Flocking to Foreclosures
Andrew Ginsburg, regional director for Waypoint Homes, shows a house being renovated in Lauderhill, Florida. Waypoint Homes, a California-based company that's making a push into the South Florida market to buy, renovate and rent foreclosed homes. (Carline Jean/Sun Sentinel/MCT)
David Sullivan, a painter working for Waypoint Homes, paints a home bathroom in Lauderhill, Florida. Waypoint Homes, a California-based company that's making a push into the South Florida market to buy, renovate and rent foreclosed homes. (Carline Jean/Sun Sentinel/MCT)
The sunken tub inside the master bathroom has potential. But the dusty, dated black countertop is a goner.
“Back in 1982, somebody thought that was awesome. We don’t,” said Andrew Ginsburg, an executive with Waypoint Homes, whose subsidiary bought the bank-owned property last month for $160,000.
The three-bedroom, mint green residence in Lauderhill, Fla., also is getting a paint job, new carpeting and appliances — all part of a facelift designed to attract a renter willing to pay more than $2,000 a month.
Oakland, Calif.-based Waypoint started buying properties in South Florida late last year, one of a growing number of investment firms pouring millions into distressed real estate nationwide.
Malibu, Calif.-based American Homes 4 Rent bought more than 200 Florida homes last year, according to figures from RealtyTrac Inc. New York-based private equity giant Blackstone Group was behind the acquisition of 166 properties.
In all, dozens of companies scooped up more than 5,200 Florida homes in 2012, figures show.
Although the foreclosure crisis is easing, Florida remains a hotbed for distressed homes, analysts say.
The Sunshine State posted the country’s highest foreclosure rate in January for the fifth month in a row, RealtyTrac said. Florida had 29,800 properties in the foreclosure process last month, which also led the nation. Thousands of other delinquent homeowners are on the verge of foreclosure.
Most of the bulk buyers are acquiring three- and four-bedroom homes in the $100,000 to $400,000 range with plans to fix them up and capitalize on a robust rental market.
“As part of this process, not only are we improving neighborhoods and providing high-quality homes to our tenants, but we are employing thousands of local contractors across the country, supporting local businesses, and ultimately stimulating local economies,” Mark Beisswanger, chief operating officer of Invitation Homes, said in a statement. Invitation was formed last year by Blackstone to buy foreclosures.
In some cases, the firms are buying short sales and foreclosures that never make it on to local multiple listing services.
“It probably will help the housing market recover faster by disposing of these properties in chunks rather than individually,” said Daren Blomquist, spokesman for RealtyTrac, an Irvine, Calif.-based foreclosure listing firm. “But individual buyers are being cut out of the process. The biggest loser is the potential homebuyer who wants to get a home in this market.”
South Florida real estate agent Michael Citron said a few of his clients have run up against these investment firms. But Citron downplayed the impact of companies rehabbing and renting foreclosed homes in bulk.
“It’s definitely happening, but they’re not taking over the market,” he said. “I think it’s a fad.”
Mike Larson, a housing analyst with Weiss Research in Jupiter, Fla., said the companies are realizing big profits. But at some point, the market could become saturated, he said.
“The issue going forward is, when is there too much money chasing too few deals?” Larson said. “If you’re going to get into this, you have to make sure you’re not another me-too player.”
Ginsburg insists Waypoint isn’t one of those.
While the company is new to Florida, it has bought and renovated more than 3,500 homes nationwide since 2008. The firm, co-founded by former NFL placekicker Doug Brien, is backed by $400 million in private equity.
Waypoint’s Adalwin LLC has bought 27 homes in Florida’s Broward County since late last year, property records show. Ginsburg wouldn’t disclose how many homes the company is targeting in nearby counties, saying only that it’s committed to the region.
Once the homes are renovated, Waypoint will rent to residents who sign two-year leases. The tenants can earn “waypoints” for paying on time, maintaining the properties and attending financial fitness classes.
The company doesn’t sell the homes, though tenants are allowed to convert the points into cash that can be used for down payments to buy other homes after their leases expire.
Waypoint won’t rent to felons or to people previously evicted from a rental, but the company will look past a foreclosure. In fact, the typical Waypoint client struggled through the housing collapse, getting the run-around from banks and harassed by collection agencies, Ginsburg said.
“A lot of them probably have been treated very poorly,” he said. “We never want them to have that experience with us. We want them to feel heard and respected.”