Vultures Swoop In On Builders' Land

Real estate vulture funds are scouring the U.S. for distressed housing developments and land sites being sold at cheap prices by homebuilders looking to clean up their balance sheets.

These funds, which target internal rates of return greater than 20%, are not betting on any immediate recovery in housing. Instead, they're seeing profit in buying the housing sites today --many of which are selling at 50% or greater below their peak 2005 values -- with the aim of flipping them or selling homes at the projects in two years or more.

"We're seeing plenty of opportunities. The market changed in the last 90 days," says Rich Knowland, a partner with Pacific Terra Holdings, a Seal Beach, Calif.-based fund that is looking for land opportunities on the West Coast. ...