Private-equity firms are lending to real-estate investors who need mortgages for rental properties.
Private-equity firms are offering buyers large mortgages on properties they plan to rent out. They are targeting a niche group: affluent borrowers buying relatively low-scale properties comprised mostly of one- to four-unit homes.
Since the downturn, borrowers have had limited access to this type of financing, largely because banks have been wary of investment properties. Now, however, conditions are changing as specialty financing firms enter the market.
In November, Blackstone Group launched B2R Finance, which is originating mortgages ranging from $500,000 to $50 million for landlords who own at least five investment properties and want to finance new purchases or refinance. That same month, FirstKey Lending—an affiliate of Cerberus Capital Management—broadened its lending, launching a program for mortgages of $1 million to $5 million, citing high demand from investors.