Home Rentals On The Rise: Ways To Invest In The Trend

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(Written by Rebecca Lipman. List compiled by Eben Esterhuizen, CFA. Institutional data from Fidelity.)

Last month Kapitall reported that house flipping was in decline and home-rentals were on the rise – a trend investors may want to use to their advantage.

Money talks, and in the housing industry the practice of house flipping wasn’t quite paying the bills after its heyday in 2009. David Hicks, president of HomeVestors, says his clients are now much more likely to buy rentals than to flip — 57% more likely than two years ago, according to a recent survey the company conducted. (via CNN Money)

Homeownership rates have fallen to 65.1% from its 2005-06 peak of nearly 70%, but people have to live somewhere, so rents are up as high as 25% to what they were a year ago, and they’re expected to rise another 4% by year-end.

And with mortgages so hard to come by (despite record low mortgage rates) it is difficult to say when homeownership numbers will start climbing again.

“You might think it’s an overreaction to call homeownership “dead” when more than half of Americans still are living in a property they own. But a closer look at the numbers reveals the trend is serious indeed,” says Jeff Reeves of InvestorPlace.com.

“For instance, home ownership rates are at their lowest for middle-aged adults — the very people who should theoretically be buying right now. Older Americans have bought years ago with the intention of staying in their homes until they are six feet under. As this generation of homeowners passes away, no one is replacing them.”

With so much profit being diverted to rental properties, real estate investment trusts (REITs) will be on everyone’s radar.

Below we list ten residential REITs with significant institutional buying during the current quarter.

Big money managers seem to think there’s huge upside to these rental property owners–do you agree?

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List sorted by market cap.

1. Avalonbay Communities Inc. (AVB): Engages in the development, redevelopment, acquisition, ownership, and operation of multifamily communities in the United States. Net institutional purchases in the current quarter at 4.3M shares, which represents about 4.88% of the company's float of 88.06M shares.

2. UDR, Inc. (UDR): Operates as a self-administered equity real estate investment trust (REIT). Net institutional purchases in the current quarter at 13.8M shares, which represents about 6.42% of the company's float of 214.97M shares.

3. American Capital Agency Corp. (AGNC): Operates as a real estate investment trust (REIT). Net institutional purchases in the current quarter at 25.4M shares, which represents about 14.23% of the company's float of 178.45M shares.

4. BRE Properties Inc. (BRE): Engages in the development, acquisition, and management of multifamily apartment communities in the western United States. Net institutional purchases in the current quarter at 11.2M shares, which represents about 15.12% of the company's float of 74.07M shares.

5. American Campus Communities Inc. (ACC): Engages in the acquisition, design, finance, development, lease, and management of student housing properties in the United States. Net institutional purchases in the current quarter at 2.9M shares, which represents about 4.19% of the company's float of 69.14M shares.

6. Equity LifeStyle Properties, Inc. (ELS): Equity LifeStyle Properties, Inc. is a publicly owned real estate investment trust (REIT). Net institutional purchases in the current quarter at 5.5M shares, which represents about 15.29% of the company's float of 35.98M shares.

7. Colonial Properties Trust (CLP): Engages in the acquisition, development, ownership, management, and leasing of commercial real estate properties. Net institutional purchases in the current quarter at 9.4M shares, which represents about 11.74% of the company's float of 80.07M shares.

8. ARMOUR Residential REIT, Inc. (ARR): Net institutional purchases in the current quarter at 11.0M shares, which represents about 15.29% of the company's float of 71.95M shares.

9. Sun Communities Inc. (SUI): Operates as a real estate investment trust (REIT). Net institutional purchases in the current quarter at 1.3M shares, which represents about 6.94% of the company's float of 18.72M shares.

10. Campus Crest Communities, Inc. (CCG): Focuses on building, owning, and managing student housing properties in the United States. Net institutional purchases in the current quarter at 2.6M shares, which represents about 8.5% of the company's float of 30.58M shares. 



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Real Estate , Stocks


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