IRVINE, CA-Institutional investors will likely expand their single-family-rental holdings into 2014, but this expansion is likely to be decidedly more restrained than the binge of the past 18 months, according to a white paper from RealtyTrac. Large investors have restructured their acquisition programs around the preferences of public-market and securitization investors—seeking a combination of yield, occupancy and collection standards that are valued by the public markets—the investors who are likely the ultimate owners of these assets, the firm reports.
RealtyTrac states that going forward, successful investors will likely shift their strategy to accomplish the following: carefully manage their portfolios in current markets; focus on the property management of their existing homes; expend geographic footprints, acquiring homes in secondary markets.
As GlobeSt.com reported last week, the largest of investors in the single-family rental market are holding their portfolios, at least initially, according to RealtyTrac’s white paper. The holds are despite some “very tantalizing appreciation that could convince some players to cash out,” the report says.
The single-family rental strategy was a bet—not only on the continued demand for rental housing and the strength of home price appreciation—but also on a long-term path to liquidity for investors, according to the paper. Large firms bought heavily before there was a clear path to liquidity; betting that something would emerge, by public offering REIT, securitization or simply a maturing industry of SFRs where stabilized portfolios could be sold to other players at non-distressed prices.