Real estate investment firms First Capital Funding and Principals Capital Funding are making a play in the multifamily sector by purchasing and redeveloping REO and foreclosed properties in Texas as banks shed distressed assets. The Austin, Texas-based firms are currently involved in debt and equity deals involving properties worth $39 million. The companies said the transactions signal recovery in the debt and equity markets. "If the economy improves, the asset values improve," said J.P. Newman, founder of both firms. "If the economy goes down, then we're well positioned by owning assets that provide housing at a reasonable price-point. Banks are saying no to too many people these days – and our goal is to offer a solid alternative. At the same time, individuals are seeking investment models outside of the stock market." Newman's companies, in conjunction with venture firms, are financing construction of a new 240-unit apartment complex in South Austin called the Retreat at North Bluff. The firms are also funding refurbishment of an 810-unit complex in Houston that has been foreclosed; and acquiring a 200-unit complex in Garland, Texas, which has been foreclosed on, as well. In the past six months, First Capital has provided $4.2 million in short-term financing for six other multifamily projects across the Lone Star State. Write to: Kerri Panchuk.