I’ve been posting glimpses about NRESs recent buying spree on the court house steps, and the uptick in their resales. Finally, I’ve updated the CHART on them to include their activity since the last comprehensive update in October. Some notes:
– The new chart combines the Page Ventures, NRES I, 2 and 3 activity since December 2008, and no longer tracks the entities individually. All recent activity has been under the NRES I LLC umbrella.
– The chart is in Excel, initially from oldest to newest Trustee’s Deed (and a few REOs) transactions. But you can sort it anyway you want by right clicking on a field. Sort by APN to see the areas of town where they are most active. Sort most profitable flip, or highest gross returns. Add your own formulas. Have some fun with it and report on your observations.
– One reader altered the chart to show the speed of their transactions from TD to resale. NRES was averaging about a month faster than the market in general.
– NRES had their very first gross loss on a sale – 649 Alpine View in Incline Village (131-212-13, 10/7/2009).
– Another loss shows up for 2525 Lake Ridge Shores (42-071-17, 7/1/2010). This is the property where the old owners refused to leave and burned the place down. Depending on fire insurance, this may be a small loss or none at all.
– Back in November, their gross margin was running at 1.417903. Currently, it is 1.401278 so it is tightening up a bit.
– I show they have purchased 312 properties, with 55 currently in inventory. That sounds like a lot, but it is only 2.5 months at their current selling pace.
– Gross profit has topped $13,233,000 on the homes they have sold since they entered the game.
Tom Joad
A tip of the cap to these folks who obviously know what they are doing. This business is clearly not for amateurs, and they clearly are not amateurs.
A tip of the cap also to Mike for compiling the data.
SouthBay
Mr. Obvious here but:
We have no idea the costs of taxes, Realtor fees, maintenance, and the big one – remodeling costs in order to get the homes in saleable condition.
We all know – many of these foreclosures have been gutted, destroyed, abandoned, landscaping left to die, in disrepair with a mile of deferred maintenance to be done.
Patrick
Of course. But I doubt they have remodeled any of these properties. Why do a remodel on a foreclosure flip? Especially when you are doing 300 plus of them. No doubt there has been some expense for repairs, costs, fees, commissions, etc. But I doubt they have spent more than $13.2 million on those things. If they were not making money they would not be doing this three years, and 300 houses, after they started.
inclinejj
Have you ever seen what some of these properties look like?
They are beat to all heck.
Also they are borrowing money from someone so the money is costing them some Interest, or a percentage of the profits.
Also they are paying tax on these Federal Taxes..
I highly doubt at the very least they aren’t painted really quick and freshened up a tad before putting back on the market.
Some of the purchases being made lately are very slim profit when you take out RE Commissions, fix up cost and carrying fees, Washoe County taxes, and to pay a crew to do any needed repairs.
Patrick
All true.
All true.
But these guys are not stupid, and if they were losing money on every house they bought and flipped, they would have stopped about 305 houses ago.
SouthBay
Of course they are not losing money on the majority of their sales and I’m sure overall they are returning tidy profit – but the 40% margin makes it seem that any dumbass can flip REO’s and make a mint.
InclineJJ
Of Course. But if you take a look at some of the Bank REO properties that are beat to all hell and show horrible, vs the Fannie/Freddie houses that are cleaned, painted, and show well.
Southbay: any dumbass with the time and money to put into it..
inclinejj
This is from a good friend of mine who is an Agent in Vegas. If anyone is looking to buy or sell down there let me know.
Trustee Sale Flips
by Renee Burrows on June 9, 2011
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Las Vegas Area Seller or Transaction Category #5: The “Flip”
This is part 5 in a series describing different types of sellers and transactions in the Las Vegas Area market.
The “Flipper” is a type of seller.
