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BY BILL FREEHLING
A new group of self-described "vulture" real estate investors is forming in the Fredericksburg area.
The Fredericksburg Real Estate Investors Association will hold its first meeting at 6 p.m. Wednesday at Salem Church Library. Group organizer Guy Prudhomme hopes to attract a "network of like-minded people" interested in profiting from the recent "real estate meltdown."
"If there is anyone who seriously thinks that Fredericksburg real estate is going to be worth less five years from now, they have their heads in the sand," Prudhomme wrote in a news release about the group.
"The time to be thinking about buying any investment is when everyone is running from it."
The idea to form a local REIA is hardly a new one. The National Real Estate Investors Association has 230 affiliates in the U.S. and three in Virginia. Prudhomme has been attending meetings of REIAs in Richmond and Washington.
Prudhomme says the local REIA is being organized as a combination "support group meets accountability group meets the money." The group is looking for people interested in learning how to make money in real estate investing--commercial and residential--in the Fredericksburg area. That could include the contractors, attorneys and Realtors who would work through the deals, but also those with money to invest.
Prudhomme notes that many people are disenchanted with the stock market and are looking to put money to work in local real estate. He points out that though housing prices in the area have now fallen to 2003 levels, the Dow Jones Industrial Average has been at 1997 levels.
Prudhomme sees housing prices bottoming later this year after falling another 8 percent to 10 percent. He thinks low interest rates, the $8,000 tax credit for first-time home buyers, the comparable prices of a monthly mortgage and rent, and the region's relatively good job market will stabilize area housing.
Prudhomme comes to the real estate business from a background in designing and selling men's clothing through his company, Jaysix USA Inc. The recession has crimped sales, so he decided to get into real estate investing. He formed Alternate LLC in November and has been running that out of his home on Fredericksburg's Royston Street, where he's lived since January 2001.
The other members in the Fredericksburg REIA are: Ray Milano, a licensed general contractor who runs ACI Inc. and 23Hammers.com; TJ Baxter, part-owner of VA Homes LLC; and Vince Coin, a Realtor with Exit Powerhouse Realty. All are involved in different aspects of real estate investing.
They're hoping Wednesday's meeting will attract 15-20 people who are interested in getting involved. They hope to hold monthly meetings and plan to bring in speakers from Washington and Richmond on topics including how to find, fix up and sell the best properties.
Some might think that it's better to keep one's cards close to the vest when it comes to real estate investing. But Prudhomme said that having a network could help investors find partners in purchasing, fixing up, financing, managing and selling properties.
Sherman Ragland, managing director for the Greater Washington Real Estate Investors Association, agrees. Ragland helped form the D.C. REIA in 2001, and it's since grown to 5,300 members.
Ragland thinks his REIA has grown because its members share information and discuss trends in the market. He noted that with the glut of homes now available, there are plenty of opportunities for everyone. His association is talking about creating a pool of money that can be used to invest.
"There are so many deals out there that it's not even funny," Ragland said. "Now's a good time to be getting into the business."
Bill Freehling: 540/374-5405
Email: bfreehling@freelancestar.com
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Many are found through word of mouth. They speak directly with banks and pay attention to probate proceedings and auctions. They're looking for what value stock investors call a "margin of safety"--a discount to what the home is worth. They often have to put money into rehabbing and then selling the property, and they want to protect themselves in case prices fall more. TJ Baxter, one of the owners of the real estate investor company VA Homes LLC, said it's unpleasant to make offers that are 30 percent to 40 percent lower than what the seller thinks the house is worth. But he said those lower prices are the new reality in this market. Baxter isn't alone. Many area Realtors say sellers still want to list their homes at prices commanded during the boom. A national survey released last week by HomeGain showed a gap between what buyers and sellers think houses are worth. That discrepancy is evident in the Fredericksburg area (city, Caroline, King George, Spotsylvania, Stafford). Of the 280 area homes that sold in February through the MLS, 53 percent went for less than $200,000. Yet just 33 percent of the 2,690 homes listed at the end of February were on the market for less than $200,000. --Bill Freehling |
