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Sunday, November 15, 2009
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25 comments:
I received another bulk sale offer (this one 10mil). This is the third one I have gotten and I am not really a "player". It seems that this is what is happening to many reo's and why they aren't hitting the market. Groups of investor's are pooling money and obtaining financing.
VA_Investor -
All I get are these, "REQUEST FOR URGENT BUSINESS RELATIONSHIP" e-mails from some Nigerian princess. You must be on the 'A' list.
Robert,
I place myself more on the "D" list, but I have made a few contacts. There is money to be made and these guys are making it.
So much for "shadow inventory". Not much is going to make it to the average buyer (at least not at wholesale where much of the profit is going).
Yeah VA I think I will agree with you on this one. I recently saw a place where I'm looking come on the market that was renovated etc. I looked at the tax records and it was foreclosed on in Sept. never hit the market-just dumped to an investor group and now they are reselling it at x profit. There current price is way too high IMO.
Maybe that's the next shoe, when these "investor" companies can't make a profit on them and go belly-up.
Don't hold your breath.
Don't worry, I'm not. Hopefully, if a couple of things work out for me I'm out of this area for several years.
If they are for real, many of them will get burn very soon!!!
Va Investor, does this sound like 2005-2006 all over again?
Housing is greatly motivated by unsustainable government intervention, specially in this region coupled with short term stimulus money being thrown around.
spider,
No, I don't think it's 2005-06 again. These aren't first time investors or wannabe's. I've seen the addresses and numbers.
This is real money. The financing packages require substantial down. The prices are well under (40%+) current reo pricing.
If they are being purchased 40% under, they should result into additional inventory..eventually everything has to make it to "real" homeowners...
Penny Mac was formed as a LARGE
investor group buying up failed mortgages and they are unable to get paper in quantity to generate a profit.
as long as the NAR is out there hyping the market with tax credits, we won't get to a clearing price.
But don't worry, no way they can reinfate a popped bubble.
KeithK,
The Coleman decision was reversed by Congress in 1999. So at a minimum anyone who moved to an Arlington home near I-66 since 1999 was on notice it could be widened.
I guess I just think it was obvious the Coleman decision was going to be overruled the minute there was funding and demand for a wider I-66.
Even the U.S. Constitution can be amended. Why would the Coleman decision be inviolate?
By your line of reasoning the Obama administration would not be allowed to overrule any agreements or major decisions made by the Bush administration? I think we can all see how silly that notion would be. And same with the notion that Bush couldn't change anything Clinton decided (and so on going back). The U.S. Government can change its mind. Otherwise we would not live in a democracy because the decisions of past generations would have decided everything.
Ace,
You keep referring to I-66 as if it is something irrelevant to Arlingtonians. A large number of Arlingtonians use it. Particularly those who live in the western portion of the county (anything near Exits 69 and 71).
Also, again, no one is talking about making it 12 lanes so I think the notion it would be "paving over" Arlington is hyperbole. As reecon pointed out the land already is held by VDOT for expansion -- it's just a matter of funding it and doing it.
The funding was there but then the Virginia Supreme Court said the NOVA taxing authority was unconstitutional so they have to reset this up.
spider and Pat,
Here is the way I see it.
Spider,
your opinions regarding inventory are understandable, but murkey.
We aren't going to see the ownership levels that we saw in 2005 (an all-time high, I believe). People that could not afford were buying. They are returning to the rental pool.
Yes, some are moving in with relatives or roomates. The majotity are now renter's. The rentals cost 2/3rds or less, so many are leasing. This obviously handles the supply/demand argument.
Add to that the fact that new housing coming on-line is going to be a ways off and demand will certainly exceed supply - if the past gives us any guidance.
"Bulk" purchases are well under market. Investor's will"flip" bring up comps or renovate raising rents.
FWIW, I think these bulk sales are a win-win for putting in a bottom and clearing out inventory.
