As early as days after Hurricane Harvey ended and Houston residents began returning to their ravaged neighborhoods to find people wanting to buy their flooded homes, and now the big-time investors are trying to make similar moves.
With backers like Bain Capital and Salesforce CEO Marc Benioff, Gary Beasley, CEO of an online investment marketplace called Roofstock, is selling the idea of buying flooded Houston properties as the “Next Big Thing” to private equity firm and pension funds, according to Bloomberg News.
“It’s much like the housing crisis, when the institutional guys came in to buy homes nobody wanted,” Beasley said to Bloomberg.
Beasley’s company Roofstock is an online marketplace where people can invest in single-family rental properties; just two years old, Roofstock recently raised $35 million in a Series C funding round, The Real Deal reported. Beasley’s pitch is buy the damaged homes, fix them and then rent them back to former homeowners, arguing it’s better than them walking away from damaged property.
It’s a dangerous game, because, as Jesse Keenan, head of Harvard Graduate School of Design’s real estate program, pointed out, investors are holding assets that could literally tank in the future.
“The risk is that in the two or three or five years that you hold on and rent out the house, you get another event,” said Keenan to Bloomberg.
[Bloomberg News] — E.K. Hudson