Do you think the problems with subprime mortgages means major opportunities?

[petemfa]

I can only speak for my area, the Northeast.  Everything NJRE student mentions is having the following effect in Southeastern New England.

Rents in this area are failing in tandem with house prices.  There is so much rental inventory that people are TAKING OFFERS from renters. Just look at the condo projects going on.  NO ONE is buying these things as a result THEY too are turned into rentals. Do you want to compete with this stuff??? We just had a big article in the major newspaper that looked at 5 couples who were looking at renting,  they looked at 15 properties each,  they bargained EVERYONE of the owners down on rent, some by as much as 25%!!!!  The theory that foreclosures lead to better rental markets is flawed thinking in my market.  People who lose their homes are LEAVING the state.

As far as remodeling your properties.  It all depends on where you are price wise when the home hits the market.  Right now, I'm $20,000 under market on anything I retail.  That's on houses in the $200,000 range.  Even then things are not going fast, they sell, but it takes time.  It WILL GET WORSE.  I have  currently sold my LAST retail rehab.  from now on I will do ONLY handyman specials that I can buy at BIG discounts and sell at LOW prices to AS IS  buyers.  This type of home always seems to sell.  If you leave enough money on the table for the next guy anything will sell. 

At this point in the cycle it will get very dangerous.  You must buy at blow out prices and forget making them beautiful, those days are over.  Blow 'em out quick.  By doing this you compete with MUCH less comparable properties.  Even the banks are spending money on their repo's.  Don't do it.  WHOLESALE< WHOLESALE<WHOLESALE.  Let the next guy take the big risk.  If I buy a home for $125,000, clean it , and blow it out in 2 weeks to a rehab contractor for $150,000.  I make excellent money for VERY little work and risk.  Let these guys do the rehab, let them spend the time and money, MAYBE this guy makes $50,000 and thats retailing it, and doesn't include broker fees.  Now is not the time for time.  Turn 'em and burn 'em.

[NoMoneyDown]

Don't forget, China just announced a $1 TRILLION SURPLUS.  Now THAT'S scary.

[Rich_in_CT]

Don't forget, China just announced a $1 TRILLION SURPLUS.  Now THAT'S scary.

Dear China,
Can I borrow $1Billion US?

Your friend,
Rich

[NoMoneyDown]

Yeah, me too!  Actually, I was thinking about the ramifications if China were to start buying cheap RE in the US (after the bottom finally falls out here).  No need to offshore anymore!

[d_sbrown]

Don't forget, China just announced a $1 TRILLION SURPLUS.  Now THAT'S scary.

Since when have we been able to believe anything a communist government announces about itself.  How would anyone know if it was half that, twice that, or negative that number?

 

DB

[NoMoneyDown]

Based on just about everything bought today saying "Made in China", which would you believe?

[d_sbrown]

Maybe we should label that cheap real estate they are going to buy " Made in the USA".  You know,  get a little of our own back.   

DB

[timo2006]

In most instances, the homeowner has made bad decisions and is paying the price for those decisions.

Win-Win?  Not even close!

I think the win for the homeowner can be summed up this way; If they have recovered financially and can refinance, great, but most of the time, no. So, their next best scenario is to sell quickly to avoid losing their property for nothing, ruining their credit, and possibly having a deficiency judgment following them for who knows how long afterwards.  To sell it and pay off their loans IS A WIN for them when they are facing the latter.  Although they likely got themselves into the situation, they sometimes do not, they may have lost a job, gotten sick or had to pay medical for a relative which put them behind, bad things can happen to good people, I see it everyday.  Secondly, the Banks are chiefly responsible for the types of loans done to these people in many cases because they are dictating the rates and programs available, who do you think runs this country anyway?  Not the politicians, THE BANKS!  Anyway, we should approach this as an opportunity to help first, bail out second and of course, since we are businessmen/women, make money while doing it.  It's a valuable service to help homeowners either refinance or pay off their mortgage loans, even if we discount the price we offer them to do so, who else is going to help them?