Jun
9

New Real Estate Trends Provide Tremendous Opportunity

Filed Under Real Estate Investing 

It was the best of times, it was the worst of times.

Opportunities abound and if you watch and believe the news you should go out and buy your cemetery plot and check in early.

Statistically the hardest hit areas are California, Florida, Nevada and Arizona where prices shot up during the housing boom and are now returning to reality. In these markets foreclosures, REOs, vacant new homes and other distressed properties lead the charge for great deals and falling values. Living in Arizona I know the reality of the markets very well!

A relatively new trend for REO properties offers huge opportunities for investors and homeowners; Many banks are setting the property prices extremely low to generate interest and create a multiple offer bidding wars. Houses that sold for $350,000 two and three years ago are going to market for $175,000.

“It’s not uncommon to have 10 to 20 offers on one house, and for the house to end up selling for more than its market price,” said Erin Attardi, a Sacramento Realtor. The strategy, she said, allows the bank to be selective, picking buyers with solid financing or those able to pay in cash.

Same goes for short sales. Many lenders are encouraging extremely low listing prices and in some areas buyers are getting frustrated because the low price attracts multiple buyers and a bidding war. Imagine wanting to buy a house in today’s market and being beat out by a higher offer in a bidding war. It’s happening every day!

For those who follow my writings you know I’ve long said we do not have a housing slump, the problem has been artificially created by making it very difficult for buyers to get loans. Once the financing is made available to the masses the markets will “bounce back” very quickly.

Note: Imagine being the new President and taking over the presidency then putting a program in place that returns financing to the masses where 95-100% loans were easy to obtain. The housing market would recover overnight and the President would be the hero for saving the economy. The housing market leads the American economy and when money is pumped into houses everyone benefits financially.

If you want to buy bargain properties the time is now! In a report by Fitch Ratings last month they stated lenders lose an average of 56% of a property’s value through auctions and 40% for ordinary sales. Huge losses for the lenders represent tremendous gains for real estate investors.

What You Should Do Right Now!

Take action. Find a realtor or resource so you can pull up the lowest cost 3 bedroom 2 bath homes in your area with over $1,000 square feet. Determine the market rent (easy for most realtors). Now compare the PITI payment of a 30 year fixed loan to the market rent. This will tell you two very important facts about the market and what you should do.

Can you tell name the two important facts? Why is this important? COMMENT BELOW.

Author: Gerald Romine

Comments

4 Responses to “New Real Estate Trends Provide Tremendous Opportunity”

  1. mosb on June 9th, 2008 4:51 pm

    1. This will tell you the cashflow that you’ll receive on a monthly basis.

    2. With the annual cashflow number you can calculate your ROI.

    These numbers are important to help you determine where you should be investing your money to get the highest possible return.

  2. Gerald Romine on June 9th, 2008 7:57 pm

    Good answers and that is half of what I was looking for.

    For cashflow you will need to include expenses(management, vacancy, repairs, etc).

    Anybody know the second and VERY important item I’m looking for?

    Hint: It’s a little tricky so think about it then give it a shot.

  3. Burns on June 9th, 2008 9:48 pm

    By learning what the market will sustain you will know the number you need or want when you go to short sell the property.

  4. cbf5500 on June 10th, 2008 3:25 pm

    Right now in Tucson rents are about $1.00/s.f. If you have a 1200 s.f. house, you can get $1200 per month. If you purchase the house for $100 to 150./s.f. you still have enough profit margin for a good cash flow.

    Once money becomes available again, people will be able to use the banks money to put them in a home they can buy with a similar payment to rents they have been paying.

    Hordes of people buying will push the per s.f. price of houses up again to $150 to$200/s.f. plus, and the cash flow will be smaller for the investor at the new market prices for homes.

    Now is the time to buy for anticipated appreciation and greater cash flow margins.

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