Investment firm takes stake in Minnesota home marketST. PAUL, Minn. (AP) — A giant private equity firm has taken a major stake in the Minneapolis-St. Paul housing market.
ST. PAUL, Minn. (AP) — A giant private equity firm has taken a major stake in the Minneapolis-St. Paul housing market.
Dallas-based Invitation Homes has bought around 700 single-family homes in the Twin Cities and their suburbs, Minnesota Public Radio reported Monday. Across the nation, the company has spent $7.5 billion to acquire 40,000 properties in 14 markets, making it the largest landlord of single-family houses in several cities.
Invitation Homes is backed in turn by The Blackstone Group, a major New York investment firm with major stakes in big companies such as Hilton Worldwide.
Real estate agent Jim Tice was in a bind when he was trying to sell a house in Minnetonka last spring. His client was behind on mortgage payments and wanted to unload the place. But they had no takers until they got an offer from IH2, a division of Invitation Homes. The company was willing to pay cash.
"They were somewhat of a rescue because the property was headed for foreclosure," Tice said. "They were the only offer and the best offer that we thought we'd get."
Housing economist Elliot Eisenberg said companies such as Invitation Homes have helped curtail the housing downturn by acquiring homes that were in foreclosure or heading that way. They're betting that a growing numbers of families will rent, he said, either because they now view housing as too risky or because they can't get a mortgage.
The company has been in Minnesota such a short time that its track record at managing properties isn't clear, MPR reported. A number of houses owned by Invitation Homes — in Apple Valley, St. Paul and Minneapolis — are still vacant six months after the company bought them.
Micheal Apple, whose family is renting a house in Eagan, said the latch on a storm door needed repair and some shelves were misplaced when they moved in. But he said the company's project manager responded quickly.
It didn't go so well for Brad Dukes, who moved into a rental home in Minnetonka in October. Dukes said it was advertised as having two bathrooms, but the second was just a freestanding toilet in the basement, with no privacy. Invitation Homes agreed to build a room around the toilet. But he said the work took weeks to complete, and resulted in a cramped, unpainted space.
"I'm going to be looking at sheetrock," he said.
Andrew Gallina, a spokesman for Invitation Homes, said the company has hired about 1,400 people nationwide to repair and manage properties but is still learning the business.
"To do what we've done in terms of acquiring and renovating 40,000 homes and renting the vast majority of those to families is no small undertaking," he said. "There are times we're going to be disappointing to a resident. But at the same time, we have a real commitment to getting it right."