Money managers such as BlackRock Inc, hedge fund Angelo Gordon & Co and real estate investment firm Starwood Capital, are beginning to cash-in on so-called shovel-ready residential land-tracts with most of the pre-construction and zoning approvals already in place.
"We are coming out of the mother of all housing cycles, and residential land is the best way to play the ultimate recovery," said Michael Barr, a Paulson & Co portfolio manager, who oversees the Paulson Real Estate Recovery fund, which has under $500 million in assets for the $19.5 billion hedge fund. "Land is the highest returning component of the home building equation."
"These returns are back-end loaded, and more of an opportunistic, higher risk strategy," said Dale Gruen, a senior portfolio manager for BlackRock Real Estate, which has raised a fund that invests in such lots. "Single family rental is one in which returns are a more moderate."
The Paulson fund, whose founder John Paulson rose to fame and fortune by betting on the collapse of the subprime mortgage market, got into this market in 2010. Hillwood Development and Starwood got into the market even earlier. But new entrants are joining the hunt all the time given the ability to still buy land with development approval for as little as 30 cents on the dollar.
Investors cash-in on land deals as U.S. housing picks up - Yahoo! Finance
"We are coming out of the mother of all housing cycles, and residential land is the best way to play the ultimate recovery," said Michael Barr, a Paulson & Co portfolio manager, who oversees the Paulson Real Estate Recovery fund, which has under $500 million in assets for the $19.5 billion hedge fund. "Land is the highest returning component of the home building equation."
"These returns are back-end loaded, and more of an opportunistic, higher risk strategy," said Dale Gruen, a senior portfolio manager for BlackRock Real Estate, which has raised a fund that invests in such lots. "Single family rental is one in which returns are a more moderate."
The Paulson fund, whose founder John Paulson rose to fame and fortune by betting on the collapse of the subprime mortgage market, got into this market in 2010. Hillwood Development and Starwood got into the market even earlier. But new entrants are joining the hunt all the time given the ability to still buy land with development approval for as little as 30 cents on the dollar.
Investors cash-in on land deals as U.S. housing picks up - Yahoo! Finance
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