As rents are rising, investors are on the hunt for multi-family residential properties. The slow growing economy is keeping single-home supply down. Starwood Capital, a private equity and venture capital firm, is taking advantage of this trend. This company has joined with Milestone Apartments REIT to purchase the Landmark Apartment Trust for $1.9 billion in cash. This means these partners dominate the apartment development industry. Other investors are following suit. Blackstone Group and Ivanhoe Cambridge joined to purchase Stuyvesant Town-Peter Cooper Village, Manhattan’s largest apartment complex.
It appears investors are seeking rental properties to boost their portfolios. Other alternatives, including hedge funds, are not performing well. Since people can receive a large cash yield on this type of real estate, it is seen as a smart investment.
For success, large investors are depending on job growth within the sector of young individuals. This population is booming, and people are marrying later. These factors mean singles will live longer in apartment settings.
On the other end of the spectrum, tenants are getting the shorter end of the stick. While landlords are enjoying a high return-on-investment, tenants are bracing for hikes in rent. In 2016, demand for units is expected to rise, and rent may increase by 8 percent. Approximately 8 million households will face expensive rent and may spend over 50 percent of income on housing. The burden may continue to rise through 2025. At this point, over 3 million Americans may be hit hard by rental costs. If you are searching for investment possibilities, rental units may be the answer.
