BlackRock Inc. is reported to be planning to finance investors who are purchasing single- family homes that capitalizing on rental demand. This market gives opportunity for good potential profit now that U.S. homeownership rate stays low for five decades.
According to bloomberg.com, BlackRock will acquire loans from partners that offer financing depending on the firm's specifications and will start the new venture next month. The lending partners will also finance renovations of homes that will become rental homes. These information is said to be private to the company that's why the two people who have knowledge regarding the deal asked not be identified.
The spokesperson of BlackRock, Tara McDonnell, refused to give any statement regarding the company's impending venture.
BlackRock is set to join companies that are competing in financing small landlords of 14 million rental home across the country. The new type of loan is believed to generate more money as the market for rental houses is high due to American's difficulty to obtain mortgages which leaves them to rent houses instead.
According to Ryan McBride, chief operating officer at Colony American Finance LLC, "The market could certainly bear to have more entrants. This is a largely untapped opportunity in a huge potential market."
Alex Sifakis, president of Jacksonville, Florida- based JWB Real Estate Capital, said that in his estimation, he probably need to have at least $30 million a year to finance home purchases. He has borrowed $13 million from Colony and Cerberus' affiliates to fund some his company's 430 rental homes for the last two years.
He also added that "more competition drives rates down. The more people that are in market, the more I can leverage them against each other."
With the impending venture of BlackRock, the company is believed to be expanding its reach and its market. In a report by propertyweek.com, the company's UK Property Fund arm has purchased an Atrium office building for £55.9m from Aviva Investors, in Uxbridge.
