Property Asset Investments (PAI), a Houston-based real estate investment firm, is creating two funds to invest in distressed residential real estate. The company said one of the funds will invest in real estate owned (REO) properties in Houston, Seattle and Denver, working with lenders to purchase distressed properties and resell the houses to real estate investment trusts (REITs), special-purpose acquisition companies (SPAC) and large hedge funds. The other fund will invest in bulk real estate portfolio purchases. The firm will create suggested management plans to sell along with the properties to other investors. PAI was founded in May 2009. The firm said it will evaluate the individual properties it acquires to maximize profit, using a combination of investment evaluation software and the experience of its staff. The firm said it will resell most properties it acquires within three to 12 months. PAI expects to have an inventory of 3,800 homes and earnings before interest, taxes, depreciation and amortization (EBITDA) of $11.8m during the first year of the funds, followed by second and third year EBITDA of $23.5m and $35.7, respectively. Write to Austin Kilgore.