Hedge Funds are Buying in Orlando - Plan to Resell in Five Years

By Mary Shanklin, Orlando Sentinel
A California investment group that has bought more foreclosed homes at public auction in the Orlando area than anyone else, by far, is poised to accelerate its purchases of distressed properties with $400 million in oil money from the state of Alaska.

.."Our target is newer developments, but we will buy in older areas if it's a good deal and a good house," said Jack Kourigan, the company's chief operating officer. "We're not at the high end, but we're not fishing around at the low end, either. We want our houses to be the nicest ones on the block."

.."One house can determine what the property value of the whole neighborhood is," she said.
Despite such concerns and objections, homeowners in communities across Florida are likely to see an increase in the number of investors purchasing houses in their neighborhoods.
.."I think you can commoditize these houses, and I think that kind of thing is beginning to permeate thinking with investors and entrepreneurs," said Daren Blomquist, a spokesman for RealtyTrac Inc., which tracks foreclosure data nationwide. "It is really an interesting trend that the prices have gotten so low that these kinds of investors and entrepreneurs are jumping in."

..Large-scale purchases of foreclosed houses by investment companies, institutional investors and hedge funds have been growing in Florida and other states with large numbers of distressed properties, including Arizona, California, Michigan and Nevada. A recent survey by the National Association of Realtors showed that sales of investment homes rose about 65 percent last year compared with 2010; in contrast, purchases made by owners planning to occupy the homes they bought fell more than 15 percent.

..As the economy appears to slowly recover, the combination of bargain property prices and rising rental incomes has attracted investors at a time of low returns on many other investments.

..The partnership intends to sell the properties individually or "in packages" within five years of purchase, according to a staff report.