You buy them cheap, you sell them fast, and you get paid
May 20, 2008
Post Tags: buying-bad-loans , HOA , home-values
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This is the last line in an article in yesterdays “Arizona Daily Star” business section titled: “Buying bad loans pays off”
Here is the senario but please note how speculative this senario is.
“The homeowner was $365,000 underwater after buying the house with no money down in June 2005, according to a spreadsheet listing about 30 loans for sale by a national mortgage servicer that Gutierrez referred to in his truck. If Gutierrez bought the note for 20 cents on the dollar, or $73,000, he could probably get the owner to leave by giving her $5,000 for moving expenses, then sell the home for about $150,000, well below even the neighborhood’s declining market value, he said. That would leave him a profit of about $70,000.”
Sounds like a lot of If’s and abouts to me. All that said it is possible and it seems this investor is making money, getting some homes off the market and out of the foreclosure lists. It also seems like Blackrock Inc. is working on doing this on a much larger scale according to the article.
Here are my questions: What happens to the other homes in these communities that now have Sold properties which sold fare under appraised value? What do you think will happen to Comparative Market Analysis in these locations when these sales are included in the analysis?
I’ve mentioned this before but want to remind readers of the fact many Tucson HOA’s passed rules stating people purchasing homes in their community had to live in those homes. Investors could not buy unless it was for their own residence. There were some very upset investors. However, the end result we don’t have subdivisions with lots of homes in foreclosure because speculators bought up a bunch of homes and now can’t meet the mortgages. In hindsight this was a very smart decision on the part of many Tucson HOA’s during the height of the frantic Tucson Real Estate Market.
Maybe this will work to clear the inventories of homes on the market across the country. Maybe it will be a bitter pill which will keep the process from dragging out over a period of years instead of months.
Maybe, it just isn’t this simple with all the if’s and abouts.
The bottom line: “I like the fast nickel,” he said. “You buy them cheap, you sell them fast, and you get paid.”
