A Denver real-estate investment company is capitalizing on the slumping national housing market and high foreclosure rates with the bulk purchase of 144 houses in 24 states.
Home Investment Portfolio Partners Capital closed Friday on a deal to buy the single-family homes from Homecomings Financial, a subsidiary of GMAC. The properties were foreclosed on by a number of mortgage lenders, in addition to GMAC, then were rolled into the pool being sold by Homecomings. Just one of the homes is in Colorado.
The properties’ original mortgages totaled about $7 million. Today, the properties are valued at about $4 million, HIPP president Christian Hageseth said. HIPP bought the properties for about 60 cents on the dollar, Hageseth said. That works out to about $2.4 million.
HIPP plans to include 57 of the homes in one of its mortgaged mutual funds.
“We can add value by fixing them up and renting them,” Hageseth said. “We’ll hold them for an economic cycle – probably two to four years – before we’ll sell them.”
The remaining 87 properties will be sold individually or in groups for up to 90 cents on the dollar, Hageseth said.
Homecomings has about 8,500 properties it’s trying to unload for mortgage lenders, and HIPP plans to make bids on several more groups of homes, Hageseth said. He expects to close on one more by the end of the year and one a quarter next year. By late 2007, Hageseth said he expects HIPP to buy one pool of properties a month.
Chris Holbert, president of the Colorado Mortgage Lenders Association, said he’s not familiar with HIPP, but the concept of investors buying foreclosed homes isn’t new. He said a bulk sale of this scale is unusual.
“If we reach a point where the market improves again, they stand to make a lot of money,” Holbert said. “If we see property appreciation in this market again, the people who are buying properties at a reduced price will come out ahead.”
Selling homes in bulk both helps and hurts mortgage lenders, Holbert said. It reduces their inventory of foreclosed properties – but at a price.
“What I’m hearing from our members is that they’re losing $40,000 to $50,000 per foreclosure,” he said.
Staff writer Margaret Jackson can be reached at 303-954-1473 or mjackson@denverpost.com.
