American Campus Communities Inc (NYSE:ACC), AvalonBay Communities, Inc. (NYSE:AVB) – Major Investment Firms Continue to Bet on Rental Market Growth – Are There Opportunities for Retail Investors?

It’s no secret that housing became expensive during this period of high inflation. Rents have increased by a median of 11% and house prices have climbed around 19% since 2021. Many factors are behind this increase, such as the end of eviction moratoriums, low interest rates and the ever-increasing demand for limited properties.

However, one of the most controversial drivers of rising housing costs is Wall Street. Many Wall Street investment firms, including Blackstone Inc. (NYSE: BX), bought single-family homes across the country to rent them out for profit. Wall Street’s heightened interest in real estate is also providing investors with opportunities through real estate investment trusts (REITs) like Communities AvalonBay Inc. (NYSE: AVB) and crowdfunding sites, including crowd street and Homes arrived.

Blackstone is also expanding into the college rental real estate market as it will acquire all of the outstanding shares of American University Communities Inc. (NYSE: ACC) for $65.47 per fully diluted share in an all-cash transaction valued at approximately $12.8 billion, including debt assumption. American Campus Communities is a leader in providing student rentals.

It owns 66 properties in 71 top college markets like Arizona State University, University of Texas at Austin and UC Berkeley. These properties are either on college campuses or within walking distance of campuses, making life more convenient for students.

Coincidentally, American Campus Communities has a foothold in one of the nation’s fastest growing real estate markets, the Sunbelt, which includes areas like Arizona, Texas, and Florida. Rents in Phoenix and Miami rose 18% and 39%, respectively. The acquisition of Blackstone will help it diversify its types of real estate in these hot markets.

See also: Investors turn to mobile home parks as demand for affordable housing increases

Things may seem difficult for many renters as well as first-time home buyers. Blackstone realized that unaffordable prices negatively impact the average American. He created April Housingan organization dedicated to providing affordable housing complexes nationwide.

Rents for April Housing properties are set by government regulation through the Low Income Housing Tax Credit (LIHTC) scheme. The LIHTC was created during the 1986 tax reform and provides tax credits to developers who build affordable housing, including apartment buildings. To qualify for this credit, properties must pass one of these three tests.

Want to share the profits of Wall Street? Consider These Two Residential REITs for Potentially High Yields

Communities AvalonBay Inc. (NYSE: AVB)

AvalonBay Communities is one of the largest apartment REITs as it owns over 275 apartment communities nationwide. Many of its properties are located in major metropolitan areas like San Diego, Washington DC, and Seattle. Compared to similar companies, it boasts an above-average net profit margin of 56%. Her debt ratio is 0.76, which means she can effectively manage her debts.

Residential Equity (NYSE: EQR)

Like Avalonbay, Equity Residential (NYSE: EQR) is another large apartment REIT. It has 310 apartments with a total of 80,000 units and is present in major markets such as Southern California, New York and Boston. Similar to AvalonBay, it is profitable as its net profit margin is 81.57%. It also benefits from rent increases, as three-year net income growth is 26.56%, which is higher than most competitors.

Gain real estate visibility with these crowdfunding sites

Homes arrived

Homes arrived is a relatively new and unique crowdfunding platform as it focuses on single-family homes. It helps investors from all walks of life break into real estate since you can buy shares of single-family home projects with a minimum investment of just $100. Investors can also use a self-directed IRA to invest in Arrived Homes offerings.

It offers investors multiple ways to realize returns, including rents and property appreciation. Yields can vary, but the average dividend is between 5.4% and 7% per year. Investors could potentially earn higher returns as Arrived Homes focuses on single-family homes, which are currently seeing extremely high demand.

Crowd

crowd street is a proven crowdfunding platform. Unlike Arrived Homes, it offers a wider variety of investments, allowing investors to buy shares of commercial and residential properties. One of the other major differences is that it is only available to accredited investors and most offers require a minimum investment of $25,000.

Investors can also use a self-directed IRA to invest in Crowdstreet offerings. This platform had an average internal rate of return (IRR) of 18.3%.

See Also: Benzinga’s Favorite Real Estate Investment Deals

Final remark

Inflation has increased over the past year and was measured at 8.5% in March 2022. It has particularly affected the housing market, as rents and house prices have soared.

Wall Street companies like JPMorgan Chase & Co (NYSE: JPM) also played a role in these price increases. They were able to buy houses with cash and outbid the average buyer. Fortunately, investors can still find opportunities as rents and house prices continue to rise.

Photo by Paul Kapischka on Unsplash