MACK Companies would like to congratulate our partners at American Residential Properties (ARPI) on raising $287.7 million in an initial public offering. ARP sold 13.7 million shares at $21 each and told Bloomberg that the proceeds from the offering will be used to grow its business in the single-family home rental market.
Chicago Real Estate Daily just released an article today which speaks about how Chicago may not be the most profitable place to buy and rent single-family homes but it is nothing to sneeze at. In fact the Chicago-land area fares well against most other large metropolitan areas. On the average a cash buyer of a three-bedroom home in the Chicago area receives a 7.2 percent initial yield according to RealtyTrac Inc. While the price increases have begun here just as they did in California and elsewhere, the yields haven’t dropped as much.
MACK Companies continues to make headlines regarding the largest transaction of performing single-family rentals in the U.S. Builder Magazine recently ran an article about MACK’s sale of 196 homes to a Scottsdale, Arizona, based real estate investment firm, American Residential Properties. MACK will continue to manage those properties as well as supply ARP with roughly 30 and 50 properties per month over two to three years. Fourteen investment groups approached James McClelland, MACK’s president and CEO, “But they were not realistic; they wanted to grow faster than the asset class would allow.” American Residential Properties was and is one of the few investment groups that aligned with MACK in terms of understanding how an investment strategy for single-family rental needs to be scaled to market demand.
MACK Companies’ CEO & President, James McClelland attended Zelman & Associates’ 5th Annual Housing Summit which was held in Washington D.C. last week. Mr. McClelland was one of five distinguished speakers to participate in the single-family home rental speaker’s panel. The panel discussed a multitude of subjects such as: Renewal Rates, Multi-year Leases, Raise in Rent Stats, Cost of Turnover, Move Out to Buy Stats and Move Out Stats.
Another great news article was just recently published which spoke about this being the perfect time to buy homes for rental purposes. The article from Global Street was based on a recent foreclosure news report from RealtyTrac and goes on to speak about the market being “ripe for this type of investment.” We here at MACK Companies couldn’t agree more and we too have also witnessed a shift in our current market place from that of the early 2000′s. Where once we saw investors buying homes to flip, we are now seeing them investing in our single-family homes for long-term rental purposes.
Eric Workman, MACK Co’s Vice President of Sales recently held a webinar for Australian investors about our twenty three plus years of industry experience, the market, and available cash flow properties. It just goes to show that investors the world over are very interested in MACK’s unique investment opportunities.
Warren Buffett recently appeared live on CNBC’s Squawk Box with Becky Quick and spoke about the opportunity associated with investing in single-family homes. Mr. Buffett says, “If I had a way of buying a couple hundred thousand single-family homes and had a way of managing them, I would load up on them.” Buffett goes on to say that if held for a long period of time and purchased at low rates houses are even better than stocks.
There is more to it than buying at a great price for a foreclosed property to become a positive, cash flowing investment. In fact, price is not even the most important criteria to a successful real estate investment property.