Hi Guys,
Just curious about the above title, because if you look at the amount of foreclosures in Zillow is staggering. Therefore, if major banks have millions of non performing assets (i.e., foreclosures), why don't they lease them out to the market? Would it cost them more to lease and manage them through property managers hence they better off sell at a lost? Or, they are already doing this?
If you bought two or more non performing assets in the US (i.e., you flew over there, made some offers and were accepted), how much DISCOUNT you managed to obtained? For instance, average foreclosure house prices in Zillow is $30K. How much discount does the vendors, in this case the banks, are prepared to accept (e.g., 20%, or 30% or more).
Thanks heaps.
Hi Leo
Firstly banks aren't in the property business. They are in the lending business. I have heard that Fannie Mae is currently spending $10 million per month cutting lawns and they're not happy! That's how much it is costing them to maintain foreclosed properties in their portfolio and that's just the lawns.
All they want to do is get rid of these liabilities. They have government funds propping up their balance sheets and these houses dragging them down again.
As far as discounts go it depends on the property, the suburb, the city, the county and the state AND the competition AND the lender.
If it's a total dump, you might get 80%, if its value is around $1m you may get 20%off – depends. The trouble with dealing with banks is, simply put, you're dealing with a bank. Had any good experiences here lately dealing with your bank?
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Ian
http://theblockblog.com
Free Property Information, Tools & Resources for Property Investors with a Sense of Humour!Thanks Ian, therefore these non performing assets, turned liabilities from those lenders hence they rather get rid off them (i.e., sell them cheap to stop the draining their purse which transfer the liabilities to the buyers but still have the liberty to chase up the former owners of the properties)? Are you better of dealing with the wholesellers then?
Also, where about are you based, Ian?
Further to my comments above, if Banks are not leasing these foreclosures back to the market, wouldn't this create short supply of rental properties? Because, those people who lost their home, end up renting back in the market, therefore woundn't this create huge demand for rental properties from huge renters populationwhich driving the rent to go up. …………therefore very excellent return on your investment? Am I right on saying that?
It's moreso due to liability. They would have to hire property management, trust those managers to get good tenants, purchase insurance policies, and hope that everything goes right. Too much risk. They just want out. Currently, banks are reluctant to sell assets for much less than appraised value or BPO (Broker Price Opinion)
On big commercial and multi-family, I am seeing 25% discount from current value. On single family homes, sometimes 5%. We buy small bulk from banks still and our discounts have become thinner….much thinner in just the last 6 months.
Cheeves Financial
http://www.MyRealtySource.comCheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
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