Foreclosed homes are roots of local growing business

One mans loss is another mans gain, to paraphrase an old axiom. That statement rings particularly true for Reec Akuak, who has turned the recession into a business model for building a real estate portfolio in Alexandria.

An economic consultant for National Economic Research Associates in Washington, Akuak decided he wanted to start his own business. 

But I didnt know exactly what I wanted to do, said the 29-year-old entrepreneur standing in the kitchen of a recently acquired foreclosed property in the middle of a renovation. A real estate agent friend of mine was having trouble getting properties ready for sale. It takes a lot of time to assemble and supervise various contractors to do repairs and landscaping. He didnt have that time, Akuak said.

Akuak thought he could do the work, so he asked if his friend would hire him. His answer was yes. 
Thats how I got started: getting supervisors and subcontractors to do everything from repairs to painting to cutting the grass. Its not an easy process, he said. 

Akuak then started to pick up bank customers who had foreclosed properties on their hands. Thats when he decided to start his business, TKO Services (www.tkoservices.com)

The idea is to buy foreclosed properties from the major banks, fix them up and then rent them, he said. Its a buy and hold strategy. We are not going to sell the properties.

If the present local foreclosure market is any indicator, his idea may be just what the large lending institutions are looking for. The foreclosure rate in the Washington-Arlington-Alexandria area has increased from 1.56 percent in June 2009 to 1.85 percent in June 2010, according to CoreLogic, a provider of consumer, financial and property information. 

In order to make the system work, Akuak brought in partners to help with the financing. His first acquisition was 137 Reed Ave. Built in 2006, it originally sold for $772,000. Following foreclosure this year he acquired it for $442,000.

The object is not to invest more than $30,000 for renovations on average, according to Akuak. 

However, in this case his renovation investment is closer to $50,000 since the property suffered extensive damage in last winters blizzards and the ground level is being converted to a living area with its own bath facility.

Akuak is the primary investor and renovation coordinator. The silent partners provide capital. Although renovations are still ongoing, with completion expected in approximately three weeks, 137 Reed Ave. is already rented.

We base the rental price on market analysis plus improvements, he said. In this case, those improvements include replacing carpeted floor with all hardwood, major repairs to the roof damaged by the winter storms, adding a self contained living level, and other amenities.

TKO Services also assists real estate firms and mortgage bank professionals sell foreclosed assets through property preservation and field services.     We provide knock-out service by safeguarding foreclosed assets presentable to buyers, Akuak said.

With a few properties under his belt, the entrepreneur says he already has his eye on the next one. And for not, the foreclosure market seems to be cooperating.

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Alexandria Times Staff

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