Real Estate Seemed Like A Smart Choice
The News Journal reports from Florida. “A few years ago, the oceanfront land that straddled the eastern tip of Oakridge Boulevard was the home of some time-worn motels that didn’t have the big city feel or luster of the new hotels that local leaders felt the primo beachside land deserved, and Daytona Beach needed. Then along came a group of Russian hotel developers, eager to create a 21st century-style dream high on the wow factor. Now those Russian businessmen say they’re ready to start building two massive condo hotel towers, one 29 stories tall and the other 26 stories, if they get the necessary OKs from city, county and state officials in coming months.”
“The $100 million complex could create 500 new hotel rooms, 105 condos, 15,100 square feet of meeting space, 14,000 square feet of retail space and 400 permanent jobs. Another project on the other end of State Road A1A could provide more of the hotel rooms and help attract the conventions some see as key to progress on the blighted beachside. A Canadian investment and development company, Toronto-based Bayshore Capital Inc., plans to build a 1.3 million-square-foot condominium hotel on a 10-acre lot just south of Sun Splash Park that could have 900 units.”
“Bayshore Capital needs to get through several city approval processes to become reality and hopes to break ground next summer and open in 2015. ‘There’s a lot of interest in this area from around the country and foreign investors,’ said County Chair Frank Bruno.”
The Indian Express. “City based global real estate player, Pacifica Companies (PC), today said that it aims to rent out 700 single family homes in US state of Florida within a year, after having won bids for these foreclosed home there. Pacifica purchased a managing interest of 20 per cent for over USD 12 million, after having won bids for the 700 residential property portfolio put up for auction by Fannie Mae.”
“‘We won bids for 700 foreclosed homes which were put for auction by Fannie Mae, amongst 50 bidders in fray. Within a year, these 700 single family homes shall be put on rentals. We get 20 percent upfront management fee on gross rental income collected. The minimum hold period is for three years, and thereafter a call shall be taken on exit,’ Pacifica’s Managing Director Rocky Israni, told reporters.”
“The company holds around 4,500 residential units spread across 40 states, with the majority in California, Florida, Nevada, Arizona and Washington.”
The Sun Sentinel. “A group of foreign businessmen is spending upward of $150 million to scoop up hundreds of foreclosed homes across South Florida at bargain prices. Vulcan Investment Partners, led by a group of Mexican businessmen, says it plans to buy 1,200 foreclosed homes. Almost half will be split between Broward and Palm Beach counties, with the remainder in Miami-Dade County, said Iñaki Negrete, chief executive of Vulcan.”
“Vulcan says it will pay roughly $75,000 for homes once valued at $200,000 or more and plans to renovate and rent most of them for $1,500 a month for several years before selling. Negrete said Monday the Miami-based firm is helping to boost the South Florida housing market by reducing the number of foreclosures and expanding the region’s booming rental market. ‘People have problems getting a new mortgage,’ Negrete said. ‘Now they can take some time to fix their credit scores while they rent.’”
The Orlando Sentinel. “When you mix novice landlords with growing numbers of renters, the results are sometimes not pretty — especially in a housing market where eviction notices continue to land on foreclosed rental properties with some frequency. Renters complain about getting hit with notices despite having paid rent to the landlord. Landlords complain that tenants seem more prone to skipping out on rent and abusing property. And neither party seems certain of what exactly they should do once a property enters foreclosure.”
“A house that landlord Greg May has been renting out in southwest Orlando is now in foreclosure, and even though he says he still holds title to the property, sheriff’s deputies will not let him enter the house. So he can’t retrieve his refrigerator, and the tenant who resides there is unwilling to surrender the appliance.”
“‘I just want my refrigerator back,’ May said. ‘I just don’t like being told by a tenant, who is in arrears, that I can’t have my refrigerator when he’s sitting there in the house living rent-free. … I have keys to the house, but if I attempted to go inside, he would have me arrested.’”
“Tom Long, president of the Central Florida Landlords Association, said a new wave of tenants are skilled at taking advantage of property managers as the region’s real estate market struggles to recover. ‘In the last few months, there seems to be a new influence. … There seem to be more ‘professional tenants,’ said Long. ‘They go from place to place, they know how long it takes to get an eviction, and they know the unwary landlord who may be new to the business.’”
