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Capitalizing on a Cooling Market

Capitalizing on a Cooling Market
A Pre-Foreclosure Investor Case Study

Daren Blomquist

When the South Florida housing market entered into a nosedive last year, Harry Andrade saw an opportunity. While other investors were trying to quickly jettison flipper properties, Andrade took a totally different tack — looking for bargains on investment properties that could generate a positive cash flow.

“It’s a much better strategy simply because it’s a buyer’s market today and not a seller’s market,” he said.

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About 90 days later Andrade had purchased his first foreclosure property 20 percent below market value and secured a tenant whose rental payments more than covered his monthly carrying costs for the property.

“It felt great. … I made about $1,500 an hour on this one,” he said, noting that he’s already found another property that looks like it could be turn into a similar deal.

The Miami native began his search for properties by signing up for RealtyTrac to help him find homeowners in foreclosure who were motivated to sell and still had some equity to work with in their homes. Although he had never purchased a foreclosure before, he said he has been involved in real estate since he was 18 and recognized that foreclosures represented a good opportunity to buy below-market real estate — especially in a slumping market.

“When things are bad, times are good for some people,” Andrade said. “It all depends on how you look at it.”

Andrade was careful to point out that he approaches foreclosure investing as a way to help owners who are in distress — and that type of approach is crucial to his success.

“Because it’s people in need and you can help them out in return, for a profit. So rather than them losing everything, help them make something,” he said, noting that investors are not successful when they ignore the needs of the homeowner. “If you go out and try to help others first, just make it a win-win for everyone, I think you’ll be fine.”

The property that Andrade purchased is a condominium. Although he was not originally planning to purchase a condo, he noticed the property had about $70,000 in equity — based on the value and debt data provided on RealtyTrac. That convinced him to take a look at the property, which in turn convinced him to try to make contact with the homeowner to see if he could work out a mutually beneficial deal.

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