International Acquisitions: Poised To Become The King Of Foreclosures
by Christian Chensvold
March 2008
Real estate foreclosures are becoming a big business for savvy real estate investors with the knowledge and expertise to execute profitable deals. International Acquisitions, a real estate investment fund, is taking advantage of the sub-prime mortgage meltdown by focusing exclusively on acquiring foreclosures at bargain basement prices. IA’s timing couldn’t more perfect.
"Our goal is to give investors a great opportunity to participate in our fund that otherwise wouldn't have the opportunity and expertise to be able to be involved in a fund like this," says Allison Gaddy, International Acquisitions' vice president of mortgages and acquisitions. "The real unique point about the fund is that the average investor can contribute to IA with a very small investment, whereas a hedge fund of this caliber would require a minimum investment of $500,000 to $1 million for starters. International Acquisitions is a very special opportunity for individual investors."
International Acquisitions was founded by a management team with over 20 years of experience generating profit in declining real estate markets. "We have gathered a stellar real estate management team with years analyzing declining real estate markets like the one we’re in right now. All of us have been through this before so this is nothing new for us," says Gaddy, "and despite the volatility, our track record demonstrates continual profitability even when real estate markets have declined."
The fund's goal is to raise $5 million per quarter throughout 2008. Acquisition of prime property and undervalued assets will begin… The fund plans to become publicly traded during 2008.
Sixty percent of the capital will be used to acquire residential properties in danger of foreclosure and repossession. The remaining 40 percent will be used to acquire assisted-living facilities, hotels and motels, mixed-use properties, self-storage facilities and federal government foreclosures. These distressed assets can be repaired and then offloaded to chains and large corporations that operate within these specialized markets. Timing is everything and IA’s plan appears congruent enough to work.
The fund's founders saw opportunity in the sub-prime mortgage meltdown well in advance of the actual decline, and they don’t believe the downturn is going to end anytime soon.
"It's our belief that the current market with the large volume of foreclosures is just the beginning of something much bigger. A lot of people who thought they were going to refinance aren't going to be able to, and that will drive more and more properties into foreclosure. We may be one of the only solutions around."
According to a recent MSNBC report, two million American homeowners hold $600 billion in sub-prime, adjustable-rate mortgages that are due to reset at higher rates between now and the Summer of 2008. In the third quarter of 2007, the number of U.S. homes in foreclosure hit 446,726, more than doubled for the same time in the previous year, according to RealtyTrac.
Acquired properties will be evaluated by the fund's team of managers and analysts to determine whether they should be resold or managed. With no debt, Gaddy says International Acquisitions is far less risky than similar funds. "We structured International Acquisitions so that it's a safer investment that comparable securities," she says. "An investor may choose to earn 6.5 percent interest per year for the first three years. At that point the investor can retrieve the initial investment and full interest for those years, or the equivalent in corporate stock. So the first three years are an opportunity to take a look at how we perform, and then make the decision to retain their holdings or cash out."
Furthermore, each individual investment is secured by company assets. "It's a potentially high-yielding investment, which usually comes with a very high amount of risk. But in this case, because every investor’s investment is secured, many investors will remain shareholders indefinitely."
In conclusion, the key to success for International Acquisitions is acquiring the right distressed assets at the right time. It appears they’ll have plenty of foreclosed assets to choose from.