Services Capitalize on REO-to-Rental

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7 · 05 · 12

As the first batch of real-estate-owned properties held by the Federal National Mortgage Association is readied for sale and conversion to rental properties, several firms are providing assistance for investors interested in buying such assets.

The Federal Housing Finance Agency announced Tuesday that transactions processed through its REO-to-rental pilot program are expected to close early in the third quarter.

In recent testimony, an FHFA official testified before a House subcommittee that there are around 180,000 REOs owned by Fannie Mae and Freddie Mac. She also noted that the pilot targets properties in markets with a “fundamental supply-demand imbalance” and would be “highly inappropriate on a national scale.”

Pro Teck said last month that its new REO-to-Rental Analytics Suite provides granular data and analytics on REOs, market drivers and forecasts in addition to market rents and yields. It also delivers data on the value and condition of the property, neighborhood trends and expected appreciation in the neighborhood. The service reportedly helps investors determine which properties would be the safest and most profitable rental investments.

First-quarter home sales to investors by Memphis Invest jumped to 99 properties from just 59 homes sold in the year-earlier period, the Memphis, Tenn.-based company reported. REOs accounted for 82 percent of the latest quarter’s sales.

Memphis Invest, which manages more than a thousand properties in Dallas and Memphis mostly for out-of-state investors, said that first-quarter activity reflected continued growth in the REO-to-rental market.

Enhanced investor insight is available through a property data and analytics offering announced in May by CoreLogic. In addition to average property rents and cash-flow projections, the service reportedly provides capitalization rates, neighborhood assessments and market trends, and a 24-month review of housing price trends.

Mortgage Expert

Mortgage Daily Staff