Amidst the growth in the value of US housing recovery investments JPMorgan Chase & Co. (NYSE:JPM) has decided to give its affluent clients a chance to invest in the single family rental market. Company says there would be strong returns as much as 8 % annually from the money when a home will be sold and also from rental income.
In a partnership the firm puts its clients’ money by buying more than 5000 single family homes says JPMorgan MD David Lyon. The homes are put for rent in Nevada, California, Arizona and Florida.
The affluent clients of JPMorgan are now desperately joining individuals and private equity firms that acquire rental homes in the regions hardest hit by the housing crash in the United States. Last month home prices grown faster than expectations and so The Blackstone Group L.P. (NYSE:BX) accelerated purchases by investing nearly 2.7 billion US dollars.
Investors are betting on rental properties as an alternative to housing related mortgage debt and stocks that have already soared.
New York based JPMorgan Chase & Co uses a third party manager to find homes acquire and manage them. In mid 2012 company started pooling investments from its clients into a partnership to purchase distressed properties. The acquisitions were made over speculations that prices will rise over the next several years. Company’s private bank oversees 877 billion US dollars of investments.
Banks have required higher credit scores since the financial crisis of 2008 as well as larger down payments to qualify for mortgages. Lenders whose loans for acquisitions closed in 2012 had an average credit score of 740 that previously was 716 in 2006. Conclusively the United States home ownership rate reduced to 65.4 % at the end of 2012 from 69.2 % in 2004.
JPM shares surged 0.65% to $47.99 in premarket on Tuesday. The Blackstone Group L.P. (NYSE:BX) shares fell -1.36% to $18.84 in last trading session on Monday.