To “Flip” means that the property was recently purchased (at a discount) and is quickly being resold. There are two main types of “flippers” in this market:
?Those that buy directly from “trustee’s sales” (foreclosure sales.) I am going to call these “Real Flips”
?Those that are trying to leverage nothing by negotiating short sale transaction – these are the most difficult to get through. I am going to call these “Flip Flops”
Real Flips are attractive to potential buyers because:
?They are usually rehabbed beautifully and have the smell of fresh paint, carpet and neutral colors.
?They usually have a quicker answer or response than REO or Short Sale
The pitfall of a Real Flip is:
?They are usually FHA financing ineligible because of deed seasoning rules.
?Some major home defects may be covered up during the cosmetic repair process
All about the “Flip Flop”:
A flip flop is when an “investor” comes in to negotiate a short sale. They leverage NOTHING except the time, (maybe a little) money and effort to negotiate the short sale. They then turn around and request that a Realtor list the home on the free market to find a buyer.
Here are some potential pitfalls of the “flip flop”
?The negotiator (or flip flopper) must DISCLOSE that they are turning around and doing a “double escrow”. The BANK MUST APPROVE THIS. Many times they do not know or approve it. This makes the transaction fraudulent.
?Title companies are sometimes NOT insuring the title on these types of transactions.
?Many times money is exchanged outside of escrow or “off HUD”. This may be considered mortgage fraud in the eyes of the buyer’s lender if the buyer is financed.
Technically there is nothing wrong with these types of transactions (the flip flop)- if they are transacted in a legal manner per the short sale contingency (bank’s knowledge & approval process), state laws and the buyer’s lending underwriting guidelines.
To read about more Las Vegas Area Sellers and Sales Transaction Categories Click Here!
Cal
Hey Rory, looks like there is yet another “victim” shot dead this morning in downtown Reno. At 2d and Lake St. About a block from where the “victim” football player was shot. And about a block from where the
victim” rapper was shot. Just another guy out minding his own business at 2:30 am when out of the blue somebody comes up and shoots him. This is the the third downtown shooting in three weeks. Maybe the Dude over at the Makeover Blog ought to start a”downtown shootings” section.
And the RGJ needs to rerun that story about how safe downtown Reno is that it ran three weeks ago. Back before the two most recent shootings.
inclinejj
3 things can happen when you are out at 2:30 am
2 of those things are bad
Karoda
Actually, there have been 4 shootings in downtown Reno in the past 3 weeks. There was another one this past Wednesday morning at 4 am at yet another downtown bar. There is developing a culture of violence late night in downtown Reno fueled by drugs and young people with guns. But then, since the only “development” that has occured in downtown Reno over the past several years has been alcohol related (bars, clubs, dance joints), can anybody be very surprised?
Stacey
I don’t have any first hand experience with downtown Reno, as I rarely go there. And certainly not at 2:30 am. I am not a baseball fan and I don’t drink, so not much there for me. I can go to a movie, or a restaurant, many places other than downtown.
But it does seem that there have a lot of shootings recently. Why would anybody want to live there?
inclinejj
I call it the Manhattanization of a downtown. They did it in SF around ATT Park but that is SF. They tried to build up downtown reno too big too soon too fast and it fell apart when the boom ended.
Paul
I hate to suggest importing an idea from California, but some of what they do actually works. What about closing the bars at 1.45 am. Its kind of a nanny-state idea, probably won’t be liked here in the wild west, but late-night shoot-outs aren’t exactly a great incentive for relocating businesses here. Just to put salt in the wound, there’s a huge LED billboard right next to the new Wal-Mart on the 395 offering a reward for info on the downtown murders, yes I think it says MURDERS, in bright, flashing high resolution LED. So every corporate relocation executive leaving the airport to tour the industrial parks in Sparks or TRIC gets to see this huge glaring billboard about unsolved murders in Reno. This is a great community and we deserve better.
Carole
Paul, I hope you are kidding about the high res LED WalMart sign, but I fear you are not. No doubt it is well-intentioned, but you are right what an awful message (literally) it sends to out of towners about the escalating violence in downtown. Who would read that and want to book a room at a downtown hotel?
