Avatar's Blog
» State of the Industry
Recent increases in residential foreclosures have changed the face of the hard money lending industry lately. Back in March, I wrote about the onslaught being on the way. Well. that time has arrived.
Here at Avatar, we've been seeing ever increasing numbers of owner occupied residential requests. Of course, the sad news is, Avatar does not fund owner occupied residential properties with few exceptions. We fund owner occupieds in Washington and California, so long as the loan and property value meets our minimums. And, we fund residential second homes, investment properties, etc. in other states. Again, those properties and loans have to meet our minimums.
Naturally, we get our fair share of rehab loan requests as well... and again, Avatar doesn't fund based on ARV, so we are not a good match for those borrowers either.
But it is the owner occupied residential property loans that are most troublesome... and coincidentally for the serious real estate investor, the most interesting. Consider this:
Once all the people are forced from their homes through foreclosure, where will they live? Answer: Not in condos or other private residences. They will be looking for apartments.
As I noted in the spring, the last standing rental apartment complex left standing in cities such as Miami, Tampa, Atlanta, Chicago, et al, will be one profitable puppy!
With the rush over the last few years to convert apartment to condos and resell, there is a glut of such properties on the residential market. Those folks are also being foreclosed on. And they are looking to rent apartments along with all the SFD foreclosure victims.
If you have an apartment complex, let me know how your occupancy rates are looking these days. How are rents holding up compared to a year ago? Are you seeing what I am seeing - the fallout from the foreclosures should be filling your apartments now.
