[UC] Entrepreneurs' Tactic Is to Buy Up Homes by Hundreds

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Any comments from our local real estate honchos?   Ross Bender http://rossbender.org/indus.html   Entrepreneurs' Tactic Is to Buy Up Homes by Hundreds Working-Class Neighborhoods Offer Better 'Rental Yield'; Leaky Pipes, Late Payments   By JAMES R. HAGERTY, Staff Reporter, The Wall Street Journal   TRENTON, N.J. (March 4) -- Many people agonize for months before deciding to buy a house. Jonas P. Lee is more decisive: He often buys several in a day.   This year, the 38-year-old Mr. Lee says he plans to buy more than 1,000 homes for Redbrick Partners LP, a New York firm he runs with the help of an MIT economist to invest in single-family rental property. What millions of mom-and-pop landlords do locally, Redbrick is trying to do on a grander scale.   Mr. Lee, a former Web entrepreneur who grew up in New York's posh Westchester County, doesn't see much value in most suburbs at today's lofty prices. Instead, he is buying in working-class neighborhoods in such cities as Baltimore, Philadelphia and Trenton. Even there, however, he is running into tough competition from people determined to cash in on America's decade-long housing boom.   On average, house prices in the U.S. have jumped 85% over the past decade, according to the Office of Federal Housing Enterprise Oversight. Prices have soared largely because low interest rates have cut the cost of financing a home. In coastal areas, the rise has been far steeper. In California, for example, prices have more than doubled in just the past five years.   Mr. Lee's venture is an unusual sign of the investment frenzy now surrounding residential real estate. The National Association of Realtors estimates that 23% of home purchases last year involved investment properties. Redbrick's pitch is that investors can join this gold rush without the ordeals of being a landlord.   Many real-estate investment trusts and other funds invest in apartment buildings. But the complications of owning hundreds of single-family homes are so daunting that large real-estate companies generally shun that market.   One of Mr. Lee's tactics is to find a landlord who owns 20 or 30 houses and has been worn down by the trials of collecting rent and fixing leaky toilets. Redbrick then can buy homes in bulk and hire local managers to take care of the properties. He also uses a formula created by his economist partners to identify markets -- usually low-profile working-class neighborhoods -- that have undervalued homes with potential for high rents.   http://aolsvc.news.aol.com/business/article.adp?id=20050304064509990007