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Home-buying startups that use technology to offer sellers a quick deal are increasingly offloading homes to institutional players that convert the homes into rentals.
One in 10 homes sold by startups like Opendoor and Offerpad were snapped up by such institutional investors so far this year, according to a new analysis by Attom Data Solutions. They’re then being put back on the market as single-family rentals, a burgeoning and inventory-strapped sector of the housing market, Inman reported.
According to Attom, the top three purchasers were companies linked to the private equity firm Cerberus, which manages 18,000 rentals through FirstKey Homes; Invitation Homes, which owns 80,000 rentals; and Tricon American Homes, which owns 17,000 rentals.
Sales to institutional investors represent a growing business for iBuyers — adding up to 9.6 percent of their business this year up from 6.6 percent in 2017 and 3.9 percent in 2016.
Although institutional buyers’ total home purchases fell between 2012 and 2017, some have raised additional capital, suggesting they could go on a buying spree.
“I think finding inventory is truly a challenge, which is why these buyers are going to iBuyers,” said Daren Blomquist, senior vice president of communications at Attom. [Inman] — E.B. Solomont
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