BuyNowHardMoney Blog

Last night at a meeting of the Boston Area Real Estate Investors Assn, one of our attendees was an Asset Disposition Manager who works with large lending institutions in disposing of both “tapes” of properties, and individual REO listings.  She was adamant that many of the foreclosures across the country have been put on hold, both by lenders and by governmental mandate, causing a temporary shortage of available REO investor properties - we’re not talking the “pretty” properties that might be bought by an end buyer necessarily, but the investor properties needing significant work.  Although I’m sure her comments are probably accurate for both types of properties.  This “hold” is creating a backlog of properties not yet acquired by the institutions, and certainly not yet on the market to resell.

 Anyway, because the investors perceive this is a great time to buy when the market is flooded with foreclosures, in fact there are fewer properties than buyers, creating a temporary sellers market.  She warned about bidding up the prices, and made us know that this is quite a short term situation, and that a flood of properties is still slated to hit the market.  So what is currently a sellers market in REO’s is going to turn into a buyer’s market again.  We haven’t hit bottom and started up again, it is a false bottom.

 Buyer beware, don’t pay too much!  Sometimes the best deal is the one you walk away from.

I read once that the single biggest influence on real estate investing was legislation:  The Tax Reform Bill of 1986 that changed investment property depreciation is said to have caused the next real estate crash, because everyone had bought properties with negative cash flow because of the tax write offs.  No tax write offs, no wanna.  A flood of properties hit the market – well, you get it.  You couldn’t give them away. 

Post 9/11 reductions in interest rates were intended to stimulate the economy, which had come to a screeching halt  after the terrorist attacks.  Add that to the Clinton era mandate to make loans to people who had previously not qualified, and you have a whole large group of people who couldn’t buy a house before, suddenly qualifying way beyond their means.  Why didn’t we see what could happen?  Seems pretty obvious after the fact.

Now a bill is headed to the senate with potentially far reaching consequences to the real estate investor community.  By the time you read this, it may have passed or been defeated.   It’s impact is up for debate:  Vena Cox-Jones says it will spell an end to creative real estate investing – Bill Bronchik says that we should be complying with all of these guidelines anyway if we sell houses on owner financing.  That’s not the point of this article. 

My point is that if we don’t stay informed, educate ourselves and make our voices heard, then we’ll wake up one day wondering why something is the way it is and blaming everyone but ourselves for letting it happen.  I’m guilty of this myself, since I’m the least politically inclined animal on the planet.  But making your views heard is pretty much like voting:   If you don’t vote, don’t complain.  And if we’re not careful, we’ll wake up one day with no creative real estate investing.  So read, learn, educate yourself, make your voice heard, and don’t wake up saying Huh?  Wha’ happn?