New Opportunities In Real Estate Investing

The latest events on the real estate investing, regarding the major lenders like CountryWide and Thornburg Mortgage and the change in liquidity for mortgages have created new opportunities for savvy investors. There is a lot of talking about all the bargains to be found because of the rising number of foreclosure home and properties that excess inventory. It is a fact that sellers are starting to lower prices and thus, bargains are showing up. It is believed that larger discounts are to be expected within the next 12 to 24 months. However, here we will talk about another opportunity.

This great opportunity is on the backend when you sell the foreclosure home or property. As all the lenders are putting their activity on hold, it is time for you to step up and offer financing to qualified buyers. Don't make the mistake and think I'm talking about those with “C” and “D” credit ratings. There are also buyers that have great credit scores and are getting turned down just because the underwriters are drying up. Also, the remaining lenders are asking for hefty down payments of at least twenty percent.


The new real estate investing opportunity today is to attract the buyers with great credit scores and get at least ten percent down payments, take back a note of eighty percent at seven percent or higher and then take back a second of ten percent at a higher interest rate like nine percent or higher. Of course, you need to factor in the credit score and do your best to adjust the rates accordingly. Thus, buyers will be much easier to find and you will be able to upload your foreclosure home and properties a little quicker. Don’t be surprised if you find buyers with decent credit scores who were refused credit.

AS the sub-prime lenders are gone, if you want to fund the “C” and “D” credit buyers, you can
find an even larger pool that is seeking for financing. While you are buying the bargain as foreclosure home on the front tend you also need to develop a system in order to start funding your buyers and generate large amounts of cash. This is one of the greatest opportunities in real estate investing and you will end up with selling properties faster and creating some excellent returns.

A common mistake a lot of new investors make is that they choose the wrong price range for foreclosure home to retail. If you buy homes at the wrong price range, you end up holding them a lot longer or you won’t be able to sell them at all. A retail buyer is someone who can get approval for a new loan and buy your property for full price. There is large number of such buyers that are less selective and eager to buy. In most real estate investing markets, the best deal is the blue-collar price range that has homes from 15 to 35 years of age and most fixtures and features are outdated. If you update these older foreclosure homes and buyers compare your homes to standard homes in the same price range, there is no competition as buyers are getting similar or the same amenities at higher prices with the new homes.

These so called blue-collar homes usually start selling at 50% of the market’s median price. Thus, if the market median price is $140,000 the blue-collar homes would start at $70,000. If you want to sell your homes, you are recommended to stay above $70,000. Anything below the 50% of median price is a rental or you will need to look for owners who are willing to finance the property. This happens as the buyer cannot obtain financing or they do not have income to support the blue-collar homes. If investors make this critical mistake of renovating a home in the wrong area to retail, the home will eventually be rented out, sold with owner financing, sold to a landlord or will be lost to foreclosure.

By: Ken Wilson

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The real estate investing market has suffered dome critical changes in liquidity for mortgages that have created new opportunities for savvy investors who are seeking for the bargains available due to the rising number of foreclosure home and properties that excess inventory.

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