Archive for October 10th, 2012

Distressed Properties to Be Revived by Las Vegas Investor

Wednesday, October 10th, 2012

Michael Shustek, a Las Vegas real estate investor is willing to bet a whooping $550 million on some of the country’s hardest hit areas saying he’ll be able to profit off them.

MVP REIT, Shustek’s investment fund plans on raising from investors the $550 million amount to be able to purchase commercial properties and mortgage loans in the areas of inland California, Arizona, and Nevada. The fund was launched last April and this week Shustek was cleared by US Securities & Exchange Commission to begin selling shares.

It is predicted that the Southwest real estate will not be able to fully recover soon. Because of this slow recovery, prices of the region’s foreclosed, bankrupt, and distressed properties remain low. Some are undervalued, making it difficult for borrowers to have the projects financed even with the property’s excellent quality and the borrower’s good financial strength.

These similar problems opened unique opportunities for individuals who are thinking of investing in such market. MVP believes that these opportunities can offer significant growth in the long run.

Shustek has worked in Nevada’s real estate market since 1990. He is the CEO and founder of Vestin Mortgage, which is based in Las Vegas. Vestin Mortgage invests in loans backed by real estate. The firm is in charge of managing two real estate investment trusts that are publicly-traded and an investment fund, with $135 million in total assets.

Shustek co-authored the books “If I Can Do It, So Can You” and “Trust Deed Investments” and also guest lectures at UNLV. He also taught the real estate law & ethics course at UNLV.

SEC investigated Vestin Mortgage’s various affiliates and funds. The inquiry was closed last September 2006 with issue of administrative order. SEC indicated that the firm violated the securities law in relation with the slideshow presentation prepared for investors.

Shustek neither admitted nor denied the wrongdoing but accepted the order. He settled the fine amounting to $100,000 and agreed not to associate with dealers or brokers for 6 months. The SEC order expired last March 2007.

Shustek’s MVP REIT could experience substantial gains by purchasing cheap property, which could rebound later value-wise. However, real estate could recover at a slow pace and most of the firm’s borrowers are most likely those who are unwilling or unable to apply for credit from traditional banks. The firm’s managers might misjudge the property value or the reliability of the borrower.

MVP REIT indicates that the firm’s strategy comes with significant risk.