I don’t think it will go far at all. This is a management nightmare and no sane RE investor would pursue it. 15,000 scattered site homes?
The entire story makes no sense. If they pay $150,000/home and rent them for $1500 they gross $18,000/home less any rent up costs, repairs, etc. prior to renting them out. How much are taxes, insurance and utilities on these homes? How much is maintenance?
If taxes are just one month, insurance one month and utilities are just one month you’ve got a net before maintenance costs of $13,500. Add maintenance of one month’s rent and you’re down to $12,000/150,000 investment for a return of 8% and a lot of hassle. They can’t beat that in stocks or corporate investing? Perhaps they’ll self manage it, but figure vacancies will run 5-7% and you lose another grand. That’s about 7% ROI. I’m not impressed.
I suspect Blackstone is either juicing it’s own game or hoping for massive inflation. Could be they’re taking a HUD portfolio, but the story makes it sound like their shopping the market on an individual basis. If they buy at $66K and rent at $1500 and sell out in 5 years at $150K that’s impressive, but once the Fed stops gaming the interest rate it’s going to level out. Who can afford a home at 16% interest?
Unless, that is, they were planning to farm out the management (and had a good consortium of RE management companies in mind). There is no reason why existing condo and rental management companies wouldn't jump at the chance to get involved.
Hmmm...need to think this through more slowly. There might be something here.
It would be a real boon for the local economy...
From what I hear from FL is 1500 is no where near enough for hazard insurance. I have a friend in Miami paying 6K.
It makes a little more sens if you go to the bottom of the article. It says they want to collateralize the rent payments like regular MBS