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CoreLogic Records 4.7% Drop in Home Prices in 2011

3. February 2012 by admin.

CoreLogic Records 4.7% Drop in Home Prices in 2011
Year-end data from CoreLogic shows home prices fell by 4.7 percent over 2011. It marks the fifth consecutive year the company has recorded an annual decline in residential property values.

CoreLogic performed a separate calculation, which illustrates just how big an impact distressed sales are having on home prices. The company excluded all short sale and REO transactions from 2011 and found that when the distress factor is taken out, prices declined by just 0.9 percent.
Commenting on the company’s latest results, Mark Fleming, CoreLogic’s chief economist said, “While overall prices declined by almost 5 percent in 2011, non-distressed prices showed only a small decrease. Until distressed sales
in the market recede, we will see continued downward pressure on prices.”
Montana tops CoreLogic’s list of states with the highest appreciation last year (based on overall prices, including distressed sales). There, home prices rose 4.4 percent.
Rounding out the top five list for price gains are Vermont ( 4.0 percent), South Dakota ( 3.1 percent), Nebraska ( 2.5 percent), and New York ( 1.7 percent).
At the other end of the spectrum, Illinois takes the top seed for the highest level of depreciation in 2011 (also including distressed sales), with an 11.3 percent decline.
The hard-hit states of Nevada (-10.6 percent), Georgia (-8.3 percent), and Ohio (-7.7 percent) also landed on the list, with Minnesota (-7.5 percent) capturing the No. 5 spot for home price depreciation last year.
At the national level, CoreLogic says home prices ended 2011 down 33.7 percent from their peak in April 2006.
Here again, the company illustrated the weight of distressed sales, noting that when short sale and REO transactions are factored out, the home price decline from April 2006 through December 2011 narrows to 24.0 percent.
The five states with the largest declines from the peak (including distressed transactions) are Nevada (-60.0 percent), Arizona (-51.9 percent), Florida (-50 percent), Michigan (-43.7 percent), and California (-43.5 percent).

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Real Estate Blitz: Investors Buy, Buy, Buy Bulk Distressed REO

29. January 2012 by admin.

Real Estate Blitz

Investors have created a new real estate bubble of their own. Throughout the US investors are buying bulk REO (real estate Owned by the bank) in huge quantities. Large real estate investment and capital companies, medium companies and even smaller investors are buying bulk REO.

Last year individual REO purchases from assigned Realtors have been sold in great quantities. This year there’s a real estate blitz that has created it’s own real estate bubble in a unique niche: bulk REO. Investors don’t want to buy property by property: more work, have to search for them, they are usually left overs from bulk purchases that no one wanted, and you don’t get the lowest price. So why do investors buy bulk distressed REO?

For a minimum of $2.5M you get the properties available in one bundle as much as 25-30 properties depending on your price range.
You own these properties at anywhere from .65 to .50 cents on a dollar: some lower if they are greatly distressed.
You choose the location: local or where you have partners
Investors are partnering across the country to take one bundle: shared by location
You choose commercial multi-family or residential.
Most are vacant and if not easy eviction as you own the property
You can save on rehab money because you have contractors going from one house to the other and buying certain things: paint for example, in bulk
Because of the low price, resale is easy, or what most investors are doing: turn it into a rental.
You usually get first pick: it is not on the market, not advertised, little competition, better price. Once you’ve done your rehab: you are first on the market.
Once you’ve made your return (usually up to 30% even in this market), y0u can buy more– do it again.
Bulk multi-family: units up to 300 can be huge profits and easy rehab: all the apartments look the same: use the same appliances, etc. You save up to 30% on a normal development project.
High profits, low costs: any questions?

What’s the downside?

We sell bulk REO: the demand is higher than the supply! Really! We cannot keep up, the banks cannot keep up with the demand. Investors are having trouble finding more product. Foreclosures are not turning into REOs at a fast rate.
Banks really cannot assess rehab. You ask for lite rehab: well what does a bank know. Often they only know what the appraisal says: which cannot see the structure of a house is in trouble. - Good reason to stick with commercial apartments over 4 units. But hidden problems are your problems.
Smaller investors have to pool to come up with the $2.5M or they will have very undesirable REOs left over
You get time to do due diligence on the property but often not an inspection. Sometimes yes, sometimes no.
You have to prepare to takes some losses: some will sell, some you may have difficulty selling. Most will rent.
You need a certain level of experience and you have to have a team ready: rehab team, Realtors, marketing, legal and administrative staffs. It would not be a good idea for beginners unless you have a more experienced partner on the team.

