Home Sales Up Foreclosures Going Up: Sunday Morning Thoughts 22 January 2012

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Home sales ended 2011 with an overall gain.  Mostly due to lower affordable prices, low-interest rates and a better outlook on the foreseeable job market.  It looks as though a real estate recovery is underway.

Homes sales were up but real estate prices were down and with the foreclosure crisis reigniting itself prices are due to go to new lows.  Many of the current sales for homes have been from foreclosures.   Short sales, once the dreaded enemy of many impatient investors is now the vehicle by which many real estate assets have been purchased and at hefty discounted prices for the more savvy investors.

So has flipping properties become a thing of the past?

Not at all flipping in a depressed market is still alive and well, and a well used strategy for many investors.  Only change has been the rules by which a flip can be done, but flipping nonetheless is still a viable practice.  Not all of the would-be homeowners will be able to negotiate with banks for a foreclosure let alone negotiate a short sale.

With more banks heating up the foreclosure pot, inventory is set to rise, more and more real estate deals will be sourced and made by savvy investors and home buyers alike.

But most foreclosures are sold by realtors.

Not all realtors can move foreclose properties, if the area is inundated with foreclosures a confused buyer may fall out of escrow on a few properties before finally deciding which property to close on.

So although the bleakness seems to be disappearing in some real estate markets, it is a matter of time before another cooling period will begin.

The Return of Foreclosures: Sunday Morning Thoughts 15 January 2012

Foreclosure is back and in a big way.

Many lenders took a lot of flack for the robo-signing of foreclosures.  But now with all the waiting and re evaluating period coming to an end, the banks will be stepping up the pace of foreclosures, thus creating a bigger real estate surplus.  All types of real estate from residential to underdeveloped land and everything between.

How will it all impact housing, buying, selling of real estate, and an investor’s bottom line in real estate?

The current buyers market will continue, but the heating up of the market will still be in the distant future due to the stricter changes in lending.

A new bottom may develop in some areas with more foreclosures due to enter the real estate market.

What is a possible strategy for buying properties in this weird market?

Being flexible.

Flexibility in your thinking of purchasing and owning real estate will be a necessity.  Buying and holding, leasing, and renting are all standards in real estate, but now the implementation of those standards will have to be examined.

Start thinking out of the box, because frankly, the box is an ever-changing structure and the rules are temporarily set in stone as we await the other shoe falling in our global economy.

But there is another question on the horizon, “What is going to happen with Fannie Mae and Freddie Mac?”

Is the U.S. Housing Market Bottoming out?

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According to Mark Zandi, Moody’s economist the current data is showing that the housing market has not hit bottom yet.  As stated in our last post, the housing market in the more desirable areas will experience leveling out after hitting the bottom, then a gradual increase which will pick up momentum.

We have not hit bottom yet but we are a little closer.  New construction of homes dropped in December, coupled with the existing homes sales rising and eminent foreclosures stalling, all this can equal home prices increasing moderately.  This is actually a false positive of a housing market recovery.

The more stable recovery is to come.

Once all the foreclosure robo-signing is sorted out and no longer favoring lender nor homeowner then the market will finally be back on track for a recovery.  Remember we spiraled into our current real estate slump with the subprime lending now it’s time to right the wrongs. 

If you are thinking about investing in the real estate market visit our website.

The Robo-Foreclosure mess and the effects on Private Lending: Sunday Morning Thoughts 16 January 2011

If you read last Sunday’s post then you will understand that the robo signing scandal has become the bane of most Banks.  Judicial foreclosures have been thrown out by Judges.  The reason, there was not enough proof on the lender’s part of owning the note; seems as though the process of foreclosure is going to take even longer.

With all the shoddy paperwork, what type of impact will this have on the real estate market?

A slowing effect on foreclosures, so basically property values should see an increase in markets that are considered desirable and a leveling in values for harder hit areas where every other house is a lender owned vacancy.  The future, the harder hit areas will become popular again as home values begin improving in the desirable areas, against the lower priced harder hit areas.  New inventory will also begin to pick up but not just yet that’s on the horizon.

How will this effect private lending?

Well not the same as it is affecting large banks.  Aside [If you buy paper from any institution then you better scrutinize the paperwork to make sure they are the current note holders among a myriad of other important things.]

The upside to the robo-signing  scandal, banks maybe a little easier to work with for short sales and loan modifications.

Private lenders will find themselves in a better investment in a shorter period of time, due to the slowing of foreclosures and the appreciation of various types of property. Even the DOW is showing appreciation in the REIT’s being offered.  In the coming months and years private lending will prove it self to be a very lucrative investment strategy in this weak yet improving real estate market.

