing is in the number of single family unit permits.
The global elite are populated with psychopaths that make Adolf Hitler look like a piker. The misdirection is astounding as tens of millions of people continue to die from the death injections. Now they’re out to linch a secretary.
A former Nazi concentration camp typist known as the “Secretary of Evil” has been convicted by a German court for her role in more than 10,000 murders during the Holocaust.
Irmgard Furchner, 97, was found guilty on Tuesday of complicity in the deaths of 10,505 people at Stutthof, the internment camp near Gdansk, Poland where she served as a typist and stenographer from 1943 through 1945, BBC reported.
Yen Surges as Kuroda’s Yield Cap Shock Sparks Normalization Bets
Bloomberg) — Bank of Japan Governor Haruhiko Kuroda shocked markets by doubling a cap on 10-year yields, sparking a jump in the yen and a slide in government bonds in a move that helps pave the way for possible policy normalization under a new governor.
The BOJ will now allow Japan’s 10-year bond yields to rise to around 0.5%, up from the previous limit of 0.25%, while keeping both short- and long-term interest rates unchanged, according to a policy statement Tuesday.
The central bank said the move would enhance the sustainability of its monetary easing, but many economists interpreted the move as laying the preliminary groundwork for exiting a decade of extraordinary stimulus policy.
The real hopeless victims of mental illness are to be found among those who appear to be most normal. “Many of them are normal because they are so well adjusted to our mode of existence, because their human voice has been silenced so early in their lives, that they do not even struggle or suffer or develop symptoms as the neurotic does.” They are normal not in what may be called the absolute sense of the word; they are normal only in relation to a profoundly abnormal society. Their perfect adjustment to that abnormal society is a measure of their mental sickness. These millions of abnormally normal people, living without fuss in a society to which, if they were fully human beings, they ought not to be adjusted.
Gen Z is re-thinking college and career plans in post-Roe America: ‘I want to leave the country’
Clock Work Orange. Check this out. Kubrick was a limited hang out me thinks.
That movie came to mind when I first heard about this.
Gen-z recreational violence.
Japanese Stocks Tumble After BOJ Adjusts Bond Yield Cap
(Bloomberg) — Japan stocks tumbled while the yen surged following the Bank of Japan’s policy meeting on Tuesday, where the central bank surprised markets by altering its closely-watched yield curve control program.
The blue-chip Nikkei 225 Stock Average plunged as much as 2.6% while the broader Topix slid 1.6% in the afternoon session, both erasing earlier gains. The yen strengthened about 2.8% against the dollar. The regional MSCI Asia Pacific Index erased a gain and fell.
Kuroda Shocks by Tweaking BOJ’s Yield Cap, Sparking Yen Jump
The quick slide comes after the central bank said it would widen its yield curve control, allowing Japan’s 10-year bond yields to rise to 0.5%, up from the previous upper limit of 0.25%. The central bank kept its target for the yield unchanged at around zero percent.
While some market participants were expecting a loosening of the YCC, the 0.5% level was seen as “sudden” and surprising, according to Makoto Furukawa, chief portfolio strategist at Mitsubishi UFJ Morgan Stanley Securities.
Meanwhile, bank shares surged on prospects for earnings on higher yields. Shares of Mitsubishi UFJ Financial Group Inc., the nation’s largest lender, jumped as much as 9.6%, the most since November 2016.
©2022 Bloomberg L.P.
There could be some relief the rest of the week. TSLA and AAPL and even AMZN went too low too fast, although they may continue in a downtrend, there should be upticks. CEI could get odd tomorrow.
The American dream; a person has to be sleeping to believe it. The multicultural kingdom will be a population of neo-slave renters. Done by design. When the various breeds are all competing for attention in the way my adversary wants, everyone loses. If you are crying racism and injustice, my adversary is your friend. You should embrace the iron and clay kingdom of Daniel.
Boo hoo hoo. Cry cry cry. Time for me to buy another SFR.
The collapse has already happened to most people. The alt-media just hasn’t yet been given notice. Ooh. I’m so scared of the CBDC! 🤣🤣🤣
Highest Interest Rates in 15 Years Are Derailing the American Dream
Most of all, the surge in borrowing costs is punishing the cash-poor. And it’s about to get worse as the Federal Reserve carries on with its anti-inflation campaign and keeps hiking rates next year.
“Consumers who weren’t able to make ends meet are just digging themselves a deeper and deeper hole with the higher interest rates,” said Philip Cornell, economist at the Ludwig Institute for Shared Economic Prosperity, which focuses on research about middle- and lower-income families.
As the Fed’s most aggressive interest-rate hike cycle in a generation filters through the US economy, the gap is widening between the haves and the have-nots. Even without a recession, households and businesses are feeling the financial pain.
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