John Helmick from Gorilla Capital presented about the current state of the foreclosure/distressed real estate market in Lane County as well as what he expects from the market for the rest of the year.
Highlights:
- 25% of homes in foreclosure process are in Florida
- Many of the statistics we read/hear are white noise.
- The reason Oregon foreclosures went down in 2012 and then up again in 2013 is because the Oregon legislature changed policy that slowed the process for many foreclosures, and they are now “catching up” as they work through the system which means many that should have closed in 2012 are closing in 2013. The overall new foreclosures, however, are down.
- 50% of homes purchased from foreclosure are abandoned. They call them zombie homes and revitalizing them not only helps that property but also the neighborhood.
- The other 50% usually owe more than its worth and they “let it go”
- The average cost for Gorilla to remodel a home has increased from $5252 in 2009 to $20,319 in 2013.
- The “best” homes to buy and remodel are those that are 25-100 years old and have not ever been remodeled. That’s the sweet spot. They gut them and put in everything buyers want today, especially flooring, new kitchens and baths, and in some cases new floor plans. Homes need more remodeling these days.
- Gorilla buys 1-4 houses/day and sells that many, also. They work in 8 states.
- A minimum return is 36% annualized. Goal is 52% annualized.
- Investors are primarily in Oregon and Gorilla is a Oregon based company. They are only 7 years old and are the 101st largest privately held company.