It was supposed to be a short-term play. Investors would buy thousands of bargain-basement single-family homes during the foreclosure crisis, rent them for a few years and then sell them off and be done.
That’s what the critics thought anyway, but that is not how this still-nascent class of real estate is playing out. Instead, the big players are consolidating, which could make the stocks of those left standing potentially more attractive.
The announcement last week of a merger between Arizona-based American Residential Properties, which owns 8,938 rental homes, and California-based American Homes 4 Rent, which owns 38,377, was the third such deal in the asset class this year. The combined company will own and manage homes in 22 states and is projected to have an equity market capitalization of $5.5 billion based on closing prices as of Dec. 2.