The good news is, and there is going to be, a target rich environment for foreclosure investments. The result of this target rich environment is seen in the growth of rental properties. All these people losing their homes are going to need a place to live. They couldn’t afford to pay a mortgage but will need to pay rent somewhere. Also, Lenders are losing money or I should say this is a quasi taxpayer loss which is dragging the value of foreclosures down making them affordable as rental property, via foreclosure investors. Does that make sense?
The bad news, is if you are one of those being foreclosed on. If you obtained a mortgage you knew you would have trouble paying when the arm retracted and your interest rate shot up, I don’t feel too upset about that. It was your choice. These teaser rates are just that and fee hungry mortgage brokers who did not do the math to show you exactly what your payments would be later should be “tazed bro!”.
If you were an investor using cheap and easy money to buy low and sell high, but got caught on the high, I can’t feel for you there either. A friend of mine asked me at the Tom Thumb gas pump the other day if I was partly responsible for this mess from the investor side. I quickly said “hell no”. I burnt up my own cash for that. And, I was in and out of the foreclosure market before these “financial instruments of mass destruction” hit the market in a big way.
The good news is there are more and more efforts to help those being foreclosed upon and lenders or mortgage holders are being pressured into working with mortgagees more than they used to.
The bad news is, as the volume of foreclosures grew the value of housing market dropped almost everywhere as we all know. We still don’t know where the bottom is yet so you are still at risk as an investor (of course we are always at risk). Today we have a buyers market. The The big homes still take a while to sell which is why I would advise any investor to stay in the middle income market. In this market, you have far fewer FHAs and more conventional financing. The vast majority of this market are professionals and are much easier to get financed. And there are a lot more of them. Stay in the biggest market. You may have to do a few more deals to make the same money you could on a million dollar hay maker but you can unload them quicker.
Having said that, keep in mind the middle market in your area may be the same price point as the lower or higher end of the scale in another part of the country. It all depends upon your local market.
Foreclosure Good News - Bad News
No comments:
Post a Comment