As foreclosures were just beginning to grab headlines, various investors and real estate professionals began to approach banks for their lists of "REO properties". ["REO" is an acronym for "Real Estate Owned" by banks and other lenders. In other words, REO properties are homes that have been foreclosed and repossessed by banks.]
Early on, when the banks supplied these REO properties lists (also known as "tapes"), they also provided the prices that they would accept for these homes. There was little negotiation at that time, as the banks simply weren't willing to drop their prices much below the loan balances owed on the original loans. So, in the early stages, making an REO or foreclosure property investment was a difficult process and was typically done on a local bank-by-bank, home-by-home basis.
That all changed when foreclosures began to sweep across the U.S. like a tidal wave. Today, banks are literally being inundated with mortgage defaults every week and have become much more aggressive in seeking means to cut their losses and unload their growing inventories of REO properties. This is because it costs money to hold onto a house with no payments coming in. The banks still have to continue paying maintenance expenses on every one of these homes (insurance, taxes, utilities, gardening, etc.). As a result, they have become much more willing to negotiate and accept lower prices for their REO properties -- laying the groundwork for a "perfect investment storm" for savvy investors. (When all of the necessary ingredients come together simultaneously for an extraordinary event.)
As the foreclosure situation has escalated from being a "problem" into a "crisis", a select group of people will capitalize on this extraordinary financial opportunity in the midst of all the chaos. This group of individuals shares several key attributes. (Because you are reading this right now, you probably are one of them.)
The key attributes shared by this group of people are:
1. Vision: The ability to identify an opportunity while the masses see only calamity and confusion.
2. Strong desire to be successful: These folks are driven to have more. They are highly motivated to succeed financially.
3. High tolerance for "educated" risk: These folks are risk takers, but not "blind" risk-takers. They make calculated risks, but they don't over-analyze the opportunity until it's too late either.
4. Courage to act: To quote General George S. Patton: "A good plan, violently executed today is far and away better than a perfect plan tomorrow." Nothing happens if you don't take action. These folks, after identifying and assessing an opportunity, take swift and decisive action.
It is a fact that more millionaires came out of the Great Depression than went into it. Many of the richest people in the world today, made their fortunes when the economy had hit rock bottom. These people recognized the fact that real estate, stock markets and economies are all cyclical in nature. They shared the same four key attributes listed above and they took swift and decisive action. The question is: "Will you?"
What makes this opportunity a "Perfect Storm" for investors?
Two important realities that are public knowledge regarding residential real estate in America today are:
1. There is a glut of homes on the market right now in many areas of the country. In other words, we are "over-built".
2. The U.S. population is projected by the United States Census Bureau to grow +29% between the years 2000-2030.
What does this information tell us?
First, it tells us that we currently have more homes available than we have people to buy them. Second, it tells us that this is only a temporary situation.
How do we know that? Well, if you do the math, we are going to have approximately 82 million (that's 82,000,000) more people living in the United States by the year 2030!
And I can tell you, without hesitation, that despite being over-built today, we do not have anywhere near the amount of homes available to house 82 million new people. So, the bottom line is that we will absolutely grow out of the current "over-built" situation. The $10,000 question is: "When?"
Depending on the "expert" opinion that you subscribe to, that timing is somewhere between 2-3 years away.
Why is this relevant for foreclosure property investment today?
As long as there is a glut of homes on the market, the pressure on home prices will continue to be downward. This is basic economics:
Excess Supply = Lower Home Prices
So, let's say you are an REO properties investor who is looking to make a profit by purchasing and reselling a foreclosed home. Not only can you acquire REO properties for pennies on the dollar today, but you can be quite confident that the value of the REO properties that you acquire will appreciate within the next 2-3 years. (Sooner, in some markets.) The reason for this is also basic economics:
Increased Demand = Higher Home Prices
And this increased demand is from the 82 million new people that will be added to the U.S. population over the coming years.
Q: Do you have to wait 2-3 years to earn extraordinary profits from foreclosure property investment?
A: Absolutely not! You can profit right now if you know what you're doing and where to invest.
To learn more about foreclosure property investment and how to earn extraordinary profits right now, I suggest reading "The LazyMan's Guide to Understanding Foreclosures & REO Property Investment" available at www.LazymanCompany.com
REFERENCE:
www.johnhanlin.com/Foreclosure_Investment.html
Author's Bio
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John Hanlin is an Independent Investment Consultant specializing in high yield safe investments secured by real estate. He is a seasoned investor of over 25 years, manages the investors' website: www.JohnHanlin.com and is the author of "The LazyMan's Guide to Understanding Foreclosures & REO Property Investment" - now available at www.LazymanCompany.com
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John Hanlin is an Independent Investment Consultant specializing in high yield safe investments secured by real estate. He is a seasoned investor of over 25 years, manages the investors' website: www.JohnHanlin.com and is the author of "The LazyMan's Guide to Understanding Foreclosures & REO Property Investment" - now available at www.LazymanCompany.com
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