Wall Street’s hoping that Main Street investors will want to become landlords. Colony American Homes, which has bought 8,000 homes to rent out, filed to go public and raise as much as $100 million in an initial public offering.
As we wrote in a story in this week’s magazine, renting out single-family homes is evolving from a mom-and-pop enterprise to a more institutional business. Private equity firms have raised more than $10 billion to buy foreclosures and other distressed homes, looking to take advantage of declining homeownership rates and property values that are still 29 percent lower than their 2006 peak. The funds been buying hundreds if not thousands of properties a month, and they’re trying to find other ways to raise money and in some cases exit the business.