(Bloomberg)—Amherst Residential plans to acquire more than 10,000 single-family rentals in 2019, tapping a wider range of sellers to expand its holdings.
The Austin, Texas-based firm will buy individual properties as well as pools of houses from large landlords seeking to prune their portfolios, President Drew Flahive said in an interview. Amherst will operate most of the acquisitions as rentals through its property manager, Main Street Renewal, but it also plans to renovate some for the purpose of selling them to regular homebuyers.
The key is having “a platform that’s broad enough to aggregate from smaller, midsized or institutional owner-operators,” Flahive said. “We want to buy and manage assets at a wide range of price points, so we need to have the ability to service those assets.”
Amherst is accelerating acquisitions at a time when demographic trends and tight for-sale markets are attracting institutional capital to rental homes. Pretium Partners LLC closed a $1 billion fund last year, while Tricon Capital Group Inc. launched a $750 million joint venture with two institutional partners and Cerberus Capital Management LP launched its own fundraising effort.
Finding homes to buy may be a bigger challenge. The single-family rental industry grew up in the aftermath of the U.S. foreclosure crisis, when firms like Blackstone Group LP and Starwood Property Trust Inc. scooped up thousands of distressed assets. As the housing market recovered, cheap homes became scarce, and landlords grew through consolidation.
Amherst, which has spent $404 million to purchase 2,400 houses since October, sees an opportunity in other companies’ mergers and acquisitions. In February, Amherst bought about 450 properties from Front Yard Residential Corp., a real estate investment trust that acquired most of those assets when it took over a larger portfolio.
The firm plans to continue operating many of those houses as rentals. It could eventually renovate and sell some of the higher-priced homes, either through traditional channels or a new subsidiary, Bungalo Technologies LLC.
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