Investing in Crisis: The Methods, Strategies, and Expectations of Investors in Single-Family Foreclosed Homes in Distressed Neighborhoods

Abstract

In the wake of the U.S. foreclosure crisis, the magnitude of homes flowing into investor ownership since 2007 has been unprecedented. Based on interviews with investors and other key informants active on the south and southwest sides of Atlanta, we describe the key aspects of the business models of such investors, including their methods of identifying properties, determining acquisition prices and renovation costs, and managing properties for rent. We also examine their expectations for financial return, including the sensitivity of returns to market and property uncertainties. We conclude with key findings and some recommendations for policymakers.