Here at Great Wealth Strategies, one of the alternative investment ideas we advocate is cash flow real estate. Essentially, investors own a property portfolio in competitive housing markets that deliver a steady income. This revenue is ideal for saving up for retirement, supplementing other pay or even hedging against more risky ventures. However, it should be noted that there is a difference between investing in quality rental properties and the market for buy-to-rent homes that, for the past several years, has fueled a surge in residential prices. Recent data from the industry – and announcements from its major players – suggest that some of the air may be beginning to leak.
Oaktree Capital Group was one of the most visible faces in the buy-to-rent industry, scooping up large swaths of homes in the market while credit was cheap and demand was strong. Homeowners, unable to make payments on their mortgages, were all too willing for a restructuring of their debt to keep their homes. Unfortunately, many of these folks have continued to fall on tough economic times, turning once-profitable portfolios into non-performing assets.
While Oaktree has yet to make an official statement on the matter, Reuters reported that the group is likely trying to book profits before a slowdown or even reduction in average home prices. The composition of Oaktree's assets has not been disclosed but its speculated that upwards of 500 homes are being sold.
What does this mean for the average investor? If home prices fall, a major component of economic growth – the housing market – could become impaired. On the other hand, it presents an opportunity for savvy buyers to scoop up quality properties if they have the chance. Reach out to us today to discuss your options!