“These opportunistic renters come with cash in hand, he said, but quickly stop paying their rent. ‘Three months later, they bring six family members, three dogs and a parrot,’ Long added. ‘Oh, and there’s the car leaking oil on the front yard.’”
“Carol Rumley, an Orlando-based community association manager, estimates that about 20 percent of all tenants create problems for a landlord in terms of property damage, late payments or lease violations. While that remains a constant, Rumley said, those tenants are now often dealing with a new crop of investor-owners who try to manage their rental properties themselves. ‘This is the gist of the problem, as I see it, is that investors are sometimes too cheap to give 10 percent to a property-management company to ‘manage’ the property,’ Rumley said.”
The Tampa Tribune. “When George Triebel’s employer moved his job from Fort Myers to Tampa in 2009, Triebel and his wife, Camille, had to make a life-changing decision. ‘I couldn’t afford two mortgages,’ said Triebel, 32.”
“So, they short-sold their home in Lee County — a decision that dynamited their credit and took them out of the housing market for the foreseeable future. Today, they’re among the thousands of Tampa residents living in rented housing. Renters now outnumber homeowners in Tampa, according to recently released Census Bureau research.”
“In Seminole Heights, the Triebels have settled into their rented home on a quiet street. Sunflowers tower over the front walkway. A Moroccan-style lantern hangs on the front porch. Downtown is an easy bike ride away. It’s an old house that could use some work, but they’re unwilling to put their own money into someone else’s investment. Financially, the family is hunkered down, waiting for the day they’ll be able to buy another home to call their own.”
“Meanwhile, the couple are raising their baby daughter in someone else’s house. ‘Having a family in a rental house that she’s not going to be able to grow up in — that’s emotional,’ Triebel said.”
The Herald Tribune. “Sarasota mortgage broker Arthur Seaborne, who recruited investors to join him in a series of boomtime real estate deals, has been indicted on 11 counts of bank fraud. From March 2003 through July 2008, Seaborne bought and resold houses at higher prices to investors and filled out mortgage applications with false information so that investors could get loans, an indictment filed in Tampa’s U.S. District Court says.”
“Seaborne’s management company later rented out the houses. But the indictment says that he failed to use the proceeds ‘to pay all the expenses associated with the residential properties’ as promised. Seaborne has pleaded ‘not guilty’ to the charges. Seaborne is one of the real estate professionals highlighted in the Herald-Tribune’s flipping fraud series published in July 2009. The newspaper revealed that Seaborne bought and sold more than 41 new homes worth $11.6 million in Sarasota and Manatee counties from 2006 to 2007, and made more than $1 million in profits along the way. He recruited more than 30 investors into the property-sharing venture.”
“In summer 2006, when prices already were declining, Seaborne started buying dozens of new houses in Ellenton and Venice. He marked up the price by $8,000 to $75,000 and, within a few months, sold them to people who came to his real estate seminars.”
“Interviewed by the Herald-Tribune in 2009, Seaborne said every real estate deal that he struck was legitimate, backed by bank appraisals and paid for by willing investors. He said his financial troubles came from the unforeseen downturn in the real estate market that forced him to stop paying his investors’ mortgages. ‘We certainly would not have done some of the buying we did if we knew we’d be where we are today,’ Seaborne said.”
“One of his alleged victims, Jessica Leis, told the Herald-Tribune in 2009 that she met Seaborne by attending one of his seminars. The widow of a police officer who died from injuries sustained during a 1990 rescue, Leis had a nest egg to invest. Real estate seemed like a smart choice.”
“Leis bought her first house with Seaborne on a quarter-mile stretch of North Manatee suburbia where Seaborne bought at least 15 houses that he planned to sell to investors. Within a year, she bought two more houses from Seaborne. Not long after she closed on the last one, in August 2007, things started to go wrong. Leis’ deal with Seaborne required her to buy a house from him for a set price — as much as 30 percent more than Seaborne paid a few months before. Seaborne retained part-interest in the house. In return, he agreed to find renters and to pay most of the monthly mortgage.”
“But in late 2007, Seaborne stopped paying his bills, Leis said. She and seven other investors told the Herald-Tribune that Seaborne put them in negative amortization loans without telling them. ‘He kept saying ‘no money down’ and I kept thinking I can’t lose,’ Leis told the Herald-Tribune.”
