Atlanta Ground Zero for Institutional Investors
Below is an excerpt from an article in today's WSJ. I knew that institutional investors were major players in Atlanta, but I had no idea that they were bigger here than anywhere else. That says a lot of good things about Atlanta RE, only problem is finding properties before the "quants" working for the big investors find them.
Competition for conventional real-estate listings is particularly fierce in Atlanta, where the six largest institutional buyers own more homes than in any other market, according to RentRange.
Oakland, Calif.-based Starwood Waypoint, one of the six, said it has cut the time it takes to calculate a first bid on a house to eight minutes. “We encourage our guys to make an offer before they see the house,” said Ali Nazar, Starwood Waypoint’s chief experience officer. “I don’t want to wait for anyone else. Our competitors are also fast.”
One local Atlanta real-estate agent said bulk purchasers are making it more difficult for individual home buyers to compete for new listings. Home prices in Atlanta have jumped 22.5% in two years, according to the S&P/Case-Shiller Home Price Index’s data through January.
“They’re outbidding all of us,” said Brian O’Neal, a Realtor based in McDonough, Ga., a southeastern suburb of Atlanta.
Operating from the firm’s largest branch office at a former meatpacking plant in Atlanta, Starwood Waypoint’s acquisitions team evaluates potential purchases with a data map that ranks the “livability” of local neighborhoods according to information provided by local employees of the firm who frequently visit the area. Factors include proximity to retailers and how noisy the neighborhood is.
Employees ultimately weigh about 15 variables when calculating a bid price, the monthly rent and renovation costs. Employee bonuses are based on the accuracy of their home bids and rental estimates.
After submitting a bid, Starwood Waypoint employees visit the home with iPads and take it through a 45-minute inspection, marking what renovations need to be made. The results—labeled “satisfactory” or “unsatisfactory”—get shared on the company’s internal network and are used to keep tabs on all of the roughly 2,700 homes Starwood Waypoint owns in the Atlanta area.
On a recent visit to a suburban Atlanta home that Starwood Waypoint owns, David Zanaty, a senior vice president, walked into a four-bedroom home available to rent and glanced at his smartphone. “Our guy was here just yesterday,” said Mr. Zanaty. “And there aren’t any unsatisfactory notes.”
Mr. Zanaty inspected whether, as instructed, the thermostat was left at 67 degrees; it was. He opened the dishwasher to verify it had been run recently. He examined the second-floor bathroom, where silver faucets were offset by walls painted in a “toasted almond” color, a pairing seen in many Starwood Waypoint homes because the firm purchases those items in bulk.