Rental-Home Manager Preps for Next Wave of Landlords

(Bloomberg) -- America's biggest third-party manager of single-family rental homes will help investors buy properties, betting the burgeoning asset class will draw landlords big and small in need of a one-stop shop.

Renters Warehouse LLC, the manager of 22,000 homes in more than 40 U.S. metro areas, agreed to acquire OwnAmerica Real Estate LLC, an online service that connects buyers and sellers of rental properties, Renters Warehouse Chief Executive Officer Kevin Ortner said in an interview. He declined to comment on the price.

Investors have made $490 million of rental home purchases on OwnAmerica's marketplace since the company launched in 2013, from deals for single properties to portfolios of hundreds of houses. Combining the two firms will help Renters Warehouse's existing customers buy more real estate, and also help the company go after an emerging class of large investors who want a passive role in managing homes, Ortner said.

“A lot more institutional capital is coming out and saying we want to get into the SFR space but we don't want to do anything as far as building an operation or building an acquisition team,” said Ortner. “We've been approached by a number of folks that have said, ‘Can you help us acquire and liquidate assets?' and the answer was really, no.”

Single-family rentals were largely a mom-and-pop affair until the U.S. foreclosure crisis a decade ago, when Wall Street firms such as Blackstone Group LP and Tom Barrack's Colony Capital Inc. amassed unprecedented pools of homes. After an early rush, institutional interest cooled as mega-landlords like Invitation Homes Inc., which owns 80,000 houses, and American Homes 4 Rent, which owns 50,000, focused on improving their operations.

There are 22 million single-family rentals in the U.S., according to Attom Data Solutions. While the vast majority are owned by landlords with fewer than 100 properties, the business is seeing fresh interest from large institutions. Earlier entrants, like Amherst Holdings LLC and Cerberus Capital Management LP, have raised funds this year, and new players – including the Teacher Retirement System of Texas and Angelo, Gordon & Co. – have waded in.

Renters Warehouse, a portfolio company of Wayzata, Minnesota-based private-equity firm Northern Pacific Group, charges customers a fee for leasing properties, collecting rent and making repairs. The company is aiming to manage 50,000 homes by 2021, Ortner said.

It isn't the only company angling to attract new institutions. In July, Roofstock Inc., a marketplace for single-family rentals, acquired the property manager Streetlane PM LLC, enabling the company to offer a full suite of services to investors.

To contact the reporter on this story: Patrick Clark in New York at pclark55@bloomberg.net

To contact the editors responsible for this story: Debarati Roy at droy5@bloomberg.net, Rob Urban, Christine Maurus

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