Investors Grab Foreclosure Auction Opportunities in Phoenix

Representatives of real estate investment firms have been snapping up cheap homes from foreclosure auction events in Phoenix, which is among the most foreclosure-battered cities in the nation.

In the first quarter, the metro area covered by Phoenix, Scottsdavle and Mesa is ninth in RealtyTrac’s ranking of metro areas with the highest foreclosure rates. One home in every 40 houses was hit with a foreclosure filing in the first quarter and a total of 41,382 houses received default notices and foreclosure auction notices.

Among investors driving around Phoenix looking for foreclosure auction events and new foreclosure properties is Lou Jarvis, an executive for real estate management company Brewer Caldwell, which has been hired by Alberta-based CBI Group to invest in Phoenix’s housing market. CBI has allotted money to buy 175 houses from foreclosure auction events in Phoenix and then turn them into rental homes.

Jarvis was a former wood molding firm co-owner who also invested in a house that has gone underwater. He said he is working to recoup his losses by working out deals in the same area where he, his adult children and brother have lost money.

One of the homes Jarvis has snapped up for CBI is a house previously owned by the Aguilars. The Aguilars said they bought the house in 1999 for only $111,000, but they refinanced it in 2006. They now regret the refinancing decision, because although they are now renting the house at an amount lower than their monthly mortgage payment, it is no longer their house.

In contrast, the purchase and rental deal has a lot of profit potential for CBI. CBI executive Jarrett Zielinski said CBI’s investment of $52,000 in the Aguilars’ house will be recouped in just five years. He said no other city housing market has fallen the way Phoenix’s market has.

Because of the apparent success of CBI’s first round of investments, it has opened another fund to finance the purchase of 160 more Phoenix homes from foreclosure auction events and from other sellers of foreclosure homes.

CBI is also planning to conduct investment seminars for its renters with the goal of making them acquire their house back.

Jarvis’ company Brewer Caldwell has already purchased about 125 homes in 2009 for CBI. About one-fourth of these homes were occupied by former owners who were willing to rent them.

Although Jarvis’ company is benefitting from foreclosure auction events in Phoenix, Jarvis is sad that he had to advise his daughter to walk away from her house whose value has declined by 60 percent.

Related Posts:

• Buyers Get Foreclosed Home Auction Bargains in Dallas
• Foreclosed Home Auction Sales Still Up in Phoenix
• Anatomy of a Foreclosure Auction in Texas
• Financial Leverage for a Foreclosed Homes Prevention Program
• 2008 Foreclosure Records in Florida and California Implies Worse 2009