The dynamics of the market are simple: Home prices are low, rents are high and the investments are outperforming other asset classes.
Real Estate in Florida
The Players: Who's buying single-family foreclosures
Directors of the Malibu, Calif.-based company include B. Wayne Hughes, the billionaire founder of Public Storage, the nation’s largest self-storage company.
» Total Investment: At least $600 million nationwide
» Sweet Spot: Homes at average price of $122,000 in mostly newer developments in Jacksonville, Tampa and Orlando. The company also has properties in Georgia, Texas, Illinois, Nevada and Arizona.
The New York equity firm has created a new entity, Invitation Homes, to handle the acquisition and management of its rental homes.
» Total Investment: Approximately $440 million for 2,900 homes in Florida, to date, and a total of $1.5 billion nationwide
» Sweet Spot: Three-bedroom, two-bath homes between $100,000 and $175,000 but occasionally larger homes if the price is right. Focused on Jacksonville, Miami, Orlando, Sarasota and Tampa markets in Florida. Also buying homes in Arizona, Nevada, California, North Carolina, Georgia, Illinois and Washington state.
The San Diego-based real estate investment firm was the first winning bidder in the Federal Housing Finance Agency’s real estate owned (REO) rental initiative, a federal pilot program designed to sell repossessed homes in bulk to investors.
» Total Investment: Paid more than $12.3 million for 699 Florida properties valued at $78.1 million. The deal with Pacifica is structured as a joint venture with Fannie Mae, which will receive 90% of the rental revenue until it collects $49 million. Then Fannie Mae’s share will drop to 50%. Pacifica receives the balance of rental income in both cases as well as a separate 20% asset management fee.
Sweet Spot: The bulk purchase included homes of varying sizes, ages and values in every region of the state except the Panhandle.
The Miami firm is headed by Erik Wesoloski, a real estate attorney, and Scott Kranz, who is a partner in a merchant banking organization called Strategica.
» Total Investment: $200 million in Florida, including $50 million for buy-fix-flip investments
» Sweet Spot: South Florida homes valued at between $50,000 to $250,000, with rents ranging from $1,200 to $2,000 a month.
The Aventura-based private equity company, headed by Jordan Kavana, is eyeing three possible exit strategies for its portfolio of homes: Taking the portfolio public; taking a portion of the portfolio public and securitizing a portion; or selling his portfolio to a private equity firm.
» Total Investment: Purchased close to 1,000 homes in Florida and plans to buy another 4,000 for a total investment of about $500 million.
» Sweet Spot: Kavana’s firm is buying in every county in the state. He says the key to success is diversification and sound underwriting that puts 80% of its weight on the cash flow the home will generate and 20% on the equity it will produce.
The Minnesota REIT is spinning off its portfolio of single-family homes into a new publicly traded REIT called Silver Bay Realty Trust.
» Total Investment: Two Harbors has a portfolio of 3,100 homes. As of August, 1,370 of those single-family homes nationwide were valued at $150 million.
» Sweet Spot: Focusing on nine markets in Arizona, California, Nevada, Georgia, North Carolina and Florida
The Miami firm was founded by a group of Mexican businessmen. CEO Iñaki Negrete is a former vice president of banking with Credit Suisse Securities and most recently supervised more than $10 million in distressed residential real estate investments as CEO of the East Coast Opportunity Group.
» Total Investment: At least $150 million on 1,200 homes
» Sweet Spot: Focused on foreclosed and bank-owned properties in south Florida. Negrete says the company is buying homes once worth “$200,000 or more for $75,000 and making them available for a reasonable $1,500-a-month rent.”