Creating New Businesses From the Ruins of Bank-Owned Homes
In every downturn, there’s always an entrepreneur who finds a way to create a business opportunity out of terrible financial circumstances. This recession is no exception. Jon Lansner at the OCRegister. com reports that “land consultants” are popping up to help banks do something with their foreclosed bank-owned homes — also known as REOs, or Real Estate Owned properties.
An increasing number of land consultants are setting up shop to advise lenders, funds and financial institutions on how to handle bigger distressed properties they end up possessing after developer/owners default on their loans.
“The banks are taking the properties back, and they don’t know what to do with them,” said Barry Gross, president of Developers Research of Irvine, which is actively soliciting business from lenders.
Lansner points out that some banks can handle their REO inventories on their own. But smaller banks sometimes require help – which is why some think the land consultancy business will only grow. Plus, the banking system is overwhelmed by growing numbers of REOs, with 1.5 million predicted this year alone.
Here’s one example of how a land consultant works, from Lansner:
Rick Peters of Huntington Beach said an unfinished apartment building in Hemet had been idle for 16 months when he was hired to work on it.
The project was “in absolute disarray, weeds so high, you couldn’t see block walls,” he said. Walls were covered with graffiti. Dual-glazed windows had all been shattered. People loitered on the site, and squatters had taken up residence in two of the units.
Peters arranged for crews to spend two or three weeks cleaning the site, removing weeds, repainting walls and repairing $160,000 worth of windows.
“There ended up being five bidders … who submitted offers to the trustee that were over the asking price,” he said.
If land consultants can clear bloated bank inventories, that helps communities to avoid being stuck with them. In that way, it’s a business opportunity that could pay off — for everyone.