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  1. #1
    Senior Member JohnDoe2's Avatar
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    Big investment firm buys hundreds of houses in Sacramento area

    Big investment firm buys hundreds of houses in Sacramento area

    By Hudson Sangree and Phillip Reese
    hsangree@sacbee.com
    By Hudson Sangree and Phillip Reese The Sacramento Bee
    Last modified: 2012-11-25T16:11:21Z
    Published: Sunday, Nov. 25, 2012 - 12:00 am | Page 1A
    Last Modified: Sunday, Nov. 25, 2012 - 8:11 am

    An investment firm that owns the Waldorf Astoria hotel and the Weather Channel has bought more than 500 houses in Sacramento in the past few months, betting upward of $60 million that home prices will rise.

    Blackstone, a New York-based group with billions of dollars in investments and offices from London to Tokyo, has been snapping up low-priced homes across the region, from Elk Grove to Citrus Heights, at a rate of about 40 a week.

    It marks the first time a major investment firm has bought in Sacramento on such a scale – a direct result of the thousands of houses left vacant by foreclosures in recent years and offered at fire-sale prices.

    "Prior to the current housing cycle, it was essentially unheard of" for major investment funds to buy single-family homes, said Stuart Gabriel, director of the Ziman Center for Real Estate at UCLA. "The exodus from home ownership and the dislocation of homeowners has been unprecedented."

    Experts said the bulk purchase of single-family homes by Blackstone and other big investment firms could have a significant effect on Sacramento neighborhoods, pro and con.

    The purchases may boost prices in the short term by clearing out distressed properties and create needed rental housing. But they could also alter neighborhoods once populated by owners rather than renters, and make it more difficult for first-time buyers to compete in today's market.

    Whether the entry of such large players is positive or negative depends in large part on how well Blackstone treats its tenants and maintains its piece of suburbia.
    "The jury is out in this particular respect," Gabriel said. "There's a lot of asset management involved here. It could be more challenging than they expect."
    This year, across the United States, a number of big investment firms have been active in areas hit hard by the housing collapse. Blackstone, one of the largest, says it will spend about $1.5 billion to buy 10,000 homes nationwide with the idea of renting them until prices increase enough to sell.
    The firm calls itself the world's largest real estate private equity firm, whose $54 billion in assets includes shopping centers, hotels and office complexes.
    But fixing faucets and collecting rent on single-family homes is a new strategy for Blackstone, which owns hotel giant Hilton Worldwide, has a major stake in T-Mobile parent Deutsche Telekom, and frequently partners with Mitt Romney's old firm, Bain Capital.
    Blackstone has embraced the plan with gusto.
    "It's a long-term investment for us," said Philippa Brown, spokeswoman for Blackstone's new housing division Invitation Homes.
    Starting in May, the firm bought about 900 homes in Riverside and San Bernardino counties, Southern California's Inland Empire, which saw a boom-and-bust cycle last decade similar to Sacramento's.

    Big player, small pricesBlackstone arrived in Sacramento in August, opening a Roseville office for its purchasing partnership, which operates under the name THR California and includes Invitation Homes.


