Finally, An S&L Windfall For The Little Guy

In their haste to clean up the savings and loan mess, government officials have often sold the assets of failed thrifts in big bundles. That had the effect of locking out small investors. But thanks to a directive from the Administration, the Resolution Trust Corp. has instituted changes that should give small buyers first crack at more of the $100 billion in assets left in the RTC's warehouses, particularly residential and commercial real estate.

The program kicks in on May 18 when the RTC will begin auctioning off 150 properties in 26 states, ranging from $5,000 to $5 million in assessed value. Given the changes, individuals "should give the RTC a second look," says Mitchell Clarfield of Secured Capital Corp., a Los Angeles investment firm with extensive RTC dealings.

Small investors--those with up to $1 million to spend-- will get dibs on the RTC's real estate assets for at least 120 days after the properties have been listed for sale. And until 60 days before a scheduled auction, they will be allowed to pluck specific assets out of large pools offered to institutional buyers. The RTC vows its sales will have more of a hometown flavor: The agency's open-outcry auctions will be smaller, with more local assets on the block.

To find out which properties are available--and when they'll be sold--call the RTC at 800 782-3006. Tell the representative what type of property you're interested in, and for 10 a listing (minimum order: $5), you'll receive within two weeks a printout of assets that fit your request. Serious investors might consider a subscription to RTCNET, an on-line data base operated by Business Information Network (800 366-9246). For $192 a year, plus 41 for every minute on-line, you can use a personal computer and modem to conduct searches through the RTC's asset data bases. All RTC and RTCNET listings provide information about each property as well as the name of a local broker who can provide details.

TREAD CAREFULLY. The RTC has also put out booklets designed to help potential investors prepare a bid. For an independent perspective on the sales process, pick up a copy of Profiting from the Bank and Savings & Loan Crisis by Stephen Pizzo and Paul Muolo (Harper Business, $23). Published this past February, the book reviews the RTC sales made so far, with a view to determining how to get the best deal. For instance, the RTC requires at least 15% down if the agency provides financing. But the RTC will sometimes count toward the down payment money that buyers put into escrow to use later for renovations, the authors say.

Prospective investors ought to tread carefully. The $316 billion in properties sold by the RTC so far consisted mainly of its most sought-after ones. Hence, determining the true market value for the remaining assets could be trickier. But for those who are willing to do their homework, this could be the best time yet to check out what has become the mother of all garage sales.

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