In yesterday's Sun Sentinel, Paul Owers wrote an interesting piece, "Florida foreclosures big business for investment firms," and if you delved into the article, you'd discover that the business these investment firms are targeting is bulk buys of foreclosed single family dwellings here in Florida to re-vamp and rent.
Turning Foreclosures into Rental Investment Properties in Bulk Buys
We've been monitoring investors, both foreign and domestic, coming into Florida to buy foreclosures for investment purposes - including these volume purchases where companies are counting on a strong rental market here in hard-hit Florida. For details, see our past posts where Beezer Homes out of Atlanta was buying up homes here in Florida for Rental REITS back in May 2012, and by August 2012, real estate experts all over the country were opining that Rental REITS were the next big thing in real estate investment.
Heck, back in August Warren Buffett was quoted as thinking that buying up all these foreclosures, fixing them up a bit, and then renting them out for a profit was a smart thing to do right now, given the depressed housing market in the United States generally. And there's no place in the country that's got more bargain buys in real estate right now than the State of Florida.
In the Sun Sentinel article, other names pop up as investment groups buying in Florida, adding their names to biggies like Beezer and American Residential Properties. These include:
American Homes 4 Rent
Invitation Homes (Blackstone Group)
Investor as Landlord - Will This Work in the Long Term?
One of the criticisms of these rental REITs is the problem of daily duties that must be met by a landlord. There's upkeep. There's dealing with tenant squabbles. There's slow pays and sometimes, the need to start eviction proceedings. Toilets will need repair and trees will need trimming. Will the investor find these cumbersome in the future and regret taking on the role of landlord? Some have thought so.
However, as the wave continues to hit the Florida market, interesting things are emerging that speak to the success of these ventures in the future. Waypoint, for example, is offering tenant incentives called "Waypoints" that give the tenant "points" for things like keeping up the property, paying the rent on time, and participating in classes on finances.
What do these Waypoints provide? Not cash. Instead, as explained by Waypoint on its website:
As a resident in our Lease Plus Rewards program, you have options when it comes to putting your Waypoints to use. During the course of your lease, you can redeem Waypoints for a variety of home customizations. If you're interested in pursuing homeownership, Waypoints can be put to use at the end of your lease as a home purchase credit - or simply redeem your Waypoints for cash back. With our Lease Plus Rewards program, you have the flexibility to make the most of your rental experience.
With creative ideas like Waypoints, these rental investments look to be good deals in the long run for both the tenant as well as the investor.