    The company wasted little time in becoming the largest purchasing force in the Sacramento foreclosure market, spending more than $60 million, according to a Bee analysis of county records.
    Using local real estate agents, brokers and former house flippers, the company went from owning no homes here in August to owning 250 by mid-October.
    House flippers who had to compete against Blackstone's buyers in auctions on courthouse steps began to grouse. They were regularly being outbid.
    THR has paid, on average, a roughly 20 percent premium for homes, according to a Bee review of data from Zillow.com. In one case, THR purchased a 1,000-square-foot home in Meadowview for $175,000, or roughly 80 percent more than Zillow estimates the home is worth.
    "They're betting on appreciation," said Eric Peterson, managing director of Praxis Capital, a house-flipping and property management firm in midtown Sacramento. Blackstone's attitude, Peterson said, is "'I don't really care what I pay today, because I think it's going to be double that five years from now. Ten grand's not going to affect my return that much.'
    "We don't necessarily disagree with their thesis, but our appetite for risk is much lower than theirs," Peterson said.
    As of last week, tax records showed THR California owned 510 houses in Sacramento County. The firm added about 40 properties a week during the last three months – one in every 10 houses sold in Sacramento County in that period.
    More recently, Blackstone has sped up the pace. During the first three weeks of November, the Sacramento County recorder's office showed THR bought 145 properties, almost 50 per week.
    THR California also bought 22 homes in Yolo County, 21 in Placer County and one in El Dorado County during the past three months, according to official records.
    Most of the houses THR has acquired are relatively small, between 1,000 square feet and 1,800 square feet, and cost from $75,000 to $200,000. They are located mainly in distressed areas – such as North Highlands, Rancho Cordova and Galt – where sales prices have plummeted but rents remain relatively high, creating quick cash-flow opportunities.
    In South and North Natomas, the company has purchased about 50 homes. The Bee visited a dozen last week. Some were dilapidated, with paint peeling and dead grass in the yard. Some were being fixed up by contractors with new carpet and sod. Others were neat and trim, with fresh paintwork and appliances, ready for new tenants.
    Only one had a tenant in residence.
    At his house on Regatta Drive in the city's Northgate neighborhood, John Coaxum, 50, gripped two eviction notices he had received from THR California.
    Coaxum, whose rent is subsidized by Section 8, said he had lived in the house for 14 years and done much of the landscaping himself. His landlords used to be a local couple, but they lost the house to foreclosure.
    When THR bought it from the bank, the company wanted more money, which he didn't have, he said. Coaxum said he called the company's number in Roseville and left messages but had not heard back.
    Now he was facing the prospect of being tossed out.
    "I'm not scared, I'm terrified," Coaxum said. "I raised all my kids here. I love my neighborhood. I have no delinquency. I don't know what's going down."
    THR California has not yet filed any "unlawful detainer" lawsuits in Sacramento Superior Court to force the eviction of tenants. But in Riverside and San Bernardino counties, where the company has been active a few months longer, THR California has filed more than 125 such lawsuits, court records show.

    Tenants and toilets

    Dealing with tenants in single-family homes is sure to pose challenges, even for a multi-billion-dollar behemoth.
    It will be difficult to rehabilitate 500 houses in short order, Peterson said, and keeping them up won't be easy, either. Praxis manages 80 rental homes, and the coordinator's phone rings off the hook with complaints of leaking roofs and broken toilets, he said.
    Profit margins that look great on paper can end up being offset by tenant and maintenance headaches.
    "It's a lot to handle," he said.
    That's why Blackstone's Invitation Homes has contracted with Riverstone Residential Group, one of the nation's largest managers of apartment complexes. The two companies now share an address in Dallas.
    "We want our customers to be happy," said Invitation's Brown. "Those are their homes."
    Brown, who just began her job two weeks ago with the startup company, said she could not answer questions about the Sacramento market or individual tenants. She referred questions about property management to Riverstone. Riverstone, in turn, referred all questions back to Brown.
    Ryan Lundquist, a local property appraiser, said that how the properties are managed remains a crucial question. By purchasing en masse, Blackstone is helping boost neighborhood property values, but increasing the number of rentals is potentially destabilizing, Lundquist said.
    Whether the properties are kept up and rented to good tenants will affect values of neighboring homes, he said.
    In Elk Grove, where Blackstone has bought about 40 houses, newly elected Mayor Gary Davis said he shares those concerns. He also worries about a future hit on home prices if Blackstone decides to sell its holdings all at once.
    And he said the company's spending spree could squeeze out local residents who are trying to buy homes at today's low prices and interest rates.
    "We have residents who are finally able to buy their first home or get back into a home after renting for a while," Davis said.
    "When they have to compete with national investment companies," he said, "it makes it hard for residents to get a foot in the door and get their house."
    Citrus Heights Mayor Jeff Slowey had a different take.
    Blackstone's purchase of about 60 homes in Citrus Heights and surrounding communities is a good sign for local homeowners, he said. By investing, Slowey said, Blackstone is saying "they think it's a good market, and it's going to turn around."