So, how do you get these real estate gems? Email us for more details. investors@strikerinvestments.com

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Tips for Choosing a Financial Planner

12. January 2012 by admin.

By Erik Braunitzer, and courtesy of Douglas Elliman Real Estate Company, agents for NYC Rentals.

There are several reasons to invest in a financial planner. Whether it is to buy a new home, securing a child’s college savings, or saving for retirement, there are a number of valid reasons to invest in a financial planner. When looking around for the right individual to suit your needs, there are several things to keep in mind. Although there may be any number of qualified professionals, not everyone will suit your individual needs; that is perfectly acceptable. Be sure to interview and communicate with several different financial planners before making a final decision. There are several things to consider when choosing a planner.

Disciplinary Record: First and foremost, it is important to make sure the financial planner is honest and above board. Ask the potential planner if there has ever been disciplinary action. Action could have occurred for two reasons. One reason that a disciplinary measure could have occurred would be anything that was done illegally. The other reason a disciplinary measure would have happened is if anything was done unethically. These actions are not necessarily against the law; they just are not necessarily the most honest course of action in any given situation.

Experience: Find out the experience of the financial planner. Does this planner have experience in only a couple aspects or an overall rounded expertise level? For example, if you plan to hire a financial planner to take care of the IRAs and 401(k), you want someone who has experience with these types of funds. A financial planner who only has experience with college funds may not be the best fit for your needs.

Qualifications: To ensure that the individual is not using the term “financial planner” too liberally, ask the individual what credentials they hold. Many financial businesses tend to use the term “financial planner” too casually. An uneducated consumer may sign up for a service they may not have wanted. A certified financial planner (CFP) is regulated by a set of rules and regulations. They have to be licensed every couple of years.

Services: Find out what services are offered. Some financial planners may not offer the particular service needed. This tends to run in with the experience aspect. A particular financial planner may only offer retirement services and not the best way to save for a home.

Who You Will Be Working With: Some financial planners are in a business by themselves; however, other professionals may be in an office with other partners. It is important to find out who you will be working with. Will it be only the individual being interviews or others as well? One way is not necessarily better than the other; it is usually just a matter of personal preference. By having only one person working with you, they will generally be a little more familiar with you and your finances. By having two or more professionals working on the finances, more opinions are expressed. Many times with finances, there is not a right or wrong way to invest money. Multiple financial planners may each have a different idea. This allows you to pick the option that you feel is best.

Rates and Fees: It is important to know how much a financial planner is to be paid and how it will occur. There are several different ways a financial planner can be paid. An hourly fee could be charged, or a flat salary could be collected. Some planners are mostly commission based. This means any additional services that are sold to you are partially given to them. For example if a planner sells an additional service for $100.00, the planner may make $10.00 off of the sales. One innovative way to get paid is based on the total amount of assets that are invested. The more money is in the care of the financial planner, the higher the annual fee will be. Most commonly, a financial planner is paid from a combination of two or all three of these types of payments.

Any Other Beneficiaries: It is important to find out if any other person besides the financial planner has a special interest in sales or services offered to you. If there are special interests involved, there may be reason to question how ethical transactions may be. While special interests by no means question the honesty of the financial planner, there does leave large loopholes for an unethical transaction to occur.

Get It on Paper: Any agreement struck up with a financial planner should be written down and signed by both parties. Keep this paper somewhere safe, such as a fireproof locked safe, for future reference. Should something go awry, it is necessary to have this paper for legal action.

Personality: Each individual has a distinct personality. Even if the financial planner is highly acclaimed and has a spotless record, if they rub you the wrong way, keep looking. It is important to be able to like and trust your financial planner.

Special Thanks to Erik for his article. If you would like to write a guest post, please email me at investors@strikerinvestors.com

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Five Dumb Things Investors Do

10. January 2012 by admin.

Here’s a hint: IT’S NOT INVESTING IN REAL ESTATE: That’s the smartest: Read the whole article.

