Jay's Notes: Some of the smartest investors that control a lot of money are not buying apartment buildings, or shopping centers, nor stocks, bonds or gold. They are buying single-family homes and they are buying as much as they can get their hands on. Investors would be smart to do the same - get as many as you can as fast as you can. This window is closing and you are now competing with the big guys who will be driving prices up.
Billionaire B. Wayne Hughes is snatching up about 10,000 single-family homes to turn into rentals.
Hughes has purchased the properties through his American Homes 4 Rent,
which now makes the firm the second-biggest owner of single-family
rentals (behind only Stephen Schwarzman’s Blackstone Group).
Hughes incorporated American Homes 4 Rent last year as a non-public
REIT to fund his venture into the single-family rental business. The
American Homes 4 Rent is expecting about 6 percent to 7 percent return
on the rents.
Hughes’ firm is buying up mostly foreclosed properties at auctions in
some of the areas hit hardest by the housing crash. The homes targeted
most by Hughes have been built in the last 20 years, have three bedrooms
and two baths, and are part of a homeowner association — and thus tend
to be well-maintained.
The rental properties mostly are located in Arizona, Georgia, Nevada,
Texas, Illinois, and Indiana. Last year, the company also had purchased
homes in Colorado, North Carolina, Florida, Ohio, and California.
Hughes is the founder of Public Storage, the largest storage-rental company in the world.
“Wayne founded Public Storage at a time when the industry was run by
moms and pops out of their garages, and it’s kind of the same pattern,”
says Paul Saylor, whose Atlanta-based firm manages $1.4 billion and
advises institutions with $4.3 billion in real-estate assets. Buying
“single-family homes has been dominated until very recently by small
investors across the country doing it locally.”
Source: “Billionaire Hughes Chasing Blackstone as U.S. Rental King,” Bloomberg (Feb. 13, 2013)