Bungalo, a newly launched subsidiary of institutional landlord Amherst Holdings LLC that owns/manages +20,000 single-family rentals nation-wide, has just unveiled 25 single-family, newly renovated houses in Dallas and 10 such houses in Tampa for resale.
If this sounds like a typical find, fix and flip business, it isn’t. Prices and features are different.
Rather than finding, fixing and reselling homes at capped prices of approximately $250,000 plus or minus, as do OpenDoor, Zillow, Redfin, etc., Bungalo ‘s current price point goes up to approximately $560,000. Additionally, all of Bungalo’s homes have fully renovated kitchens and bathrooms, new flooring and fixtures, smart-home appliances and high rental yields.
Features of the deal include
- no hassle pricing, ie. take it or leave it
- listings of homes for sale on its website
- promise to sell the home to the first pre-approved buyer to meet the sales price
- warranties comparable to builders’ warranties
- mortgage and notary services
- systems to help buyers manage homes and tenants
Greg Stewart, COO of Bungalo, said, “We’ve streamlined an A-B-C-D approach, explaining the process in layman’s terms, so our buyers really understand the road map to close with us.”
Looking to expand its impact among residential markets, “…markets where people want to live and where people are moving to…” Bungalo intends to extend model nation-wide next year with its already in-hand $1B from institutional investors.
Drew Flahive, president of Amherst Residential, believes the Bungalo model solves many problems currently inherent to the housing market. He said, “A lot of distress in the US housing market right now is not necessarily people upside down in mortgages. It’s really the fact that a lot of these assets (residential homes) have a significant amount of deferred capex. An individual who wants to live in ‘that’ house knows they have to come up with a down payment AND a repair budget.” Bungalo’s model includes the repair budget and the time to do those repairs.
Can Bungalo turn over a profit at a time when flipping margins have decreased over each of the past seven quarters? According to Daren Blomquist, senior vice president with ATTOM Data Solutions,” The traditional home-flipping market model is to buy a property at a steep discount, add value by rehabbing it and selling it for a premium because it’s fixed up. These days, it’s tough to get that discount on the front end.”
We’ll see. Certainly Wall Street investors who’ve provided Bungalo with that $1B of venture capital money are betting on it.
