Blackstone Buys Home Partners of America

Investors Bet on US Real Estate Market

Private equity firm Blackstone Group (BX) is betting that red-hot demand for real estate will continue. Blackstone recently inked a $6 billion deal to buy Home Partners of America, a company which buys and rents residential homes. The transaction is a sign that Wall Street thinks the US real estate market will not cool down anytime soon, despite a lack of inventory.

Sales of homes surged last year as mortgage rates fell and people working remotely searched for roomier houses. That growth has been blunted in recent months by a lack of inventory and surging prices. Nevertheless, many investors believe that demand from millennials in their home-buying years will drive growth in the future.

Blackstone Sends a Message

Following the subprime real estate crisis which took place more than a decade ago, Blackstone and other large investment firms bought up houses on the cheap. Blackstone owned tens of thousands of single-family homes, which it rented out via Invitation Homes (INVH).

Blackstone sold its remaining stake in Invitation Homes in 2019, but began investing in real estate again last year. It purchased a $240 million preferred equity stake in Tricon Residential, which buys and rents homes in North America and is now purchasing Home Partners of America. Blackstone joins Brookfield Asset Management (BAM), JPMorgan Asset Management (JPM), and Rockpoint Group in making large investments in residential rental companies.

Rent Prices Rising

Investors are drawn to companies which buy and rent single-family homes because increasing home prices as well as upticks in rent make these investments more valuable. The rental market suffered as people left cities during the pandemic, but rents are climbing again, rising 1.1% year-over-year in March. Rents may increase further as a lack of inventory in the housing market forces potential buyers to continue renting.

The real estate market has been red-hot for over a year. While inventory is low, many Wall Street investors are betting there is still room for growth.

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Fast-Food Chains Invest in Loyalty Programs

McDonald’s Launches Rewards Program

For the first time in its history, McDonald’s (MCD) is rolling out a loyalty program nationwide as the company works to retain digital customers it gained during the pandemic. Other fast-food chains including Popeyes (QSR) and Taco Bell (YUM) have also launched rewards programs in recent months. Loyalty programs are helpful for these brands because they can spur more traffic, drive up the average size of checks, and provide restaurants with insight into customers’ preferences.

The McDonald’s loyalty program will go live in early July after months of testing in select markets, and customers will earn 100 points for every dollar they spend at McDonald’s. They can then use these points to redeem free menu items. To entice consumers to join the program, McDonald’s is giving customers 1,500 points following their first order as a rewards member.

Boosting Digital Sales and Improving Customer Experience

McDonald’s is integrating the new rewards program into its other technology offerings, which include its mobile app and digital menu boards. The idea is to boost digital sales, which were close to $1.5 billion in the first quarter of 2021.

In addition to increasing sales, McDonald’s wants to use the loyalty program to improve customer experience. Rewards members will be greeted by name at McDonald’s. The company will also send customers personalized emails with deals focused on their preferences.

Chipotle Tweaks its Rewards Program

At the same time that McDonald’s is launching a rewards system, Chipotle Mexcian Grille (CMG) is tweaking its own program for the first time in two years. With the changes, rewards members will be able to redeem points for items across the menu. It will take just two visits to rack up enough points for a free order of chips. Previously it took longer to accumulate points and they could be used only for a free entree. Since it rolled out Chipotle Rewards, the fast-food chain operator has amassed 22.9 million members.

From McDonald’s to Chipotle, fast-food operators are realizing that loyalty pays off. It will be interesting to see how consumers respond to a variety of new fast-food loyalty programs.

Benefits of Debit Cards vs. Credit Cards

Pros and Cons of Credit Cards

Credit cards have some advantages. Credit card use is taken into account on your credit report, so using a credit card responsibly—things like making on-time payments and keeping credit utilization low—can be a good way to build credit.

Credit and debit cards both have security measures built in, but credit cards tend to provide more protection. If a debit card falls into the wrong hands, fraudsters can have access to real money. Generally victims can recover that money, but it can take time. When fraud occurs with a credit card, the consumer usually isn’t on the hook.

One big thing to watch out for with credit cards is the interest. Most credit cards charge compounding interest, which means that you end up paying interest on the interest you accrue. Essentially, if you don’t pay your statement in full each billing cycle, interest is calculated continually and added onto your balance, which you then also pay interest on (in other words, it compounds).

Even if you always make the minimum payment due, if you’re not paying off the credit card bill in full, then the remainder will accrue compounding interest. That can still add up, and the debt can start to feel insurmountable.

Pros and Cons of Debit Cards

There’s an old saying that “cash is king,” but for many consumers, it’s their debit card that’s the real star of their wallet.

A debit card serves a dual purpose–you can use it to get cash from an ATM, and also make purchases at both physical and online retailers.

While debit cards look, and sometimes act, like credit cards, these plastic payment cards actually function in a very different way. Debit cards deduct money directly from a consumer’s account to pay for a purchase.

Using a debit card for a majority of transactions may make it easier to stick to your budget, because you can spend only what you have in your account. You aren’t borrowing money as you would with a credit card, so you may find yourself paying more attention to every purchase and whether you can really afford it.

Debit cards also tend to come with lower spending limits, even if you have a hefty amount of money in your account. Those daily limits are meant to protect account holders by limiting the amount fraudsters could spend with a stolen debit card. But if you aren’t aware you have a limit—or don’t know what the limit is—you could get an unpleasant surprise when making a major purchase.

The Takeaway

It can be helpful for consumers to have both a credit and a debit card in their wallet, because each payment method has its advantages.

Ultimately, decisions about when to use debit cards and when to use credit cards come down to personal preference. By considering security, surcharges, and other factors, consumers can make more informed choices.