Five Dumb Things Investors Do
The beginning of a new year is usually a good time to reflect on the past in order to make certain resolutions about the coming one. In investing, future success can have little to do with what has worked well in the past. Trying to predict short-term market movements is also generally an investment strategy that can lead you to financial ruin. Keeping these perspectives in mind, below are five of the dumbest things you can do with your money in 2012.
Trade Volatility

Lately, it has been en vogue to consider volatility its own asset class. Trading volatility has become possible through vehicles based off the Chicago Board Options Exchange Market Volatility Index, or VIX for short. A range of exchange-traded funds (ETFs) have been created so that investors can make bets on the extent to which the market bounces up and down. There are even ETFs that let investors gain twice the exposure to market volatility, which can be used to make bets on both advances and declines in the market.
The problem, as with most short-term strategies, is developing a compelling trading strategy capable of predicting market volatility. Trading VIX-related indexes may make sense for hedging near-term market fluctuations, but there is simply not going to be any way to predict market moves with any certainty. Major inflection points in the market are missed by the best investors and include the credit crisis, flash crash and latest concerns over sovereign debt levels in Europe. Without a crystal ball, speculating on future market volatility has to be one of the dumbest things investors can do with their money. (To learn more on volatility, read A Simplified Approach To Calculating Volatility.)

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FHA Waives Anti-Flipping Rule Through Year-End to Speed REO Sales

9. January 2012 by admin.

The FHA has been waiving this rule for the last few years and now extends it again:

Great for investors: Let’s buy these REOs. We have bulk REOs for sale, email us at investors@strikerinvestors.com Minimum $2.5M direct from bank.

FHA Waives Anti-Flipping Rule Through Year-End to Speed REO Sales
The Federal Housing Administration (FHA) is extending the temporary waiver of its property anti-flipping rule through the end of 2012.

FHA rules typically prohibit insuring a mortgage on a home owned by the seller for less than 90 days. In 2010, however, the agency waived this regulation, and later extended the waiver through 2011.
The new extension announced late last week will permit buyers to continue to use FHA-insured financing to purchase HUD-owned and bank-owned properties, no matter how long the homeowner has held the title, through December 31, 2012.
FHA says the waiver will allow homes to resell as quickly as possible, helping to stabilize real estate prices and revitalize communities experiencing high foreclosure activity.
“This extension is intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight,” said Carol Galante, FHA’s Acting Commissioner. “FHA remains a critical source of mortgage financing and
stability and we must make every effort that to promote recovery in every responsible way we can.”
According to FHA, the waiver contains strict conditions and guidelines to prevent predatory property flipping in which properties are quickly resold at inflated prices to unsuspecting borrowers.
Among these conditions, all transactions must be arms-length, with no link between the buying and selling parties.
In addition, in cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will apply only if the lender meets specific conditions, and documents the justification for the increase in value.
FHA’s property-flipping waiver is limited to forward mortgages, and does not apply to the agency’s Home Equity Conversion Mortgage (HECM) for purchase program.
Since the original waiver went into effect on February 1, 2010, FHA has insured nearly 42,000 mortgages worth more than $7 billion on properties resold within 90 days of acquisition.
The agency says its own research has found that in today’s market, acquiring, rehabilitating, and reselling foreclosed properties to prospective homeowners often takes less than 90 days.
As a result, FHA says prohibiting the use of its mortgage insurance for a subsequent resale within 90 days would adversely impact the willingness of sellers to consider offers from potential FHA buyers, namely because they would be required to cover holding costs and the risk of vandalism that comes with allowing a property to sit vacant over a 90-day period of time.

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Fannie Mae No Longer Requires Borrowers to Demonstrate Ability to Repay

26. December 2011 by admin.

In an attempt to make the Home Affordable Refinance Program (HARP) more accessible in its second incarnation, government-controlled GSE Fannie Mae is no longer requiring borrowers to demonstrate that they can repay their home loans in order to refinance them[1]. The caveat was removed from the borrower-vetting criteria because lenders have argued that it is preventing them from refinancing loans through the HARP program. The lenders have been refusing refinance options because “the lack of clarity on what ‘reasonable ability’ precisely means could expose [them] to indemnification liability in the event that the loan defaults.” The removal of the clause will allow lenders to look more narrowly at the amount owed and the number of payments to be made rather than factoring in other facets of a borrower’s finances.

However, the changes to HARP may not be good news for everyone. For example. while Bank of America responded to the changes by affirming “strong support” for HARP, BofA investors could suffer because the prepayments triggered by refinancing can put a dent in returns on investments[2]. The Federal Housing Finance Agency (FHFA) projects that the number of participants refinancing through HARP could double in the next year alone thanks to the changes in qualification standards.

Isn’t this how we got in trouble in the first place? When lenders put through loans that borrowers could not repay? What do you think?

