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Investments in Bank Owned Land Showing Some Signs of Life

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By : John Cutts    99 or more times read
An increasing number of real estate investment trusts (REITs) are starting to show interest in bank owned land and farmland parcels as they take advantage of the low prices of undeveloped real estate. Although most of them have yet to start their development projects, more are starting to look for good purchases and some have even started buying.

Bank owned homes in Minneapolis are not the only problem for Minnesota; farmland and other undeveloped properties were also hit by the foreclosure crisis, with prices of land declining to historic lows and investors unwilling to buy them despite their low prices. However, a recent purchase has given hope to land sellers that the market is starting to recover from its depression.

Bank owned properties in Minnesota had depressed the values of real estate in the past four years. A 55-acre farmland in the state was recently purchased for a price of $2.1 million, way below its original listing price of around $6 million. The land was purchased by the Pennsylvania REIT, Liberty Property Trust.

Although the selling price was below traditional rates, the transaction brought hope to real estate observers that REITs are starting to consider development projects, and more undeveloped parcels will soon be plucked out of the market. Most investors have shown interest in low-priced bank owned land in the state, and although they admitted that they are not planning an immediate start to the development projects, they did claim that they are on the lookout for bargain real estate that they can buy now and maybe develop later.

Sales of distressed land and properties under listings of bank owned homes remain below normal market conditions, but REITs are starting to show interest in the market. In 2010, land sales in the whole U.S. totaled around $5.5 billion, up from the 2009 total of $2.8 billion. Despite the increase, the figure is still way below the peak of 2007 when over $40 billion were recorded for land sales.

Bank owned land and apartment REIT transactions are spearheading the recovery of investment sales, market analysts have stated. Development projects for this year are expected to reach as much as $3 billion, an improvement from the $2 billion spent in 2010.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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