    http://www.sacbee.com/2012/11/25/5008543/big-investment-firm-buys-hundreds.html
    NO AMNESTY

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  2. #2
    Super Moderator Newmexican's Avatar
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    Wall street Investors crash the housing market,which crashes the job market so that people can't pay for the homes and get kicked out. Now these same people are scarfing up the real estate at bargain basement prices. Reminds me a little of Nazi Germany.
    But then we must have accommodation for the new citizens that have money. I have to think that George Soros bought his citizenship since he was kicked of of two countries before he started buying politicians here. JMO
    Buy a house, get citizenship?! Yes, it’s true



    By Michelle Malkin • January 16, 2009 01:56 PM


    A reader sent along a story published in a Bulgarian newspaper about an outrageous-sounding scheme offered to foreigners: Invest in real estate. Win American citizenship. Yes, it’s true. And I’ve told you about it before. More on that in a minute.

    From Bulgaria:

    Investment in real estate in US guarantees a green card

    16:58 Thu 15 Jan 2009 – Nick Iliev

    The purchase of a piece of property in America, a single-family house, a PUD (planned unit development) or a condo (flat within a condominium) will guarantee you and your family a green card. This is one of the extreme measures implemented to help stall the meteoric fall of the United States economy in light of the economic crisis, Bulgarian weekly Stroitelstvo Gradut reported on January 15.

    Thirty-five accredited investors will have the opportunity to acquire real estate in the south-eastern state of Florida – by purchasing a house – they will be granted a green card for permanent residence and right of employment for the buyer himself and his/her entire family.

    Additional conditions are that the prospective buyer must havea clean criminal record, a good credit record, the ability to present and prove a decent monthly income, and no outstanding financial obligations or credit liabilities. The purchase itself can be done either with cash, bank transfer or monthly instalments, but the financial resource must be proven legitimate.

    The US government has allocated 10 000 such visas nation-wide for potential investors in real esate, under a programme approved by the US Congress. Florida’s is the first such programme that has actively been given the green light to commence. Specialists in the field argue that this is the best time to invest and purchase property in America, as prices in some states have been slashed by as much as 25 per cent. Experts argue that within three years’ time, however, the market will stabilise and prices will rise.
    Would Congress really approve such a money-grubbing and potentially dangerous scheme?

    You betcha. I first reported on the EB-5 program eight years ago this month and blogged about it 2 years ago. You will not be surprised to learn who the supporters of the program are. God save us from bipartisanship.

    Flashback:
    Jan. 24, 2001
    American citizenship for sale?

    Michelle Malkin

    In his inaugural address, President George W. Bush issued a call to reinvigorate citizenship: “We are bound by ideals that move us beyond our backgrounds, lift us above our interests, and teach us what it means to be citizens. Every child must be taught these principles. Every citizen must uphold them.”

    Bush can do his part by eliminating one of the greatest abuses of American citizenship: the immigrant investor visa program. It has spawned a niche market in skirting laws, scratching backs, and selling out.

    This fraud-ridden scheme was created under an obscure section of the 1990 Immigration Act, signed by Bush’s father. Known as the EB-5 law, it allows wealthy foreigners to purchase green cards by investing between $500,000 and $1 million into new commercial enterprises or troubled businesses. After two years, foreign investors, their spouses, and children all receive permanent resident status – which allows them to contribute to U.S. political campaigns and provides a speedy gateway to citizenship.

    Making political access and the privilege of citizenship available to the highest foreign bidder offends the very ideals Bush wants to promote. Arkansas Senator Dale Bumpers, a longtime critic of the program, noted: “All you need is green. You do not have to know anything about the poor and huddled masses that Emma Lazarus wrote about…How crassly we demean this precious blessing we call citizenship.”

