Single-family plays aim for critical mass, better efficiency

|By:, SA News Editor

Critical mass in limited markets is key to achieving greater economies of scale and American Residential Properties (ARPI +0.7%) - which owns 7K homes in 12 states - owns 1K+ homes in core markets like Phoenix, Houston, Dallas, and Atlanta, and plans to have 500 homes by year-end in five other markets.

American Homes 4 Rent (AMH +0.1%) started with 49 markets, but has whittled that down to about 30, and Starwood Waypoint (SWAY -0.3%) aims for at least 1K homes in markets where it does business.

The companies are also investing in technology to aid in things like determining how much to pay for a home to managing maintenance. Starwood has a system tracking 400K neighborhoods to figure out fair prices, and a revenue management system based on traffic and rent prices allowing it to optimize rents.

Likely IPO candidates: Blackstone's Invitation Homes, with about 43K homes, and Colony Financial's (CLNY +2.7%) Colony American Homes with more than 8K rentals. Reven Housing (RVEN) - with 177 homes mostly in Houston - has filed with the SEC to raise up to $29M and uplist from the pink sheets.

Related: SilverBay Realty Trust (SBY -0.6%).