"So Far, Institutional Ownership of Single-Family Rentals Appears to Have Legs, Analysts Say."
By Randyl Drummer. CoStar. March 6, 2013.
"Despite the volume of [single-family] acquisitions in recent months in some markets, the percentage of homes for rent in the U.S. is not expected to materially change," said Suzanne Mistretta, senior director in Fitch’s U.S. RMBS Group; and Dan Chambers, managing director in the U.S. CMBS group.
"What is significant, however, is the trend towards institutional ownership of [single-family] homes, and this does not seem to be a fleeting trend. That said, distressed buying opportunities are likely to fall off from current levels."
"In general, home sales and effective apartment rent growth will be able to co-exist," said Luis Mejia, director of multifamily research for CoStar. "More single-family rentals will complement, rather than compete with, the multifamily market, because the transition between renter and homebuyer is getting longer due to credit and economic issues," Mejia said.
The question appears to be one of sustainability of the large-scale model being employed by Blackstone and the other cash-rich entities that have been plowing billions into the single-family-to-rental model. How much of a bubble can be created in this market segment if the most sophisticated equity real-estate firms comprise such a large percentage of current buyers? Aren't they the least likely to continue buying to the point of overbuying, where profit margins will overly tighten and they should start channeling their investment funds elsewhere?
Regardless, what does this all mean for the smaller investor? The bargains have been being snapped up by those with very deep pockets full of cash and the money to hire professional buyers. Smaller investors likely are best served by not having unrealistic expectations but rather investing with the long-term in mind, keeping themselves from becoming overly leveraged and especially not leveraging based upon the faulty notion of one way real-estate-price appreciation, up, as so many now failed investors did in the run up to the 2007-8 collapse.
If you are an investor in 1-4 unit properties in Arizona, California, Nevada, Oregon, Utah, or Washington, please do the financially responsible thing and make sure you have proper Landlord Insurance with PropertyPak™. We love focusing on real estate and the economy in general, but we are also here to serve your insurance needs.
Hill & Usher (PropertyPak™ is a division) has many insurance offerings. See our menu above for more info and links.
Did this post help you? Let us know by leaving your comment below.
Note: This blog does not provide legal, financial, or accounting advice. Seek professional counsel.
Furthermore, we, as insurance producers, are prohibited by law from disparaging the insurance industry, carriers, other producers, etc. With that in mind, we provide links without staking out positions that violate the law. We provide them solely from a public-policy standpoint wherein we encourage our industry to be sure our profits, etc., are fair and balanced.
We do not necessarily fact checked the contents of every linked article or page, etc.
If we were to conclude any part or parts of our industry are in violation of fundamental fairness and the legal standards of a state or states, we'd address the issue through proper, legal channels. We trust you understand.
The laws that tie our tongues, so to speak, are designed to keep the public from losing confidence in the industry and the regulatory system overseeing it. Insurance commissioners around the country work very hard to analyze rates and to not allow the industry to be damaged by bad rate-settings and changes in coverages. The proper way for people in the industry to deal with such matters is by adhering to the laws, rules, and regulations of the applicable states and within industry associations where such matters may be discussed in private without giving the industry unnecessary black eyes. Ethics is very high on the list in the insurance industry, and we don't want to lose the people's trust. That said, the industry is not perfect; but what industry is?
For our part, we believe in strong regulations and strong regulators.
We welcome your comments and ask you to keep in mind that we cannot and will not reply in any way or ways where any insurance commissioner could rightly say we've violated the law of the given state.
We are allowed to share rating-bureau data/reports and industry-consultant opinions but make clear here that those opinions are theirs and do not necessarily reflect our position.