Beazer Homes has announced that it is expanding beyond new home sales with the introduction of its Pre-Owned Homes Division. Beginning in the Phoenix, Ariz. market, the new division is charged with acquiring, improving and renting recently built, previously owned homes within select communities in markets in which the company currently operates. By augmenting the sale of newly constructed homes with rental options of previously owned homes, Beazer expects to appeal to a broader range of consumers.
"While many prospective homebuyers recognize that this is an excellent time to purchase a new Beazer eSMART high performance home—with all of its award-winning energy-saving features - other consumers want or need different home alternatives," said Ian J. McCarthy, Beazer Homes chief executive officer. "With the Pre-Owned Homes Division, we look forward to addressing this demand."
Homes targeted for inclusion in the Pre-Owned Homes program will have been built since 2004 by a reputable builder, including homes built by Beazer Homes. All Beazer Pre-Owned Homes will receive necessary repairs and upgrades to bring them up to strict Company standards.
Because the primary source of Pre-Owned Homes will be distressed sales, typically foreclosures or short sales, Beazer anticipates acquiring homes at a discount to their replacement cost. Having completed its first acquisitions and tenant move-in during March, Beazer anticipates increasing the size of its Pre-Owned Homes portfolio to more than 100 homes in Phoenix by the end of fiscal 2011.
The company expects the rental of these homes to appeal to consumers who have elected not to become homeowners, as well as those who may not fully qualify for mortgage financing for a new home at this time. The rental market for recently built homes in Phoenix is very strong, with an estimated vacancy rate below five percent.
The new division leverages Beazer's strengths as a homebuilder and knowledge of its markets, and offers an attractive investment proposition for a portion of the Company's cash reserve. Rich O'Connor, a longtime Beazer executive, has been appointed to lead the company's Pre-Owned Homes Division.
"As a public homebuilder with significant financial resources, Beazer has the expertise to identify, acquire and improve this select group of previously-owned homes," said O'Connor. "And by working with third party local property management companies, we will be creating a best-in-class rental experience for consumers."
Because Beazer will own each home, rather than a bank or an under-capitalized investor, renters can have confidence in the homes and neighborhoods served by the Pre-Owned Homes Division. In the coming months the Pre-Owned Homes Division may expand its geographic coverage to include homes in Nevada or California.