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RE Investors See Opportunity in a Downturn

Under the “buy low, sell high” theory of investing, some larger single-family landlords see economic downturns as a chance to increase their inventory.

NEW YORK – Single-family landlords are watching the decelerating U.S. housing market with an eye out for buying opportunities, wagering that reduced consumer demand will prompt discounts from builders.

American Homes 4 Rent CEO David Singelyn said his company is taking calls daily from potential sellers that include national builders. They’re offering concessions on deals even as they refuse to lower prices – although he anticipates reductions in the future.

Singelyn said that landlords are “sitting on a significant amount of investable cash and funds, and we can take advantage of those opportunities.”

The odds for high profits on new rental homes are improving, especially since a rising number of would-be buyers are getting priced out of the market or losing their ability to save for a down payment as their monthly rent keeps going up.

For builders, slowing price increases and a growing inventory may benefit prospective buyers over the long term, but they’re raising builders’ risk. Dealing with landlords who plan to rent single-family homes can help builders keep work crews busy and add housing inventory if consumer demand falls.

Source: Bloomberg (06/13/22) Clark, Patrick

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