Update: Landlord Inc.
Investment groups that bought clusters of foreclosed homes as the market bottomed are staying in the rental business.
Three years ago, real estate investment trusts and other groups were busy buying groups of foreclosed single family homes at bargain prices. Their business strategy: Rent the homes for the short term, then sell and cash in when the market rebounded. Since then, home prices have risen, and the pool of foreclosures has dried up. The public and private investment groups have sold some homes at a profit, but the strength of the rental market means they’re still holding on to many income-generating assets and even making new purchases.
“While foreclosures continue, the opportunity to pick up large blocks of homes at bargain prices is largely past,” says real estate analyst Lewis Goodkin, president of Goodkin Consulting in Miami. “However, the strong demand for home rentals has largely incentivized investors to hold onto these assets rather than sell them.”
Vulcan Investment Partners in Miami, for example, is still buying foreclosures and bank-owned real estate properties, as well as small portfolios of homes from other investors who want to exit the market, says Emilio Braun, co-founder and marketing investor relations director. “There are still very good opportunities out there,” he says, adding that the group’s portfolio includes 160 homes in the Miami area. “We plan to keep about 30% of those homes for mid- to long-term rental income.”
Invitation Homes, a Blackstone company based in Dallas, is still buying homes in Orlando, Miami, Tampa, Jacksonville and elsewhere in Florida, says Denise Dunckel, senior vice president/external affairs. The company, which recently sold 1,300 homes in Atlanta, now has about 15,500 homes in Florida, primarily three-bedroom, two bath residences. “We are a growth company, and we like the outlook for Florida,” she says.
Transcendent Investment Management (dba Build U.S. Back), a private equity firm in Aventura, expects to have 10,000 homes in its portfolio by 2018, says Jordan Kavana, founder and CEO. “In 2014, we decided that 50% of our capital will go into Florida and the balance into our other southeastern markets,” Kavana says. “We are buying homes up to $350,000, where before we had a cap of $250,000. We are selling non-strategic assets in terms of location or yield. But we are raising a $400-million fund now with an investment bank to pursue the buy-to-rent strategy for the next 60 months.”
What $250,000 Buys in Florida
9044 S.E. Hawks Nest Court, Hobe Sound, 33455
This two-bedroom, two-bath 1,680-sq.-ft. townhouse/villastyle home sold for $250,000. It had been listed at $259,000. Built in 2002 with a poured concrete method, it abuts a state park, has tile throughout the living area and a screened porch and pool. It has a $248-a-month homeowners association fee. Brokers report a shortage of homes in the $250,000-andunder range.
3029 N.E. 188 St., #516, Aventura, 33180
This one-bedroom, two-bath 816-sq.-ft. loft condominium in Uptown Marina Lofts sold for $250,000 in May — a little less than its $260,000 sales price in 2008 and well below its $304,517 price in 2006, when it was new. The waterfront complex includes a tennis court, pool, fitness center, sauna and business center, as well as 24-hour valet parking and security. The unit’s maintenance fee is $555 per month.
15748 Gardenside Lane, Tampa, 33624
This four-bedroom, 2½-bathroom house in northwest Tampa sold for its list price of $250,000 last June after 26 days on the market. Built in 1981, the 2,188-sq.-ft. house has a remodeled kitchen and bathrooms, wood floors, screened porch and pool. It previously sold for $104,500 in 1993. Judy Clark, managing broker at Coldwell Banker’s Tampa Southwest office, says buyers can still find desirable homes in the mid-$200,000 range, but they’re “going fast. The market has really tightened up.”
10717 Mottram Point, Orlando, 32832
Located near the Lake Nona community southeast of Orlando, the three-bedroom, two-bath home sold in May for its $250,000 asking price. The 1,652-sq.-ft. house, built in 2004, includes a screened-in pool and views of the Eagle Creek Golf Club. The sale price was 36% higher than the $186,000 the home sold for in 2010 — but still 13% below the $286,700 price it commanded in 2004.
219 Clear Lake Drive, Pensacola, 32507
The three-bedroom, two-bath stucco home has a large foyer, formal living and dining rooms and a study/office. Built in 1997 on a half-acre lot, the 2,120 sq.-ft. home has a large master bedroom, lush landscaping, and carpet and tile. The property last sold in 2012 for $203,000. Despite a steady rise in single-family home prices across northwest Florida, $250,000 will still buy “a three- or four-bedroom, three-bath house, with at least 2,200 square feet on a quarter-acre in a good neighborhood with good schools,” says Tim Ekelund with The Agency in Pensacola. Ekelund says he’s seeing more two-income millennials buying homes in this price range.
1663 Blackhawk Court, Fleming Island, 32003
This four-bedroom, two bathroom home was built in 1995, has a new air-conditioning system and new roof, skylights and insulation added in the past five years. The 2,276-sq.- ft. Stucco home, listed for $250,000, has split bedrooms, formal living and dining rooms, a large owner’s suite, wood and tile floors, screen lanai, mature landscaping and citrus trees. It last sold in 2005 for $290,000. It is located in Eagle Harbor on Fleming Island near Orange Park in Clay County. Amenities include four pools, tennis, walking paths, day boat docks and a golf course. There is a $1,400-a-year community development fee and $50 annual association fee.
Coming on Strong
A robust residential real estate market is spurring development across the state:
In central Florida, a developer is dusting off plans for the Hills of Minneola, a 1,850-acre, 4,000-home planned subdivision.
In Miami, Bay Harbor Islands is becoming the hot new waterfront location.
In the northeast, developers are aggressively building single-family homes in Jacksonville, Amelia Island and Nocatee.
In southeast Florida, supply is tight in the new construction market.
A region-by-region round-up of the residential real estate picture starts on the following pages.