When Tom Barrack lost the bid for the Los Angeles Dodgers baseball team, he decided to a leap into one of his largest bulk foreclosure purchases. With contacts high above in the real estate industry, Barrack reached out to Fannie Mae and bid on their bulk for a $176,000,000 purchase.
Going up against the ever so famous Magic Johnson, Barrack a rude awakening when he was told he lost the bid. The Chairman and CEO of Colony Capital which is a very well known investment firm based of out Los Angeles, found himself seeking a colossal purchase that had LA Paparazzo’s tagging along. He was in touch with associates of Fannie Mae I regards to a plan of theirs where they will roll out distressed homes and sell them in bulk to help sustain their pipeline. Barrack went in with a bid of $176,000,000 for a total of 970 foreclosure properties located in Arizona, California and Nevada. The bid was quite competitive in the auction room where Barrack ended up paying 112% of their estimated worth.
I know you’re wondering what an investment firm can possibly turn around and do with almost 1,000 properties; they rent them. We were struck that thought as well and found that he has plans to hold on to the properties, rent them and turn them later for a profit. An actual list of the properties has not been disclosed but we are certain they will be in low income neighborhoods. Considering low income homeowners are losing their properties or short selling them, this could be a good idea for Barrack to provide to these communities. Everyone needs a roof over their head and 970 properties can supply a substantial amount of roofs.
When news of this sale broke, the agents and brokers associated with National Association of Association of Realtors shared their opinion and stated that this bulk purchase could hurt the market since they are finding a shortage of properties for sale. If these 970 foreclosures went up for sale in their markets, it would help thrive the inventory and thus push for positive market growth.
Let’s see what the outcome of these purchases will be. You can never predict what a billionaire investor will do next.