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SANTA ROSA -- When Santa Rosa's Praxis Capital launched as a vehicle for real estate investment in 2009, the firm was inundated with opportunities to buy, refurbish and resell deeply discounted homes at a profit for investors -- a practice popularly known as "flipping."

[caption id="attachment_77305" align="alignright" width="374"] (left to right) Eric Peterson, Brian Burke, Chris Peterson[/caption]

Today, as a fervent period for flipping lower-priced homes has begun to taper off in many housing markets, Praxis itself has grown. Though the practice remains a strong focus, the firm has evolved its approach amid a changing real estate environment, offering private placements in investor funds that focus on single-family rental and multi-family properties and eying other real estate investments both in California and beyond.

As home flipping shifts more towards major renovations like room additions and significant upgrades, principals at the firm said that those projects are likely to encapsulate much of the construction activity for many regions while new home building remains tepid.

"It goes back to the homebuilding days -- we're adding value the old-fashioned way," said Eric Peterson, a principal at the firm.

Praxis Capital currently has around $30 million under management, having started with $2 million in capital and a small group of investors. The firm launched as a collaboration between Chris and Eric Peterson, formerly of homebuilder Rivendell Homes, and Brian Burke, who had developed a specialty in investments involving distressed real estate properties.

"Our goal was to do six homes in six months. We ended up doing 60," said Chris Peterson, of the earliest phase for the company.

The firm quickly grew beyond its three founders in that early period, reaching 21 employees and turning over around 100 homes per year, principals said.

Yet for 2013, Eric Peterson estimated that Praxis would turn around approximately half the number of homes for the same $10 million to $25 million that it would usually invest annually. The trend, he said, is moving towards more major home upgrades like additional rooms, with Praxis focusing on markets like Walnut Creek and Calistoga whose aging housing stock was built when those cities were considered remote to the core of the Bay Area.

Investors in the company's home resale fund, which focuses on flipping homes in Northern California, have seen an average 20 percent annualized return since its inception and higher over the past 12 months, Mr. Burke said. That fund generates its returns at the time of a sale, meaning that investors receive their share of the profits "all at once."

Yet the company has been pushing harder into rentals as well, most recently with offerings focused on multifamily apartments in high population and job growth areas of Texas. While those investments aim to produce steady rental income before selling properties after a five-year window, Praxis' first multifamily property in Austin, which received $600,000 in renovations, was sold three years ahead of schedule and created an annualized return for investors of 42 percent, Mr. Burke said.

The company is nearing the investment threshold to purchase a second multifamily property, expecting returns in the "mid- to high teens" when resold, Mr. Burke said.

"There's such an opportunity to do value-add and improve management for multifamily properties," he said.

Praxis also launched a fund focused on single-family rental properties, largely in Southern California, in 2011. A competitive rental market made for a steady stream of income for investors, while the bottoming out of home values increased the possible profit spread after holding the property for five to seven years, principals said.

"You started to see people getting foreclosed out of their homes and looking for rentals," Mr. Burke said. Eying rental properties amid that demand, the firm found cases when "that same $550,000 house that rented for $1,500 in 2009 is now selling for $200,000," he said.

The firm is in its third fund along those lines, with rental income generating a regular 4 percent to 6 percent return for investors, Mr. Burke said.

While focusing on real estate, principals at the firm said that they see Praxis as not competing with other real estate investors, but more with other investments like stocks, bonds and commodities. While there are currently no specific plans for other areas of investment, possibilities include branching out into nonresidential real estate in the future, depending on market conditions, they said.

"It might mean single-family homes in California. It might mean multifamily properties in Texas. At some point, it might mean mobile home parks in Kansas. We will find those opportunities," Mr. Burke said.