No, you haven't missed the boat. With an estimated $2 trillion in commercial loans maturing through 2017 and half under water, distressed multifamily plays have dropped anchor and are here to stay. (We thought these hot temps warranted some water imagery.)

We caught up with Thorofare Capital SVP Felix Gutnikov (snapped this afternoon at RECon with Thorofare founder and CEO Kevin Miller), who just funded a $1.4M acquisition loan for a Chicago-based multifamily operator buying a portfolio of 60 REO for-rent condos in the Crestwood Condominiums neighborhood in Des Plaines. Now that CRE values are on the rebound, banks are trying to sell off REO properties to limit overhead and carry costs (like taxes and opex), Felix says. While fractured condo deals can be a headache to manage and difficult to finance due to the complexity of homeowner associations (why do they hate above-ground sprinklers?!), investors are making good returns by collecting rents on some units while rehabbing the others for individual sale.

Crestwood Condominiums are pictured above.While more money is chasing less REO and distressed deals available today, funds and private investors can count on many borrowers in the pipeline who will be unable to refinance or find JV partners, ultimately handing their buildings back to the banks. Fractured condo dealmakers aren't banking on quick sales or a condo boom, Felix adds, unless they are buying bulk condos, rehabbing, and flipping to another investor for lower returns (5% to 6% cap) because the risks of renovation costs and leasing are gone. While tricked-out condos in 24/7 markets could sell fast to the young and upwardly mobile, today's opportunities (with less demand putting artificial pressure on price) are in the small balance space ($1M to $15M range), he observes.