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Industrial Real Estate Rallies

14. December 2011 by admin.

According to Grubb & Ellis research, the national market will absorb 110 million sq. ft. of space this year, up from 34 million sq. ft. a year ago

Industrial Real Estate Rallies

Jones Lang LaSalle reports that transaction volume for industrial real estate is up year-over-year and that $17.8 billion in deals were made in the third quarter of 2011. Analysts expect this high level of activity to continue through 2012 as more sellers come into the market. Much of the deal-making will continue to be made by large institutional owners in large distribution markets, but activity is expected to be bolstered by healthy activity in second-tier markets by investors seeking value. Slowed construction and decreased availability have stoked demand for industrial real estate, making this year’s third quarter the strongest since… read more

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Taking Back America

13. November 2011 by admin.

A good example of small investments in America can change our economics in the future.

From the NY Times:

November 12, 2011

Buying Underwear, Along With the Whole Store

By AMY CORTESE

SARANAC LAKE, N.Y.

THE residents of Saranac Lake, a picturesque town in the Adirondacks, are a hardy lot — they have to be to withstand winter temperatures that can drop to 30 below zero. But since the local Ames department store went out of business in 2002 — a victim of its corporate parent’s bankruptcy — residents have had to drive to Plattsburgh, 50 miles away, to buy basics like underwear or bed linens. And that was simply too much.

So when Wal-Mart Stores came knocking, some here welcomed it. Others felt that the company’s plan to build a 120,000-square-foot supercenter would overwhelm their village, with its year-round population of 5,000, and put local merchants out of business.

It’s a situation familiar to many communities these days. But rather than accept their fate, residents of Saranac Lake did something unusual: they decided to raise capital to open their own department store. Shares in the store, priced at $100 each, were marketed to local residents as a way to “take control of our future and help our community,” said Melinda Little, a Saranac Lake resident who has been involved in the effort from the start. “The idea was, this is an investment in the community as well as the store.”

It took nearly five years — the recession added to the challenge — but the organizers reached their $500,000 goal last spring. By then, some 600 people had chipped in an average of $800 each. And so, on Oct. 29, as an early winter storm threatened the region, the Saranac Lake Community Store opened its doors to the public for the first time. By 9:30 in the morning, the store, in a former restaurant space on Main Street opposite the Hotel Saranac, was packed with shoppers, well-wishers and the curious.

The 4,000-square-foot space was not completely renovated — a home goods section will be ready for the grand opening on Nov. 19 — but shoppers seemed pleased with the mix of apparel, bedding and craft supplies for sale.

“Ooh, that’s nice,” said Pat Brown, as she held up a slim black skirt (price: $29.99). She and her husband, Bob, a former professor of sociology at a local community college, live in town in an early 1900s home furnished with deer heads and other mementos from Bob’s hunting trips. The couple — who were voted king and queen of the village’s annual Winter Carnival in 1999 — bought $2,000 worth of shares in the store early on, and later bought a few more during a fund-raising drive.

“It’s been a long process for all of us. We’re very proud to have it finally become a reality,” Ms. Brown said. Her husband, a vigorous-looking man who had a neatly trimmed white beard and was wearing a cowboy hat, added, “This is a small town trying to help itself.”

Think of it as the retail equivalent of the Green Bay Packers — a department store owned by its customers that will not pick up and leave when a better opportunity comes along or a corporate parent takes on too much debt.

Community-owned stores are fairly common in Britain, and not unfamiliar in the American West, where remote towns with dwindling populations find it hard to attract or keep businesses. But such stores are almost unknown on the densely populated East Coast. The Saranac Lake Community Store is the first in New York State, its organizers say, and communities in states from Maine to Vermont are watching it closely.

Indeed, community ownership seems to resonate in these days of protest and unrest, when frustration with Wall Street, corporate America and a system seemingly rigged against the little guy is running high. But rather than simply grouse, some people are creating alternatives.

“It drives me crazy when people criticize how our system works, but they don’t actually go out and try anything,” says Ed Pitts, a lawyer from Syracuse who along with his wife, Meredith Leonard, is a frequent visitor to the area and has invested in the store. “This is more authentic capitalism.”

SARANAC LAKE is known more for its natural beauty and clean air than for experimenting with new forms of commerce. Nine miles from the Olympic town of Lake Placid, it is surrounded by lakes and mountains. In the past, it drew summer residents including Albert Einstein and Theodore Roosevelt, as well as tuberculosis patients who came to the village to take “the cure” of fresh air. Today, many of the village’s onetime “cure cottages” are filled with tourists who come in the summer months to hike, canoe and unwind, swelling the population threefold.

