Article Courtesy of The Miami
Herald
By Mike Schneider
Published July 7, 2016
Many of the single-family homes in the Piedmont Park
neighborhood of Apopka, Florida, used to be owned by families — the Vargases and
the Townes, the Pierces and the Riddles. Now, they're owned by Blackstone,
American Homes 4 Rent and Colony Starwood Homes, companies associated with big
real estate investment firms.
And the occupants are tenants, not owners.
In the decade since the housing boom deflated into a bust, financial firms
recognized an investment opportunity in hard-hit areas like this Orlando suburb.
Single-family homes lost to foreclosure could be bought cheaply and transformed
into rent-generating income streams.
The corporate purchases
have spread through Piedmont Park and surrounding neighborhoods,
where the percentage of renters rose from a bit over 10 percent
to more than 35 percent within a decade. Piedmont Park
homeowners complain that the result is more transient neighbors,
less engagement at homeowners' meetings and difficulties
reaching absentee corporate landlords.
Apopka Mayor Joe Kilsheimer regards the surge of renters in
houses throughout central Florida as an unfortunate consequence
of the damage this region absorbed from the Great Recession and
housing bust.
"Having an owner-occupied house is better for a neighborhood and
better for a community than a house occupied by renters,"
Kilsheimer said. "They are invested in their children's school.
They're invested the quality of life in their community."
Claudette Guerrier, one of the original homeowners in Piedmont
Park from its development in 1988, feels disheartened by the
transformation. She said her four-bedroom, two-story house has
been broken into twice recently
"It was better in the beginning; now it's not so good," Guerrier
said.
In the aftermath of a housing crisis, metro Orlando suffered one
of the highest foreclosure rates in the nation. A few homes in
Piedmont Park sat empty for months, attracting squatters who
moved in and were hard to evict, said Karin Settle, president of
the local homeowners association. One house of college-age
renters, she said, threw fraternity-like parties with 20 or so
cars parked outside and drunk men hanging out on the porch --
something the neighborhood didn't see in years past. |
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In this Thursday, April 14, 2016, file photo, renter
Nicole Caverly gets settled at her home in the Piedmont Park
neighborhood in Apopka, Fla., a former agricultural hub now crowded with
housing developments. Where one in 10 homes was once a rental, now more
than a third are. Caverly began renting in the Piedmont Park
neighborhood this year. The previous owners had lost the three-bedroom
house to foreclosure in 2015, after which it was bought by Freo Florida
LLC in January.
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Several homeowners have said they're considering selling their homes because
there are so many renters now, she said.
"If these people come in and they're out-of-state investors — some place in
Canada or Arizona — you don't really have a physical office or people to contact
about when there is something going on with the home," Settle said. "On the good
side, they come in, renovate the house, typically gut it. They paint it, fix the
fence and it looks nice from the curb. But then these companies don't take a lot
of pains in terms of who they rent to."
Laura Smith, a resident for 17 years, was close friends with her neighbors in
the house behind hers until they moved a couple of years ago. Since then, she
said, it's been one renter after another.
"They just come and go; you just see different cars," Smith said. "I say to
myself, 'I should make a better effort to get to know them.' But by the time I
get around to it, they're gone."
The three-bedroom, two-bath home next door to Michelle Harner's house was sold
in March. She was hoping that owner-occupants would move in. But the telltale
signs of a corporate landlord appeared within days.
"Somebody doesn't buy a house like that and turn around and rip everything out
and completely remodel the whole thing and put a new roof on it five days after
buying the house," she said.
Property records show that the house was bought at the end of March by Freo
Florida LLC for $145,000. Freo Florida, part of Progress Residential Trust,
which owns over 3,000 homes around the nation, listed the house on Zillow as a
rental for $1,325 a month.
Some renters do show pride in tending to their homes, Harner said, but it's
often easy to pick out which homes are rentals. Yards tend to be untended, cars
are parked all over the street, "and you see one family a year come and go."
The transient nature brings other challenges. At a recent homeowners'
association meeting to discuss installing a new playground, only nine homeowners
showed up from a neighborhood with more than 400 residents. A decade ago, dozens
would likely have attended.
"When you have a high percentage of renters, you end up having a low turnout at
things like homeowners' association meetings, when you do a community yard
sale," Harner said. "That collaboration sort of declines.
Ask the renters themselves, and some will say that very sense of community is
what they value most about living there. Nicole Caverly, who began renting in
the Piedmont Park neighborhood this year, doesn't consider herself a disengaged
neighbor. After having lived for years in an apartment building where people
kept to themselves, she loves living where she can chat with neighbors during
walks.
The previous owners had lost the house to foreclosure in 2015, after which it
was bought by Freo. Caverly, a store manager, says the management company her
landlord uses has been pleasantly responsive. It quickly fixed troubled locks on
the front door after she moved in with her daughter and boyfriend.
She is saving for a down payment to buy a home. But she doesn't yearn for the
responsibilities of ownership — from having to fix appliances to dealing with
insect infestations.
For now, Caverly observed, "It's a renters' market because nobody can afford a
down payment."
There are few signs that the real estate investment companies plan to sell many
of the homes they bought. But the temptation to do so will keep rising if home
prices do. In the meantime, the companies have scaled back their purchases —
from 9 percent of all sales nationwide in 2013 to about 2.5 percent early this
year, said Daren Blomquist, a vice president at RealtyTrac, which tracks housing
data and trends.
The industry has been consolidating as companies try to create efficiencies of
scale. Colony American Homes and Starwood Waypoint Residential merged this year.
And American Residential Properties merged with American Homes 4 Rent late last
year.
"It seems like the players who are still around are pretty committed to a
long-term strategy of holding these homes," Blomquist said. "You had a lot of
investors jump on the bandwagon during the acquisition phase because honestly
the easiest part of this strategy is acquiring these properties ... Efficiently
and effectively managing these properties is just harder, so there are fewer
players who want to do that."
Christine Anderson, a Blackstone spokeswoman, said in an email that the company
has sharply reduced its acquisitions. It has bought nearly 50,000 homes
nationwide.
Wynkoop, LLC, which owns about 1,000 homes in Arizona and Florida, including
some in Piedmont Park, has been winding down its Phoenix acquisitions as the
supply of low-priced homes has dwindled. But it plans to buy about 200 homes in
central Florida this year to serve a still-growing population of newcomers who
need homes to rent, said Brandon Jundt, who runs the Denver-based investment
firm.
If builders start constructing many more homes, or if the homes become more
profitable to sell than rent, it would create an incentive to sell off the
portfolio, Jundt said.
Still, he added, the firm's investment in single-family homes is a matter of
"years, but not for decades." As the number of home sales from the foreclosure
crisis fades, limiting opportunities to buy homes at discount, and as rents
peak, it will eventually be time to look elsewhere.
"At some point, you're going to have a normalization between rents and home
values," Jundt said. "And once things get back to normal ... I'll probably move
on." |