Dive Brief:

• Ex-Goldman Sachs Group executive Donald Mullen Jr., who helped orchestrate the company's so-called short strategy prior to the housing crash, is now raising $1 billion to buy foreclosed single-family homes in order to rent them out, according to The Wall Street Journal.

• Pretium Partners, Mullen's real estate investment firm, managed to garner huge investments in two prior rounds — one in 2012 ($1.2 billion for 16,500 homes) and again in 2014 ($900 million for 14,000 homes) — making it the fourth-largest owner of single-family homes in the country.

• Despite a slowdown in the rental market due to a multi-year housing boom, Pretium told investors that "tight credit" should continue to propel those who can't qualify for a mortgage into rental homes.

Dive Insight:

A dwindling stock of foreclosures means that Pretium will likely have to try its luck on the open market in pursuit of home deals rather than buying in bulk. With homeownership at its lowest share since 1965 (62.9%) and ever-increasing home prices (averaging 5% annually), Mullen is trying to convince investors that rentals are a sure bet, according to The Journal. Mullen, like many other investors and developers looking at the market today, is betting on the millennials waiting longer to marry and start a family, postponing home purchases. A persistent low inventory of available housing stock should also keep many potential homebuyers in rental units.

The good news for Pretium and its investors is that rental rates, like home prices, are continuing their upward march. Although the rate of growth has slowed somewhat (1.7%), rising rates have taken the Zillow Rent Index to $1,405. Still, rate appreciation is consistently high in hot markets like Seattle (9.7%), Portland, OR (7.4%), Sacramento, CA (5.5%), San Diego (4.9%), San Francisco (4.8%) and Los Angeles (4.7%).

Consolidation in the residential rental industry has led to just a handful of companies and real estate trusts holding a huge percentage of the market. For example, last year, American Homes 4 Rent, the second-largest holder of single-family home inventory (47,000 homes in 2015) next to the Blackstone Group (50,000), merged with American Residential Properties in a $1.5 billion deal, giving them a combined valuation of more than $5 billion. According to The Journal, the six biggest holders of for-rent, single-family homes have spent more than $28 billion on property acquisitions since the market's peak.