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Continued: Deep-pocketed investor paying cash for hundreds of Twin Cities homes

  • Article by: JIM BUCHTA , Star Tribune
  • Last update: September 1, 2013 - 11:15 AM

Bray said sellers must be prepared for the frustration if an offer is rescinded, or if a bid is amended with a much lower offer price. “It’s all a business to them. They’re not emotionally invested in the house,” he said. “They look at it purely as a financial investment. If it doesn’t work with their numbers, they won’t pursue it.”

But even with all the economic stability the Twin Cities has to offer, some companies haven’t been so willing to take a chance on the area. With home prices steadily rising and foreclosures accounting for about 10 percent of all listings, some investors are finding fewer deals and consider an investment here risky.

Colony American Homes, one of the country’s largest real-estate investors, is taking a pass on the Twin Cities, said spokeswoman Caroline Luz. “And nothing for the foreseeable future,” she said.

Even Twin Cities-based Silver Bay Realty Trust Corp., which recently went public after assembling a portfolio of nearly 6,000 houses, mostly in the South, owns no real estate in Minnesota.

“We do not currently have plans to acquire single-family homes in the Twin Cities area,” said David N. Miller, Silver Bay’s CEO. “We have been strategically deploying capital to markets that were most impacted by the housing downturn, such as Phoenix and Atlanta.”

Real estate experts say Invitation’s model isn’t without risk. Chip Johnson, founder of Georgia-based Turnstone Group, said he expects prices in the Twin Cities to appreciate, creating the potential for a profit when the company decides to sell homes. But he and others are concerned that managing thousands of single-site houses across the country will be challenging, and that expected yields from rents will be difficult to achieve.

In June, Turnstone, which has been acquiring distressed assets from banks, sold a small portfolio of 48 North Carolina homes to Invitation. “I have concerns about the ability to perform effective property management on thousands of homes,” Johnson said.

Experts also say it’s inevitable that some of these institutional investors someday will become sellers. Ridgway didn’t rule out the possibility that Invitation eventually might flip its holdings.

For now, though, he said the company is making a long-term commitment to the Twin Cities houses.



 

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  • Kevin Stone worked on the porch railing of a Blaine house owned by Invitation Homes.

  • Invitation Homes is spending an average of $20,000 fixing up Twin Cities homes it buys.

  • A sampling of Invitation Homes purchases and rental offerings

    White Bear Lake

    1610 9th St.

    Rent: $1,400

    Bedrooms: 3

    Baths: 2

    Square feet: 1,480

    Sold for: $155,000

    Maple Grove

    7585 Orchid Lane N.

    Rent: $1,600

    Bedrooms: 2

    Baths: 4

    Square feet: 2,117

    Sold for: $186,279

    Blaine

    1843 113th Court NE.

    Rent: $2,200

    Bedrooms: 5

    Baths: 3

    Square feet: 2,709

    Sold for: $264,000

    Lakeville

    16978 Galleon Circle

    Rent: $2,415

    Bedrooms: 5

    Baths: 4

    Square feet: 2,863

    Sold for: $257,500

    Woodbury

    11345 Ivywood Trail

    Rent: $3,250

    Bedrooms: 4

    Baths: 3

    Square feet: 3,310

    Sold for: $358,000

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