HOUSINGNEWS REPORT
THE RISING ‘BIG MIDDLE’ OF SINGLE FAMILY RENTALS
GROWING SHARE OF FINANCED FL IPS
TOTAL FLIPS
FINANCED FLIPS
FINANCED SHARE OF FLIPS (COUNT)
35.8%
35.3%
35.3%
238,372
229,999
163,338
146,033
31.8%
84,112
81,107
58,483
46,436
2014
2015
2016
JAN-SEPT 2017
Frustration with SFR Financing Both Pintar and Nahon — two prime examples of the middle-market operators Cisterna refers to — expressed some level of frustration with the financing options available to them. “We couldn’t get financing until a couple of years into the game, and then we had to deal with community banks,” said Nahon. “Wall Street acknowledgement of our asset class is allowing us to borrow with more favorable terms.” Pintar said about a year ago he began looking into options for getting his company’s portfolio of about 400 rental properties into long-term debt, ideally a 10-year term with a 30-year amortization so the loan term could be fixed anywhere from 10 to 30 years.
according to a New York Times article on the announcement. “In all, Freddie Mac could provide up to $1 billion in financing or loan guarantees to smaller firms that buy single-family homes and operate them as what it considers affordable-housing rentals, a company official said in an interview. Some nonprofit housing groups might also be eligible for financing.” Cisterna expressed optimism that the Freddie Mac financing will go much further than the Fannie Mae-Invitation Homes deal to support the rapidly growing middle of the single family rental industry. “A lot of the middle market guys (are) getting squeezed right now as their cost of capital is more expensive than the debt,” he said. “A lot of people are eager to see what that program really looks like.”
as possible but also gives us as much flexibility (as possible),” he said, noting the ideal financing would allow for swapping out of properties and not incurring pre-payment penalties. “For a lot of banks it just falls into the too- hard basket.” Pintar said that while there is “no shortage of capital” from non-traditional lenders such as Anchor, Genesis Capital and CoreVest, all of which also have strong processing operations that allow him to submit and get a loan within 24 hours, the higher cost of debt along with less flexible loan terms make those non-traditional lenders less appealing. “They are trying to securitize the loans so they have some things in there that are pretty specific … that basically make it punitive. There is a real lack of flexibility that we weren’t comfortable
“It is important to us to get debt that pushes out that debt expiration as far
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NOVEMBER 2017 | ATTOM DATA SOLUTIONS
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