LENDING
Colony American Finance Wants
to Jumpstart Your SFR Portfolio
D
o you think that you might have missed the boat to
invest in single-family rental homes? The answer is
a resounding NO!
We all remember 2005-2007 when it seemed that
investors couldn’t make a mistake in the residential fix
and flip market. Investors with little experience were
able to outbid the competition, slap some minor paint
and carpet improvements and then sell their properties
for incredible returns. But then the bubble burst and
many investors were left with homes that couldn’t be
sold or in some cases, even given away. They had two
choices: Give up the properties through foreclosure or
become a landlord.
RENTAL DEMAND
OUTPACES EXPECTATIONS
Statistics show that nearly 35% of Americans now
rent instead of own. Drill further into the statistics and
you’ll find that 35% of renters choose single-family
homes and 19% choose duplexes, triplexes or fourplexes. With these two categories encompassing 54% of
all rental choices, it makes perfect sense that investors
are looking to 1-4 unit properties instead of owning
larger multi-family apartment-style buildings; 1-4 unit
properties have a lower price point, the ownership risk
is spread out among multiple structures and the overall
expense ratio is lower. Renters in single family housing
tend to pay their own utilities, maintain the landscaping
themselves and have access to municipal water/sewer/garbage at a much lower rate than through private
service.
Rental demand is projected to change significantly
over the next ten years, primarily driven by the changing
nature of the household. Baby boomers are moving in
with their children or into senior housing and millennials
are favoring renting over owning because of its flexibility and lower commitment level. Being well versed in
the changing market is the key to having a profitable
portfolio.
Also noteworthy is that there are an estimated 14
million rental homes owned by non-institutional investors in the United States – most of which are owned free
and clear. Quick math: Using 14 million rental homes
at an average value of $100,000 each, that’s potentially $1.4 trillion in new loans that can be originated and
re-invested into the market.
Colony American Finance has multiple financing opRealty411Guide.com
By Jennifer Goralski, Senior Vice President Originations
tions available so you can access your portfolio’s equity
and quickly put it to work to buy additional properties,
invest in your children’s education, or simply replenish
your cash position.
KNOWLEDGE IS POWER
The savviest investor will do three things: research,
research and more research. Mortgage brokers and
real estate brokers have invaluable information such
as market trends and vacancy rates as well as access
to properties that might not be listed for sale. But it’s
significantly more critical for investors to have access to
capital: Both liquid cash and innovative financing.
No longer is the SFR rental market monopolized by
private money loans with steep interest rates and fees
or the more traditional Fannie/Freddie product that caps
out at 5-10 properties. Colony American Finance provides non-recourse term loans for stabilized portfolios
and fix and flip lines of credit for acquisition funding.
FIX/FLIP LINES OF CREDIT
If you want to grow your portfolio or perhaps don’t yet
own a rental portfolio, a line of credit is definitely the
right choice. Colony American Finance offers two different line of credit options depending on investor experience and short-term/long-term goals.
Our Entrepreneurial Line of Credit is a non-revolving,
declining line designed for the investor who does less
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Continued on pg. 50
Private Money411