Aventura Condo Mortgage Meltdown or South Florida

Mortgage meltdown: Vulture investors
Real estate investors are betting on bargains in depressed markets they think are ready to bounce back.
By Les Christie, CNNMoney.com staff writer
September 27 2007: 11:01 AM EDT


NEW YORK (CNNMoney.com) -- Real estate investor Matthew Martinez is the point man for a private equity group that plans to invest $200 million in Florida condo developments.

But recent forecasts show many housing markets in the Sunshine State are looking at double-digit drops in home prices. What is he thinking?

"The smart money is thinking about buying there right now," says Martinez. "It may be six to 12 months early, but it's a good time to be searching for deals."

Local housing markets that have fallen far, yet have the potential to recover soon, are ripe targets for "vulture investors," who buy cheap in the hope that prices will rebound.

One area suffering from steep declines is the Miami/Ft. Lauderdale/Palm Beach region, where prices are expected to drop as much as 12 percent. The correction comes after years of intense real estate speculation.

"We believe in the long-term viability of the Florida real estate market, but we're buying on rental economics," Martinez says. "People had been purchasing on condo economics and those numbers no longer apply."

He's looking for 15 percent or higher discounts off previous condo prices to make his purchases viable. He then plans to convert the apartments back into rental units.

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Chris Dodd on CNBC's "Power Lunch" discusses the recent fluctuations of the market and issues confronting the mortgage market.



Aug. 31 - President Bush and Fed Chief Ben Bernanke both say no bailout for speculators in housing while White House pushes plan to help some people keep homes. At the White House, President George W. Bush adopted a tough love stance toward speculators and homeowners who over-reached during the housing boom.