A $3 Trillion Untapped Investment Opp

14 millionsingle-family rentals worth trillions are ripe for the picking by investors, says Reven Housing REIT CEOChad Carpenter. (The hard part: Buying 28 million cars to put in the two-car garages.)

Only a handful of institutional investors and two public companies are out there to harvest them. Institutions like Blackstone (which Bloomberg reports recently expanded its single-family investment credit line from $600M to $1.2B), Colony, and JP Morgan have deep pockets on their side, and public companies Reven and Silver Bay Trust can take advantage of a low cost of capital. Altisource Residential also had a successful IPO in December but is mostly buying loans; American Residential Properties has submitted the paperwork to go public; and Colony American Homes likely will do so, Chad tells us.

The REO/value-add single-family rental market opp could reach $800B, Chad says. So far, only about $8B has been allocated to that arena. Reven's focus, though, is to acquire portfolios of leased and cash-flowing homes (like this one in Atlanta), a long-term proposition for which supply won't dissipate when the housing market reaches full recovery. That market's capacity is more than $2 trillion. Chad says a purchase of 100,000 homes--just 0.5% of the market--could reach an enterprise value of $10B, depending on average home prices. Boosting the class' appeal: Premier Property Management Group recently released a study that says single-family renters are 18% more likely to stay put for five years.