By RS Rodriguez
Last week The Ventura County Star ran a piece on its’ newspaper and web site stating Invitation Homes (aka THR California), a subsidiary of New York-based international investment firm Blackstone Group, has been purchasing homes in Ventura County at alarming rates since August of this year. The majority of these purchases have been based in the cities of Oxnard and Simi Valley locally (though they are also targeting over ten markets nationwide, with Blackstone purchasing over 12,000 properties with a value of more than 2.2 billion).
Most of the Oxnard purchases have been made on Oxnard homes at foreclosure auctions, buying directly from financial institutions, with cash offerings. The strategy of THR in these markets seems to be to invest in fixing-up the Oxnard properties to attract renters, with hopes, apparently, of perhaps selling the homes if and when the real estate market recovers (thereby making significant profits with their portfolios).
The articles attracted attention and raised concern in local circles. Oxnard Mayor Tim Flynn expressed concern THR’s investing throughout the city in the rental market might devalue existing single family homes by depressing the market. One realtor was quoted in the article saying a recent transaction he was involved with resulted in more than six institutional investment firms competing with six potential inviduals or families who wanted to buy. During that particular transaction, the broker said THR out-bid all rivals by making a bid approximately $11,000 over asking price. A representative of THR stated it is not uncommond for them to offer 10-15% more than the asking price of a single family home they target.
There are a plethora of opinions in the “Comments” section following the article, both supportive of THR strategies of investing locally, but also many concerns expressed about inviduals and families alike being unable to secure mortgages from financial institutions while interest rates and housing prices are relatively low while Blackstone, for example, was able to acquire a 300 million loan from Deutsche Bank for “additional purchases.”
Will other investment firms begin following the strategies of Blackstone and begin to swallow-up residential properties, potentially squeezing out invidiuals and families wanting to buy? And will the likes of Blackstones and THR potentially depress local neighborhoods by innundating those markets with rental properties?
We shall see.