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The Role of Investors in the Single-Family Market in Distressed Neighborhoods: Lessons from Atlanta …and from Cleveland,

The Role of Investors in the Single-Family Market in Distressed Neighborhoods: Lessons from Atlanta …and from Cleveland, Las Vegas, and Boston. National Housing Conference Solutions 2013 Dan Immergluck Professor School of City and Regional Planning Georgia Tech Atlanta, Georgia.

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The Role of Investors in the Single-Family Market in Distressed Neighborhoods: Lessons from Atlanta …and from Cleveland,

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  1. The Role of Investors in the Single-Family Market in Distressed Neighborhoods: Lessons from Atlanta …and from Cleveland, Las Vegas, and Boston National Housing Conference Solutions 2013 Dan Immergluck Professor School of City and Regional Planning Georgia Tech Atlanta, Georgia
  2. Likely REO-Investors Ownership Disproportionately Concentrated in Distressed Neighborhoods Level of Likely REO-Investor Ownership, December 2011 LRI MRI HRI VHRI
  3. Demographics and REO Activity by Neighborhood Type
  4. Learning from conversations with Atlanta investors… Acquisition factors: crime, vacancy, homeownership; building attributes less important All-cash financing is dominant (but price points are low) In low-income neighborhoods, investors generally preferred tenants with Housing Choice Vouchers (HCVs), due to the stability of the rental stream Problems using property managers; some vertically integrate; others focus on aligning incentives and close oversight No investors complained about excessive code enforcement; some viewed lack of enforcement as a major problem Some institutional investors avoiding “distressed” neighborhoods
  5. Lessons for Practice and Policy Investor behavior fluid – function of market conditions NSP-type/gut rehab generally not viewed as sustainable model for buy-to-rent; standards and cost-structures must be realistic and sustainable Housing and vacant property code and enforcement provide critical context for local investor behavior In distressed neighborhoods with low market rents, substantial rehab for buy-to-rent often not feasible without subsidy (e.g., HCV) Without subsidy, “milking” behavior and abandonment is more likely HCV program must be well-managed locally Sustainable sources of financing/subsidy may be needed to support responsible, buy-to-rent activity in distressed neighborhoods, especially in weaker-market metros; must include quality control/inspections Need for partnerships/methods to bring institutional investors into distressed neighborhoods in responsible ways
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