The Timing Has Never Been Better!
By Uri Gofman
While it is undoubtedly a difficult period in our economy, we are currently living through the biggest real estate
opportunity of our lifetimes. The loose lending standards of recent years coupled with the looming recession has created a wave of mortgage defaults not seen since the Great Depression. We must take advantage of the unique opportunity that this has presented.
My investors and partners are regularly buying properties for 20 to 30 cents on the dollar. These are not needles in a haystack and are not difficult finds. The sheer volume of foreclosures has created a most difficult situation for the lending institutions taking back the properties. Banks are regularly "disposing" of these foreclosed assets at prices not seen since the 1970s.
The question is how do you play this market? Sure, you can buy some great deals but what do you with with them? The resale opportunities that existed just a few years ago are distant history. You have several options.
First, you should seriously consider the old buy and rent method. Look for marketplaces where your rental income can not only support the property's expenses but can also earn you a significant "
" while you sit and wait for the value of the property to recover. Consider depressed suburban markets throughout the midwest for the best Rent to Price ratios. You can easily earn a double digit annual return while you sit back and wait for this market to change. Give yourself a minimum of three years but be prepared to hold up to seven. Besides the dividend that you've been getting to pay you for your patience, you'll be looking at about another 100% return on your investment (cost of acquisition and rehab) at the resale.
Another option you have at this time is the lease option. Many homeowners who were recently foreclosed on have good jobs and can afford a significant monthly housing payment. They tend to have a homeowner's mentality and want to get back into howeownership at the earliest possible opportunity. Renting them your property with the option to purchase allows them to start building equity right away while they wait for their credit score to recover. This is normally about three years from the time their previous home sold at the foreclosure sale. Once again patience will yield you a significant profit several years down the road and you'll be paid handsomely in the interim with the income you receive from the rents.
Your last option is to attempt to resell your property immediately in the current marketplace. There is only one way to do that: You have to have the best house in the neighborhood at the lowest price. You must be the absolute best value! There are buyers out there but they're a tough bunch and they're looking for value. If you can deliver that, you will reap the rewards.
Whatever you choose to do with your acquisitions be certain that there will likely never again in our lifetimes be the opportunity that currently exists. I understand that it may be scary to
in anything at this time given the economic uncertainties, but you need to know that it is the people that act in this environment that will reap the most benefit when the markets recover. If your personal capital does not permit you to take immediate action, go to friends and family. Create a partnership that can take advantage of this. You undoutedly will be very pleased that you did a few short years from now.
Good luck and don't hesitate!
Uri Gofman Real Estate Broker / Investor 216-598-0116.