Catalyst Capital Management, a Miami-based boutique private equity investment firm, just announced the launch of a $50 million fund that will aim to repair and resell foreclosed residential assets throughout Florida.
Andres McBeth, a managing partner at Catalyst, told GrowthSpotter at least 25 percent to 30 percent of that commitment will go toward properties in the Orlando Metro area, including markets in Kissimmee, Orlando and Sanford.
“The strong demographic numbers, job growth increases and median price points makes it a big market for us,” McBeth said in an email response.
He adds the firm is launching the fund at a time when the number of affordably priced homes is decreasing, in hopes to give relief to the challenges created by a shortage of entry-level homes.
“I think that’s where the biggest need is,” McBeth said. “We want to be able to place more people in homes.”
The Catalyst Capital Fund will target assets directly from county mortgage and tax foreclosure auctions throughout Florida. McBeth said the fund will typically spend up to $250,000 on a property, including rehabilitation costs that will, at minimum, upgrade the utilities to lower overall energy costs.
After an acquisition is made, Catalyst will then complete the necessary repairs and renovations to flip them. The target buyers are families earning between $50,000 to $80,000 a year.
Whereas other investors may want to build newer, more executive-style homes, McBeth said the fund will work to preserve the inventory of entry-level homes.
He adds the fund does not intend to rent out large portfolios of single-family homes, but will help a home buyer enter into a rental program with their properties, if need be. It will also help home buyers source financing.
Catalyst’s in-house construction team will perform the repairs and improvements, while its in-house sales team will handle listing, sales, marketing and transaction management for all the fund assets.
“We’re perfectly comfortable producing 4,000-square-foot homes and rehabbing them based on appraised value,” he said. “The main thing is that we sell them and take them off the market immediately after we acquire them."
The Catalyst Capital Fund is an open-ended fund, which means is can issue an unlimited number of shares. McBeth said it’ll likely appeal to investors who aren’t looking for a long-term commitment.
“Our properties don’t stay with us longer than 150 days,” McBeth said. “Investors will be able to see the impact immediately.”
Preservation efforts are often praised by non-profits and local politicians advocating for affordable housing in Central Florida, especially at a time when real estate values in cities like Apopka, Orlando and Winter Park continue to rise.
In Orlando’s Parramore neighborhood, a fund called the Parramore Asset Stabilization Fund, bought 83 houses and duplexes for renovation while keeping rents at an average of $660 a month. It’s managed by the philanthropic Central Florida Foundation and a pair of community loan programs.