I hear more and more about the amount of commercial foreclosures that are and will be hitting the market in the near future. Are their websites out there listing these? Are they done a lot through auctions? And, of course, the million dollar question, any suggested marketing ideas on how to find these? Any thoughts are appreciated!
The banks are sitting on the non paying deadbeats for longer than usual and there are a massive number just floating out there. The banks do not want to do them all at once because it will drop the market value of property and their resale value too much at once.
Get your local paper or look at their web site to see foreclosure sales as they come about. View the property on your local GIS to see if it is a commercial property. Typically they post that the property will be for sale within a couple of weeks to a month prior to the sale. Then find out who owns the house on your local governments GIS if it is not listed in the legal notice. Then do a phone search for them and give them a buzz and try to work a deal.
In my area, there’s a couple of wholesalers/brokerage firms that have a bunch of foreclosed apt buildings. Keep an eye on craigslist for wholesalers that appear to have a lot of properties listed and follow up with that on their websites (if they have one) or just call them up and inquire about any commercial props they may have under contract.
Unless you know someone in the ‘troubled loan department’ with a particular lender, it will tough to discover these deals before they hit the market for all to see. Unless you buy it at auction, it will be foreclosed and listed with a commercial agent. Auctions obviously require some buying power, and it’s not even guaranteed that you’ll get a good deal. This all works the same on the residential side.
Keep in mind, unless you can locate a troubled property in the PRE-foreclosure process, you’ll have to be able to buy with no creative financing. Lenders will want a pre-approval letter, a decent deposit, and you’ll have to get conventional financing. This may or may not even be realistic for you. If you found solid investors you might be able to do some flipping, but you still have to go through the process of networking.
Commercial lenders put much more thought into how to dispose of a property than residential lenders do. You’re talking about everything from 100+ lot subdivisions to multi-tenant office buildings to car washes. These properties can get buried in paperwork for months. You’ll have better luck dealing with local banks. Once a foreclosure gets in the ‘system’ at a regional/national lender there’s no stopping the process.
I know acquiring a great commercial foreclosure sounds really nice, but it’s not easy to accomplish if you have no buying power. Your best bet is to get to know the market participants, try to find out who’s hurting, and see if you can work out a deal in the PRE-foreclosure stage…
I’m finding it’s surprisingly easy. More and more commercial properties now are being held by the banks relatively long term and managed by a receiver. The receivers are typically property management companies and are often brokers. These are the people you want to meet. They have a pipeline into the banks and also know about the properties. If they know you are serious, and have money, they will be very interested in speaking with you. They will often show you deals just before or after foreclosure and before they hit the street. In addition, they are often the most knowledgeable about the property since they manage the day-to-day operations.
Alternately, the larger commercial brokers handle about 40% of their deals as pocket listings and these include foreclosures. I’ll guess that this number is increasing. I’m observing that properties offered privately are often at fishing expedition prices where the bank or broker is hoping to catch a live one. It’s sometimes best to let the deal be publicized a bit. After a few low offers, the banks come down to reality. There’s risk, of course, that someone will overpay for a deal you like; but that’s life. Once these hit the MLS or Loopnet for any extended period, they’ve generally been shopped around and are junk.