Check out this article I just read on Bloomberg. I think the article is well worth the read if you are considering investing in single family homes. Here is a link to the article: http://www.bloomberg.com/news/2012-03-13/private-equity-buying-u-s-foreclosures-for-hot-rentals-net-8-mortgages.html However, if you’d like the abbreviated version, here are my thoughts and how they apply to our current market in Birmingham:
With returns down across the investment board, investors are in search of yield. It has been my experience that you can invest in homes (if you buy them right) that can yield from 10 – 12% unlevered returns right here in Birmingham.
Sophisticated money is beginning to chase these homes in areas where they can buy a lot of them quickly. They perceive Birmingham as too small of a market to buy large blocks of these homes, so you and I don’t have to worry about competing with them.
If sophisticated money is chasing single family homes, and they are the ones that are doing all the research, shouldn’t you feel comfortable buying now?