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Foreclosed Homes a Buying Feast for Investors

This post was written by jd on May 26, 2009
Posted Under: Real Estate

foreclosure-chart

Foreclosed home sales are going up here in Nevada County and elsewhere. The price of many of the foreclosed homes are making it affordable for investors to buy homes, do minor repairs and resell them for a profit. In many cases, mom and pop buyers are in the market to get a few rentals. But the big boys are into the market now, knowing that this is a buying opportunity a lifetime.

According to the Wall Street Journal:

“The pace of housing sales has been rising in many markets this year, but it is only partly because families seeking affordable housing are returning to the market.

It also is because of investors like former Deutsche Bank managing director Matthew Cooleen, whose firm has spent $30 million buying pools of foreclosed houses from banks.

His newly formed Greenwich, Conn.-based firm, HudsonCross Financial, is betting it can make a profit reselling in beaten-down markets in states like Nevada, Arizona and Florida and in Southern California because it is paying so little for the homes.

In Phoenix, Mark Allen, a former division president at D.R. Horton, the nation’s largest home builder, is reselling homes he is buying at courthouse auctions with funding from Gorilla Capital, an Oregon-based firm that targets foreclosures. “It’s the only way to make money in Phoenix residential real estate right now,” Mr. Allen says.
After mostly retreating from the housing market after the bubble burst, investors are returning in droves, hoping to take advantage of the distress. In many cases, Realtors say, investors also are outbidding first-time home buyers and other would-be occupants because they often come to the table with all-cash offerings.

“Foreclosures are low-hanging fruit at the moment,” says Laurence Pelosi, who helped close big land and housing-development deals for Morgan Stanley before he left the bank earlier this year and joined McKinley Partners, a small investment firm that is buying foreclosures in California.

McKinley and a partner are in contract to buy four homes in Pittsburg, a small city east of Oakland. The firm is buying one house, which was valued at $412,000 near the peak in 2005, for $84,000. McKinley plans to rent out the homes for as much as $1,200 a month. After paying to manage the property and other expenses, it expects 5% to 7% returns on its investment from the rental income and, hopefully, a big payoff from a resale when the market improves.”
“Foreclosures are low-hanging fruit at the moment,” says Laurence Pelosi, who helped close big land and housing-development deals for Morgan Stanley before he left the bank earlier this year and joined McKinley Partners, a small investment firm that is buying foreclosures in California.”

By the way, if you are in the market to buy foreclosed homes, please contact me at E-Mail John O'Dell or use the contact page. Thanks

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