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Now may be a worthwhile time to invest in REITs

On Behalf of | Mar 21, 2018 | Commercial Real Estate

Investors in Missouri and throughout the country may be interested in putting their money into single-family rental REITS. This is because they have access to more funding and are even engaged in new home building to create additional properties to rent. According to the National Rental Home Council, demand for rental homes should continue to grow in 2018. In 2018, American Homes 4 Rent plans to spend up to $600 million to build new rental homes.

Of the 46,996 homes in its portfolio, 95.7 percent of them were leased in the last quarter of 2017. This was up 0.5 percent from the third quarter of 2017. In February 2018, Invitation Homes was able to close on a $917 million mortgage loan. It has a term of seven years and has a floating interest rate 124 basis points above LIBOR.

The loan was acquired to replace those that were expected to mature in 2019. Between that deal and others that Invitation Homes has received, it is expected to save more than $9 million in mortgage interest costs. It had a portfolio of 82,570 houses at the end of 2017, and it bought 290 homes for a total of $80.5 million after accounting for renovations in the fourth quarter of 2017. That is an average of $313,000 per home purchased.

Buying residential rental real estate may be a good investment. However, it may be advisable to have an attorney check to see that there aren’t any zoning or title issues with a property prior to signing a purchase agreement.