The Downturn Analyst

One of the largest private home builders, John Laing Homes filed for bankruptcy on February 19, 2009. It had 105 real estate developments across the United States and operated mainly in California, Colorado, Texas and Arizona. Our latest report discusses the impending liquidation scenario of substantially all properties and provides a List of Real Estate Properties coming on the market.

Caruso Homes’ primary business consists of developing real property and the management and building of single family homes in Maryland, Virginia and Delaware. See our discussion of recent developments regarding the real estate properties of Caruso Homes, and possible implications for real estate investors.

A leading home builder in Nevada which has developed 40 communities since its founding in 1988, Rhodes Homes, filed for bankruptcy on March 31, 2009. The builder has 2 key projects - Rhodes Ranch and Tuscany Residential Village. At the time of bankruptcy, there were more than 300 finished lots remaining to be sold in Rhodes Ranch and more than 350 finished lots to be sold in Tuscany Residential Village.

Trying to make a bid for the home inventory of the distressed developer or builder? Use appraisal values provided by professional appraisers available in court filings to help you set a range.

There are many places in a bankruptcy docket to investigate the minimum price which a distressed builder will sell the property. One type of filings to look out for is the affidavits by senior managers of the builders or the Chief Restructuring Officer.

One of the more problematic issues of buying from a distressed builder is that one may not get clean title to the home. In some states, the law allows contractors to file a mechanic’s lien on a home up to 6 months after the work was completed.

One of the important first day motions filed by the bankrupt builders is a request for authorization to sell homes free and clear of liens in the ordinary course of business. We explain here how you can exploit value from these lists.

Heritage Highgate, Inc and Heritage-Twin Ponds, II LP (related to Heritage Homes Group) own and develop a residential subdivision in Lehigh County. Prior to bankruptcy, they have delivered 101 units of a 411-unit subdivision, with sales pending for 35 units. Heritage Residential at Wilton’s Corner own and develop a residential subdivision in Sicklerville, NJ. Prior to bankruptcy, they have delivered 104 units of a 195 unit Subdivision, with sales pending for 12 units.

Mercedes Homes Inc, along with 10 affiliates in bankruptcy, is engaged in the marketing and construction of single-family homes in sales price range of $90,000 to $700,000 per home. Their homebuilding operations are mainly located in Florida, Texas and the Carolinas. In the last fiscal year ending Jan’09, the companies generated $407 million in revenues.

The Landcraft subdivions are part of North Carolina and South Carolina limited liability companies engaged in land development. These include Saddlebrook, The Heights, Kelsey Glen, Water Mill, River Chase, Myers Mill, Aumond Glen, etc. Since May 2009, there have been several lot sales and ongoing negotiations for the sale of subdivisions and regarding builder contracts.