Take advantage of the wave of our near future.

Will the Real Estate Market continue to Decline?

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We are currently in the eye of the storm of impending foreclosures.  The foreclosure pace has seen a slowing in the past few weeks and will slow even more in the coming weeks.

For November the decline was caused by the robo-signing scandal which forced lenders to slow the roll of foreclosures until they made sure all of the blank spaces were filled and all sentences made sense.  The triple checking of paperwork caused a slow down in foreclosures.  Many people on the chopping block were given a temporary reprieve.

Starting on the 20^th of December banks will get into the holiday spirit, and halt foreclosures for the last two weeks of the year.  But then promptly restart foreclosures on the 3^rd of January.  These factors contribute to what will look like a slowing in foreclosures for the end of the year, then January will see a hard spike in foreclosures due to the catching up by the banks.

What impact will this have on property values?

Property values for the end of December will flat line then in January; there will be a decline due to a housing surplus from lenders proceeding with foreclosures.  The robo-signing scandal did have a positive impact on property values.  With lenders going at a slower pace, making it appear that the overall inventory was shrinking.

Once the banks begin to pick up the foreclosure pace again we will see another decline in property values.

This is great for buyers but sellers in areas where pre-foreclosures and foreclosures are on the rise, the value of the property may suffer.

How can this benefit a private lender??

Even with a decline in property values a private lender may still make a profit in a real estate venture.  Lending on commercial property– people who have been foreclosed on will need to rent a place- or lending on a single family residence then taking quarterly, monthly, or a one time payment depending on the situation of a particular property.  So even in a down market you can still realize a return.  Visit our website to learn and possibly earn more  http://www.BackedByRealEstate.com

The Lows and Highs of ROR: Sunday Morning Thoughts 05 December 2010

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As everyone has already seen the effects of buying high; in most cases buying when things are too high.  For example, the real estate industry in most markets is now appearing to suffer from an ever-increasing foreclosure surplus.  Foreclosures are still ongoing with more being added daily, except for the last two weeks in this month.  A short reprieve for Christmas and New Year’s holidays.

But the foreclosure tidal wave will not only resume in the New Year but will also see a higher amount from the McMansion sector.  Many of the suburban areas built expensively expansive homes in out lying areas.  Many of the McMansion homeowners realized the house and the commute have become too much for them.  So the new foreclosure landslide is the luxury market as more and more people decide to move closer to work.  This movement back to urban areas is creating an on slot of lower vacancy rates in areas where work is not as hard to find.

There exists a possibility of a shortage of rentals due to older more established homeowners.  Although a “shadow” market does exist of the very same established homeowners moving away from city areas preferring something with a slower pace and less congestion; Although conveniences has always been a consideration among younger and older alike.

Now we are in the buy low phase which increases rate of return.  Now is the time to start purchasing commercial property and more specifically, apartments.  People going through foreclosure are now displaced and looking for a place to rent.  The banks ever tightening their grip on credit is also contributing to people not being able to purchase homes.  The market of renters in middle-income areas are still a viable group.  They did not move to homes, or maybe they were foreclosed upon, but all in all they will need a place to live.

Invest in American Real Estate: Sunday Morning Thoughts 31 October 2010

In the not so distant past American real estate was hitting all time highs in almost every area.  Today we are seeing all time low’s in those same areas that once had great appreciation.

 

What caused the shift you may ask?

 

Well, unless you have not been living in the country nor have an affinity for American news you would be clueless to the opportunity which awaits you.  With so many foreclosures on the horizon, housing in most American communities has before affordable and profitable again.

 

Buying a foreclosure or pre-foreclosure is one way to make money in this recovering economy.  If you were to consider purchasing a short sale, consider purchasing it all cash which gives you the ability to purchase at a lower price.   Once purchased you could either sell it for a profit to another buyer, or rent it out and gain equity while waiting out the recovery.

 

So let’s say you have a home with equity of $250,000, you could use the equity to purchase a home in pre-foreclosure or a foreclosure.  The equity usage could be in the form of refinancing to cash out or a line of credit.

 

What if you did not intend to own the property but want to still make a profit from this American recovery?

 

You could use a line of credit or the cash out to become a private lender.  Being a private lender gives all the benefits without the headaches.  You lend money; receive interest without ever having to own the property.  Being a private lender is less of a liability position.

 

But also keep in mind when becoming a private lender the money does not go in the hand of the buyer.  The money goes to escrow for a specific property.  This way, you can have your cake and eat it too, without losing in the end.

Weak New Homes Sales

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Most people would not understand that this news is good from an investor’s standpoint.  With new home sales being at all time lows, new home construction will also be at all time lows.  In fact the August sales were the third lowest level since the Commerce Department started tracking new home sales in 1963.