Come winter, though, the town’s Main Street quiets down and local residents reclaim places like the Blue Moon Café, which dishes up food and gossip. So when the local Ames store closed, few major retailers were interested in taking its place, despite the town’s efforts to woo them.

Wal-Mart was the exception. But its interest in building a supercenter larger than two football fields sharply divided villagers. Signs for and against Wal-Mart sprouted on front yards. At heated town meetings, people would shout: “You can’t buy underwear in Saranac Lake!”

In the end, Wal-Mart decided not to pursue the store; a spokesman said that “no single factor” contributed to the decision. But the tensions the debate stirred up only made the lack of shopping options more glaring.

That’s when a group of residents exploring retail alternatives heard about the Powell Mercantile, a community-owned store in Powell, Wyo., that was born of a similar dilemma. The Merc, as it is known, was established in 2002 after the town’s only department store, part of a chain called Stage, shut down.

“There was a great concern that Main Street would fail if we didn’t have a store to replace the Stage,” said Sharon Earhart, who was director of the Powell chamber of commerce at the time. Ms. Earhart and a few other residents raised more than $400,000 from local residents in three months by selling $500 shares, and opened the Merc.

The Merc prospered from the start, with fashion brands sharing space with rancher-appropriate Wranglers. When space in an adjacent storefront opened up, it expanded to 14,000 square feet. Now coming up on its 10th anniversary, the Merc does about $600,000 in annual sales and has turned a profit most years, even paying investors a $75 per share dividend in one particularly good year.

Powell’s Main Street is now thriving, with a wide range of retail outlets. The store “created a very positive domino effect,” Ms. Earhart said, to the extent that it can be hard to find parking space.

When she came to speak at a town hall meeting in Saranac Lake in 2006, nearly 200 people showed up. Following the Powell model, the Saranac Lake organizers put together a business plan and assembled a volunteer board of directors made up of local professionals.

The board then approached a local lawyer, Charles Noth, who created a prospectus and filed it with New York State authorities. By limiting the offering to residents of New York, in what is called an intrastate offering, the organizers were able to avoid more complex and costly federal securities regulations. (The Powell Merc also raised money through an intrastate offering.)

“I had done a lot of investment proposals but nothing quite like this,” said Mr. Noth, whose family has roots in the area and had recently moved here full time. “The idea of a community store is pretty unique.” He became an investor, as did his brother, the actor Chris Noth (best known for his role as Mr. Big in “Sex and the City”).

“We didn’t want it to be a cooperative or nonprofit,” explained Alan Brown, a former banker and the board’s treasurer (and no relation to Pat and Bob Brown). “We wanted it to be just another business on Main Street.”

It was also important that it be widely owned, so the shares were priced at $100 and the amount any one person could buy was capped at $10,000. Shares can be bought and sold or willed to future generations. The store’s projected near-term annual revenues of $350,000 to $400,000 will most likely be eaten up by operating expenses, said Melinda Little, the store’s interim board president, but in the future, investors could receive dividends.

Getting the first $80,000 was easy, but the board found it hard to keep people’s interest and raise new funds, especially as the recession hit. Board members organized fund-raisers to keep the project in front of people. One year, the board had a float in the Winter Carnival, featuring a clothesline with underwear hanging on it. The share offering will close in December.

Many residents, and even board members, were skeptical that the store would ever open. “We had our dark hours,” said Mr. Brown, the treasurer.

THOSE have been dispelled, for now. The first day, the store rang up $7,000 in receipts. Not surprisingly, underwear was a big seller.

“This is cool,” said Diane Kelting, who was waiting in line to buy a gray poly-rayon cardigan ($36.99) and a “hard to find” bra. “I have two young daughters and I can bring them in here now rather than shopping online,” added Ms. Kelting, who is not an investor in the store.

Heidi Kretser, who also attended the opening and is an investor, said online shopping had drawbacks. “Nowadays you don’t even know if the reviews are genuine. If I can actually see it and feel it and talk to someone about it, it just makes for a nicer shopping experience.”

For Ms. Kretser, a coordinator with the Wildlife Conservation Society who grew up in the area, the store is about more than convenience: “I’ve always loved the idea of thriving hamlets throughout the Adirondacks, and part of that is healthy downtowns.” Like other residents, she would sometimes drive the 50 miles to shop at the big box stores in Plattsburgh, “which could be Anywhere, America.”

Big boxes may offer a wide variety, she said, as her daughter Leena selected some pink yarn and buttons and her son Owen ran over clutching a knit animal hat. But “the size is not compatible with communities like ours,” she said. “And money does not stay local.”

