After the federal government recently announced that it plans on launching a pilot program in the first quarter this year to sell Fannie Mae, Freddie Mac and Federal Housing Administration REO homes in bulk to investors, two California companies have decided not to wait to develop their own rental platform.
Private equity fund GI Partners is investing $250 million in Waypoint Real Estate Group, an Oakland, Calif.-based company that buys foreclosed homes, renovates them and then leases the properties to residents.
Waypoint has acquired nearly 1,000 homes in California since opening its business three years ago and plans on purchasing and leasing $1 billion in single-family rental homes over the next two years.
With the support of the Menlo Park, Calif.-based firm's investment, Waypoint plans to begin a national expansion program in 2012 into new geographic markets such as Las Vegas, Phoenix, Atlanta, Chicago and South Florida, which were all hit hard by the mortgage crisis and contain a high volume of distressed properties.
“Our approach to buying and renovating distressed homes and leasing to residents who are committed to a path to future home ownership is a viable solution to our nation's housing crisis,” said Colin Wiel, managing director and co-founder of Waypoint Real Estate Group.
With nearly four million homes across the country either bank-owned or in a serious state of delinquency, Waypoint uses proprietary technology to identify residential real estate markets that are characterized by strong rental demand that can benefit from the company's “REO-to-rental” model.
Ric Magnuson, executive managing director of GI Partners, believes Waypoint will thrive given the current market dislocation in single-family housing and the sustained tenant demand for rental property.
“Waypoint has not only developed an effective strategy for investing in distressed single family homes, but has built a business that has positive social and economic benefits in the communities in which they invest,” Magnuson said.
