The Wall Street Journal just put out an interesting article about a company called Invesco putting $5 billion into a hedge fund that's purchasing single family homes.
And they're not alone. There's another $6.5 billion dollars targeted with other hedge funds doing exactly the same thing.
Now, why are these hedge funds going after single family homes?
Well, they've identified that they can get a cap rate of as much as 6.8%. That's the target rate that they're comparing to apartment buildings and commercial — which is like the low sixes.
So what they're saying is: we're going to make money on this. And we're going to rent these houses to millennials that are choosing not to become homeowners.
What we need to do as an industry, number one is to recognize that we should be investing in single family homes as well. But also we need to encourage everybody that's not a homeowner today to get into the real estate arena and buy their first home. Start building equity.
Pulseconomics just did a study with a hundred top economists. They're showing that home prices are going to continue to appreciate over the next five years, 13% over the next two years alone. On top of that, interest rates are going to begin to rise. So we got to get people into home ownership now.
We don't want them waiting any longer than they've already waited. We don't want them writing more checks to the landlord so the landlord can pay their mortgage. We want them building equity.
By the way, somebody that buys a home today -- according to the Pulseconomics study again -- and holds that home for five years, will have an average equity gain of $93,000.
So what a great way to build wealth. And it's really the fastest way to build wealth for Americans.
According to a Harvard University study, 45% of American wealth is built on home ownership.
We got to help people become homeowners. Let's do that. Let's get out in the market and make it happen.
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