 

What this means foe investor’s, homes going into foreclosure or already foreclosed in strong markets will be sought after investments.  Banks are making the rules of lending more stringent than in the recent past and now people who would have once qualified will have a hard time qualifying for conventional financing.

 

In other words, this is the time to be a private lender.  The interest rates on other investments are low to almost non existent, CD’s, money markets, even tried and true stocks are having issues of less than stellar returns.  Diversifying a portfolio with real estate investments is a great option to the weak gains in other investments.

 

At this time the most viable real estate can be purchased far below fair market value.  So when considering investments and how to diversify your portfolio let us help you better understand the advantages of being a private lender.

The Re-Evaluation of Money and Mortgages: Sunday Morning Thoughts 24 October 2010

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President Obama recently asked the Bank of China to reevaluate the Yuan to raise its value.  This would help make the dollar weaker against China’s Yuan, making it easier for America to compete in the world of exporting.  The hope of this strategy is to help keep jobs in the United States instead making it more cost-effective to manufacture abroad.

Sounds good in theory.

If China were to reevaluate the Yuan to a higher value, then manufacturers would probably reevaluate the use of China as one of the many low-cost manufacturing places.  With China’s current booming economy the next back up for manufacturing has been Indonesia and Vietnam.  Companies such as Nike have already moved the bulk of their manufacturing to these countries.

So even if the Yuan were reevaluated to a higher value, this would not necessarily return manufacturing jobs to the U.S.  The cost to manufacture in America would out weigh the product, making it more expensive and harder to afford.

With the reevaluation of money in world markets, one would begin to think of the reevaluation of our current banking system.  The New Reform is slowly taking place colliding with the halting of foreclosure due to paperwork problems.  The process of foreclosure is not halting, but proceeding in court has halted to make certain all paperwork is in order.

Re-evaluating properties in foreclosure has now become more of a problem for the banks, which they did anticipate.  The investors in notes, mortgages secured by property, are now clamoring for a refund.  This is very understandable since they were promised good notes, and not bad notes.

Investing in a good note is the amount you will pay for a note that will later mature and generate passive income.  A bad note is also a good investment but from a different stand point.  An investor would not pay as much for a potentially non-producing note (bad note), when compared to a producing note, (good note).

Law suits are to be expected for the fraudulent selling of notes.  The lawsuits will more than likely make mortgage policy stricter and bolster the use of the New Banking Reform watch dogs.

So, how can an Investor profit from all this Bad News?

Well, opportunity is knocking, purchasing non-producing notes at a deep discount and acquiring the property for resale.  Purchasing producing notes, at a deep discount because other investors might not want to deal with the banking issues to come; and then profiting from the passive income generated by the note.

Stocks, and Bonds, and Mortgages Oh My: Sunday Morning Thoughts 10 October2010

This week has proven to be a time of many revelations.  The stock market has seen the dollar gain strength to only start falling short of expectations.  The Fed’s are possibly going to lower interest rates to help the slow moving economy to pick up speed.

And now President Obama has had to veto a bill that would make it harder on already suffering home owners when it comes to foreclosures.  The Senate obviously did not read the bill before voting.  As for mortgages-whether defaulting or originating -things are about to get even trickier and stricter than before.

What comes to mind, how all this will effect my investments, and is the New Reform Bill currently working?

The bill is slowly being implemented.  Keep you eyes and ears open for more updates.

The Bond market is rumored to be on the verge of a bubble about to burst.  But as you watch the video, predicting a bubble that will bust, is not as easy as you think.

Is A Bond Bubble Forming? Economist Burton Malkiel talks to Steve Forbes about the trouble with bubbles.

A final note on mortgages, as we have all heard Bank of America, JPMorgan Chase, and Ally Financial are placing some of their foreclosures on hold.  No doubt to check the paperwork.  Although halting the paperwork, will not halt the foreclosure process.  So once the paperwork is in order then the foreclosure will happen.

Many courts have been throwing the request for foreclosures out, due to multiple errors in the paperwork.  A temporary pause could cause pressure later.  Like when water is held by a dam then the dam is removed, the rage of the water causes more damage than if it were allowed to flow freely in the first place.

A false lift to home prices could happen in some areas if almost all of the foreclosures are halted for an area with a lot of impending foreclosures. If only a few are halted then the impact would be slight to minimal at best.

By no means will the temporary halting of foreclosures turn this better than buyers market into a strong seller’s market.  Instead of buyers stopping a new purchase of a home, one may want to take advantage of this new Bad News and invest through a short sale.

The lenders may be more apt to work towards getting a short sale approved instead of losing money on a halted foreclosure.