Walter
In the next couple of days look for a story in the RGJ with a quote from the mayor and maybe a councilman about really everything is fine downtown, these shooting are just an abberation, and it’s really very safe. Really. Maybe even a quote from Fernando Leal about his complete and utter confidence in downtown as a family destination. And look for the WalMart sign to come down. Surely a phone call from the mayor can help redirect the concerns of WalMart. No need to make a big deal out of this. Four shootings is nothin’ by Detroit standards.
Zen
Man oh man, there is a lot of downtown reno bashing going on. In the last couple of weeks, I ate at the Wild River Grill, the Old Granite Street Eatery, 275 Hill Restaurant, the Hash House A Go Go, and had a glass of wine at the Siena. Most of those are really good home grown restaurants owned by locals, which I far prefer to some chain restaurant. I went to an Aces game, took my kids to see the high water flow at the river one day and then to see the Egyptian and Frank Lloyd Wright exhibits at the Nevada Museum of Art on another. I also caught two movies at the Century Riverside Theater. Wow, until I started writing this, I didn’t realize how much time I had spent down town. I am not making this up. I have had some time off, which made this possible. My point though is that if you are not visiting some of this stuff, you are really missing out on some great things that reno has to offer. I agree that it would be safer to go home long before 2:30am, but I think that’s the case in any city I ever visited. Just my $0.02, take it or leave it.
Paul
Zen, you’re right about the downtown attractions, but just a little escalating violence can close those places in a heartbeat. That’s why Reno needs take the problem seriously, close the bars early and clear the streets. A few people get drunk between 11p – 1:30a, and a whole lot more between 1:30 and 4am. Just sayin, add some meth and a few guns, you got big problems. Incline JJ i’ve liked your comments in the past but I don’t agree with the premise that if people are out after a cetain hour then whatever happens is their fault. Well managed cities MAKE their streets safe for tourists and business people. In San Jose, bars and clubs close at 1:30 and the cops have the streets cleared by 2. In Mexico City, in the business district, they have cops on every block, some armed, some in plain clothes with radios at every hour. Mexico City is dangerout but at least everyone feels safe in the business / hotel district at all hours.
inclinejj
I really like what they are doing with downtown. But, like any other downtown and being out late at night you have to be aware of your surroundings. Like many area’s you wonder a block or two away from downtown and you are in a bad area pretty quick.
Also the bad economy well, it makes people desparate.
Norton
Downtown Reno, like a lot of cities, is a different place at 2:30 pm and 2:30 am. What happens at 2:30 pm usually does not have much impact on what happens at 2:30 am. The reverse, however, is not always true. A city cannot be allowed to degenerate into unchecked violence and unlawfulness at night. If it does, it will eventually impact what happens during the day. Paul is correct. Something needs to be done with the nightime bar scene downtown. It is getting worse. Two years ago the complaint was that the downtown condo dwellers could not sleep because all the noise emanating from the bars downtown. Now we have four shootings in 3 weeks. Time to step in and take control before it gets too further out of control.
Sydney
I doubt that many readers of this blog frequent downtown Reno at 2:30 am and thus have little insight as to what is going on. Zen’s comments are well taken for somebody who has no idea about the situation. My brother in law is with the RPD and he says that what happens downtown at night is way out of control. Meth is readily available at any number of bars. Some cars cruising late at night have an arsenal of weapons. Most people are in their 20s with a macho attitude, the women included. This is not a good combination. Especially when that is all who goes downtown at night. Who else goes there? Not Zen and his kids.
Larry
Downtown Reno in the daytime is a marginal ok. I can’t give it anything more than an a marginal ok because of all the areas that are still run down, dilapidated, and decaying. Which is basically all of downtown north of First Street. Even walking to the ballpark in the daytime when there is no game can be a bit concerning what with all the aggressive street people you encounter.
Downtown Reno late at night is just plain scary as hell.
bob
I agree with Zen.