By Cody Laska,
Money and Investing Writer
In attempt to test the water of the next generation of housing, Blackstone’s (NYSE: BX) Invitation home is set to become a publicly traded security. Starting at the peak of the housing crisis and continuing for four years, Global Head of Real Estate at Blackstone began purchasing houses that were in foreclosure.
Accumulating 50,000 houses with a $10 billion price tag, the purpose is to see how open investors are to changing the current status quo that is both real estate and real estate investing.
Per reports, “[it] is unlikely to sell much or even any of its stake in an IPO” but the firm is much more interested in seeing if the rental home business can follow in the path of the other major real estate industries before it; think apartments and offices.
It seems that Blackstone is on the proper trend to continually seize opportunities within the real estate space: first by acting on the ability to purchase houses for less than what it cost to build them and now by being able to offer an opportunity to many who have felt is impossible.
The current generation is one of the most debt-burdened in history and the general consensus is that home ownership is merely a dream from baby-boomer’s past. But with large scale institutions joining the mix, millennials being able to own a home rather than a city apartment might become the new reality.
Only time will be able to tell though if the large scale operation style of Blackstone and properly transition into a space generally run by regional magnates and “mom and pop” operations.
They must be capable of finding the perfect balance in rental charges that will be enticing to potential tenants as well as being able to generate a return that will appease investors.
But with the housing crisis at its end and foreclosure, bankruptcy and other red flag rates returning to their normal levels, Blackstone may find it more difficult to find a cost effective way to acquire new homes.
Investors need to be wearing of this as this is a long term play that could potentially see the value in Invitation Homes plummet and leave a pretty sizeable blemish on Blackstone’s rather impressive record.
If this bold new attempt at investing were to take off however, it could revolutionize the real estate market.
As this is not the first time Wall Street has tried to move into the rental market it is up to Invitation to learn from the mistakes from its predecessors such as American Homes 4 Rent or Starwood Waypoint Residential Trust.
The recommended play here would be to ride the quick success of an IPO and potential new market generation and waves that have been generated by Blackstone.
But not hold these securities as long term plays in a portfolio but rather keep it on a watch list so as to monitor its progress and growth.
It should take at most one year to determine whether or not Invitation Homes will be a success and whether or not the rental home market will become a reliable industry.
All that can be done is to wait.
A version of this article appeared in the Tuesday, December 13th print edition.
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