Residential Subdivisions are built differently in Brazil. There is no Pulte or Centex – a vertical integrated residential home developer – in Brazil. Instead, lots are developed by specialized developers and then the house is usually built by a contractor hired by the homeowner. As there is no bank financing for parchasing lots, these lots generate very high IRR returns. There is a developed “take out” market for the cash flow upon stabilization. As approval for lot development takes three to five years, many projects started before the downturn have distressed partners that need liquidity. This results in investors being able to step into attractive risk reward investment opportunities.
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