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Investors Target Arizona Foreclosures

Investors are zeroing in on the distressed housing market in Arizona. According to the research firm ""MDA DataQuick"":http://www.dataquick.com/, nearly 4 out of every 10 homes sold in the Phoenix area in April were snatched up by absentee buyers, which typically constitute investors or vacation property purchases. Based on the company's market data, that homebuyer segment is up 50 percent from late 2007, and is nearly equal to the investor ratio during the 2005 peak.
""Sharp Equity"":http://www.sharpequityhomes.com is a Phoenix-based real estate investment firm. The company's partners, Kyle Brown and David Arnce, say now is the perfect time to invest in residential real estate. Sharp Equity opened its doors in 2007 and has been buying undervalued properties throughout Arizona. The firm says that when investing with Sharp Equity, the return to investors ranges from double- to triple-digits, depending on risk tolerance. All of the company's investments are directly secured against individual properties, which Sharp Equity acquires for 20-50 percent below current market value.
Sharp Equity says it has increased the number of acquired homes it sells each month by 600 percent. Last fall the company was selling four to five homes per month, and now that figure has jumped to more than 25 homes per month. Sharp Equity says it has set a new goal for the future, of purchasing and selling 100-plus homes per month and controlling a large percentage of the Arizona residential wholesale market.
Irvine, California-based ""Real Estate Disposition Corporation"":http://www.auction.com (REDC) held an auction in Phoenix earlier this month and sold 462 properties, for $31 million, that had been taken back by lenders in the foreclosure-ravaged state. The auction generated over 4,000 registered bidders and drove 9,500-plus open house visitors and more than 60,000 Web visitors. REDC spokesperson Rick Weinberg estimates at least 30 percent of the homes sold at the Phoenix auction were bought by investors.
Auctions have become a compelling venue for investors looking to cash in on below-market real estate. So far this year, REDC has sold more than 17,000 foreclosed homes for $1.2 billion at 110 live auctions. The company also completed live auctions in Denver and Salt Lake City last week, and is conducting four online auctions simultaneously for distressed assets from Los Angeles to New York.
A recent _""New York Times"":http://www.nytimes.com/2009/05/24/business/24phoenix.htmlx_r=3&th&emc=th_ article tells the story of a local real estate investor who is buying up foreclosed homes along the streets of metropolitan Phoenix. But the hook is the families being foreclosed on are given the chance to stay in the home as tenants, for a lower monthly rental fee.
One of the investor's clients is ""CBI Group"":http://www.cbigroupinvestments.com/, a real estate fund based in Calgary, Alberta. According to the _Times_, CBI has bought up 175 distressed property rental houses in Phoenix, and has just opened a new fund to buy another 160 Phoenix homes.
Speaking about the investment group's strategy, Jarrett Zielinski, a CBI executive, told the _Times_, ""This type of deal is absolutely not available in Canada. No city here has fallen by 50 percent, the way Phoenix has.""
And as a studious landlord, CBI has begun planning investing seminars for its tenants, the _Times _reported. ""Our goal is to be able to sell them their house back,"" Zielinski said. ""Wouldn’t that complete the circlex""

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.
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