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One of the reasons that a lot of investors are actually attracted to the Atlanta market
is because there is a lot of new construction here. My general feeling from having drove
around and see quite a lot of properties now is that there's a mixed way in terms of like
there is someone with the construction. There's a newer construction. There's some brand new
stuff. I mean, can you give me some general comments about what you're looking for and
how the new investors deal may end up here in Atlanta.
Sure. One, in the properties there's two categories. There's the new construction foreclosure and
then there's just going to be the resell foreclosures - home that have been occupied. The resell
foreclosures, that's just your traditional foreclosure. And those are broken down into
a bank foreclosures or corporate foreclosures and then government foreclosures of which
you consider homes. The resell is actually what we see out there in the market in a pretty
regular basis. On the new construction foreclosures, that's essentially from a builder who has
just gone down under water. They've got no money. They've got out of the business and
the properties have been left abandoned. So we've seen homes that have been from 90-95%
complete in which case that's leftover for a buyer to come in and get that. They still
got to qualify through a bank.
Yep.
And the bank has got to see that that property is complete. So they'll do a construction
on so that the buyer will need to have money to complete the building of that home -- the
additional 5-10% that needs to be done. So we do see a lot of new construction deals
all over Atlanta.
Yep.
And those are a great deal. Because, I mean, it's a new home and it hasn't been lived in.
They've just needs to be finished out. But the banks that own those properties and that
are retaining then it should be a bank that has a whole neighborhood for sale. And they're
going to liquidate those properties as I've said because they've been sitting for years.
And it just creates, I guess, a trashing forward when the bank is just losing money. They're
bleeding. They want to sell those properties. So they want them down to liquidate.
Can you comment a little bit on the quality or what you perceived to be quality of these
newer house and stuff? Because I think to some degree, particularly in Australia, there's
an association with newer mean better. And the experience that I've had is that that's
not necessarily the case because some of the modern construction makes it more a little
bit more flimsy. Can you kind of comment on that in Atlanta?
Yeah. It's all in a case to case basis. It depends on the builder. If it's supply, the
builder has taken the money to actually buy the building materials and supplies and construct
along a house. That's great. Whereas some of the builders, I can't point anybody out
specifically just because every builders different, but they put a home together. They cut the
corners, they just slap them together so that they can make a profit and move on. So some
of them have shorter warranties, they may not last as long. I mean, they used to build
the houses good back in the 80's and the 90's. These homes were constructed and they were
all made and they're solid. The newer homes, you know, you've got attractive land and they've
been subdivided up to where the builder wants to put as many homes on a parcel of land as
they can because it's about profit for them. So that's essentially what we say.
What about with homes that are sort of built after 1990? I mean, I would still consider
that as new construction. Often you don't have the records to go back and see who built
it and how it was built. So, what are you looking for when you're looking at these properties?
Well in going in through the house, I mean, structural is the first thing that we look
at as an investor. And as an investor myself just being in the industry for as long as
I have and just buying from a buyer's perspective and looking for our clients, I'm not looking
for anything that I won't consider buying myself. So when walking through the home,
the main thing that I'm looking for are going to be the structural issues. The homes that
we have here, you have homes on slabs which is just a kind of re-foundationed and you
have homes that are on basements. The basement homes tend to need a little bit more repairs
and more things to look for. So we want to look for things like roof issues, any kind
of foundation issues, cracked foundations, water penetration; because the lay of the
land in Atlanta, it's not flat. It's very mountainous. So with what we see here, part
of the homes that have basements can be partially below the or underground. And we have to walk
around the house and do a close inspection to see the condition of the property as a
whole. What we're looking for is we're looking for properties that just need cosmetic repairs.
We want things that have minimal repairs to get in because basically we want to make a
profit. We don't want to get into the situation where we're buying a house and the good deal
that we have; we've spent so much money, it's no longer a good deal.