Commercial real estate companies adjust to foreclosure market

Although many aspects of the housing industry were affected after the subprime mortgage crisis of 2008, some commercial real estate companies responded by buying foreclosed properties in bulk. That institutional buying is credited with helping home prices to rise in many distressed markets.

Yet the market for such purchases and sales of investment properties may be changing, according to a recent report. Specifically, as cash flow issues normalize and collateral values once again start to rise, the supply of foreclosure properties is diminishing. Some commercial buyers and lenders are responding to this change by investigating the feasibility of flipping those distressed properties. Institutional buyers that have benefited in the past few years from rental income from purchased foreclosure properties may now be looking to sell those homes to lock in their profits. 

According to one commentator, it is natural for the industry to consolidate as inventory dwindles down. Companies with many foreclosure holdings may now be pooling their resources, renting out properties and even using those homes as securitization for bonds sold to investors. That consolidation, in turn, means that some commercial real estate companies may be turning to property managers to deal with maintenance and delinquent rent issues.

The consolidation may also necessitate the assistance of a real estate attorney. An attorney can provide local counsel services to landlords and institutional investors, as well as providing advice for issues that may face commercial property managers and investment companies. An attorney that focuses on commercial real estate transactions might even proactively resolve disputes before they develop into litigation.

Source: The New York Times, “Investors Who Bought Foreclosed Homes in Bulk Look to Sell,” Matthew Goldstein, June 27, 2014