The government and private equity firms are gearing up to start marketing foreclosed homes as rentals in an effort to help lessen the downward impact foreclosures have on the price of nearby homes.
The Federal Housing Finance Agency plans to offer some of its 180,000 foreclosed homes through Fannie Mae and Freddie Mac to private operators who will turn them into rental properties, Bloomberg News reports.
The Federal Housing Administration also plans to participate in a rental program. In a November memo, it has suggested that its program work with public-private partnerships to share the risk and profits, as well as explore offering rent-to-own opportunities to tenants of the homes.
Private equity firms are stepping up to acquire some single-family homes to manage as rentals. GTIS Partners has already earmarked $1 billion by 2016 to acquire single-family homes to manage as rentals. GI Partners also says it will invest $1 billion on rental housing.
“We’re starting to see this as a billion-dollar opportunity to buy rental housing,” Thomas Shapiro, the founder of the GTIS Partners fund, told Bloomberg News.
A few months ago, the White House solicited ideas from the public on how to work a foreclosure rental program to get a better grip on the government’s foreclosure inventory. The White house says it hopes that by turning some of the foreclosures that have dogged many markets into rentals, it will be able to ward off any further drops to overall home prices.