Small Investment Firms Buying Foreclosed Homes for Sales
May 21st, 2009 by 
Joseph Smith
As the number of foreclosed homes for sales increase, a rising number of small investment firms and individual investors are traveling across the country buying foreclosed homes at auctions and from banks.
Some of the buyers are former top executives at financial companies who have discovered good profits that can be found from buying and selling foreclosed homes for sales.
One of these investors is Matthew Cooleen, a former managing director at Deutsche Bank, who formed his own Connecticut-based investment firm HudsonCross Financial to buy foreclosed homes for sales in battered states like Arizona, Florida, Nevada and California. Cooleen expects to earn much because he says he is paying bargain prices for good homes. Since the launching of his firm, he has spent around $30 million in acquiring foreclosure homes from banks.
Another investor is a former executive director at Morgan Stanley who has formed his own company in San Francisco to buy and sell foreclosed homes for sales mostly at auctions. He has purchased four homes for 75 percent less than their prices four years ago. He is also raising another $6 million to buy other properties.
The third investor is former D.R. Horton division president Mark Allen who has partnered with Oregon-based Gorilla Capital to buy foreclosed homes for sales in Phoenix. He said he has been buying foreclosure houses at court auctions with money from Gorilla Capital. He reiterated that buying foreclosure homes is the best way to profit from Phoenix’s housing market during the downturn.
Realtors in many housing markets said that investors backed by investment firms have been outbidding first time buyers and other types of buyers because they bring loads of cash with them.
Some of the investors are even so lucky because they profited during the housing boom and are now again profiting from the housing decline. In contrast to their comfortable executive offices, some are staying in lodging houses looking for bargains in suburbs and courthouse auctions.
Home purchases by small investment firms are often not tracked by real estate research firms, but their purchases can be determined by the number of cash purchases.
In Phoenix, about 38 percent of all single family houses sold were paid in cash. In Punta Gorda in Florida, about 67 percent were cash sales and in Las Vegas, almost 40 percent were cash sales.
Buying foreclosed homes for sales, rather than apartment complexes, fit small investment firms because small investors are knowledgeable about local submarkets.
