A recent Wall Street Journal article (reposted on Realtor.com) explores the recent phenomenon that millions of homeowners are “house-rich but cash-poor,” thanks to high levels of equity in their homes. However, as the article points out, this situation could be a boon for big single-family rental investors as owners have either fallen behind on their loans, are at risk of doing so or want to cash out while the market is in their favor.
“A lot of people are house-rich but cash-poor,” said Ivy Zelman, chief executive of real-estate consultant Zelman & Associates. “If they bought in the last two or three years, even if they bought five months ago, they have equity.”
Having plenty of home equity but reduced means to keep making payments could prompt many to sell while prices are high and exit homeownership with a cash cushion, Ms. Zelman said.
Some of these big players are even floating sale-leaseback programs, where the property owner sells to investors and then rents it back.
“Such arrangements would allow those who face the prospect of losing their homes to cash in on high house prices without having to move, said Jarred Kessler, chief executive of EasyKnock Inc., a startup that he said raised $25 million from venture investors in June and hundreds of millions of debt to launch a sale-leaseback program this month called ReLEASE.”