Ascot Place Condominiums

Ascot Place Condominiums

The Texas real estate market languished from the late 1980s into the early 1990s before it began to recover.  Before the recovery, the federal government owned most of the foreclosed real estate along with all of the failed banks and savings & loans. As with most government operations, confusion was the order of the day, which led to tremendous buying opportunities.

The steepest discounts were in the condominium market, which, ironically, was the market segment that had caused the most losses for lenders. Condominiums, nonetheless, were an exploitable asset class, especially when managed by bank REO officers who were more motivated to sell than protect the bottom line.

The very deepest discounts occurred when two or more lenders foreclosed on condos in the same project, especially if one lender only owned one or two condos, and another lender owned the majority. When that occurred, purchasing the single individual condo created tremendous leverage that could be used against the other lender whose hopes of consolidating and converting to apartments were dashed with your purchase. By purchasing one unit you could effectively control the options available to the other lender. And, while it was not possible to finance condominiums, it was a relatively simple matter to finance the purchase of apartment projects, provided you could purchase all of the condos in the project and convert them into one apartment project.

Ascot Court was just such an acquisition. Acquiring one condominium provided the necessary leverage to force the lender to reduce the price of the other 33 units. I was able to negotiate an acquisition price of $29,400 per unit, which was substantially lower than the market price of $70,000 per unit. Further, the bank that sold the 33 units was compelled to provide the acquisition financing.

The property was located in the Swiss Avenue Historic District on Bryan Street, an area that was much more supportive of Class A condominiums than the Class C property into which this property had deteriorated. By correcting the deferred maintenance and performing a great deal of value-add cosmetic remodeling, I was able to return the property to a Class A property. In so doing, I successfully doubled the value of the property in less than 10 months.

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