By Les Christie, CNNMoney.com staff writer,
Jonas Lee, of Redbrick Partners, a real-estate investing firm specializing in single-family homes, says his company has had success since 1993 by “playing in the lowest-priced markets.” The typical single-family home his company buys costs a mere $80,000 and has three bedrooms and two baths.
Redbrick has found these bargains in the downtown residential areas of rust-belt cities such as Baltimore and Philadelphia. The company shuns hot markets like Boston and New York.
He’s hoping a housing-market dowturn will enable him to expand his holdings.
Many investors who bought in at the top may not have the resources to ride out a bust and they’ll be forced to sell out or even give their properties back to the banks.
“In falling markets, people need to sell their homes more quickly,” says Lee. “They’ll take a discount to the true market value at that time.”
Foreclosures become more common because there’s little benefit to the property owner to cash out before it reaches the foreclosure stage; they may owe more than the property is worth. And foreclosures can pile up in local markets causing a spiraling down of prices and providing opportunities for bold investors.