Those mortgage bonds - often packed with risky home loans that produced mass defaults - turned into the toxic assets that helped bring down major banks during the financial crisis. These firms are also exploring ways of packaging rental income streams into securities, similar to the way mortgages were bundled during the boom years. The goal is to bring corporate scale and efficiency to what has historically been a mom-and-pop, single-family-home rental business. In all, major investors have raised between $6 billion and $9 billion to buy single-family homes, according to a recent analysis by investment bank Keefe, Bruyette & Woods. The company is creating jobs and providing quality homes for families, said Mark Beisswanger, Invitation Homes chief operating officer. These firms say they’ve invented a new investment strategy that also serves the public good by fueling the housing recovery and sprucing up homes. So they’re racing to buy up the bargains, rent them for short-term profit and hold them for long-term price appreciation.
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It’s a new business model emerging from the misery of the mortgage meltdown.īlackstone and a handful of other firms believe prices fell too far in the hardest-hit markets. More than 200 homes later, the company’s Dodger Blue “for rent” signs are a fixture in the Valley - markers for a massive Wall Street wager on the housing recovery.Ĭreated last year by private equity titan Blackstone Group, Invitation Homes has spent about $3.5 billion buying 20,000 houses in nine U.S. Invitation Homes bought one of its first fixer-uppers in the San Fernando Valley just last May, a three-bedroom steps from a sought-after school in north Granada Hills.