I can only tell you what’s happening in MY market. So here goes…
I’m in the Southern New England, the rental market is actually depressed up here. Homes that would have SOLD in a normal market are being rented. This adds to the available rental inventory and actually has caused rents to fall. We also have another issue here that I would STRONGLY suggest you look at in your local market. During the BOOM years we had BOAT LOADS of condo projects built. A lot of these projects are complete or nearing completion.
The original idea was to SELL these condos, THAT ISN’T HAPPENING!! So they too have been added to the rental inventory.
How bad is it??? The median price for a single family HOME (3 bed /1 bath, in a decent neighborhood) is around $230K here. You can RENT the EXACT same house for $1200/MONTH!!! Think about that…NO TAXES, NO INSURANCE, NO MAINTAINANCE, AND…Your rent is about half the monthly payment compared to a mortgage. The theory that Landlords are going to be stuffing their mattresses with money during this down turn is NOT the reality up here.
Let’s step back here for a moment…we have FALLING home prices, a economy in recession, tighter lending standards AND THE MOST IMPORTANT THING…Everybody who COULD buy a home, HAS bought ALREADY!!!
I know, I know…there’s always NEW blood in any market but the reality is…
If you couldn’t get a mortgage 3 years ago when the banks were literally THROWING MONEY at home buyers, you sure as hell ain’t getting one now.
Another interesting fact…as these people lose their homes most of them STILL have JOBS. The foreclosures are a result of housing prices falling and ARM mortgages RE-ADJUSTING and people being so upside down they just walk away.
Want to get RICH off of this???
Here’s what I’m doing and why…
I am now a BANKER!!! Never thought I’d say that…
Think about it…These people lost homes because they used the WRONG financing at the WRONG time in the market cycle. Some of these people actually make good money. When their $1700/month mortgage TRIPLED and the house they purchased for $300K is now worth $220K they WALKED. What other alternative did they have at that point??? Can’t afford the mortgage, can’t refi because the house won’t appraise. I’m not saying it’s right, I’m just stating THE FACTS!
If you can buy houses in your area for 40 cents on the dollar DO IT and BE THE BANK. This is a CASH COW!!!
Here’s an example…
I bought a 3 bed, 1 bath ranch house for $45,000 CASH, I put $10,000 into it so my total is $55,000. the house is worth $195,000 but buyers are having a tough time getting financed. So I BECOME THE BANK. I require a $10,000 down payment They pay 10% interest on the mortgage and the house is THEIRS. The payment is fixed at $1624/month (10% for 30 years)
or $19488/year or $584,640 over the life of the loan to ME (so in a little over 2 years ALL my money is out!) Because THEY owen it, THEY pay the TAXES and INSURNCE. I do carry a small catostrophic loss policy on the home to protect me ($300/year) And if they don’t pay I FORECLOSE and do it ALL OVER again. I fund this by Flipping some of the houses I buy and that provides funding for THE BANK OF PETE. BEAUTIFUL!!! A few more (I have a few already) of these bad boys and I’ll have a $200,000/ year income as a BANKER!!! WOOO HOO!! And my high school teacher said I’d never amount to anything!!!