Beazer Homes buying Phoenix REO for rental conversion
Homebuilder Beazer Homes USA is going after an untapped market: Renters who want to live in fairly new homes, but who either lack the credit or desire to buy the homes outright. Beazer introduced its pre-owned home division this week, which will be limited to Phoenix for the time being. Beazer intends to acquire up to 100 homes in the Arizona city — most of them distressed properties — by year-end. "I wouldn't be surprised if other builders followed in their footsteps, but it is going to be restricted to those companies that have a significant amount of capital," David Crowe, chief economist with the National Association of Home Builders said Monday. Crowe said Beazer's rental plan is a unique concept for a large, public homebuilding company. Beazer will improve the homes and rent them to tenants, allowing renters back into the existing home market. The homebuilder will target homes built by reputable builders in the past seven years. "Because the primary source of pre-owned homes will be distressed sales, typically foreclosures or short sales, Beazer anticipates acquiring homes at a discount to their replacement cost," the builder said in a statement. The company completed its first series of acquisitions in March. In the future, these homes will be offered for re-sale, either to tenants or other buyers. Crowe said the "clientele they are renting to are most likely those who prefer to buy, but who can't get a mortgage for whatever reason." Beazer's initiative comes on the heels of disappointing earnings. Beazer reported a first-quarter loss in February, blaming falling demand for housing and the absence of federal homebuyer incentives. The Atlanta-based homebuilder reported a loss of $48.8 million, or 66 cents a share, for the three months ended Dec. 31, down more than 200% from a $48 million, or $1.17 per share, income a year earlier. Write to Kerri Panchuk.