Are there investor clienteles in rental housing?
Wood, G.A. and Tu, Y. (2004) Are there investor clienteles in rental housing? Real Estate Economics, 32 (3). pp. 413-436.
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The possible existence of investor clientele groups has received little attention in the real estate finance literature. In this paper we develop a clientele model, which in equilibrium produces a clustering of investors by tax characteristics. Low-tax-bracket investors are concentrated in low-value rental housing that attracts rents which are high in relation to property values. On the other hand, only high-tax-bracket investors will be observed in high-value rental housing, and they charge rents that are low in relation to property values. An empirical model is specified and estimated using a cross section of investors in Australian private rental housing markets. Investor clienteles are detected among property investors, though there is a weak diversification effect indicating that clientele effects may be stronger among single property investors
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