Buyers get out there and get your home now! The market is changing and the investors are snaching up the residential properties. Do you want to make your landlord rich? Read this great article by Aaron Glantz at The Bay Citizen.
Report: Investors buy nearly half of Oakland's foreclosed homes
Real estate firms turning properties into rentals, becoming "massive landlords" in some neighborhoods, critics say
By Aaron Glantz on June 28, 2012 - 11:01 a.m. PDT
The rental listing advertises a “gorgeous remodeled craftsman-style house” with three bedrooms, two bathrooms, a converted basement, a large deck and a backyard for $2,595 a month.
Eight months ago, this West Oakland home was owned and occupied by Theodros Shawl, a local chiropractor. Shawl bought the house in 2004, his first since emigrating from Ethiopia in 1990. Over the years, Shawl said, he rebuilt the home’s foundation and replaced its aging plumbing and electrical systems.
“I liked the fact that it was an older home, that I could repair and paint and fix there on the weekends. I was always at Home Depot,” said Shawl, 40. “I was living the American Dream.”
Last October, after being sidelined with a wrist injury, Shawl lost his home to foreclosure; in May, Bank of America sold it to a real estate investment firm, REO Homes 2 LLC, a company founded in 2010 by Bay Area businessman Neill Sullivan.
According to a report released today by the Urban Strategies Council, a nonprofit think tank, real estate investors have purchased – usually with cash – 42 percent of the 10,508 homes in Oakland that went into foreclosure between January 2007 and October 2011. Many of these investors are turning the homes into rental properties and charging rent that is significantly higher than the monthly mortgage payments many families would make if they purchased the homes.
“They are massive landlords in neighborhoods that historically have had high rates of homeownership, and very few people are aware of the investor activity that’s taking place under feet,” said Steve King, the organization’s housing and economic development coordinator.
The most prolific investor, the report said, was a company registered to Community Fund LLC, which bought 307 foreclosed homes and apartment buildings. The company is registered to Michael Marr, an Oakland real estate broker who declined to comment for this story. Community Fund paid, on average, $111,000 for a foreclosed home.
The homes Sullivan’s firms purchased accounted for the second-highest number of foreclosures now owned by investors. The Urban Strategies Council said at least 171 foreclosed Oakland homes have been bought by companies Sullivan founded. Many of those properties are like Shawl’s old house on 30th Street – detached single-family homes that were owner-occupied before foreclosure.