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When Elliott Ross stepped into the Kelly Hotel, it wasn't the musky odor or leaking walls that gave the building's age away. It was the fact that it had a basement — in the middle of St. Petersburg.
The building, which was constructed in the 1930s, is an example of the properties that Ross' commercial real estate firm Ross Realty Group has sold during the last two years. The dilapidated state is representative of the bank-owned sales that have spotted the market since the housing bubble deflated.
Ross and company have closed on 15 such properties over the last two years, with three coming at the close of 2011.
Explaining how he strikes deals for distressed properties, the well-known real estate broker deflects credit, saying that's just the way the market is right now. Looking back at the crash, which happened about four years ago, Ross says the timeframe matches how long it takes for the distressed properties to move through courts, appraisals and finally get to the market.
Just the front-end eviction process can take up to two years. According to Lender Processing Services, a data-collection agency based in Florida, the average mortgage loan spent 631 days in delinquency.
But Ross does concede that old-fashioned direct mail marketing has helped his firm snare potential buyers. “I got 10 emails in the 15 minutes we've been talking,” he says, “most people don't even read these anymore.” Indeed, Ross does some email marketing, but he says “there's nothing more powerful than a piece of paper in someone's hand.”
Another way he overcomes the difficulties marketing these properties is a renewed interest in working with residential brokers. Ross says his firm is a member of residential real estate boards (even though they don't buy or sell residential property) and works with residential brokers on prospective commercial deals.
For example, Ross recently brokered a deal to sell an apartment complex on Pinellas Beach to a residential Realtor. “In 2012 the only agents that survived are the good ones,” Ross says, “it doesn't matter if they specialize in commercial or not.”
The expediency of the brokers' process is another important element in moving bank-owned properties. Ross recalls a shopping center in Pasco County that his firm was charged with finding a buyer. He says on a Monday he looked at the property, the next day he changed the locks and by Wednesday the “for sale” signs were up. “As a boutique firm with a smaller portfolio we can focus on one property to get it on the market as quickly as possible,” Ross explains.
But being a boutique firm has also worked against Ross Realty. In fact, Ross says if he could bring on more agents he could double the amount of properties the firm could handle. He laments that even if he wanted to expand the firm, the talent isn't out there.
Nonetheless, Ross says his brokerage will continue in its focus on bank-owned properties with 10 currently in its portfolio. The important thing to remember, Ross says, is that there is a buyer for anything, even an old, leaky building like the Kelly Hotel. “You just have to look at the old fixtures and mildewed walls and take a deep breath,” Ross says, “and remember there is a buyer for anything.”
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