CHULA VISTA, CA – June 26, 2012 – Alegria Real Estate Funds has announced the purchase of its 100th distressed property, making it one of the largest homebuyers in San Diego County.
In the past few years, the private investment fund has raised three funds and spent over $41 million picking up a foreclosed or underwater homes. Competition for these homes has heated up significantly over the past few months, which the fund’s principals see as a sign that the local housing market is turning around.
“The bottom line is that the recovery is happening in San Diego County and it’s happening now,” said Principal Ronnie Morgan. “Housing prices have hit a sweet spot, mortgage interest rates are at all-time lows, and people are feeling more secure in their jobs so they are more willing to purchase. This is a great time to be investing in residential real estate.”
Alegria was formed back in 2010, when was looking for something to do while the real estate market was bottoming out. He partnered with Elias Lilienthal, Brad Tuck and Ari Hirshhorn to buy hard assets — detached, single-family homes – at the bottom of the market for cash, in areas with a lack of inventory and high barriers to entry.
The first Alegria fund raised approximately $5 million and was used solely to buy homes one-by-one on the courthouse steps or through a short-sale, renovate them and sell them to families who could afford them. The second fund raised approximately $6 million and was used for the same purpose.
The third fund will raise up to $10 million. Unlike the first two funds,however, Alegria Real Estate Fund 3 is being applied to a different business model. Not all the high-quality homes purchased are being resold immediately; some are being refurbished and rented, part of a longer-term hold approach. The plan is to sell them in a few years once the market has rebounded.
“We’re at the forefront of the housing recovery,” Morgan said. “We go into a neighborhood and acquire a property that needs a little TLC, fix it up, price it to market and put a family in it — a family that needs a home, wants a home, can afford it and can take care of it. What our company and others like it are doing is absolutely essential to getting rid of the glut in housing inventory. Once most of these distressed properties are absorbed, everyone’s home value is going to improve.”
While many of the homes acquired by Alegria to-date are in the South Bay area of San Diego County, the funds have also acquired condominium properties in downtown San Diego and have expanded into North County.