The tentative recovery in the residential housing market has not put a damper on the supply of single-family home investment properties?or buyer demand.
Both individual and institutional investors continue to find ample opportunities to acquire properties at discount prices. Since starting to buy single-family homes at the beginning of 2012, Los Angeles-based Colony American Homes has amassed a portfolio of nearly 10,000 homes. “The ability to buy homes at attractive values in all of the markets that we are in continues to be very compelling,” says Justin Chang, CEO of Colony American Homes. For example, Colony expects to buy 1,000 or more properties in South Florida alone over the next year.
Colony isn’t the only institutional investor active in the single-family home niche. Blackstone Group LP recently secured a $2.1 billion syndicated loan from Deutsche Bank AG to facilitate its REO-to-rental investment program. These buyers are facing more competition and rising prices as the housing market begins to improve in many metros. Yet there continues to be a solid inventory of available properties including properties in foreclosure or distress, as well as homes listed on the open market at prices that are well below peak 2006 prices.
“There really seems to be a continued flow of distressed properties and shadow inventory,” says Stephen Karbelk, CAI, AARE, co-chairman and founder of AmeriBid LLC in Reston, Va. AmeriBid conducted an auction of single-family homes on behalf of the New Orleans Redevelopment Authority (NORA) last October where approximately 125 homes were sold. Nearly half of the properties that sold, 47 percent, sold to investors.
AmeriBid had a second NORA auction planned on March 23to sell about 130 homes. In addition, the firm has multiple auctions in the works with other public agencies that it will be announcing in the next week, one of which involves the auction of as many as 6,000 properties, Karbelk notes.
“Buying opportunities are not drying up for us in Chicago,” agrees Eric Workman, vice president of sales and marketing for MACK Companies in Tinley Park, Ill. MACK is a veteran investment group that has been buying distressed or foreclosed single-family homes and redeveloping them as rentals for the past 15 years. Earlier this month, the firm announced the sale of 93 single-family homes to American Residential Properties,an Arizona-based REIT, for more than $12 million. MACK is continuing to actively pursue acquisition and redevelopment opportunities to provide additional inventory for ARP on an ongoing monthly basis.
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