In the span of just more than a year, a rental home company has bought hundreds of homes throughout Johnson County and is renting them for prices of about $1,000 or more per month.
Neighborhoods of homes once owned by families are turning into rental communities.
American Homes 4 Rent of Agoura Hills, Calif., now owns about 350 houses in Johnson County and approximately 1,800 in central Indiana — a buying blitz that started in June 2012. In some Franklin and Greenwood neighborhoods, the company has bought up to six houses on the same street, including Colonial Way and Bridlewood Drive in the Heritage subdivision in Franklin.
And as long as the company is making money, officials say they plan to continue to buy more, especially in central Indiana.
About the company
Who: American Homes 4 Rent, a publicly traded company based in Agoura Hills, Calif.
What: Buying hundreds of houses in central Indiana to convert into rental properties
How many: About 350 in Johnson County, and approximately 1,800 in central Indiana
Why: The rental market in the area is strong, particularly since the recession, officials said.
Some real estate agents in the area are concerned about what could happen if American Homes 4 Rent changed its business model and chose to sell all of its rental properties at once, said Claire Belby, spokeswoman for the Metropolitan Indianapolis Board of Realtors. Others see the company’s purchases of multiple homes as beneficial for the local housing market, she said.
“It does stimulate a lot activity, and by and large the companies are being good stewards of the properties,” she said.
Out-of-state companies buying large numbers of houses in Indiana is a new idea that began when home values were down during the recession, according to Jim Litten, president of F.C. Tucker’s residential real estate division.
“I don’t know, in my career, that I’ve seen anything like this,” he said.
The demand for rental homes is a product of the recession, which caused wariness of home ownership in people who had houses they couldn’t sell and made it difficult for some to qualify for mortgages, American Homes 4 Rent’s Chief Operating Officer Jack Corrigan said.
Joseph Berkemeier’s home in Greenwood had been on the market for about a week when American Homes 4 Rent approached him with a purchase offer. Berkemeier had never heard of the rental home company, but when American Homes 4 Rent offered $191,000 cash for his 10-year-old house and didn’t ask him to fix anything, he agreed to sell. Berkemeier’s original asking price was just under $200,000, so the cash offer that was nearly that much and the convenience of the deal were attractive, he said. He didn’t have to worry about whether the buyer would be approved for a mortgage.
He’s not sure if a renter has moved into his old house but said the rental company was asking for rent of about $1,700 a month, he said.
Berkemeier has driven past the house since he sold it in June, and the property appears to be maintained well. His former neighbors haven’t complained about having a rental house in the area, he said.
Michelle White, who lives on the same block as Berkemeier’s former home on Gainesway Drive, said she hasn’t noticed any changes to the neighborhood since Berkemeier sold and moved. If the company bought more houses on the street and didn’t maintain them, she wouldn’t be happy, but that doesn’t seem to be happening, she said.
“I don’t have any issues with it,” she said.
Homeowners in the Heritage subdivision in Franklin were more cautious about the trend. American Homes 4 Rent has bought at least 11 houses in the past year near Barbara Barnaby’s home, and she thinks the rentals could drag down property values in her neighborhood, depending on how well the rental company and tenants take care of the homes.
“On the whole, it’s not been too bad. We just don’t know what the future holds,” she said. “All we can do is hope that they continue to rent to good people.”
Homeowner Wes Foddrill has been a renter and knows responsible renters, but he also knows some people don’t maintain properties they don’t have much invested in, he said.
“They don’t care about the homes,” he said.
Foddrill doesn’t plan to sell his house anytime soon, but he worries that if more houses turn into rentals in the neighborhood, his property value will be lower, he said.
Central Indiana’s steady population growth has made Hamilton, Marion and Johnson counties appealing for the company to invest in, Corrigan said. The company will keep buying in the area as long as it has the funds, he said. American Homes 4 Rent owns more than 21,000 houses nationwide.
The company is purchasing an average of 100 houses per month, which isn’t enough to eliminate options for residents who want to buy their own homes, Litten said.
The company looks for houses that are about 11 years old and cost between $100,000 and $400,000, Corrigan said. American Homes 4 Rent spends from $5,000 to $25,000 on house repairs, depending on how big they are and their condition. Then it lists them for rent.
On the company’s website this week, 17 homes in Greenwood are for rent between $995 and $2,000 per month. In Franklin, American Homes 4 Rent is advertising eight houses at prices between $950 and $1,275 per month, and, in Bargersville, two houses at $1,000 and $1,050 per month.
“Our philosophy is to buy them, fix them up and rent them out. We’re hoping to build a national brand that when people are thinking about renting a house, they think of us,” Corrigan said.