And profit? “If we end up with a profit that’s another perk, but we’re in it for the community,” Ms. Kretser said. The Saranac Lake Community Store and others like it reflect a growing shift among some communities to lessen their dependence on global businesses and invest their resources in homegrown enterprises that contribute to the welfare of the community. These efforts flow from studies showing that, dollar for dollar, locally owned companies contribute more to local economies than corporate chains. That is because more money stays local rather than leaking out to a distant headquarters.

In a recent analysis of nearly 3,000 rural and urban areas across the United States, a pair of Pennsylvania State University economists found that the areas with more small, locally owned businesses (with fewer than 100 employees) had greater per capita income growth over the period from 2000 to 2007, while the presence of larger, nonlocal firms depressed economic growth.

“There is definitely a trend towards community-rooted alternatives,” said Stacy Mitchell, a senior researcher at the Institute for Local Self Reliance, a nonprofit research and educational organization. Citing the Occupy Wall Street protests and Move Your Money campaigns, she said, “More people are interested in taking the economy back.”

Cooperatives — nonprofit businesses like food stores and credit unions owned by and run on behalf of their members — are one common manifestation of the trend. In a co-op, each member gets one vote, and excess revenue not reinvested in the business is distributed among members either as rebates or, in the case of credit unions, lower fees and better interest rates. In the United States, a University of Wisconsin study estimated, there are more than 29,000 co-ops generating $654 billion in revenue, and the number is growing.

Community-owned stores are not as well known and are structured as profit-making corporations, but the aim is the same: to keep ownership and control in the community, and to share the prosperity.

The Saranac Lake Community Store is a C corporation, the typical big business form, but the resemblance ends there. If and when there are profits that are not plowed back into the store, they will be distributed to investors — many of whom are also the store’s customers. The store’s three employees are paid a modest salary, but one that is above average for the area, and receive health benefits and paid sick days. “That was very important to us,” said Ms. Little, the board president.

THE store’s planners sought advice from residents and merchants to determine what was most needed — an effort that continues. Under the title “product offering suggestions,” on a notebook placed near the store’s checkout counter, shoppers had scrawled “larger hats and gloves,” “watchbands” and “women’s flannel-lined jeans.”

The planners also tried to avoid competing directly against local merchants, who mainly line half a dozen blocks along Main Street and Broadway. For example, the store offers a limited shoe line, since there are shoe stores in town, and sticks to brands like Minnetonka moccasins, once made in nearby Malone and not carried elsewhere in town. The strategy appears to have won over local merchants. The Coakley Ace hardware down the street offered the store discounted paint and supplies, while the nearby Rice Furniture provided carpet at cost.

“I’m of the belief that if you have more offerings in the community, more people will view it as a place to shop,” said Pete Wilson, owner of Major Plowshares, an Army-Navy store in town. “It’s giving people more reason to stay downtown, and that should benefit other retailers.” He bought a share, along with one for each of his two daughters.

But community stores are not for everyone. Even with the backing of a local bank and economic development corporation, organizers of a proposed community store in Greenfield, Mass., returned $60,000 to investors this year after concluding that it would be difficult to raise the remaining money needed.

And there is no denying the challenges of competing with mega-retailers whose scale and clout give them enormous cost advantages. Craig Waters, Saranac Lake Community Store’s general manager, has had to be creative, stocking American-made products as much as possible and paying reduced prices for merchandise that has not sold at brand-name stores. Mr. Waters, who lives in Lake Placid, also relies on longstanding connections with suppliers. He worked for decades as a buyer and manager for May Department Stores, which merged with Federated Department Stores, now Macy’s Inc., in 2005.

The prices appeared reasonable. Brightly colored rubber rain boots for children were $16.99; women’s all-cotton sleep pants and tank top (in a moose print) were $19.99 and $12.99. A waffle-knit, fleece-lined men’s hoodie was $59.99.

The Saranac Lake store is off to a strong start, although the trick will be to keep people coming back after the holiday season — and the novelty — have worn off. “We had a lot of people saying it wouldn’t work — and it might not,” said Mr. Wilson, the owner of Major Plowshares. But its existence could set an example for other disenfranchised communities and perhaps prompt shoppers and residents to think about where their dollars go.

“Most people are coming in to pick up some thread or clothing. They’re not coming in to get a political lesson,” said Mr. Pitts, the Syracuse lawyer. “But it’s nice to have a place that you can point to as an alternative.”

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