| The recently publicized problems with faulty foreclosure paperwork may slow down the wave of failures for a while (keyword "may"), but McGeough LaMacchia Realty's John McGeough and Anthony Lamacchia tell us that problems with over-extended multifamily property owners will be with us for several years. |
| We snapped Anthony and John, who six years ago co-founded their residential brokerage. Recently, they've developed a specialty in short sales and a growing number of those transactions are among multifamily property owners. Every day, John tells us, they have investors calling who are underwater with their multifamily holdings. Many of the properties are in outlying communities like Worcester, Fitchburg, and Brockton. But even some who invested in Boston's high-priced housing market have been tripped up by the weak economy. For instance, they say that Dorchester and Roxbury are among the state's most hard-hit areas, with values down as much as 60% since ?06. Communities holding their values well include Newton, Belmont, Allston/Brighton, and Arlington. |
| Anthony, here with operations director Sarah Chaisson, says that on one list of sales so far this year, of 597 multifamily properties traded, 272—or 46%— were short sales or foreclosures, and he expects that percentage to go up. Small multifamily investors, he says, were speculating that they could convert to condos and sell into a rising market for a handsome profit. One client owned six properties in Framingham, Worchester, and Fitchburg, but with tenants failing to pay rent because of lost jobs and other financial problems, she hired the firm to conduct short sales of her entire portfolio. On mortgages totaling $1.8M, the sales brought in about $1M for her lender. |
| John, with Mike McGrory and Craig MacDonald, says short sales may be part of the business for another five or 10 years. Often the investors who take that route purchased based on what a building converted into condos might fetch. ?They weren't buying based on the fundamentals, the rent rolls,? he explains. Of all residential asset classes — multifamily, condo, single-family — John says multifamily has been hit the hardest. This trend isn't about to reverse itself soon. John expects to see values continue to fall until there's sustainable job growth. |
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