The Upstate Land Rush

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Out-of-state investors are snatching up local real estate

As yet another sign that the Greenville area real estate market is heating up, an onslaught of out-of-state investors have been gobbling up area real estate. This is resulting in a shortage of finished, available home lots and potential rental properties.

Black Orchid Equity is one of those firms. Based in St. Petersburg, Fla., the boutique private equity company just completed a multimillion-dollar, five-state, 1,500-lot deal with thousands of acres of excess land for future development. Of those, 483 lots are in Upstate subdivisions.

“We went through and picked cities that had the best underlying economics,” said BOE Managing Director Blake Whitney Thompson. “The cost of living is in line in Greenville, people are able to get jobs, and we thought it would be a smart idea to come there.”

The deal originated from non-performing loans originally from Regions Bank that were then sold to Rialto Capital Management. BOE was able to go through Rialto’s portfolio and choose lots that fit the firm’s investment strategy. “I took every lot they had in Greenville,” said Thompson.

Of the 483 lots BOE purchased, 133 are in Hawthorne Ridge in Simpsonville. The others are in Hembree Station, Covered Bridge and Oakhill in Anderson; Shoally Brook in Boiling Springs; and The Orchards at Reidville in Spartanburg.

BOE is already working with homebuilders who will finish out the lots. Thompson has a deal in the works for another 265 lots, thanks to local builders contacting him with deals over the past three weeks.

Most finished home lots have been locked in by builders now, said Michael Dey, executive vice president of the Home Builders Association of Greenville. And most of those builders are from outside of Greenville. The lots that are left are primarily held by banks that are moving them now that demand has returned.

“There is a pending shortage of finished lots,” said Dey. “We did not develop a lot in this market for almost five years. While building volume was low during that time, it was still sufficient to absorb most of the lots that were on the market in 2007.”

Seabrook Marchant, owner of the Marchant Company, a Greenville real estate firm, said that this is indicative of what is going on in the market right now. “Greenville is a progressive place and people want to be here,” he said. His company also has a customer that is an out-of-town investment group that has purchased about 30 homes in the area so far this year. “People are seeing that there are a lot of investment opportunities in real estate instead of the stock or bond market, and Greenville has been the beneficiary of it,” said Marchant.

Another firm, American Homes 4 Rent, based in California, has a different investment approach. Local real estate professionals said the firm submits offers close to the asking price for area homes that are for sale, pays in cash and then rents the homes. The firm has purchased 264 homes in Greenville County since the beginning of the year.

 

 

 

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