The Role of Investors in the One- to Three- Family Market: April Hirsh Center on Urban Poverty and Community Development Case Western Reserve University Cleveland, Ohio How I Learned to Stop Worrying and Love Data Standardization

About Study convened by Harvard University Commissioned by What Works Collaborative 4 cities – Atlanta – Boston – Cleveland – Las Vegas

Research Team Neighborhood Progress Inc. lead of study Interdisciplinary – Lawyers and community development experts- Legal/process expert – Economist- Statistical modeling – Property rehab experts- Rehab model portion of study – Former REO investors- Investor connections research – Us- Data experts

Research Question To what extent does the type of investor drive negative outcome? – Investor type (for-profit versus non-profit, government and land banks) – Investor volume (large, medium, small) – Investor location (local versus out-of-state)

To answer the research question, we… Need to classify investors into type Need to know real volume of investors Need to connect investor to location

How much data are we talking about here… 13 years of data: 2000 – 2012 foreclosure sales (2000 – March 2013 property transactions) 42,565 sheriff sales 38,931 unduplicated properties 72,954 subsequent post-REO transfers through March 2013

Investor type Connect foreclosure sales to REO sales to subsequent sales, then disconnect to aggregate buyer list Then divided universe of buyers into : Individuals – Key word flag – File review Non-individuals

Non-Individual Buyers Banks and financial institution (REO holder) Government sponsored entities (REO holder) Local government, nonprofit, land bank All others (investors) – Preliminary thoughts on further breakdown of “all others”

Investor names Individuals- SAS deduplication, 3 word match Non individuals – SAS deduplication- 4 word match – Painstaking manual review Sorry, no magic bullet here – Investor connections and consolidation

Investor Connections and Consolidation Former REO investor and on-the-ground community development agencies generated possibly connected organizations through years of work Examined connections among largest buyers to consolidated related LLCs – Deed transfers – Signatures on deeds

Investor location Most difficult question to answer, data-wise After standardization, looked at business records for investor purchasers with at least 25 transactions

What difference did it make? Number of Post-REO Transactions by Number and Year of Transaction, All Types of Purchasers, Purchaser Classification by Number of Transactions N%N%N%N%N% 1-3-9,703-13%-2,212-21%-3,895-13%-1,985-11%-1,611-11% 4-98,37011%5715%8233%-120%2812% ,446-3%4935%6822%2031%2292% %2252%960%1511%2862% ,1792%1702%5342%4142%610% 100+2,4663%7537%1,7606%1,2297%7545%

Who’s buying REO property? Number of Post-REO Purchasers by Number and Year of Transaction, All Types of Purchasers, Purchaser Classification by Number of Transactions N%N%N%N%N% ,61294% 6,06491% 15,16193% 8,86995% 7,51897% 4-9 1,8915% 4587% 8835% 3414% 2093% % 1152% 1741% 901% 391% % 240% 210% 190% 100% % 160% 140% % Total 40,053100% 6,682100% 16,261100% 9,329100% 7,781100%

Number of Post-REO Purchases by Number and Year of Transaction, All Types of Purchasers, Purchaser Classificatio n by Number of Transactions N%N%N%N%N% ,93062% 6,88565% 18,32461% 10,61160% 9,11064% ,12614% 1,45714% 4,66815% 2,29213% 1,70912% ,0178% 8008% 2,6319% 1,6699% 9176% ,5143% 3533% 9053% 7784% 4783% ,4913% 3323% 1,1464% 7434% 2702% ,8769% 7757% 2,5148% 1,73110% 1,85613% Total 72,954100% 10,602100% 30,188100% 17,824100% 14,340100% How much are they buying?

Outcomes Investor type- Properties acquired by non- profits, land banks or government were three times more likely to succeed than those acquired by all private investors. Investor size- Larger scale investors (50+ transactions) 5x more likely to fail Investor location- Out of state, 2x failure rate