Distressed Real Estate

If you are shrewd and have access to cash or are able to recruit investors to back you, there are some great opportunities to profit from the upheaval in today’s real estate market.

The first area chosen by many first-time investors is in purchasing single-family residences from lenders after they have been foreclosed, refurbishing them and selling or renting them out. This requires intimate knowledge of the local real estate market, the ability to evaluate the worth of a property and what it will take to get it back on the market, the know-how accomplish the turn-around and market the finished product. If you decide to rent it out, you will need to evaluate potential renters and manage the property or hire a property manager. You can develop these skills yourself or pay someone else to provide them.

Once you decide to invest in real estate, you will need the assistance of a knowledgeable real estate attorney to guide you. Some issues you will need to address in acquiring property are discussed in the Commercial Real Estate Section of this website. You may also need guidance regarding leases, construction contracts, financing, etc. Your attorney can help you with these matters.

More experienced developers may find opportunities and challenges in negotiating workouts, refinancing and restructuring distressed ventures and release or modification of personal guarantees.

There are also opportunities for pre-foreclosure investments, that is, the purchase of notes and security instruments offered for sale by mortgage lenders or their assignees. There may be some thorny issues regarding good title to the property, particularly if the paper has gone through a number of assignments, but because the paper is heavily discounted, the rewards may be worthwhile for those with the patience and persistence to follow through. The FederFirm Law Office can provide the needed legal guidance.

It is sometimes even possible to put together a win-win solution that benefits both borrower and investor. For example, if an investor is able to purchase a note and security deed at a discount, the investor may then be able restructure the debt on terms more favorable to the buyer. In some cases, the investor may be able to foreclose, wipe out subordinate debts and sell the property back to the owner.

The FederFirm Law Office stands ready to help you through these exciting (if sometimes complicated) transactions.