Created last year by private equity titan Blackstone Group, Invitation Homes has spent about $3.5 billion buying 20,000 houses in nine U.S. markets, including Southern California. It's a new business model emerging from the misery of the mortgage meltdown.
Blackstone and a handful of other firms believe prices fell too far in the hardest-hit markets. So they're racing to buy up the bargains, rent them for short-term profit and hold them for long-term price appreciation. These firms say they've invented a new investment strategy that also serves the public good by fueling the housing recovery and sprucing up homes.
The investors have played a major role in recent home-price surges in markets that are recovering. Southern California's median home price has jumped 21% over the last year, and Arizona's Phoenix Market has jumped up about 30%. In the process, financial firms — including Oaktree Capital Management, Colony Capital and the Alaska Permanent Fund (which manages that state's investments) — are rapidly staking claims as the new landlords of the suburbs.
On paper, the buy-and-hold calculus makes sense. The foreclosure crisis destroyed home values — but drove up rents, as repossessions created a new wave of rental demand from would-be owners with ruined credit. Fresh demand from young workers, a short supply of newly built rental units, and stricter mortgage requirements have also made the rental market competitive.
iDeal Realty & Management
9051 W Kelton Lane, Suite 10
Peoria, Arizona 85382
(623) 201-3544
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