1【 以下文字转载自 CaliforniaMortgage 俱乐部 】
发信人: blueangel2 (Frank in Fremont), 信区: CaliforniaMortgage
标 题: Investors Are Looking to Buy Homes by the Thousands
发信站: BBS 未名空间站 (Tue Apr 3 12:21:28 2012, 美东)
RIVERSIDE, Calif. — At least 20 times a day, Alan Hladik walks into a fixer
-upper and tries to figure out if it is worth buying.
As an inspector for the Waypoint Real Estate Group, Mr. Hladik takes about
20 minutes to walk through each home, noting worn kitchen cabinets or
missing roof tiles. The blistering pace is necessary to keep up with
Waypoint’s appetite: the company, which has bought about 1,200 homes since
2008 — and is now buying five to seven a day — is an early entrant in a
business that some deep-pocketed investors are betting is poised to explode.
With home prices down more than a third from their peak and the market
swamped with foreclosures, large investors are salivating at the opportunity
to buy perhaps thousands of homes at deep discounts and fill them with
tenants. Nobody has ever tried this on such a large scale, and critics worry
these new investors could face big challenges managing large portfolios of
dispersed rental houses. Typically, landlords tend to be individuals or
small firms that own just a handful of homes.
But the new investors believe the rental income can deliver returns well
above those offered by Treasury securities or stock dividends. At the same
time, economists say, they could help areas hardest hit by the housing crash
reach a bottom of the market.
This year, Waypoint signed a $400 million deal with GI Partners, a private
equity firm in Silicon Valley. Gary Beasley, Waypoint’s managing director,
says the company plans to buy 10,000 to 15,000 more homes by the end of next
year. Other large private equity investors — including Colony Capital,
GTIS Partners and Oaktree Capital Management, in partnership with the
Carrington Holding Company — have committed millions to this new market,
and Lewis Ranieri, often called the inventor of the mortgage bond, is
considering it, too.
In February, the Federal Housing Finance Agency, which oversees the
government-backed mortgage companies Fannie Mae and Freddie Mac, announced
that it would sell about 2,500 homes in a pilot program in eight
metropolitan areas, including Atlanta, Chicago and Los Angeles.
And Bank of America said in late March that it would begin testing a plan to
allow homeowners facing foreclosure the chance to rent back their homes and
wipe out their mortgage debt. Eventually, the bank said, it could sell the
houses to investors.
Waypoint executives say they can handle large volumes because they have
developed computer systems that help them make quick buying decisions and
manage renovations and rentals.
“We realized that there is a tremendous amount of brain damage around
acquiring single-family homes, renovating them and renting them out,” said
Colin Wiel, a Waypoint co-founder. “We think this is a huge opportunity and
we are going to treat it like a factory and create a production line to do
Mr. Hladik, who is one of seven inspectors working full time for Waypoint’s
Southern California office, is one cog in that production line.
On a recent morning, he walked through a vacant three-bedroom home with a
red tiled roof here about 60 miles east of Los Angeles, one of the areas
flooded with foreclosures after the housing market bust. Scribbling on a
clipboard, he noted the dated bathroom vanities, the tatty family room
carpet and a hole in a bedroom wall. Twenty minutes later, he plugged these
details into a program on his iPad, choosing from drop-down menus to
indicate the house had dual pane windows and that the kitchen appliances
The software calculated that it would take $25,413.53 to get the home in
rental shape. Mr. Hladik adjusted that estimate down to $18,400 because he
deemed the landscaping in good shape. He uploaded his report to Waypoint’s
database, where appraisers and executives would use the calculations to
determine whether and how much to bid for the house.
With just three years of experience, Waypoint is one of the industry’s
grizzled veterans. But critics say newcomers could stumble. “It’s a very
inefficient way to run a rental business,” said Steven Ricchiuto, chief
economist at Mizuho Securities USA. “You could wind up with an
inexperienced group owning properties that just deteriorate.”
The big investors are wooed by what they see as a vast opportunity. There
are close to 650,000 foreclosed properties sitting on the books of lenders,
according to RealtyTrac, a data provider. An additional 710,000 are in the
foreclosure process, and according to the Mortgage Bankers Association,
about 3.25 million borrowers are delinquent on their loans and in danger of
losing their homes.
With so many families displaced from their homes by foreclosure, rental
demand is rising. Others who might previously have bought are now unable to
qualify for loans. The homeownership rate has dropped from a peak of 69.2
percent in 2004 to 66 percent at the end of 2011, according to census data.
Economists say that these investors could help stabilize home prices. “If
you have a lot of foreclosures in one community you will improve everybody’
s home values if you take them off the market,” said Diane Swonk, the chief
economist at Mesirow Financial. “If those homes are renovated and even
rented, it is a lot better than having them stand empty.”
Until now, Waypoint, which focuses on the Bay Area and Southern California,
has been buying foreclosed properties one by one in courthouse auctions or
through traditional real estate agents.
The company, founded by Mr. Wiel, a former Boeing engineer and software
entrepreneur, and Doug Brien, a one-time N.F.L. place-kicker who had
invested in apartment buildings, evaluates each purchase using data from
multiple listing services, Google maps and reports from its own inspectors
An algorithm calculates a maximum bid for each home, taking into account the
cost of renovations, the potential rent and target investment returns —
right now the company averages about 8 percent per property on rental income
alone. By 5:30 on a recent morning, Joe Maehler, a regional director in
Waypoint’s Southern California office, had logged onto his computer and
pulled up a list of about 70 foreclosed properties that were being auctioned
later that day in Riverside and San Bernardino Counties.
Looking at a three-bedroom bungalow in San Bernardino, he saw that Waypoint
’s system had calculated a bid of $103,000. Mr. Maehler, who previously
advised investors on commercial mortgage-backed securities deals, clicked on
a map and saw that rents on comparable homes the company already owned
could justify a higher offer. The house also had a pool, which warranted
another price bump.
By the time the auctioneer opened the bidding on the lawn in front of the
San Bernardino County Courthouse at $114,750, Mr. Maehler had authorized a
maximum bid of just over $130,000.
As the auction proceeded, Waypoint’s bidder at the courthouse remained on
the phone with Mr. Maehler in the company’s Irvine office about 50 miles
“Stay on it,” Mr. Maehler urged as the bidding went up in $100 increments.
The bidder clinched it for $129,400.
The sting of the housing collapse, driven in part by investors who bought
large bundles of securities backed by bad mortgages, makes some critics wary
of the emerging market.
“I don’t have a lot of confidence that private market actors who now see
another use for these houses as rentals, as opposed to owner-occupied, are
necessarily going to be any more responsible financially or responsive to
community needs,” said Michael Johnson, professor of public policy at the
University of Massachusetts, Boston. Waypoint executives say they plan to be
long-term landlords, and usually sign two-year leases. Once the company
buys a property, it typically paints the house and installs new carpets,
kitchen appliances and bathroom fixtures, spending an average of $20,000 to
$25,000. It tries to keep existing occupants in the house — although only
10 percent have stayed so far — and offer tenants the chance to build
toward a future down payment.
Waypoint’s inspectors are evaluating hundreds of properties that Fannie Mae
and Freddie Mac are offering for sale. Because the inspectors are not
allowed inside these homes, they are driving by 40 of them a day, estimating
renovation costs by looking at eaves, windows and the conditions of lawns.
Rick Magnuson, executive managing director of GI Partners, Waypoint’s
largest investment partner, said “the jury is still out” on whether
Waypoint — or any other investor — can manage such a large portfolio. But,
he said, “with the technology at Waypoint, we think they can get there.”