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Residential property auctions have increased during the prolonged downturn in the real estate market, providing developers with a method to quickly sell multiple units that might languish on the open market otherwise.

Auctions have been a strong segment of the shore market, in part because of the large number of vacation and second homes.

Max Spann Jr., president of Max Spann Real Estate & Auction Co., said the Clinton, Hunterdon County, company has been very busy with such properties along the shore from Cape May to Monmouth counties.

“Usually, they’re the first to feel the real estate correction and feel it most severely because they’re discretionary buys,” said Spann, 46, who lives in Clinton.

In the second quarter, company auction sales of 64 units accounted for half of the 128 condominiums sold in the Wildwoods, he said.

Spann said the company, founded by his father 40 years ago, is experiencing an increase in auction sales just as it did in the late 1980s and early 1990s.

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At the height of the real estate bubble in 2006, Max Spann Co. sold fewer than 100 residential properties, he said. By 2008, such sales had risen to about 300, and last year were more than 300, Spann said.

“Percentage-wise, business has increased 50 percent the past two years in dollar terms,” he said, declining to disclose sales or revenue figures.

From 2003 to 2008, U.S. residential property auction sales increased by 48 percent, National Auctioneers Association figures say.

In 2008, the most recent data available, residential auction sales were worth $17.1 billion, up from $14.2 billion in 2005 before the real estate market went into decline. Counting commercial and agricultural real estate, the auction market was worth $58.6 billion in 2008.

“Auctions are a great solution for developers sitting with a lot of inventory and the costs of carrying that inventory such as loan payments and taxes,” Spann said.

Appeal of auctions for buyers

For buyers, the appeal of an auction is possibly getting a deal, or at least knowing that they didn’t overpay for a property, Spann said.

“Buyers can walk away knowing they bought correctly because the rest of the marketplace was competing and other people saw the same value or close to it,” he said. “They may pay $5,000 more than other bidders, but I’ll take that margin of error anytime.”

And auctions are especially appealing in a down real estate market because they compel deals to be done quickly.

“The auction format creates a sense of urgency that’s needed in this marketplace,” Spann said. “You can come and bid your price, but you’ve got to be there.”

The urgency and being there are flexible concepts in another kind of auction taking place right now for two choice building lots next to the High Bar Harbor Yacht Club on Long Beach Island.

They’re being offered in an online auction of $125 million in residential and commercial property by Carlton Exchange, a unit of New York-based Carlton Advisory Services.

Carlton associate Reuben Twersky said the bidding for the properties will continue — usually three to four weeks — until a buyer and the seller come to terms.

“The way the process works is that you make an offer, and the buyer either accepts or makes a counter offer,” Twersky said. “Based on the counter offer, you can meet it or bid again, until the seller agrees on a price.”

Bidders, who review the properties and bid through www.carltonexchange.com, aren’t aware of the bids by others, he said.

And the company has a thorough process for making sure bidders are qualified and have the necessary funds, he said.

“The sellers are using the Carlton platform to drive national and international investors in the market,” Twersky said. “You might not have a local buyer but you have national and international buyers looking at Long Beach Island as a worthwhile investment in today’s market.”
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Source: http://www.pressofatlanticcity.com/business/article_d9e6923e-9d0e-11df-be3a-001cc4c002e0.html

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Real estate investors/developers often need to think “outside the box”

Case Study: Developer sees great potential in second home segment

In doing research for a new line of country homes, Trendmaker found 3,400 parcels of land in the Round Top area that hadn’t been built on and whose owners lived in other cities.

It was part of what gave the builder the confidence to enter the rural central Texas housing market.

“With baby boomers retiring and Texas leading national population growth trends, we see tremendous potential in the second-home market,” said Will Holder, president of Trendmaker Homes.

The company is launching a line of manufactured homes called Texas Casual Cottages for buyers who own their own property in country settings where it can take longer to build a second or retirement home because the locations are so remote.

“You don’t have to worry about it getting framed and then deer season comes and it sits for a month, and it’s out in middle of the woods and stuff gets stolen,” Holder said.

The homes are being built off-site by GroundForce Building Systems of Navasota. Trendmaker will deliver and assemble them at the home sites, as well as build porches and handle other infrastructure issues.

