Huge Southwest Florida Real Estate Deal in the Works
Vultures have been circling over the slumping Southwest Florida housing market for a while, but few have actually descended - that is, until now.
Documents obtained by the Sarasota Herald-Tribune show that Joseph L. Long, a little-known New Jersey-based real estate investor, is negotiating with 60 area developers and builders to buy as many as 1,500 homes and condos at a 30 percent discount to their current listing price.
If Long, who has never done anything of this magnitude, is successful in lining up the $700 million needed to pull off the deal - a big if - it could have market-shaking consequences.
For struggling developers and home builders, Long’s proposal would relieve them of the financial burden of holding properties in a difficult market.
For a Florida mortgage lender, it would help it avoid repossessing homes and filling balance sheets with unwanted, non-performing assets.
In turn, about 5 percent of the unsold inventory in Sarasota and Manatee County would be temporarily lifted from the market.
The deal might also encourage other vulture investors to do the same thing, which could speed a Florida housing market recovery.
Long, who is listed as a principal at Oradell, N.J.-based General Property US, has been successful in signing up some builders and developers.
But he is still working to convince hedge funds and private equity funds to back his proposal, according to an August 28 e-mail message.
“The project is moving on well now,” wrote Lindsay Bucknell, Long’s local real estate agent at Century21 Sorrento Realty. “Nearly all the contracts are out and even more important, many are back in and all signed up.”
Bucknell added that the project involves $1 billion worth of property that Long intends to buy for around $700 million.
But the fact that Long does not have financing lined up does not sit well with many Florida real estate market analysts.
“I’m extremely skeptical about a guy with no track record who doesn’t have financing in place,” said George Huhn, a Venice real estate agent and Florida mortgage foreclosure specialist.
“If he thinks he’s going to get money from a hedge fund, I’ve got news for him: Liquidity out there is zero. The [Southwest Florida mortgage] crisis has taken all the liquidity out of the market. No one’s sure what’s going to happen.”
Long is aware of the challenges in front of him and of the “standard, out-of-box real estate methodology” of buying distressed properties.
Though he would not answer questions about the builders and developers he is negotiating with, he acknowledged that if the South Florida real estate market continues its downward slide, he will pull out of negotiations and head back to New Jersey.
But the idea at the moment, Long said, is to get a jump on all the other investors who are sitting on the sidelines and waiting for the right moment to buy excess inventory in Florida.
The idea is to get in before the Florida Legislature fully takes on the state’s tax and insurance problems and before the federal government intervenes to keep banks from being swamped by foreclosures.
There is no question governments are going to act, Long said.
Continue reading this article by the Sarasota Herald-Tribune about one developer’s plans for Southwest Florida real estate …
