According to a report by Morgan Stanley, the buy-to-rent market is only a fraction of where it could be, and the market is ready for major growth in the coming years.

Morgan Stanley analysts predict that the buy-to-rent market will grow from $17 billion today to more than $100 billion in the next several years. They called it a “sustainable business with a long runway for growth.”

According to analysts, institutional investors may be able to anticipate a more than 10 percent return on investments, as rents nationwide continue to rise.

“Over the past three years, investor activity has removed significant amounts of distressed supply from Southern California, Phoenix and Las Vegas,” according to the report. “Consequently, select MSAs in Florida, the Midwest and the Northeast now constitute a greater proportion of the nation’s distressed properties, making them potentially more attractive to institutional buy-to-rent investors.”

Source: “Morgan Stanley predicts buy-to-rent boom,” HousingWire (July 31, 2013)