3 Crucial Keys To Investing Success: The most successful real estate investors #1. Pick a niche like foreclosures, probate sales, commercial property, tax certificate sales and the like – #2. Learn all there is to know about that niche – #3. Exploit the heck out of it for maximum profits.
Click here to get proven help with selecting the most lucrative real estate investing niches

P.S. Need money for your deals?
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They will have metal roofs, large porches, pine floors and wood walls, along with modern finishes like open family room and kitchen combinations, large bathrooms and walk-in closets.

Floor plans will range from a 450-square-foot guest cottage to a 4,500-square-foot farmhouse. And prices will start in the $50,000s for a small cottage and reach more than $300,000.

A model home will open in Round Top next month on Texas 237 across from the Big Red Barn, a well-known antiques center.

If sales go well, Holder said, he would like to expand the product into other parts of Texas, including Corpus Christi, the Canyon Lake and Lake Livingston areas, Galveston and Bolivar.

Longtime Houston real estate agent Sandy Reed, who moved to Round Top in 1990 to renovate and sell historic houses, will serve as sales manager and design consultant for the new home line.
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Source: http://www.chron.com/disp/story.mpl/headline/biz/7027826.html

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Mitsubishi Estate Co., Japan’s biggest property developer by market value, said it will set up a real estate fund in the U.S. this year and seek takeovers overseas to counter declining demand at home.

“We cannot just sit back and be satisfied with what we’ve built over the years at home as demand will probably remain weak and competition will increase,” Chief Executive Officer Keiji Kimura said in an interview in Tokyo on May 19. “We believe this is a good time to start building up our global platform.”

His plans come as commercial property sales in Manhattan, the biggest and most expensive U.S. office market, tripled in value in the first quarter from a year earlier. Office vacancies in Tokyo are at a record high and commercial land prices declined to the lowest in at least 36 years.

The firm may initially invest in about two buildings on the East Coast through its Rockefeller Group Investment Management unit, said Kimura, 63. He declined to elaborate on the size of the fund. Mitsubishi Estate is also in talks with several real estate asset management firms in the U.S. and Europe for possible takeovers and alliances, Kimura said.

3 Crucial Keys To Investing Success: The most successful real estate investors #1. Pick a niche like foreclosures, probate sales, commercial property, tax certificate sales and the like – #2. Learn all there is to know about that niche – #3. Exploit the heck out of it for maximum profits.
Click here to get proven help with selecting the most lucrative real estate investing niches

P.S. Need money for your deals?
Click here for the best sources for money or zero down real estate sources

The firm aims to increase operating profit from overseas business to about 20 percent of the firm’s total, from 7 percent last year, he said.

‘Very Transparent’

“The U.S. real estate market is very transparent,” said Masahiro Mochizuki, a real estate analyst at Credit Suisse Securities (Japan) Ltd. in Tokyo. “It’s a good move for the company to seek expansion in that market rather than some of the Asian markets that are less so.”

At home, Mitsubishi Estate, the biggest landlord in Tokyo’s Marunouchi central business district, is planning to start its first private real estate investment trust, allowing it to securitize property investments, Kimura said.

In February, Nomura Real Estate Asset Management Co. announced plans to start a private REIT, Nomura Real Estate Private REIT, nine years after Japan opened the REIT market to developing securities pioneered by the U.S. in the 1960s.

“Private REITs are good vehicles in a way that it doesn’t get affected by the market prices,” Kimura said. “We’re starting to see some interest from pension funds to invest in real estate, so this could be a good offering.”

The TSE REIT Index, which tracks 37 funds, had a record market value of about 6.79 trillion yen in May 2007, compared with about 3 trillion yen today.

Profit Forecast

Mitsubishi Estate’s net income dropped 74 percent to 11.9 billion yen in the year ended March 31 as the firm wrote down losses on projects in Tokyo. It forecasts profit to jump more than fivefold to 63 billion yen.

Tokyo’s office vacancy rate rose to a record high of 8.82 percent in April, according to Miki Shoji Co., a Japanese office brokerage company. The number of condominiums put up for sale in Tokyo and surrounding areas rose 23 percent in April from a year earlier, a third straight monthly gain, according to Real Estate Economic Research Institute.

