SMARTERLANDLORDING

ADVICE FROM EXPERIENCE

Foreclosure

The Autumn Leaves Mean Deals

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I hope everyone had a great holiday weekend.

As we get summer behind us and look forward towards fall, smarter landlords are also looking forward to some great end of the year purchases.  It has been my experience over the years that some of the best deals show themselves towards the end of the year.

Why is that?

I think there are a couple of reasons.

  1. People have had their property on the market for a while now, some since spring trying to hit the “peak” buying season, and have had no success.  They will now be ready to make a deal.
  2. Banks will be looking to unload non-performing assets or foreclosures.

You see, the end of the year is both a psychological and fiscal boundary.  People want to start fresh in a new year.  They want to unload things that are perhaps holding them back.  They are tired and ready to deal.

Banks and many other businesses will be starting a new fiscal year.  That means it is time to clear the books.  It is time to take those tax write offs.  It is time to move some inventory so the banker can get their year end bonus.

Basically, the looming end of the year can be a great motivator.

So what should a smarter landlord do if you want to pick up some of these deals?

  1. Get your money and/or financing in order.  You will need to be able to move quickly.  It is best to have all of this arranged now.
  2. Know your market.  You will need to know what a deal is and jump because others will be looking too and the good ones go fast.
  3. Network.  Let others know that you are in the market and what you are looking for.  Paying someone a finder’s fee is a great way to get deals.
  4. Keep a close eye on all of your sources.  Many deals are still found through the Realtor’s Multiple Listing System (MLS).  Have your realtor set up a search that will e-mail you directly potential deals.  Use key words such as bank or corporate owned, price reduced, make an offer, priced to sell, estate, etc., as part of your search criteria.

It’s September.  Time to think of the autumn leaves, football and getting a break from this humidity.  But smarter landlords are also thinking about picking up some year end deals.  Some are going to come your way.  Be ready!

What Happens Without Positive Cash Flow?

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Positive cash flow is king.  If a property does not produce positive cash flow, then don’t even think about it.  Without positive cash flow, you are doomed to failure.  Eventually, the bills and the expenses will mount up and you will be writing a check every month just to keep the property afloat.  A lot of people cannot do that.  They have or will run out of money.

What happens then?

Repairs stop being made.  At first it is little things.  Apartments are not repainted.  The property begins to look worn out.  Soon it turns in to major problems.  Roof leaks continue to leak, air conditioning fails to cool, the dead refrigerator is not replaced.

Next, good paying tenants start to leave.  How long would you put up with a leaky roof?   No AC in the summer? I am out of here!  Bills continue to mount and now less cash is coming in.

Perhaps then the owner begins to take in a lesser quality tenant.  They may or may not pay.  They definitely will be dirty if not trash the place.  They will drive any remaining good tenants away.  They will likely leave in the middle of the night and stiff you on rent.

At this point it is unlikely that the owner can even get tenants in the property.  It sits vacant or nearly vacant.  It is not long before vandals take notice.  Copper starts to disappear.  First it disappears from the HVAC units then from the plumbing.  Now the property is truly uninhabitable.  The only people living in it are perhaps squatters.

With no money coming in foreclosure is not too far away.  The property has become a distressed property.  Smart investors have been watching this property for a while.  They noticed when the current owner paid too much.  They have watched the property slowly deteriorate.  They know that a potential deal is now available because someone bought without positive cash flow.

Think the above does not happen?  It is how I have bought many of my properties.  Stay tuned in the future as I write about what to watch and look for and how to pick up some of these properties yourself.

Chruch Foreclosures Soar And Other Real Estate News

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More than a 1/3 of all home sales are now foreclosure sales.

Even churches are now not immune from the real estate crisis.

 

 

 

 

 

Investors are buying up all of those foreclosures, because the prices have dropped by half since 2006.

Here is a very smart 14 year old.  Where would I be today if I had started investing that early!

 

Real Estate News – February 17

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It appears upon closer inspection that the robo-settlement is just another tax payer bailout of the big banks.  See here and here.  I can’t wait for the spin on this one.

With their latest bailout under their belts, banks are beginning to foreclose again.

Housing starts were up!  That sounds good if you only count the past couple of years.

Think we got problems?  Check out this ghost town in Spain created by their own housing bubble bust.