REO-to-Rental: An Update

November 05, 2012

In light of the unprecedented volume of distressed properties currently available in the U.S. housing market, investors are demonstrating considerable interest in single-family rentals as an emerging asset class. Government programs are giving investors the opportunity to purchase pools of foreclosed single-family real estate owned (REO) properties for conversion into rentals. Whether the REO bulk sales transactions are being offered by Fannie Mae, Freddie Mac or the Federal Housing Administration, which control large amounts of REO, or private sector actors, investors must consider a wide range of issues before participating in the REO-to-rental movement. As REO-to-rental strategies develop, market participants must take into account factors such as the form such transactions will take, the availability and terms of financing, the ability to rate the asset, and the potential use of securitization as an exit strategy.

Read “REO-to-Rental: An Update.”