There is a pending avalanche of foreclosures coming in the next couple of years. That is because there were many people (that should never have been homeowners) who bought houses with gimmick loans that are starting to reset. In many cases, these gimmick loans didn't even cover the interest on the loan. As time went by, the negative amortization got tacked onto the principal meaning that they are now upside down on their loans. They owe more than their house is worth and many of them are losing (and will lose) these houses when they can't afford the higher payments.
Just this evening, I met a potential tenant at my 3 bedroom house. This tenant has just lost her house to foreclosure and will once again become a renter. I've had several of these lately and they are helping to dramatically improve the rental market in my area.
In my opinion, this avalanche of foreclosures will create a great opportunity for owners of rental property businesses. The next few years may be a once in a lifetime opportunity to acquire properties at ridiculously low prices.
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2 comments:
Your last paragraph leaves me with goosebumps. I hope I will be able to pick up homes and then hold on to them for the long haul. Positive cash flow and equity. I have great credit and some money to play with but I am wondering if I should wait until it really does hit the skids.
I enjoy your postings. Keep up the good work.
Susan,
I would not wait for the bottom to buy rentals. It is extremely difficult to call the bottom and it will be difficult to buy multiple properties at the exact bottom.
The key is to buy rentals at a BIG discount to market and ensure that you have positive cash flow.
Mike
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