Many Customers from Overseas are Snapping up Foreclosed Units

Many Customers from Overseas are Snapping up Foreclosed Units

The Australians are snapping up foreclosed houses in clusters, renovating and then renting them out. Jim Reedy of Reedy & Company noted that recently he arranged for an Australian to purchase a house for $68,000.

In a real estate world mired by robo-signing foreclosure deals continue to be made. The Australian made a down payment of $17,000. The monthly payment turned out to be nearly $700 including mortgage payment, management costs, insurance and taxes. 12% of the rent is set aside as a crisis fund to oversee maintenance and vacancies.

The rent coming from the house amounts to $1,100. Thus the purchaser pockets profit worth $400 per month. It calculates to 28% return from an investment of $17,000 he had made. This is exclusive of the appreciation of the property that may be seen in the future. There is also advantage in currency if the Australians purchase right now. The Aussie dollar may fall in future. Optimistically Reedy said that the business of his firm was exploding.

Reedy purchases foreclosed houses every day from the foreclosure auctions held on the steps of Memphis court house. Sales have gone done slightly recently because of the robo-signing scandals but he thinks that it will pick up speed from the beginning of 2011.

Reedy is netting money on the sale of units as well as management fees. He pays about $20,000 to $30,000 for the house and then engages contractors to put in extra $10,000 to $15,000 worth of toil on it. Then he levies 8% of the monthly rent for management of the unit, finds tenants and deals with extra repairs if and when required.

Prior to 2010 the buyers were mostly Americans who were termed vulture investors'. But currently 30% of his customers are from abroad Australia, New Zealand and Singapore. Many rich Europeans are also chipping in and not allowing this opportunity to slip by. This is the scene right across America.

In Phoenix the price of property has fallen by 50% from what it was in 2002 said Tanya Marchiol. She had brokered deals for Australians to purchase 16 estates during the previous 6 weeks. She commented, "It's crazy. They're scooping up tons of stuff". Canadians have also been showing interest.

Sometimes the buying process means evicting occupants from the foreclosed units. Some are critical about this taking advantage of the bad times of others. The argument is that the lenders and banks look upon this as an excuse to step up their foreclosure operations refusing to talk with the borrowers.

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