Single-family rentals are hot. Investors have been buying and renting these properties to the tune of 1.2 million units last year, up from 749,000 in 2010, according to RealtyTrac. Investors accounted for 20 percent of the residential market in 2011, and that statistic may go up for 2012.
Who’s investing? Local investors who buy homes at foreclosure auctions have predominated the market, but since the turn of the year, corporate investors are getting into the game, seeing the potential of big profits. In January 2012, a private-equity fund, GI Partners in Menlo Park, Calif., invested $250 million into Waypoint Real Estate Group, an Oakland-based firm that buys foreclosed homes at discounts and then rents them out, according to the Wall Street Journal.
The single-family rental investment represents the fastest growing real-estate asset category, says Waypoint co-founder Colin Weil. Richard Magnuson, managing director of GI Partners, stands behind the investment. Families who are not ready to purchase often prefer to rent homes rather than apartments, so the conversion of foreclosed single-family houses presents a win-win for both landlords and tenants.