Wall Street Oasis - Investment Banking & Finance Community: Single Family Rentals - Institutional Herding Continues?

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Wall Street Oasis - Investment Banking & Finance Community The Wall Street Finance Community where investment bankers, consultants, traders, private equity and hedge fund professionals come to learn and play.

Single Family Rentals - Institutional Herding Continues? Jul 2nd 2013, 00:30, by tt1254 I originally got interested in single-family rentals with the spinoffs of Silver Bay Realty (SBY) and Altisource Residential (RESI) in the last half year or so. These companies buy single-family homes with the intention of renting them out. Given that mortgage rates (<5%) are less than rental yields (>5%), it is typically cheaper to own than rent. On face, these companies provide a compelling statement - they effectively arbitrage low mortgage rates with the fed with tight credit standards for mortgages and have an implicit put in stabilizing housing prices. But how much does this translate to company profits? Rental yields are usually < 10% to begin with pre-leverage (RESI presentation, slide 13) and mortgage/upkeep are ongoing while renters may leave and so profits depend on 1) maintaining a steady stream of renters while 2) keeping costs low. read more Media files: preview (image/jpeg, 0 MB)

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