Investors Purchasing Distressed Florida Properties

Posted on: March 1, 2013

Investment firms are buying distressed properties nationwide. Florida foreclosures are among the most popular with these firms. The popularity of Florida properties may have to do with speculation that cities like Miami will be among the nation’s fastest growing in the next decade.

Last year, firms including American Homes 4 Rent, Blackstone Group, Waypoint Homes, and Lake Success Rentals purchased an estimated 5,300 Florida homes that were in some stage of foreclosure. Additionally, foreign firms are now entering the market. US Masters Residential Property Fund, mainly Australian retirees, has raised $276 million to invest in U.S. housing recovery. Similarly, Tricon Capital Group Inc., based in Toronto, has spent $160 million to acquire almost 2,000 properties in California, Arizona, Florida, and North Carolina and plans to acquire another 2,000 by the end of the year.

Investment firms are hoping for high returns from buying homes at discounts, turning them into rentals, and waiting for an improved housing market to sell. Investors from countries with strong currencies also hope to make money from foreign-exchange rate fluctuations. Local investors who once dominated the market now face tough competition from firms that desire the investment properties. Local home flippers are having difficulty competing with larger investment firms and hedge funds that often pay cash for the asking price or higher.

Although single-family home inventory has shrunk in Florida, there were 29,800 properties in the foreclosure process last month. Banks also have many properties, which they are currently holding onto, that may soon hit the market to be purchased by investors. While many of the investors are realizing big profits, an issue may arise if too many investors saturate the market. The rise in home prices can likely be attributed to the strong demand for investment properties. With firms buying properties in bulk, the supply of homes is shrinking.

Schecter Law has represented buyers, sellers, brokers and developers in connection with the acquisition, development, and sales of luxury residential real estate since 1976. The real estate industry in South Florida is fraught with potential land mines that only seasoned real estate attorneys are equipped to successfully navigate. At Schecter Law, our attorneys will represent the client throughout the entire real property transaction, from review and drafting of the purchase and sale agreement through the providing of title insurance.