29 Jun Beware of venture capital firms that are focusing on taking away homeowners’ equity.

Beware of venture capital firms that are focusing on taking away homeowners’ equity.

The Star tribune just released an article called “Upscale rental homes catch on in Twin Cities metro area.”  The first line says new developments of high-end rental homes – renting for up to $4,500 a month – are spending across the Twin Cities metro area.

Venture Capital firms are building these rental communities across the United States. This is because buyers cannot find enough homes to buy, and these companies are exploiting the weakness in the marketplace. The big player in the metro is Chicago-based Watermark Equity Group which has five projects under construction or open in Maple Grove, Plymouth, Inver Grove Heights, and Woodbury. These communities are “build to rent” and they charge you rent of up to $4,500 a month. The home sizes are 1,300 to 3,000 finished square feet.

So why be concerned about this? In my opinion low inventory and high demand for home buyers is preventing them from buying a home and realizing the American dream of home ownership. Home ownership has been a cornerstone for people to accumulate wealth for retirement and to pass on to their children. The federal government also gives the homeowner the ability to deduct mortgage interest (up to a maximum amount), and this is a huge benefit. So, if a buyer cannot find a home and is forced into choosing this high rent option, they will not build equity and not have the tax savings. And then the venture capital firms benefit from the increase in home values and the rents pay their debt.

 

This is a disturbing trend and you as a buyer/renter should understand the facts before proceeding.

 

I hope you found my blog on “Beware of venture capital firms that are focusing on taking away homeowners’ equity” helpful. Look for more blogs on all aspects of Minnesota, real estate, and the world around us.

Just call, text, or email me with questions.

Jeff Anderson

The Anderson Team

www.mnrealestate.com

RE/MAX RESULTS

612-386-8600