Greyzdorf, a new company backed by a private equity firm, is entering the single family rental market.
It is targeting smaller landlords with financing that allows them to borrow against their inventory of single family homes, much like the revolving lines of credit that automakers provide to dealerships.
Under an approved non-recourse inventory credit line, a landlord with 10 or more properties valued at $1 million or more may be able to draw down on a payment for 75% of the value, as measured by a broker price opinion, or greater.
But unlike floorplan financing, which is used to finance inventory until it is sold to consumers, these inventory credit lines will be used to warehouse inventory to be securitized.
Ownership of the inventory (rental homes) will be contractually transferred to a Greyzdorf special purpose vehicle awaiting securitization. Greyzdorf pays the inventory’s credit line interest rate upon securitization.
Philip Foresight, a member of Greyzdorf’s board of directors, told ASR that the firm is sourcing deals “right now.”
The company said in a press release that it is targeting “90% of landlords owning 10 or more properties; as well as turnkey and buy & flip rehabbers.”
“Our concentration is in the Midwest and we are utilizing a brokerage network of RE/MAX thus we have nationwide exposure,” said Foresight. “Even though we are exposed to multiple landlord sellers, we can easily scale up to $3 million to $400 million deals.”
He said that the financing is ideal for smaller investors looking to sell single-family rental portfolios. “Just like car dealerships with new cars sitting on the lot, landlords often have inventory of rented homes on their balance sheets for sale,” the press release states.
“Targeting smaller landlords is the natural next step in the evolution of the SFR securitization market. In the $2 trillion rental finance market over 90% of landlords own less than 10 properties.”
Smaller investors are already accessing the debt capital markets via lending platforms designed to facilitate the purchase of single family rentals. In April, B2R Finance and First Key Lending issued bonds backed by smaller loans made to smaller investors via their multi-seller platforms.