Investors are now turning their heads for buying foreclosure properties and making them into single- family rentals. It has been a trend that was believed to last for just three to four years but it seems that investors are sticking with their investments for the long haul despite of low volume of foreclosure homes and high market prices.
In a report by cnbc.com, investors are buying more properties and buying new units. Doug Brien, CEO of Starwood Waypoint Residential Trust said "I actually think that we're coming into perhaps the most compelling three or four years that I've seen since I've been in the business. For us operationally, being able to have a brand-new home that typically has a warranty that works well for us. We can also customize floor plans that work for the business." He also added that "builders are the next frontier for institutional investors."
Starwood Waypoint now owns 16,000 home single- home rental units which majority were foreclosure properties. The company has also purchased about 200 brand- new units with an average price unit of $180,000 from developers.
Tim Sullivan, practice leader at Meyers Research, said "I think the institutional capital is still looking at this very carefully, because there's a belief, and I support that belief, that it is a long-term hold and there's yield and there's appreciation to be had but the real challenge for capital now, for the institutional capital sources, is that the massive low-lying fruit is gone."
According to homes.yahoo.com, investors opted for foreclosure units because they could buy homes with a price lower than its replacement and it can give rental revenue as well as property price appreciation.
Miami- based homebuilder company Lennar is also trying its luck with single- home rental market. It has now a total of 20,000 apartment units under construction. Stuart Miller, Lennar's CEO, said "One of the big criticisms of the single-family rental world is that they're all kind of one-offs in unique locations with unique amenities. The scalability of the management is what gets it complicated. This makes it much more like an apartment community in that it's all together and can be managed by a single entity."
