Your Next Landlord Might Be a Buyout Fund

The dealmakers running America's private equity firms see opportunity in one of the most distressed precincts of the US economy: residential housing. The New York-based real estate buyout fund GTIS Partners will spend $1 billion by 2016 acquiring single-family homes to manage as rentals, founder Tom Shapiro said on Jan 24. Some would-be investors are dubious. Moreover, investors need to do more than make the math work, says Shapiro: They will have to deal with the rather unglamorous responsibilities of finding tenants and maintaining properties. Even so, low prices and high demand for rentals make the market intriguing. Single-family home rentals can generate cash flows that are 3 percentage points higher than apartments, says Gregor Watson of McKinley Capital Partners in Oakland, CA.