There’s a new investor buying single-family homes in Jacksonville, one that aims to make purchasing investment property as simple as picking up a stock for a 401(k).
HomeUnion came to Jacksonville because it believes the city has a lot of room for growth.
The Irvine, Calif.-based company added Jacksonville and four other metro areas, bringing its number of active markets to 19.
It’s not a hedge fund or real estate investment trust, but an online real estate investment manager.
The company selects cities with growing economies and prescreens houses for their income-earning potential. It then presents its “buy” recommendations to clients across the U.S. as candidates for their portfolios.
The process works the same as it does for a mom-and-pop investor. Except that the homes are bought by investors at a distance, with HomeUnion acting as a consultant and portfolio manager for the life of the investment.
What made the business attractive here, said Steve Hovland, market analyst for the company, was Jacksonville came late to the recovery. Home prices haven’t skyrocketed yet, thus, there’s more upside potential for clients.
“When we looked at Jacksonville, the economic story we could tell our investors is one of growth,” he said. “Other places in the country are kind of leveling off.”
HomeUnion viewed the possible arrival of a new aircraft carrier to Jacksonville, the widening of the Panama Canal and long-term plans to deepen Jacksonville’s shipping harbor as signs homeownership would grow. Employment also looked strong.
CEO Dan Ganguly said HomeUnion’s effect on Jacksonville’s real estate market will be different than other types of at-a-distance investors, such as the hedge funds and institutional investors that swarmed the region in 2012.
Unlike those companies, HomeUnion doesn’t buy 40 or 50 properties in bulk and at a discount.
“We’re not in a hurry to go into a market and deploy millions of dollars,” Ganguly said. “We’re looking to buy four properties in one neighborhood and six in another.”
Also, HomeUnion investors own the individual homes, instead of shares in a real estate portfolio.
The business mission of Home Union is to make it easier for small investors to buy real estate.
People who buy rentals are typically limited to their local market, because they don’t have access to information about other cities.
“It’s almost like saying I have to live in Jacksonville to buy CSX stock,” Ganguly said. “I shouldn’t have to. I should get a regular update, so I know if CSX should stay in my portfolio.”
HomeUnion uses its own local real estate agents to vet markets and properties for clients, based on their financial goals and risk preferences.
It finds lenders, inspectors, insurance companies and contractors and, if needed, it manages the properties for clients. It also handles the sale when investors are ready.
Its analytics department sends regular market updates with buy, sell and hold recommendations for properties.
“We act really as an investment management company where the asset we manage happens to be real estate,” Ganguly said.
In addition to Jacksonville, HomeUnion’s recent expansion includes Orlando; Atlanta; Davenport, Iowa; and Huntsville, Ala.
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