    Supporters of the program claimed it would attract substantial overseas investment to aid struggling American businesses. But the benefits of this economic development plan have gone mostly to former Immigration and Naturalization Service officials, who formed lucrative limited partnerships to cash in on their access.

    Here’s how the racket worked: Immigrant investors paid token fees to these partnerships. The partnerships secured promissory notes for the remainder of the foreign investments, which were forgiven after investors received their permanent green cards. Former INS employees, working for these partnerships, aggressively lobbied their old colleagues to accept such bogus financial arrangements. As a result, according to an internal U.S. Justice Department investigative report, “aliens were paying $125K” instead of the required $500,000 to $1million minimum, and “almost all of the monies went to the General Partners and the companies who set up the limited partners.”
    A Baltimore Sun investigation last year found “only a tiny fraction of the money ever made it to the companies seeking assistance.” Many of the distressed U.S. firms that the program intended to help have closed because they never received promised funding.

    Steven Perlman, a New York City immigration lawyer who sued the government to disclose parts of the internal investigative report, told me last week that the EB-5 program became a “money-making machine.” That wouldn’t have been possible, Perlman notes, without political protection. One INS document indicates that officials worried about keeping “promises to the Hill.” When the agency finally moved to end fraud, “influential Members of Congress protested,” according to the New York Times.

    Key supporters of the immigrant investor visa program included Democrat Sens. Paul Simon and Ted Kennedy. Republicans embraced it, too. Prescott Bush, W.’s uncle, was on the board of American Immigration Services, one of the leading visa vendors. So was former President Bush’s INS commissioner, Gene McNeary. And leading GOP Sen. Mitch McConnell worked closely with the woman who was instrumental in drafting the EB-5 law: Maria Hsia, a McConnell donor who later laundered more than $100,000 in illegal donations to the Democratic National Committee through a California Buddhist temple.

    At the time Hsia was working for McConnell and others on the immigration bill, she also worked for a campaign fund-raising group called the Pacific Leadership Council. Hsia co-founded the PLC with Lippo Bank officials John Huang and James Riady, the chief figures in the Clinton-Gore Donorgate scandal convicted of campaign-finance crimes. At least six Lippo Bank officials have reportedly benefited from the EB-5 law.

    Was this visas-for-sale program established to launder foreign funny money into our political system? We may never know for sure, but President Bush should shut down this suspicious pipeline now and stop the shameless pimping of Lady Liberty.

    Michelle Malkin » Buy a house, get citizenship?! Yes, it’s true
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  3. #3
    Senior Member JohnDoe2's Avatar
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    1. Investment firms buy single-family rentals
    2. Green Bay Press Gazette-Oct 28, 2012
    3. With house values still depressed in many areas, investment funds and ... Cogsville said, adding that his company wants to buy more homes to rent ...

    Wall Street Journal
    Investment Firms Eyeing Single-Family Rentals

    San Francisco Chronicle-Oct 31, 2012
    ... are buying up foreclosed homes with plans to rent them as single-family units. ... Theinvestment group offered nearly $12 million for the homes, with a ... that large investment firms were turning to single-family homes and ...



    Investment companies see opportunity in scooping up foreclosed ...

    Dallas Morning News-Nov 18, 2012
    Investment companies see residential rentals as a solid market in which to ... investors could make a profit off buying property at a low price and ...

    1. Miami firm looking to buy foreclosed homes in Florida
    2. Sun-Sentinel-Nov 18, 2012
    3. A Miami-based company says it's seeking investors interested in buying into Florida's bloated foreclosure market. Title Capital Management is ...
    NO AMNESTY

    Don't reward the criminal actions of millions of illegal aliens by giving them citizenship.


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  4. #4
    Senior Member JohnDoe2's Avatar
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    NO AMNESTY

    Don't reward the criminal actions of millions of illegal aliens by giving them citizenship.


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