Too bad the first-time home buyer is trying to get a foothold on the Charleston-area hot real estate market ladder. Mortgage rates are skyrocketing. Good luck, too, competing against the deep pockets of Dan Rudin or Scott Kelly.
Take 57 Reid St. on the east side, for example. It’s a duplex, much like the one my family bought half a lifetime ago in Cambridge, Mass. It was in bad shape, but we moved upstairs and let the tenants downstairs pay our mortgage. Over the years, we have arranged it bit by bit, which has allowed us to build our heritage through home ownership. We still own this house today.
The house on Reid Street was vacant and in worse condition than the one we had purchased. But no first-time home buyer need apply because Rudin, an investor, got there first and offered $480,000, $30,000 more than the asking price. Repairs are in progress. College students to follow.
Who is Dan Rudin? It’s hard to say; certainly he does not say.
“I’m a pretty private guy,” he told me in a brief phone interview. “That’s why I do everything through partnerships.”
He’s also a pretty busy guy who loves downtown Charleston real estate. In addition to buying 57 Reid in April, Rudin has purchased downtown homes on St. Philip, Thomas, Warren, Bogard and Sumter streets for the past three years and rented them out, property records show. .
Most were purchased through funds tailored to tax-advantaged opportunity zones championed by Tim Scott, our US Senator. My favorite twist: Rudin registers his businesses at an AirBnB on Kiawah that rents for $1,100 a night — about the monthly rent for a one-bedroom apartment in North Charleston these days.
Rudin is not alone. He is part of a large movement of investors, particularly in the Sun Belt states, buying homes and turning them into rentals. The investor trend is accentuating the shortage of homes for sale, driving up prices and increasingly putting homeownership out of reach for many first-time buyers.
Once the domain of family homeowners, single-family homes have become staples among some of the global investment giants such as Blackstone Inc. and Starwood Property Trust. They represent a small but growing share of homebuyers: Real estate investors bought a record 18.4% of homes sold in the United States in the fourth quarter of last year, according to market research firm Redfin. That was up from 12.6% a year earlier. In Charlotte and Atlanta, more than 30% of homes were purchased by investors in the fourth quarter, according to Redfin.
Brookfield Asset Management, a huge Toronto-based secretive investment firm, owns more than 10,000 homes in 26 Southeast and Midwest cities through its Charleston-based subsidiary, Conrex Property Management.
Brookfield bailed out Donald Trump’s son-in-law, Jared Kushner, from a bad business deal by leasing 666 Fifth Ave. in Midtown New York and paying 99 years’ rent up front. Now its subsidiary Conrex, operating on the fourth floor of the Charleston Tech Center on Morrison Drive, buys and rents throughout South Carolina.
Real estate records show that Conrex owns over 100 homes in the Charleston area, with over 40% in North Charleston. In January, Conrex bought 15 properties, including 11 on the East Side, in a single transaction valued at nearly $20 million, according to real estate records.
Conrex’s website shows that the company is constantly buying single-family homes and converting them to rentals. He bought a four-bedroom house on Eider Down Drive in Summerville in June for $275,000 and was offering it for rent for $2,075 in July. A three-bedroom home on Tanglewood Drive in North Charleston, bought in June for $263,000, was available for $1,750 a month. Four of his new East Side properties were also for rent.
Time will tell if Conrex is a good owner. Hopefully, tenants with clogged toilets or broken refrigerators will have a better chance of reaching a customer representative at 1-833-4CONREX than I will of reaching Scott Kelly, the president of Conrex, via his email.
Whether it’s investors buying homes through Opportunity Zone funds or global investment firms opening 15 properties at once, it’s not good news for communities like Charleston who face a severe shortage of affordable housing. We need more rental housing, but the strongest neighborhoods are built on home ownership, and deep-pocketed investors are making it increasingly difficult for real people.
Buying a home has been the surest way for generations of average Americans to build wealth. If you’re a first-time home buyer and feel like everything is against you, you’re not wrong.
Steve Bailey can be contacted at [email protected]. Follow on Twitter @sjbailey1060.
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