Goldman Sachs to Buy House-Flipping Lender

By Liz Hoffman and Peter Rudegeair Features Dow Jones Newswires

Goldman Sachs Group Inc.'s push onto Main Street has taken it to small personal loans, even smaller deposit balances and a partnership with Fidelity Investments' retail brokerage customers.

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The latest frontier for the Wall Street titan: house flippers.

Goldman is acquiring Genesis Capital, a private Los Angeles firm that backs investors seeking to buy, renovate and quickly sell single-family homes, according to people familiar with the matter. Genesis, founded in 2007, has been growing rapidly as the housing market continues to recover. Last year, the firm lent $1 billion, up from $50 million in 2013.

The acquisition, which could be announced as soon as this week, reflects both the buoyancy of the housing market about a decade after it last peaked and the growing interest Goldman Sachs has in diversifying its businesses as its core trading engines remain stuck in a postcrisis slump.

Wall Street firms' appetite for "fix-and-flip" loans has been growing. Volumes last year were at their highest level in a decade. In recent months, affiliates of private-equity firm Blackstone Group LP and asset manager Fortress Investment Group LLC have each acquired companies that specialize in making these credits.

Rising home prices in many large metropolitan areas combined with anemic growth in the number of new houses under construction have made house-flipping more attractive. Total housing inventory at the end of August fell 6.5% from the same month a year earlier, according to the National Association of Realtors.

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Write to Liz Hoffman at liz.hoffman@wsj.com and Peter Rudegeair at Peter.Rudegeair@wsj.com

(END) Dow Jones Newswires

October 12, 2017 12:49 ET (16:49 GMT)