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18 Oct 2012
Peter Horbulewicz started noticing investors from New York and California at Atlanta-area foreclosure auctions about four months ago. Working for private equity firms such as Colony Capital LLC and Blackstone Group LP (BX), they’d clutch plastic folders crammed with cashiers’ checks and astonish locals with how much they were willing to pay.

“If you go head to head with them, they always win, because they always overbid,” Horbulewicz, a Polish immigrant turned American house flipper, said during a foreclosure auction outside the Gwinnett County courthouse, northeast of Atlanta.

Colony, Blackstone, Waypoint Real Estate Group LLC and American Homes 4 Rent have converged on Atlanta in search of low-priced properties to buy and rent out, after helping drive prices up 34 percent in Phoenix from a year ago. Their goal is to take advantage of the burgeoning U.S. housing recovery, earning annual returns of at least 6 percent on rents until home prices rise enough to make a lucrative exit.

Their arrival may set the stage for a real estate rebound in the Georgia state capital, where banks seized more homes in the last 12 months than any other U.S. metro area, according to CoreLogic Inc. Atlanta prices have risen 6.5 percent on a seasonally-adjusted basis since March, when they dipped to levels last seen in 1997, the S&P/Case-Shiller Index shows.

“Is Atlanta the next Phoenix?” said John Burns, an Irvine, California-based real estate consultant. “The answer is yes for these guys. The economy isn’t nearly as robust in Atlanta as Phoenix, but we’ll be talking about a robust economy there in a year. Clearly these guys are buying everything they can before the price appreciation kicks in.”
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