In 2009, after the housing recession was in full swing, I traveled around the Orlando area with a real estate agent who specialized in significantly undervalued properties, typically those that had been foreclosed on and were now bank-owned. Some of the properties were in awful shape, with interior walls punched in by angry former owners as they left their home for the final time, and some outside mechanicals, like air conditioner units, lifted off their foundations and taken away. Unsurprisingly, the selling prices of these properties were way under their inherent value, and with something like $8,000 to $10,000 in rehab costs, the properties could be put back in
For those without an uncle (or son) in the business of rehabbing distressed houses, there are similar opportunities today for the adventurous. Some golf community property owners pressed for cash are still listing their condos and town homes at recession-era prices. Last week I was conducting research for a customer looking to move to a $200,000 golf community condo within eight hours of New York City, and I was perusing listings in the Kingsmill Resort in Williamsburg, VA. I came across one listing for a 2 BR, 2 BA unit posted at $199,500. The fine print indicated it was a foreclosure, but the general description indicated an average annual rental income on the property of $41,000, for an impressive annual return of about 20%. ($40,000 divided by $200,000) Something smelled fishy –- I thought I knew what it was -– and I contacted a Williamsburg Realtor I know and he confirmed my suspicions about management fees the Kingsmill real estate office charges for renting out the condo.
“They get 50%,” he said. “It’s highway robbery, but they are the only game in town.”
