SCI Residential strives to offer solutions to the current distressed home market by providing the capital and expertise necessary to renovate and improve residential properties for today’s buyer. We are focused on providing affordable quality product to the current market by identifying under-valued residential opportunities and then investing the capital necessary to improve the homes for today’s consumer.
The Company’s operating strategy is to capitalize on the massive volume of distressed residential inventory in Southern California by acquiring homes at substantial discounts through the trustee sale auctions, or by purchases of pre-foreclosed assets.
What We Do
Southern California Investors has developed significant experience in utilizing the trustee sale auction markets to acquire foreclosed real estate property. Since 2009, SCI and its affiliated entities, have acquired at trustee sales, short sales, and through direct purchases of REO assets, in excess of 410 separate properties for an aggregate purchase price of over $90 million. These properties have been successfully reconditioned and resold in an average of approximately 120 days, at gross profit percentage levels exceeding our target of 10%, and at gross annual returns on cash invested in excess of our target of 30%.
Our Focus on Results
Southern California Investors’ primary focus is to provide quality homes to today’s consumer. We strive to accomplish this objective while preserving investor capital and producing an attractive return to our investment partners. We accomplish this by:
- Utilizing the firm’s expertise in the trustee sales auctions and pre-foreclosure markets to acquire properties at significant discounts to resale value.
- Operating locally to gain an information advantage and to leverage existing support relationships.
- Limiting capital outlays for transition and improvement costs and focusing on quick turnaround, high return properties.
- Limiting property holding period (target of 4 months or less for resale product).
- Focusing on resale affordability and buyer financing availability by targeting properties within conforming loan limits.
- Accomplish the above while emphasizing delivering a quality home so that our end product satisfies today’s selective buyer.
- Vertically integrated operations. SCI handles and controls all aspects of the process, from underwriting, bidding, renovations, marketing and sale.
- Focusing on realized profits – “nothing counts until it closes”. SCI receives no profits or fees until the property closes. All SCI profits and fees are subordinated to the investor’s return of principal and interest.
Our Focus on Acquisition Expertise
The Company focuses its acquisition efforts in Southern California. These acquisitions over the past year have been primarily in Riverside and San Bernardino Counties through daily trustee sales auctions of foreclosed property. The trustee sale auctions require the buyer to be able to perfect its purchase process skills utilizing very short lead times. Many buyers are unable, or uncomfortable, in reacting at the speed and certainty required at these auctions.
To capitalize on this market opportunity, SCI has developed complex proprietary systems to quickly identify, underwrite, track and ultimately acquire properties that can be purchased at significant discounts to the future sales value of these homes.
The firm utilizes its own tracking software to identify properties throughout the day with potentially attractive opening bids. Our real estate underwriters perform fast-paced due diligence reviews on properties deemed potentially attractive that include:
- Multiple automated valuation model (AVM) estimates.
- Title check.
- Review of map, location and aerial statistics.
- Visual feedback – SCI trained inspection staff conduct drive-by field review and scores various conditions and factors related to property resale value.
- Rehab and transition costs are estimated based on characteristics of the property (size, age, bed/bath count, occupancy) as well as visual feedback scores.
- Full property valuation analysis.
- We only purchase in neighborhoods where SCI has complete and significant market knowledge.
Properties that meet minimum estimated return on asset thresholds are tracked at the auction site by SCI bidders. Underwriters communicate bid parameters to the firm’s bidders who engage in the bidding process once the auction of the target property(s) begins. The firm believes that these systems are a critical component to our operating strategy and have been a significant contributing factor in SCI’s success to date.
SCI Residential continues to strive to maintain best in class business processes and market knowledge in order to acquire distressed residential properties at significant discounts to their market value. Our track record of continued success helps document our ability to provide investors with high returns and short term liquidity in these challenging economic times.