The Real Deal Miami

Foreclosure investors cannot spend money as quickly as they raise it

June 13, 2012 02:15PM

The combination of a hot U.S. rental market and a tight home lending climate has investors racing to raise money for buy-to-rent single-family homes, but Bloomberg News reported they aren’t finding enough suitable properties that warrant the money.

Investment funds, including Colony Capital and Och-Ziff Capital Management, are meeting little resistance in attempts to raise money as home prices remain 35 percent off 2006 levels. Bloomberg said they’ve raised a total of $6.4 billion for single-family rentals. However, the inventory of low-cost foreclosures has plummeted.

“We’re finding the hardest things is deploying funds,” said Rick Sharga, executive vice president of Carrington Capital Management. “It’s hard to find investments in any volume.”

According to RealtyTrac numbers, banks repossessed a total of 185,451 homes in the first quarter, which is a 14 percent year-over-year decline. In addition, the number of REOs bought by third parties in the first quarter had a 15 percent annual decline to 123,778. Many states are running low on inventory, making it more difficult for investors to find lower-priced properties. [Bloomberg]