Foreign firms eye U.S. single-family rental market

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WASHINGTON – Feb. 22, 2013 – Several foreign firms are jumping into the single-family rental market of late, seeking high returns by snagging up homes at discounts, turning them into rentals, and waiting for an improved housing market.

“The business of buying and renting houses, long dominated by local mom-and-pop investors, has morphed over the past two years into one of the hottest investments on Wall Street,” The Wall Street Journal reports.

For example, US Masters Residential Property Fund, a real-estate investment trust consisting mostly of Australian retirees, has raised $276 million to invest in the U.S. housing recovery.

“Investors from countries whose currencies are strong can outbid U.S. investors because they also are hoping to make money from foreign-exchange rate fluctuations,” The Wall Street Journal reports. For example, Australians consider single-family U.S. houses “really cheap” due to the currency exchange rate.

US Masters is earning a yield of about 7 percent off its rental portfolio when accounting for operating expenses, but investors will possibly earn 30 percent more in profits when the fund sells its homes, according to a spokesman for the fund.

The Toronto-based Tricon Capital Group Inc. also has jumped in, spending $160 million acquiring nearly 2,000 properties in California, Arizona, Florida and North Carolina. It hopes to own up to 4,000 homes by the end of the year.

“If I’m a foreign investor and I’m not entirely confident in my own economy, of all the places that I could put my money, U.S. housing looks like a really attractive place,” says Lisa Marquis Jackson, senior vice president with John Burns Estate Consulting LLC.

Source: “Foreign Buyers Hop on Rental Trend,” The Wall Street Journal (Feb. 20, 2013)

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