Real Estate investment firm The Steinbridge Group has kicked off a $425 million initiative for the acquisition and refurbishment of single-family and small multifamily residences as rental housing. The firm plans to target transitioning neighborhoods in major U.S. cities focusing on middle income family residences in close proximity to transportation and employment. The company kicked off the scheme in Philadelphia recently with the acquisition of around 60 homes and it plans to invest $50 million to $60 million on a further 500 properties. The Steinbridge Group anticipates further expansion into other dense urban markets including Northern New Jersey, the New York City outer boroughs, Baltimore, Chicago, Washington DC and Boston.
Steinbridge research notes that the average rental period before home ownership has increased since the 1980s from 2.3 years to 6.6 years. Meanwhile, the average mortgage as a percentage of household income has nearly doubled during that time. Nearly half of Americans spend more than 30 percent of their incomes on housing, up from one third.
Steinbridge further notes that at nearly $3 trillion, the U.S. single family home market outpaces the multifamily market (approximately $2.5 trillion). But of the 14 million U.S.single family homes for rent, fewer than 300,000 (less than 2 percent) are owned by institutions. In addition, before 2012 there were no single family rental secularization, REITS, or institutional owners in the market.
“In response to the housing transition in the U.S., investors and developers initially focused on high-end amenitized multifamily units, which drove down cap rates and now achieve limited rent growth in order to make returns,” said Tawan Davis, CEO of Real Estate investment firm The Steinbridge Group. “From an investment perspective, return spreads over interest rates for single family homes are consistently positive and higher than those for multifamily residential in major U.S. cities.”