Japanese commercial land prices declined 6.1 percent in 2009, more than the 4.7 percent drop a year earlier, the Ministry of Land, Infrastructure, Transport and Tourism said in a report released in March. Values are at their lowest since the ministry began collecting comparable data in 1974.

Signs of Rallying

By contrast, the U.S. property market is starting to pick up. About $3.3 billion of transactions priced at $10 million or more were closed or went under contract in the first quarter, almost matching the $3.5 billion sold during the whole of last year, New York-based property broker Cushman & Wakefield Inc. said in a report on April 6. About 5.7 million square feet (529,000 square meters) of offices were leased in the first quarter, 84 percent more than a year earlier.

“We expect the condominium market in Japan to slowly pick up, but we will never see the kind of growth we used to see at its peak,” said Kimura. “In the U.S., we’re starting to see some investments return to the market.”
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Source: http://www.businessweek.com/news/2010-05-21/mitsubishi-estate-plans-u-s-property-fund-takeovers-update2-.html

Opportunity is knocking for smart investors

There are profits to be made for smart real estate investors who know how to find and finance commercial properties that are bank foreclosures, short sale prospects or are owned by other distressed sellers.

Shorten your learning curve and avoid costly mistakes with knowledge from seasoned investing pros. Take a look at these courses:

# Commercial Property Foreclosures The next real estate bubble starting to burst is commercial real estate. Learn how to buy commercial property short sales and pre-foreclosures for pennies on the dollar with 100% financing without good credit and without any real estate experiences or licenses needed.
#####

# Commercial Property Buildings Learn how to buy office, warehouse and retail buildings with no cash and no credit. Right now the most profitable units are retail stores, small office space and smaller industrial spaces like warehouses of 3,000 square feet and under.
#####

# Apartment Buildings Learn how to start making $24,000 per month (or more) in passive, cash flow, by investing in apartment buildings with no cash or credit within 90 days.
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Laura Pomerantz, a principal and founding partner of PBS Real Estate LLC., says it’s time for REITs to invest in NYC commercial real estate

In a recent blog post on forbes.com, Pomerantz, shared her positive outlook.

Pomerantz noted that New York’s economy is on the mend, with a strong stock market and employment improving. She sees that the mood is clearly changing. The stocks of New York-centric commercial REITs have been big winners. In the last 12 months, Vornado Realty Trust (VNO) has jumped by 60%; Boston Properties (BXP) gained around 60%; And SL Green (SLG) climbed by 180%.

Investors can obtain New York City commercial REITs at a generous discount

Despite the gains, New York REITs have plenty of more room to grow. In fact, with underlying dynamics poised to push asking rents higher, a rare window of opportunity has emerged in which investors can obtain New York City commercial REITs (Real Estate Investment Trusts) at a generous discount.

Asking rent for prime commercial property space should rebound

Beginning in mid-2011, asking rent for prime commercial property space in New York City, which can buoy or sink a REIT’s value, should rebound, marking the beginning of a steady rally, according to Real Estate Econometrics, an analytics firm tracking commercial real estate. By 2014, asking rents are expected to climb by more than 20% reaching $84.10 per square foot. Even at this point, prices will not have hit their upper echelons–a peak of more than $91 per square foot in mid-2008.

Property managers still rely on lower rents and concession packages to attract nervous tenants but these should fade away by mid-2011

By 2011, however, Pomerantz thinks tenants with pending lease expirations will race to renew in hopes of securing favorable rates–particularly those who want more space. With a healthy dose of demand back in the market, concession packages should fade away by mid-2011. REITs will again be in a position to make deals that create revenue and add to profitability.

Meanwhile in Downtown Manhattan, One World Trade Center (formerly known as the Freedom Tower) is slated to open its doors in 2013, adding 2.6 million in new office space to the mix. Combined with a handful of other large lots of space expected to become available, vacancy rates in the Financial District are expected to spike higher. While this usually spells trouble for landlords, Real Estate Econometrics expects overall asking rents in NYC to climb. That’s because the incoming space is better quality to what’s currently available, and will command higher rents.
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Source: http://blogs.forbes.com/investor/2010/05/21/buying-time-for-nycs-commercial-reits/

Opportunity is knocking for smart investors

There are profits to be made for smart real estate investors who know how to find and finance commercial properties that are bank foreclosures, short sale prospects or are owned by other distressed sellers.

