Home Sales Attract Foreclosure Investors

Three months of increased home sales have investors such as GI Partners, a mid-level private investing firm, looking to expand and invest in the foreclosure market.

It was recently announced that GI Capital has backed Waypoint Real Estate Group – which buys, renovates and rents foreclosures or short-sale single family homes in the San Francisco bay area– to the tune of $250 million, with the hopes of investing $1 billion over the next two years.

Waypoint also provides a rent-to-buy program that allows consumers to build their credit enough to eventually purchase the home they rent. This business model seems to agree with Freddie Mac’s announcement that the national average commitment rate for a 30-year, conventional, fixed rate mortgage is at a record low of 3.96 percent in December, down from 4.71% in December 2010.

GI Capital’s investment in Waypoint is a sign of things to come in the housing market, where total housing inventory dropped 9.2 percent to 2.38 million homes available for sale. According to the National Association for Realtor’s chief economist, Lawrence Yun, “The inventory supply suggests many markets will see prices stabilize or grow moderately in the near future.”

In the recent white paper to Congress the Fed said “reducing some of the barriers to converting foreclosed properties to rental units will help redeploy the existing stock of houses in a more efficient way.” It seems that GI and Waypoint are one step ahead, and other institutional investors are sure to follow suit.

Featured Reading: U.S. Corporations Paying Fraction of Statutory Income Tax Rate>>

To contact the reporter on this story: Gina Smith at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com