Executive Summary
Background
Scuttina Real Estate Group is actively participating in the acquisition, rehabilitation, management and disposition of foreclosed real estate assets located in Palm Beach County. Assets are bid on and acquired via public auction held daily at the Palm Beach County Courthouse. Currently the focus of Scuttina Real Estate Groups acquisition efforts is geared toward single family, townhome and condominium type properties located in dense family areas with retail values below $300K. Scuttina Real Estate Groups target acquisition price has been between $30K and $200K. Other types of assets may be acquired dependent upon pricing and demand in the local Real Estate market. At the current housing market, the demand and pricing for residential housing allows for the greatest potential profit for the investors acquiring auction sale properties.
All homes that have been purchased and immediately rehabilitated and listed for subsequent resale or rent, competing with the least expensive homes in any respective neighborhood. The strategy is focused on competing with short sales and bank owned sales on the Multiple Listing Services as these properties have proven harder to attain for highly qualified buyers due to a variety of factors.
Overwhelming inventory, a glutton of buyer demand and shortage of experienced staff have all led to banks taking weeks to make sales decisions on properties listed for short sale or directly by the bank after foreclosure.
Scuttina Real Estate Group has been successful in acquiring properties at discounts to current market value, adding value to these properties, mostly cosmetic, and renting or reselling them at fair market value to FHA, conventional and cash buyers alike.
The Process
Scuttina Real Estate Group represents investors’ capital whereby investors contractually agree to have the Company represent their interest in the public auction and in the acquisition, management and disposition of real estate. Investors maintain control of their capital; Scuttina Real Estate Group is not a “Fund Manager.” Title to all assets acquired is held in each investor’s name in the court house account offering our investors safety and control over their own capital and real estate throughout the process.
Real Estate is selected from a weekly inventory of foreclosed assets, approximately 400 homes per week. Scuttina Real Estate Group research the properties by obtaining comparable sales, active listings and pending sales on each home before placing a bid for the property. All taxes and any liens are compiled with these values and then placed on a spreadsheet to attain minimum and maximum bid amounts. These values also reflect prospective rehabilitation monies needed, Real Estate agents’ fees and other costs associated with the resale of Real Estate acquired.
Management
Management has over ten years of experience encompassing finance, acquisition, construction and sale of physical Real Estate. Management’s focus is to identify all properties listed for sale before each auction, research all title liens on properties of interest, account for any tax liens, inspect court filings for additional judgments, conduct a market analysis of pending developments in the area and inspect each property personally of interest before any property is to be bid upon.
Potential Profit
Revenue will vary by transaction. Thus far, transactions have shown between 15% and 75% total net return to our investors. Profit varies mostly due to the amount of money necessary to bring a property back to market value condition, including possible back taxes and HOA fees owed as well as any liens on the property. In many cases the property is turnkey and ready to be immediately sold or rented which means higher profits.
Structure
Scuttina Real Estate Group earns a $5,000 acquisition fee for any auction purchase. A performance fee is also earned, based on the acquisition price and the total net profit shown on all HUD settlement statements. All accounting is tracked with transparency and is kept current with weekly accounting for all expenses on each property and organized into separate folders for each investor’s accounting. Security of capital and transparency are the foundation of our property acquisition business model. All HUD settlement statements for closings are executed either by the investor or an appointed representative. If requested in writing, Scuttina Real Estate Group will act as POA for our investors.
