Thursday, March 5, 2009

The Name of the Game is Change in Real Estate

Change is the name of the game here in California's Central Valley. And after reading the paper today we may be stuck with it for a while. See Modesto Bee article: Housing programs could have little impact here The reason why the program will not help the central valley is the big price drop. The median price in the Central Valley has drop over 50% from its high. The Government's plan only deals with payments not values. So hundreds if not thousand of people who are upside down have to decide if it is worth the wait and continue to pay a large mortgage on a property that is worth 50% less than when they bought. Most people are going to walk away. One home owner I spoke with has a $500k mortgage on house that they purchased for $700,000 in a neighborhood with house selling for $200k. There is no incentive to stay. Well a foreclosure on your credit report is bad, but there will be so many people in the same boat that the credit market will have to adjust.

So what does that mean for us investors. We have to buy better and better, translation lower and lower price. As long as we have foreclosures, the median price of homes will continue to drop so the banks can sell their properties. Couple that with the unemployment rate and you have a lot of change. But that is exactly why the market needs investors. It needs individuals who will take the risk to buy the properties, rehab them and sell or rent them to people. In fact there are going to be a lot of people who had adjustable rate loans that will need to rent. Better yet - do a Lease Purchase Option and you begin to restore their dignity and self-worth of former homeowners who lost everything. While giving them the chance to owner a home.

That is why Countrywide's new policy on not allow a purchaser of a foreclosed home to resell it in the first 30 days puts one more roadblock in the marketplace. I know why they did it (fraud being a big part of it) but to throw a large wet blanket on a complicated transaction does not help the situation. What should you do? Get all the private money you and go buy foreclosed homes from banks and lower prices so you can Lease Purchase Option them. That is what we are doing.

If you have the money but do not want to go through the process of buying, rehabbing and renting then email us. We can handle all that for you and give you a good return that is secured by the property. We are always looking for private lenders.

See Ya,

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