Spitzer Starting Vulture Fund

Forced out of office by a sex scandal, former New York governor Eliot Spitzer is reportedly considering his next act — in distressed real estate

(WSJ) -- The New York Sun reports that Mr. Spitzer is proposing to start a vulture fund that would buy distressed real estate around the country and then flip it for a profit. Mr. Spitzer, whose father manages a real estate company in New York, is proposing to invest pension money from labor unions, according to the newspaper.

Mr. Spitzer has plenty of company, as vulture funds have raised billions to pounce on everything from half-built Florida condos to raw, undeveloped California land. Even mom-and-pop vultures may be getting into the bargain hunt, says the National Association of Realtors. The trade group attributed much of the 6.3% rise in pending home sales in April from March to bargain hunters scooping up fire sales.

But Mr. Spitzer may want to tread carefully with the unions’ money. While real estate values have plunged steeply, the worsening economic recession could cause prices to sink even further. While nobody can time a bottom in prices perfectly, vultures can get hurt if they swoop too soon and a recovery takes longer than they expect.

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