Shorten your learning curve and avoid costly mistakes with knowledge from seasoned investing pros. Take a look at these courses:

# Commercial Property Foreclosures The next real estate bubble starting to burst is commercial real estate. Learn how to buy commercial property short sales and pre-foreclosures for pennies on the dollar with 100% financing without good credit and without any real estate experiences or licenses needed.
#####

# Commercial Property Buildings Learn how to buy office, warehouse and retail buildings with no cash and no credit. Right now the most profitable units are retail stores, small office space and smaller industrial spaces like warehouses of 3,000 square feet and under.
#####

# Apartment Buildings Learn how to start making $24,000 per month (or more) in passive, cash flow, by investing in apartment buildings with no cash or credit within 90 days.
########
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Former executive, Adam C. Hochfelder, was once a rising star in Manhattan’s real estate commercial world. At his peak, Hochfelder, managed or had ownership stakes in $2.7 billion worth of skyscrapers.

Hochfelder pleaded guilty to stealing more than $18 million from banks and investors, including relatives and close friends, to cover debts and finance his lifestyle as a mogul.

The former executive, Adam C. Hochfelder, 39, pleaded guilty to 18 counts of grand larceny and schemes to defraud investors; he was accused of misrepresenting his personal wealth to obtain loans and investments. Justice Michael J. Obus of State Supreme Court in Manhattan said he would consider a prison sentence of 4 to 12 years.

It was a fast fall for Mr. Hochfelder, a Long Island native and University of Pennsylvania graduate who was associated with an enviable real estate portfolio in his 20s. By his 30th birthday, he had taken over the office once occupied by the renowned skyscraper owner Harry B. Helmsley and was socializing with some of the city’s biggest real estate names.

Plagued by his own demons

According to Mr. Hochfelder’s lawyer, Marc A. Agnifilo, a soured partnership with the real estate investor Peter S. Kalikow led Mr. Hochfelder to buy out Mr. Kalikow in 2002 for far more debt than he could handle. Court records show that Mr. Hochfelder also used some of the money investors placed with him to pay for perks like his sons’ school tuition and private jets.

Mr. Hochfelder also suffered from a severe cocaine addiction that sent him into rehabilitation and required several operations to repair his nose, according to court filings.

The Manhattan district attorney’s office said Mr. Hochfelder forged documents and lied about the collateral he owned or the deals he was undertaking to obtain loans and investment capital fraudulently.

At his courtroom appearance on Friday, Mr. Hochfelder spoke in a low voice as he read the names of investors he had bilked, including some relatives. As he spoke, his father, James L. Hochfelder, held his head in his hands.

In a statement, Mr. Agnifilo said Mr. Hochfelder had already paid back $15 million to investors and would pay back “every dollar he owes.” Mr. Hochfelder’s plea agreement requires him to pay $9.5 million in restitution. Hochfelder’s sentencing is scheduled for Sept. 7.
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Source: http://www.nytimes.com/2010/05/22/nyregion/22hochfelder.html

Opportunity is knocking for smart investors

There are profits to be made for smart real estate investors who know how to find and finance commercial properties that are bank foreclosures, short sale prospects or are owned by other distressed sellers.

Shorten your learning curve and avoid costly mistakes with knowledge from seasoned investing pros. Take a look at these courses:

# Commercial Property Foreclosures The next real estate bubble starting to burst is commercial real estate. Learn how to buy commercial property short sales and pre-foreclosures for pennies on the dollar with 100% financing without good credit and without any real estate experiences or licenses needed.
#####

# Commercial Property Buildings Learn how to buy office, warehouse and retail buildings with no cash and no credit. Right now the most profitable units are retail stores, small office space and smaller industrial spaces like warehouses of 3,000 square feet and under.
#####

# Apartment Buildings Learn how to start making $24,000 per month (or more) in passive, cash flow, by investing in apartment buildings with no cash or credit within 90 days.
########
real estate investing, commercial property foreclosure, property investments, buying rental property, rental property investment, property investors

Technorati Tags: real estate investing, commercial property foreclosure, property investments, buying rental property, rental property investment, property investors