SureTrader Advertisement Advertisement
Home > Boards > Stock Clubs > Long-Term > Billionaire Boys Club Member Forum (BBCMF)

in full; Private Equity Bets Billions on Foreclosures

Public Reply | Private Reply | Keep | Last ReadPost New MsgNext 10 | Previous | Next
mick Member Profile
Member Level 
Followed By 2,221
Posts 608,166
Boards Moderated 270
Alias Born 09/04/00
160x600 placeholder
Fresh VW Probes Opened in Germany, California
More Top Equities Stories Of The Day
Correction to Barron's Friday Blog Item on Pfizer-Allergan
With Merger Looming, Pfizer Weighs Plan To Split In Two
Airbus Gains Regulatory Approval for New A320neo Plane
Prescription Skin Drugs Explode in Costs, Study Shows
EPA Seeks to Revoke Approval of Dow Chemical's Enlist Duo Herbicide -- 4th Update
Apple Buys Motion Capture Startup Faceshift -TechCrunch
Here's Are the Real Reasons Comcast Customers Won't Get to Watch Nets, Yankees Games
Intel Taps Rival For Chip Talent
mick Member Level  Friday, 07/27/12 01:25:00 AM
Re: None
Post # of 405297 
in full; Private Equity Bets Billions on Foreclosures
By John Gittelsohn on July 26, 2012 Tweet

Carrington Capital Management paid $207,000 in May for a house at 36644 Ponderosa Court in Murrieta, Calif. Built in 2005, the four-bedroom home originally sold for $420,500 with 100 percent financing. The owner borrowed $100,000 more in 2007, increasing total debt on the property to $520,000, before losing the home to a bank in August 2011.

The house looked almost new as workers replaced the kitchen stove and laid fresh sod on the front lawn during a July 23 visit. “When you think of foreclosed property, this isn’t the first thing that comes to mind,” says Carrington Vice President Rick Sharga. “I’m betting renters will be lining up when we put this on the market.”

Private equity firms including Colony Capital, Blackstone Group (BX), KKR (KKR), and Och-Ziff Capital Management Group (OZM) are rushing to make similar bets. They plan to spend at least $7.2 billion to snatch up undervalued single-family homes and then rent them out.

The aim is to capitalize on U.S. home prices that are 34 percent below their 2006 peak, as well as on a broader shift toward renting. At 65 percent in the first quarter, U.S. homeownership is at its lowest level since 1997. Scott Simon, head of mortgage bonds at Pimco, says about 6 million borrowers will lose their homes in the next five years, creating demand for as many as 4 million new rental homes.

“Our view is there’s tons to buy and tons to buy attractively,” says Justin Chang, acting president of Colony Capital’s American Homes unit.

Public Reply | Private Reply | Keep | Last ReadPost New MsgNext 10 | Previous | Next
Follow Board Follow Board Keyboard Shortcuts Report TOS Violation
Current Price
Detailed Quote - Discussion Board
Intraday Chart
+/- to Watchlist