Sunday, November 30, 2008

Vultures circle Bend real estate

From the Oregonian:

Several times a week, Ryan Strasshofer enters a list of addresses into the GPS unit on the dash of his well-worn Audi sedan. The digital display leads him on what might be called the Burst Bubble Tour of Central Oregon.
Strasshofer is the Bend-based representative of Gorilla Capital, a Eugene company that is Oregon's leading buyer of homes at foreclosure auctions. It's his job to sift through the ever-growing number of homes entering the foreclosure process to see which ones his company might buy and rapidly resell.

"To summarize our business model, we sell them cheap because we buy them cheaper," said John Helmick, Strasshofer's boss and Gorilla Capital's CEO.
Riding shotgun with Strasshofer offers a good look at the breadth of the crisis. In every neighborhood, from one-story rows of early 20th-century mill shacks near the Deschutes River to upscale homes on the west side where planted ponderosa pines are just taking root, borrowers have fallen behind.
Defaults seem to come from every economic caste, but there are common causes: divorce, layoffs, luxury purchases and too much leveraging of falling equity, said Strasshofer, who operates as a private contractor.
"It's amazing how many homes I drive by and see a new boat or motor home in their driveway, and they're in foreclosure," he said.
Strasshofer attends most of the daily auctions on the Deschutes County Courthouse steps. Often, he's the only one there as process servers or sheriff's deputies read pages of documents before opening up the auctions for cash bids.
Every month, Strasshofer sifts hundreds of default notices a title company culls from the county clerk's office. Of those, he may buy only one house. He's looking for properties he can resell quickly with a markup to 10 to 15 percent.
He estimated he buys only one out of every 400 houses he looks at.