One-off rentals or package deals?

[John Franczyk]

Southeast Wisconsin is drawing a lot of speculative money for rental housing as a result of the FoxConn development in Racine County. Out-of-state investors are seeking to capitalize on the anticipated demand for housing that will materialize when the construction ramps up, and later when the development starts to hire its 10,000 new employees.

As a small investor, I'm locked out of some of the bigger deals that are happening now for new developments and apartment complexes that will have 100+ units. Where I do have an advantage here is in my being able to find standalone houses that rent for $800 to $1000 per month or more, and that feature good cash flow and cap rates. 

From what I can see, the big pools of out-of-state money aren't looking for these small deals. What I'm wondering is if there is a tipping point somewhere for an assemblage of these one-off rentals into a package deal. For example, if I can put together a package of 12 standalone rental houses, is that big enough to draw outside investor attention? Maybe 20 is the right number? Maybe higher?

My concept here is to look for rental houses that all rent for roughly the same amount, and that are all within a defined geographic region or the same zip code, that are all under professional management. The package would then be evaluated as a whole, rather than as a group of several individual rentals.

I'm looking for any feedback or opinions on what might be attractive to hedge fund or private investor money within this business model.

Thanks!