Bloomberg: (TODAY) Foreclosures jump 87% as lending standards tighten

General Real Estate Investing
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U.S. foreclosures jumped 87% led by CALIFORNIA, FLORIDA, OHIO, and MICHIGAN!

The article goes on to explain that this is not limited to just sub-prime, people who took these interest only, teaser intro, and even ARM’s are being forced into foreclosure because property values are falling and lending satndards are tightening. (can’t borrow $300,000 on a house now worth $250,000)

DUH?? Ya Think??? Who didn’t see this coming?

I know you guy’s are getting tired of the negative posts so I’ll put a positive spin on this one and let you in on a secret…

All you have to do RIGHT NOW is postion yourself for what IS HAPPENING! Think about it. Market forces are converging and the results will be the GREATEST buying opportunities you my ever see.
NOT NOW… But in the next few years…BUILD CREDIT AND CASH!!!

I have to admit it… I’ve been using this forum for a little experiment over the last 6 to 9 months. The theory is until SENTMENT changes we haven’t hit bottom. As we all know the best time to REALLY start buying ANYTHING is when NO one wants it anymore. In my opinion “sentiment” is still too positive for a really strong buy signal.

Now-a-days when I post these statements, which all come from major news sources, I get about 30% to 40% of respondents telling me I’m nuts, too negative, not in MY market ect. But I will tell you this…9 months to 1 year ago when I first floated the idea that we could be headed for an unprecidented market EVENT and a crash in real estate prices, about 80% of responders thought I was nuts/wrong, that number has dropped substantially.

What we’re all seeing here is people’s feelings about the market, it’s how they process information. Look at this site, there are STILL TON’s of new people out there who “Want to get started flipping, need to learn” Man, I’d like to get started learning how to be a Fighter Pilot but I’m 42, it’s a little late. Just like it’s a little late in this cycle to start flipping houses with NO EXPERIENCE.
Let me say right now that you have to start somewhere and you CAN make money in any market. But…I read some of these posts and it’s like watching people being thrown to the lions.

Prediction…when we start seeing more questions like "just bought a flip, can’t sell it, now what? or ARM kicked in can’t afford it, need advice? we’ll be closer to that bottom. Those questions are starting to pop up now in ever increasing numbers. Compare that to 1 or 2 years ago.

In the long run this is actually a good thing for our business, it’s unfortunate that a LOT of people will get hurt learning some tough lessons, but in the end THEY too will never make those same mistakes again. It’s called Capitalism folks, it’s as beautiful as it is ugly.

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What surprises me, is that we’re still seeing so many commercials for those teaser rate loans. Quicken is all over TV offering a $150,000 loan for $450 per month. That’s less than half of the interest, meaning that you’d have a negative amortization of about $450 - $550 per month. When the mortgage adjusts, your payment would more than double! OUCH!

Mike

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When you first started posting this stuff I publically said I didn’t think it would be as bad as you were making it out to be. Since then I’ve been following what you’ve been posting and every day my outlook gets bleaker. I’ll admit that I was wrong back then, I have no problem admitting that.

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Not to mention getting farther upside down on a monthly basis in an already falling market…gee hope you don’t have to sell for about 5 years or you’re SCREWED!

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Rich,

I’m wrong more than anyone I know. But I can tell you this buddy, YOU just showed the ONE personality trait that makes more sucessful people than ANYTHING else.

How many people have you seen who just CAN NOT admit they made a mistake, it’s no big deal, we ALL do it, but I’ve seen guy’s lose hundreds of thousands of dollars because they couldn’t say “I was wrong on that one!”

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After attending my local REI Club meeting last night, the consensus was that finding deals has become much easier, while finding buyers has become the more difficult part. In these times, its much more important that we buy correctly. Thin deals that may have worked a year ago are not to be considered. Increased risk means we should be working for bigger spread. Buy lower, sell lower.

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You right on the money!

Same thing here in New England, more deals, thinner margins, lower selling prices but still making money.

What I’ve been doing now is anything I can REALLY steal I hold and rent. ALL SFH’s, I had gotten out of the residential rental market a few years back but this is just too good to pass up. They have to cash flow, and be in good condition structurally because the one thing you can take to the bank is…

10 years from now 99% of Americans won’t remember this down turn ever occured. And I’ll be ahppy to sell them my “bust” houses!

Some things NEVER change. Thank GOD.

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I appreciate reading these posts since it is expert information for FREE!

I acquired 5 multi-family properties over the past year in the Boston area. They pretty much break even with rents and expenses. My original plan was to sell them as condos after about 2 years. Sounds like I’ll be better off just keeping these properties rented and wait until the market turns around again. Any suggestions would be appreciated.

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The thin deals back then would have appreciated while you were rehabbing back then, sadly those days are gone. Now its the opposite and we have to take into account prices FALLING while you are rehabbing. At this point it looks like the only thing worth rehabbing is something that is below 50 cents on the dollar.

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I’ve made more mistakes than anyone I know, I am not afraid to admit it. My ex g/f is a good example!

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I’m surprised no one has mentioned the S&L crisis back in the 1980s - or are all of you too young to remember first hand? We had a field-day then and we’re about to have another one with this subprime fiasco. Keep your powder dry, folks. The good buying times are-a-coming!

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Excellent point OLDGUY!!!

I have a theory, nothing EVER changes we just come up with new names for the same old songs.

The S&L crisis is a perfect example. Back in the 80’s you could go into a Savings & Loan and if you were one of the good ole boy’s they’d loan you $200,000 on a house that was worth about $100,000. (inflated apraisals! Now were did I just see something…nevermind) Everything worked fine initially because house prices were sky rocketing. But… as always… the party ended, people couldn’t afford these over priced homes and the S&L’s ate it. Well, actually we ate it, because the FEDS bailed them out. AAHHH, the sweet, sweet memories of home prices falling by 50%. Condo’s that 2 years earlier had sold for $100,000 were selling for $39,000 ( I know I bought 2)

Good times coming (for some)

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WoW. is that really what the S&L crisis was all about? I am 31, I remember the terms and even right now picture dudes in suits in old 70’s and 80’s styles on the news and them talking about “the S&L crisis”.

I’m in Michigan… I’m CERTAINLY getting ready to cash in! Over the next couple of years I plan to buy a LOT of properties, at very VERY good prices!! I’m not looking to be a landlord though, so I’m hoping to exit using tenant buyers, or even wholesaling in the short term. Would you say that is a soud exit strategy or do you believe that buying and holding is really the solution in the current market and economic situation here (and the nation actually)

Thanks Pete, enjoy your insights!

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Here in Montreal, Quebec, Canada we haven’t yet felt the effects of the American foreclosure fiasco.

But… with all the crazy construction of homes, the downfall of the American market, we will hit a real downswing / downturn within the next 2-3 years, maybe 4 max.

My notary/lawyer who has been in the business of closing for 50 years predicted the market will slow down in 3 years. He said the market cycles every 10 years and the past 7 years have been too good for real estate.

I personally wish it won’t happen since I make more money when the market is hot… but I will prepare for it nonetheless.

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I'm not looking to be a landlord though, so I'm hoping to exit using tenant buyers,

If you sell “using tenant buyers”, you are a landlord!

Mike

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temporary landlord.

:slight_smile:

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This is some good info
not sure where you are in New England
but I’m also in the area Petemfa and I’m right behind you

1 property little cash flow not bad and I’m not greedy ,

Now I just need to find/figure out how to multiply that to the 10th power
But I hear you loud and clear

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He’s in RI. I’m also in New England…Bristol, CT checking in.

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Boston Mass. here
:beer