Lennar Corporation (LEN), D.R. Horton, Inc. (DHI): Rent Or Buy? Too Much College Debt Changes This Housing Equation

Renting a House

While school loans may stop people from buying a home, it probably won’t alter the desire to live in one. That’s where companies like Silver Bay Realty Trust Corp (NYSE:SBY) and American Residential Properties Inc (NYSE:ARPI) could shine. These two are among the companies institutionalizing the single family home market.

Silver Bay Realty Trust Corp (NYSE:SBY) has a portfolio of around 3,400 homes across Arizona, California, Florida, Georgia, Nevada, North Carolina, Ohio, and Texas. At the start of the year, however, occupancy stood at just 50%, which is pretty bad. That said, it provides notable upside to the rent roll even if no new properties are purchased.

American Residential Properties Inc (NYSE:ARPI) only came to market a short while ago. It owns more than 2,500 homes in Arizona, California, Florida, Georgia, Illinois, Indiana, Nevada, North Carolina, South Carolina, and Texas. It also manages over 600 properties for others. As of March 31, the company’s portfolio was 86% leased, which gives it a leg up on Silver Bay today, but makes acquisition driven growth more important.

Neither REIT is appropriate for income seekers, however. Silver Bay Realty Trust Corp (NYSE:SBY) only just initiated a dividend, a token $0.01 a share, and American Residential has yet to make a dividend announcement. But, for those looking to get in on the ground floor of a new REIT asset class, these are two of the best options.

Nothing Changing, Yet

The recovery in home sales isn’t going to change overnight. However, the indebtedness of the up and coming generation could become a big issue. Watch the home builders in case sales turn quickly. Meanwhile, single family home owners Silver Bay and American Residential Properties Inc (NYSE:ARPI) may hold some appeal for those who think living in a home will still be alluring.

The article Rent Or Buy? Too Much College Debt Changes This Housing Equation originally appeared on Fool.com and is written by Reuben Brewer.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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