As blogged several times on my website, I stated that the smart money is buying into coastal distressed real estate. I am investing in coastal North Carolina successfully.
The consortium's are working Florida.
The Related Group under CEO Jorge Perez has put together a $1b fund to buy South Florida condominiums. Perez isn't alone. Another South Florida-based developer, Sky Development, has launched Sky Real Estate Fund 1, a $300m entity to buy distressed properties in numerous US cities. Yizhak Toledano, founder and CEO of Sky is leveraging personal contacts and overseas investors to participate in his fund. The firm anticipates amassing a portfolio in excess of $1b of commercial and residential properties.
These two funds are just the tip of the iceberg, according to Richard Swerdlow, CEO of Condo.com. He sees both private equity and hedge funds jostling for position to scoop up distressed real estate.
"I think people are starting to get geared up and get money together," Sweardlow stated, "But I don't think any bulk properties have moved yet. We're not seeing the large transaction happen. Large funds will try to buy multiple units in the same building."
Foreign buyers, taking advantage of a favorable exchange rate with the cheap dollar, will also be formidable competitors for condos. "Interest is coming back, but it's coming from abroad as well," says Andres Lemos, a realtor with Miami WaterView Properties.
Once bad condo deals return to banks, Swerdlow believes the well-positioned buyers
will be the ones who can manage the properties and close the deals to relieve banks of properties. Banks are notoriously poor property managers."Obviously, Related and the larger funds will have that ability," he says.
I believe to the point of pounding the table, that the present environment presents a superb opportunity for qualified investors to buy real estate at this time. I continue to be justified by insider interest in purchasing distressed real estate, and I have directly participated in some outstanding deals.
You can as well in your own geographical area. Not for flipping, but for long term rentals. It will add a tax advantaged income stream to your portfolio that few other investments can match.
Thanks to Multifamily Executive Magazine and author Les Shaver for the meat of this post.