Beazer Begins New Pre-Owned Homes Division
In order to appeal to a broader range of consumers, Beazer Homes has launched a new pre-owned homes division to go along with its new home sales division.
The new division’s purpose is to acquire, improve and rent recently built, previously owned homes within select communities the homebuilding company currently operates, starting with Phoenix.
“While many prospective homebuyers recognize that this is an excellent time to purchase a new Beazer eSMART high-performance home, other consumers want or need different home alternatives,” said Ian McCarthy, CEO of Beazer Homes. “With the pre-owned homes division, we look forward to addressing this demand.”
Properties included in the division that will be owned by Beazer rather than a bank or an undercapitalized investor, would have been built since 2004 by a certified developer, including homes constructed by the Atlanta-based company. Since the primary source of pre-owned homes that are expected to be part of the division are distressed sales, including foreclosures or shorts sales, the company anticipates acquiring homes at a discount to their replacement cost.
All homes that are selected for this division will receive necessary repairs and upgrades to bring them up to strict company standards.
The company expects the rental of these homes to appeal to consumers who have elected not to become homeowners as well as those who may not fully qualify for mortgage financing for a new home at this time. The rental market for recently built homes in Phoenix is very strong, with an estimated vacancy rate below 5%.
By completing its first acquisitions and tenant move-in last month, the homebuilding company anticipates increasing the size of its pre-owned homes portfolio to more than 100 homes in Phoenix by the end of this year. In the coming months, the division may also expand its geographic coverage to include homes in Nevada or California.
Once a recovery in the housing markets takes place, characterized by higher home prices and lower cash yields from rental income, the homebuilders expect to offer these previously owned homes for resale, either to their respective tenants or to other buyers.
“As a public homebuilder with significant financial resources, Beazer has the expertise to identify, acquire and improve this select group of previously owned homes,” said Rich O’Connor, a Beazer executive who will lead the pre-owned homes division. “And by working with third party local property management companies, we will be creating a best-in-class rental experience for the consumers.”