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REAL ESTATE what am I missing?

camski

Contributor
Jul 24, 2007
247
97
46
Noblesville, IN
I hear a lot of the doom and gloom about subprime lenders and rising bankruptcies and the housing bubble, but for me as a beginning real estate investor it causes me to be optimistic. My thoughts are that as property values drop and more and more people lose ownership of their homes this will create an opprotunity for me to buy property at a reduced price. In addition people have to live somewhere so while many of these people are losing their homes to bankruptcy they are moving into rentals. So what am I missing lower prices on RE and an increase in the amount of renters needing housing. How is there not opportunity here?
 

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phlgirl

Bronze Contributor
Read Millionaire Fastlane
Aug 29, 2007
813
174
85
Philadelphia
The issues within the subprime/lending market have created great opportunities for real estate investors.

There are a few threads in this forum, which I would recommend reading, if you have not already:

Foreclosure Market Discussion

preforeclosure note buying thought


While the changes in the market have presented massive opportunity, it has also created some challenges. The financing of real estate, for example, has become more difficult. Most banks are getting killed on the RE portion of their portfolio, which makes them hesitant to hand out more money. It is certainly not impossible to find financing - just more challenging. Part of our business model requires that we obtain a type of financing which is tough to find, in ANY market (stated income, based on appraised value, no seasoning requirements, cash out refi).

We are still able to find it, we just that we have to look a little harder.

Sounds like what you might be 'missing' is a plan to execute, so that you might best take advantage of the market at hand. Educate yourself, ask lots of questions & I would definately recommend paying attention to Reipro's conference calls.

It is an excellent time to buy. We see more deals than we know what to do with.....so we try to cherry pick the best of the bunch, recycle the funds back out and start over.

Make sure you understand both the opportunities and the challenges, mitigate and move forward.
 
OP
OP
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camski

Contributor
Jul 24, 2007
247
97
46
Noblesville, IN
No I think you misunderstood a little bit of what I am saying. I have the plan and am working it, what I meant is what am I missing in my logic? What I described is opportunity, not just for me but for everyone, and yet the common concensus is that you should stay away from real estate. I, on the other hand say that you should be preparing to dive in due to all the bargains that will be available. Just wanting to see if most of you agree or can punch holes in my argument. As far as financing goes I deal with a small local bank(with whom I have a great relationship)a nd have very good credit history and score so that isnt a problem.
 

yveskleinsky

Bronze Contributor
Speedway Pass
Jul 26, 2007
2,233
496
192
42
What I described is opportunity, not just for me but for everyone, and yet the common concensus is that you should stay away from real estate.
The common concensus is for people buying common homes (primary residence) in common areas. Most common advice is in direct conflict with fastlane advice. This is why most people are stuck in the rat race. This advice falls in the category of turn your money over to a financial planner, invest for the long term, save and diversify.

I don't think your logic is faulty at all. I see the market in the same light, as do most other RE investors. Keep workin' your plan and keep us posted! Carpe Diem!
 

JScott

Legendary Contributor
EPIC CONTRIBUTOR
FASTLANE INSIDER
Speedway Pass
Aug 24, 2007
4,203
8,121
1,961
The question isn't whether you should stay away from real estate or not, it's where and what kind of real estate you should be looking for. There are lots of different types of real estate, lots of different ways to make money in RE, and lots of different areas you can buy RE.

Find the right type of property, with the right business model, in the right place, and you'll surely make money. Find the wrong type of property and/or the wrong business model and/or the wrong location, and you'll surely lose money.

There have been some great posts on this forum about how to make money in different types of real estate and using different business models; dig them up.
 

Adam

New Contributor
Aug 12, 2007
68
15
20
Minneapolis
Now is a great opportunity to buy because so many others have been pushed out of the "race." The issues in the credit markets have caused many investors to pull back (or go out of business) and this has prevented many from purchasing these "great deals." The really small guys can't get their stated investment property loans, the medium sized players are having their own liquidity issues and are losing their credit lines and for the really big guys, the spreads have increased on their leveraged purchases, causing them to pull out of deals because there is now increased layers of risk due to thinned profits from the increased spreads.

So many of the reputable players are out of the game and this has scared so many people. This has caused people to be hesitant of the RE market, but at the same time, created much opportunity for others.
 
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camski

Contributor
Jul 24, 2007
247
97
46
Noblesville, IN
http://hosted.ap.org/dynamic/stories/I/IN_INDIANA_FORECLOSURES_INOL-?SITE=WBBMAM&SECTION=HOME&TEMPLATE=DEFAULT

This story just illustrates what I am talking about. Bear in mind I live in Indiana.

A study by the Mortgage Bankers Association found that 2.98 percent of all loans in Indiana are in foreclosure, compared with 1.28 percent nationally.

That puts Indiana behind only Ohio in terms of foreclosure rate.

The Center for Urban Policy and the Environment also studied Indiana's foreclosures from 2002 through 2005 and found a higher concentration in urban areas. That study also found that these areas are spreading each year.
 

randallg99

Bronze Contributor
Aug 9, 2007
1,390
179
92
NJ
.... what I meant is what am I missing in my logic? What I described is opportunity, not just for me but for everyone, and yet the common concensus is that you should stay away from real estate. I, on the other hand say that you should be preparing to dive in due to all the bargains that will be available.....
YOU ARE NOT MISSING ANYTHING. YOU ARE ONE OF THE SMALL MINORITY THAT ACTUALLY "GETS IT."

WHO CARES WHY THEY STAY AWAY. THEY HAVEN'T INVESTED THE TIME TO LEARN AND TO IMPLEMENT STRATEGIES.

CONGRATULATIONS.
 

8 SNAKE

Contributor
Aug 15, 2007
239
44
25
Midwest
I'm certainly not an expert in REI, but I do have a general observation that I'd like to hear more about. I think that a lot of "investors" are eager to throw their money into REI right now because they're reading about all of the doom and gloom. When I say "throw their money" I mean it quite literally, because many won't understand REI and just assume they're getting the deal of a lifetime right now. Later, they'll be the second wave of foreclosures when they find out that they can't unload their properties for the massive profits that they envisioned when starting out.

None of this is to suggest that now is a bad time to invest. It's just an observation that I predict a lot of "investors" will lose their shirts and prices will bottom out more than once. I'd love to hear some other opinions.
 

Bilgefisher

Bronze Contributor
Read Millionaire Fastlane
Aug 29, 2007
1,849
285
73
Aurora, Co
Personally, I'm excited to start into RE right now. I figure if I can make it now, any other time will be a breeze. Screwy logic, but it motivates me.
 

phlgirl

Bronze Contributor
Read Millionaire Fastlane
Aug 29, 2007
813
174
85
Philadelphia
My apologies, Camski. I misunderstood you.

I agree with Yves and Randall - the very nature of who we are (most of the personalities on this forum) means that we are designed to think against the grain. When the general population is up in arms about the latest issue, we tend to look the other way - for the opportunity, which is often created in such situations.

Our company has definately noticed - in our local market of Northeast FL - that many of the other investors have dissapeared. We talk to our Title companies and they tell us there are very few companies who are still coming in, regularly, for closings.
 

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