As I side note; two years ago I had a reason to drive down Sterling Blvd. on a daily basis. It was horrible area of abandoned and boarded up homes. I was even thinking "bulldozer", but it is night and day today.
Pat,
No one is re-inflating anything. I've bought 70% off peak. What is re-inflating?
Va_Investor,
This could be good for buyers. Hopefully if they are pooling that much money it's for something grand. Say taking a group of foreclosures -- maybe some crappy crap crap homes on large lots, tearing down all the crap, and building a modern subdivision with twice the number of homes (subdividing the 0.5 acre lots into 0.25 acre lots).
But if they are just pooling $10M to buy some homes, put some lipstick on pigs, and hope to get a huge profit then it's a waste of everyone's time. Adding some pergo is not a reason to delay the clearing of inventory.
VA_Investor -
I could see a bulk purchase of low end homes not all that different from buying an apartment complex. Riskier, but potentially more rewarding.
Fix them up just enough to meet code and hire a management group to administer the rentals.
I have seen a number of transactions for apartment complexes in Northern Virginia. And they seem pricey. Take a look at this one
Equity Residential closed its purchase of Metropolitan at Pentagon Row, a 326-unit apartment complex in Arlington, VA, from joint venture partners Cornerstone Real Estate Advisers and Kettler for $100 million, or approximately $306,748 per unit. The acquisition was made free and clear of existing financing.
tbw,
Your first scenario is not what is going on.
Purchasing 100 or more homes and spinning some off to small investors (10 or so at a time) is what is happening.
"lipstick" on a pig? I've done many renovations and don't consider any of them lipstick on a pig. Please elaborate.
Just ignore TBW, he didn't get his daily hug.
quiet update on the hunt.
we did find a house we'll be bidding on, I'm not willing to say more at this juncture.
Robert,
Although many of the homes are lower end, quite a number are in the 6-9 range in Loudoun (going for 4-5).
Come on Cara,
Just a little info????
Well, I can tell you about the house as long as everyone promises not to search for it an post it before our bidding process has ended one way or another.
It's a single family rambler (L-shaped one story) with a large walk-out basement, screened in porch off the eat in kitchen with a U-shaped work area. It has a franklin stove insert in the white brick fireplace in the basement. 3 bed 2 bath. Over quarter acre hilly lot (with the correct house sighting for drainage away from the foundation), one of our three target high school pyramids. It's in that nice in-between state of move-in ready for now with a few updates, but not so perfect that you're paying for everything up front, instead you'll be able to make your own improvements on your own schedule. (I think the appliances are all craig's list though...so those may be sooner rather than later, which is fine by me).
Cara..whohooooo..I'm like you I keep quiet afraid to jinx stuff..I so hope you get it for the price you want to pay. YEAH, SFH. We have a place U/C in AR. GOOD LUCK!
Cara,
I think you are making the right decision in going for a house. If hubby is in school, you can handle the yard. I used to enjoy cutting the grass, etc. Added benefit - being able to blast the stereo!
Yes, anyone who tries to track this down and post it should be ex-communicated.
Muliple offers? REO? Short?
"By your line of reasoning the Obama administration would not be allowed to overrule any agreements or major decisions made by the Bush administration?"
No. Only by the reasoning you just invented rather than listen to what I said. Where did I say it could never be overturned.
There are a lot of people who bought before 1999. A lot of these people thought the compromise that allowed for building I-66 would hold. They were wrong, but that doesn't mean they have to quit fighting. (It doesn't mean they'll win in the long run, either).
va_investor,
Well-priced regular sale, owned since 1988. There may or may not be another offer "coming in" but the LA had the impression that that was going to be a low-ball, so not really competition. Unless they think ours is a low-ball, which would be crazy because it's within the range of (real sale) comps. Where I'm looking, once you add up the cost of the repairs the shorts and REO's aren't any cheaper than the real sales at the moment. (other than what I call teaser shorts).
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