No condo market has been hit quite as hard during this downturn as South Florida. And no developer is more synonymous with that beleaguered market than Jorge Pérez, CEO of The Related Group of Miami.

So it came as no surprise when Pérez started a $1 billion fund to buy up some of these excess condos at distressed prices. The Related chieftain and private equity firm Lubert-Adler of Philadelphia created an investor-backed fund that will buy troubled mortgages and distressed property that range from raw land to finished condominium units in the southeastern United States.

Pérez isn't alone. Another South Florida-based developer, Sky Development, launched Sky Real Estate Fund I, a $300 million fund to buy distressed properties in numerous U.S. cities. Yizhak Toledano, founder and CEO of Sky, is leveraging personal contacts and overseas investors to his fund. The firm anticipates amassing a portfolio in excess of $1 billion of commercial and residential properties.

These two funds are just the tip of the iceberg, according to Richard Swerdlow, CEO of He sees both private equity and hedge funds jostling for position to scoop up distressed real estate.

"I think people are starting to get geared up and get the money together," Swerdlow says. "But I don't think any bulk properties have moved yet. We're not seeing the large transaction happen yet. Large funds will try to buy multiple units in the same building."

Foreign buyers, taking advantage of a favorable exchange rate, could also be formidable competitors for condos. "Interest is coming locally, but it's coming from abroad as well," says Andres Lemos, a realtor with Miami WaterView Properties.

Once these bad condo deals go back to the banks, Swerdlow thinks the well positioned buyers will be the ones who can manage the properties and close on the deals. "Obviously, Related and the larger funds will have that ability," he says. "When you have a brand name, that's who the sellers are going to make a deal with."

But it takes more than a brand name to get a lender's or developer's attention. Related brings that as well. "Their presence in South Florida is big," Lemos says. "They're a strong company and their financials are solid."