Foreclosures are common events in American society. During the middle of the 2007 financial crisis, the number of foreclosures skyrocketed since many people were no longer able to make their monthly payments. This eventually resulted in lower housing rates because property owners were trying to boost demand for their assets. From an investor’s perspective, foreclosures are viewed as good real estate deals. Indeed, most investors imagine themselves buying houses in excellent condition at a discount from distressed sellers, and then reselling them at a profit. Yet, things rarely go according to plan. This blog is about foreclosures - how they work and what that means for you as an investor.
A statistic published by the National Association of Realtors (NAR) confirms the fact that the available existing housing market is not booming. In fact, the market was losing momentum as 2014 closed. Cash sales, mainly investors, only comprised 25% of the total sales in November. This was down 27% from October. The median housing price was near $200,000 and climbing. Investors were watching for a cost decline that could drive down prices on their existing properties. It didn't materialize. At a minimum that prevented immediate losses to existing holdings.
When it comes to real estate investment, there are many factors that should be considered before taking the leap. Investors often speak of the general economic conditions as their main impetus for investing or holding back. However, this should not be the only criteria that you work under. Demographics should also be very carefully considered. Here are three reasons to analyze demographic data before investing in real estate.
It can easily be surmised that there are definitely more than 3 myths about REI. Very likely, you've heard multiple wild tales, odd conjectures, and serious head scratchers. Once people know you are considering REI, the advice will just roll in. Depending on whether it's from the guy next door whose third cousin tried it, other investors, or even the get rich quick guys on late night TV, there are probably plenty of confusing cross signals to go around. For the sake of keeping it brief, I will confine my input to just 3 random bits of dubious wisdom making the rounds.
Successful real estate investors know that they need to re-evaluate their strategy regularly. That strategy, however, is founded in a solidly constructed investment philosophy. Knowing what you need to do to withstand the ups and downs of the market is key. Keeping a reasoned and consistent outlook on where you want to be and how best to get there is the substance of that philosophy.
Wholesalers, flippers, and sellers. Oh, my. Anyone considering real estate investment (REI) needs to research the various avenues used to create a successful business. Get to know the business from others involved. Talk to agents. Discuss options with lenders, both standard mortgage and hard money. Remember, you are looking at being a business professional, creating profitable deals for the seller, the rehab flipper, or general investor, as well as yourself.
Real Estate Investments are tricky things, and while a property might seem like the perfect investment, given the rate of market growth in an area, the equation isn't as simple as, "Will the value be greater in a year?" So…..When Should You Walk Away from an REI Deal?
Real estate investment wins or loses by the numbers, specifically by key ratios. Metrics like monthly rent as a percentage of purchase price, cash flow per rental unit, and debt coverage ratio give investors a road map to REI success and, sometimes, a red flag signalling potentially disastrous deals.
Non-professionals can effectively tackle many home improvement projects with basic knowledge, a little research, and the correct tools. However, some jobs are best left to a licensed contractor in order to achieve the best results possible.
For real estate investors, pre-foreclosure or short sale listings are a potential gold mine. The owners of these homes are often in serious default and they desperately need to sell fast. Homes that fit this category are plentiful and a savvy investor can score some incredible deals. Here are some tips for investors on how to find and navigate a short sale.