A work out plan for a first Tier buyer

When buyers complete a transaction they often look to us to help them become sellers. When a Hedge Fund or banks acquires a tape often they have thousands of homes and land in various states of development to sell or move through.

Remcor, my firm offers the new seller (was the 1st tier buyer) a plan for breaking up the properties in to smaller blocks and alternative models.

Condition of Package dictates the Exit Strategies
The exit strategies are limited by the class of the product. You will hear sellers and buyers asking about the rating of the properties. The ratings are based on the quality of the homes, this is based on location and condition. Typical ratings are; A = Good Location and Very good condition, B = Good location and Fair condition, C= Poor location and Poor condition, some people do use a D = very Poor location and Trashed throughout.

The Typical way Out!
These sellers typically create smaller blocks of properties in the 100 to 500 home range that are marketed at a price that offers the seller the ability to recover the investment capital and profit. This strategy works well in the first two phases of the bulk sales process. Some investors have a long term workout plan, but today most investors are in the former category. The condition (A or B) of package provides a fast path to cash minus costs. Everybody wants the cash now!

The Alternative way!
When a seller has 3 thousand homes to sell the seller has a real challenge. Now this problem can be complicated by the condition of the homes. A viable path to cash is possible via a trade. Recently, Remcor helped a bank with a package that was loaded with builder inventory that was in various states of completion and some was vandalized. This bank traded the properties for performing properties by discounting their B,C,D stuff in exchange for commercial triple net properties. The Bank got the liabilities off it's balance sheets and added assets which improved the Banks discount borrowing rate with the FED. The Bank in one transaction lost some money but was able to show the FDIC auditors later that year the improvement in thier financials and was rewarded for fast action.