The Big Buyout

Corporations and investment firms are gobbling up properties in choice neighborhoods, killing hopes and dreams for many first-time buyers

60 Minutes recently reported on an alarming but growing trend in the Sunbelt—big companies buying out single-family homes and renting them out at a premium. These powerful firms often spiff up the homes so that they can raise the rents by up to 40%. In “hot” popular cities like Jacksonville, up to 30% of the available homes are owned by big companies.

Exacerbating matters, people with homes in California and New York can sell their properties at a considerable profit, giving them outsized, all-cash buying power in places like Florida.

The affordable market is drying up.?

Investment firms are coming for the most desirable markets, squeezing out first-time buyers who often get outbid even when they are completely qualified.?

Here at Bee, we’ve had several customers who were pre-approved and overqualified, but couldn’t close a deal. One buyer was shut out of five properties in a row, including a listing for $448,000—a 1975 cinder block home with a single car garage. For the record, they were ready with the asking price in full, but a corporation came in with a cash offer that was $52,000 over the asking price.??

There is an indescribable amount of pressure on those new homebuyers that want to achieve the dream of homeownership.?

Thankfully, the phenomenon hasn’t taken hold everywhere. These companies and investment firms study up on the hottest property markets and come after them for one simple reason—they know they can rent ‘em out without a hitch. People are going to be moving to Florida and Texas no matter what, and if they have to rent, they will.?

What’s rarely discussed, though, is the larger impact on communities that go through this transformation. One thing is certain: there is a different tenor and quality of living in a neighborhood dominated by renters. Homeowners by definition have a greater investment in fortifying and improving the area that surrounds them.?

Just how much of a crisis are we in? Will the corporations—who argue that “the market is the market” while changing that very market—start coming for less desirable areas as well? Will targeted neighborhoods start going to their legislators and insisting that they do something about these buyouts? Can there be change at the government level??

It’s anybody’s guess, but one thing is certain: with remote work on the rise, Silicon Valley and San Francisco are already relocating—to Miami, Tampa, and the surrounding areas. This migration is not just a trend, it's a matter of public record— and these companies and investment firms can see the data and act accordingly.???

Or take Atlanta, what many are calling “the new Hollywood”. Georgia.org announced in July 2021 that the film industry there reported a blockbuster year, with film and other supporting industries quickly becoming a key part of Georgia’s success story.?

Where there is new money, there are people ready to purchase a home—but if the corporations beat them to the punch, they just might not be able to find the homes they really want.?

As new technology and ideas form, look to innovative thinkers, regulators, and legislatures to level the playing field in various ways should these big companies upset too many voters. In the meantime, Bee is working on a novel financing mechanism that will allow buyers to compete with cash offers, and even beat them, preserving the American dream of homeownership for generations to come.?

Nobody knows exactly how this will all play out, but here’s three things a buyer can do to protect themselves from big corporations gobbling up houses:

1. Get a fully verified pre-approval that’s been underwritten by the lender. This makes you as good as a cash buyer since your income and assets have already been verified by the underwriter. Make sure your agent is presenting your offer as being just as good as a cash offer.?
2. Don’t quit. Keep looking until you find the home that’s meant for you. This may take one or 5 visits, but it’s worth it.?
3. Get smart and aggressive with your offers. If you find the home you want, build rapport with the sellers so they don’t want to sell that place to anyone else, and don’t be afraid to raise your offer to compete.?

Most of all, always remember that you don’t buy a home because it’s a good investment. You buy a home because it’s best for your family and your dream, and nothing will make you happier than living your dreams!

?1. https://www.movebuddha.com/blog/silicon-valley-miami-migration/

2. ?https://theculturetrip.com/north-america/usa/georgia/articles/how-georgia-overtook-hollywood-to-become-the-film-capital-of-the-world/

3.?https://www.georgia.org/press-release/georgia-film-records-blockbuster-year