This is an article aimed at smaller owner/operators, but the takeaway is clear: there is good value in the smaller properties. At PGP, we agree and are pursuing deals that are in the $1,000,000 to $5,000,000 range, and then we are packaging them and presenting them to our investors as exempt securities with non-recourse debt, great cash flow, and solid IRR's.
Essentially, we are working hard to present an institutional grade product with superior returns, but one that is created from acquisitions in an asset class that is currently overlooked.
From the article:
Single-family rental investors should find more predictable, steady returns going forward as home price appreciation stabilizes and aligns more closely with trends in rental rates, according to a recent RealtyTrac report about the buy-to-rent market.
Average rental rates on 3-bedroom properties increased 3 percent from a year ago across 285 counties analyzed by real estate data firm RealtyTrac, while average sales prices on 3-bedroom properties increased 4 percent across those same counties.
Potential buy-to-rent returns increased in 41 percent of the 285 counties analyzed thanks to rental rate growth outpacing home price growth in those counties.
The average potential annual gross rental yield was 8.94 percent for 3-bedroom residential properties purchased in the first five months of 2015, down slightly from 9.07 percent in the year-ago period, according to the data.
“Buying rentals continues to be a brilliant strategy that allows investors to hedge their bets in a real estate market shifting away from homeownership and toward a sharing economy,” said Daren Blomquist, vice president at RealtyTrac.