Business

Blackstone Group enters residential mortgage market

Steve Schwarzman is stepping up his effort to profit from the beaten-down US housing market.

The billionaire’s Blackstone Group, already the largest single-family home landlord in the US, this week will — through a newly created unit — write its first residential mortgage, The Post has learned.

The unit, B2R Finance, will start originating loans to buyers of multiple single-family homes, sources said.

The first loan will go to a buyer of Miami single-family homes, a source close to the situation told The Post. B2R is targeting small investors who own 20 to 100 homes, a slice of the US residential home market that is often ignored by banks because they can’t resell the loans to Fannie Mae.

Fannie Mae allows a borrower only 10 home loans.

Blackstone, which owns 40,000 homes, will profit from its mortgage business by having B2R borrow money directly from banks, typically at less than 4 percent, and lend it to investors at 6 to 7 percent, sources said.

If B2R charges points on the 10-year loans, its profits will be even greater. The loans will be relatively conservative, at a 60-to-70 loan-to-value ratio.

B2R will focus on such areas as Dallas, Atlanta, Chicago, Phoenix, Los Angeles and parts of southern Florida, where investors can buy foreclosed homes and fix them up, then rent them for more than their monthly mortgage cost.

Schwarzman isn’t the only PE mogul looking to profit off the recovering housing market. Barry Sternlicht, another PE titan, this week brought Starwood Waypoint Residential Trust public. It will buy single-family homes and rent them out for more than the monthly mortgage payments.

Nearly 5 percent of single-family homes nationally are owned by investor landlords who don’t live at the address, a source said. Of that total, 60 percent, representing a $450 billion market, are the mom-and-pop variety Blackstone’s B2R is targeting.

Private equity firms Cerberus Capital Management (through FirstKey Lending) and Colony Capital are Blackstone’s biggest rivals in lending in the mom-and-pop single-family home landlord space.

Blackstone, meanwhile, last year was busy buying 28 multi-family apartment buildings with 300 to 400 units each, a mortgage executive told The Post.

The firm declined to comment.