That means it takes only about eight years of rental payments to pay back a typical house that Invitation Homes has bought. According to a recent SEC disclosure, Invitation Homes’ portfolio of homes is worth of total of $16 billion (after renovations), and the company collects about $1.9 billion in rent per year. One way to think about Invitation Homes’ business strategy is to consider the value of the properties the firm is buying, relative to the rents they charge. While Invitation Homes uses a mixture of debt and cash from renters to buy houses, its offers are almost always all cash, which is a big leg up in a competitive market. ![]() In practice, this means that Invitation Homes can afford to tack on an extra $5,000 to $20,000 to the purchase price of every home, while getting the house at the same actual cost as a typical homeowner. (Though that’s not much compared with the 80,000 homes sold in Atlanta each year, Invitation Homes bought 90 percent of the homes for sale in some ZIP codes in Atlanta in the early 2010s.) While normal people typically pay a mortgage interest rate between 2 percent and 4 percent these days, Invitation Homes can borrow money for far less: It’s getting billion-dollar loans at interest rates around 1.4 percent. Invitation Homes operates in 16 cities, with the biggest concentration in Atlanta, where it owns 12,556 houses. ![]() Let’s focus on Invitation Homes, a $21 billion publicly traded company that was spun off from Blackstone, the world’s largest private equity company, in 2017. Although the number of houses being purchased by mega-investors is currently not enough to move the market in most parts of the country, these firms’ underlying structural advantage is profound and growing. ![]() The truth is between the two: We can panic and acknowledge Wall Street’s small role at the same time.
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