Moneyed investors hunting home bargains haven't let rising prices slow them down, and in recent months have amassed a stronghold of Tampa Bay homes worth more than half a billion dollars.
Eight big investors from New York, California and beyond have led an unprecedented land rush, gobbling up 4,000 local homes since early last year with more than $560 million in cash, a Tampa Bay Times analysis has found.
Leading small armies of contractors, agents and analysts, investors are aiming to renovate their homes and rent them out to a swelling submarket of foreclosed former homeowners and long-term renters turned off by the prospect of owning a home.
A Times analysis in March found five of the biggest players — the Blackstone Group, American Homes 4 Rent, Silver Bay Realty Trust, the American Home Real Estate Partnership and Fundamental REO, now called Progress Residential — had spent $280 million in the last year buying 2,200 homes.
But in the three months since, their holdings of single-family homes have ballooned even further, to more than $460 million spent grabbing up more than 3,200 homes.
With no signs of slowing down, they have been joined by other investors — Colony American Homes, Beazer Pre-Owned Homes and Waypoint Homes — that helped bump Tampa Bay's big-investor shopping spree past the half-billion-dollar mark.
"The appetite is still there. They're buying big," said Century 21 broker Craig Beggins. "They're building pretty much horizontal apartment complexes. They're going to be here for the long term."
The alpha dog of investors remains Blackstone, the New York private equity titan that owns SeaWorld, the Weather Channel and Hilton Hotels. The firm's subsidiary, Invitation Homes, has since August spent more than $250 million acquiring 1,650 homes in the Tampa Bay area — a rate of $840,000 a day.
That could be an understatement. Many home sales are registered under throwaway companies, bought in secret or delayed before becoming public record, masking the full fury of their gold rush.
While local property records show Colony has spent $57 million buying up nearly 400 homes, CEO Justin Chang says they own more than 1,000 across Tampa Bay, and have spent $170 million buying and fixing them up.
"We like your market. We're buying there every week," said Chang, whose Arizona investment trust is owned by private equity firm Colony Capital.
"We've seen some price increases, but we haven't seen any markets . . . where we say, 'Boy, the economics are starting to change.' This is a long game, and we're still in the early innings."
Some real estate watchers have predicted investors would quickly wind down their buying as price gains bit into their bottom lines. But updated buying data shows investors have yet to slam on the brakes. In fact, from April 28 to May 4, the eight investors tracked by the Times spent $20 million, one of the busiest weeks yet.
In a Securities and Exchange Commission filing last month, Silver Bay said it had spent more than $100 million buying and renovating its 900 Tampa Bay homes, half of which were rented. And it's not just happening here: Blackstone has spent $5 billion across the country buying and renovating 30,000 homes, a spokeswoman said. She declined to comment about Blackstone's plans for the Tampa Bay area.
Investors said they are still set to buy up some of the thousands of homes repossessed through foreclosure and now winding their way to auction. In the past half year in Hillsborough County, bidders tied to five of the biggest investors spent $75 million buying 600 homes in foreclosure auctions alone, records show.
About half of all Tampa Bay home sales these days are paid in cash, but it's not all from the big guys. Big investors' home buys represent only a fifth of the 20,000 cash sales since February 2012, as smaller investors and mom-and-pop landlords have swamped the market.
They could be around for a while. Deutsche Bank, the mega-lender that has fronted Blackstone's home-buying arm more than $2 billion, is planning to dole out money for smaller investors looking to get in on the action. Those loans, of $10 million to $50 million, could turbocharge the market by freeing investors from having to fund their investments with cash.
Investors are still casting their nets mostly in suburbia, where homes are often bigger, newer and cheaper than their urban counterparts. Those homes, investors said, are also more attractive to a family crowd tired of apartment life.
The big investors are asking a premium to rent their homes. About 85 percent of Invitation Homes' online rental listings are priced above $1,200, the average rent for a single-family home in the bay area. Their offerings range from an $840-a-month ranch home off a Hudson cul-de-sac to a $3,500 "executive" mansionette in Wesley Chapel's gated Meadow Pointe subdivision.
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Will this investor onslaught last?
Though they came here seeking bargains, their competition has helped drive prices upward, with the average investor home sale in Tampa Bay climbing from $100,000 in May 2012 to $162,000 last month. Every price bump chops into what investors expect to net in return.
One of the first big investors to jump into home rentals, Carrington Holding, has started to jump out by selling its homes, saying climbing prices and rampant competition has served to sour the deals.
"We just don't see the returns there," CEO Bruce Rose told Bloomberg Businessweek this month. "There's a lot of — bluntly — stupid money that jumped into the trade."
And in a national ORC International survey this month, nearly half of polled investors said they planned to cut back on buying in the coming year. Most said they planned to hold onto their rentals for five years or more to sop up the cash flow from rising rents.
Investors also are encountering what longtime landlords say is the toughest part of the business: property management. Some worry the speed of the buying is leaving many homes neglected.
When Steven Howe, an aluminum contractor, moved into one of Blackstone's nearly 300 Pinellas County homes, he saw what he called a "nightmare": Haphazard electrical wirings, a leaky roof, an attic devoid of insulation and a front door he couldn't lock.
When he complained, he said, Blackstone's Invitation Homes quickly dispatched contractors he thought were unlicensed, and whom he refused to let inside.
Within weeks, he said, the firm had sent out licensed contractors to fix up the home, but he worried the same problem was happening elsewhere on a massive scale.
"If they're doing this to me," Howe said, "what are they doing to people who have no knowledge of construction?"
Ultimately, the level of care investors show for their homes won't just affect their tenants.
In one Valrico subdivision, Josette Paresi, 64, recalled when her next-door neighbors moved out in the middle of the night, leaving their yellow cookie-cutter home abandoned for months.
In January, when American Homes 4 Rent bought the home for $250,000, Paresi expected the new owners would finally cut the overgrown lawn, clean the pool and fix a falling-down fence.
But after four months, the home has only sunk further into disrepair. She worried vandals would break in and trash the place, but she couldn't just bang on the door or rally the neighbors. The buyers were thousands of miles away, in Malibu, Calif.
The firm, a brainchild of billionaire Public Storage founder B. Wayne Hughes, did not return messages or emails this week seeking comment.
"It's horrible. They bought a lot of properties and now they're being irresponsible about it," Paresi said. "It's like corporate America against the regular people in a nice neighborhood."
Contact Drew Harwell at (727) 893-8252 or [email protected]