Foreclosure investing isn’t always about profit. Sometimes it’s about loss too.
At least that’s what a Pittsburgh area man learned the hard way when he returned from the holidays to discover that a foreclosure property he had purchased, and was renovating to move into, had been demolished by a city crew. Accidentally. This is one of those stories of events gone awry to an almost incomprehensible extent. Like a surgeon amputating the wrong limb or mistaking granny’s ashes for yard waste.
In case you’re not familiar with the particulars of a reverse mortgage, here’s how the scenario works. Often, senior citizens find themselves in the position of being house rich and cash poor, which simply means they have a lot of equity built up in their house but are subsisting on a fixed income, perhaps on Social Security, and with investments that return very little. A reverse mortgage is a financial strategy by which a bank or other financial institution agrees to pay a lump sum or monthly payments to the owners, based on the house’s value and life expectancy. In return, the bank receives the title to the house once both owners have passed away but, until they do, they can continue to live there.
If part of your portfolio is still entwined with stock investing, now might be a good time to begin making concrete plans about how you’re going to divest yourself of that asset, and don’t come crying to us next year when the situation is even worse. Given the nature of this blog, we hope we have a bunch of real estate professionals reading this who have been fired up for a while about the benefits of income property investing and to whom this warning is unnecessary, but there are always a few stragglers.
As an agent, do you enjoy banging your head against a brick wall? If so, then helping a client through the process of pricing their property so that it will sell, rather than sit on the market for years, is probably one of your great joys in life. These days, with a LOT of competition from foreclosures, it’s even more important to find a good selling price sooner rather than later. Some markets have more than a year’s worth of inventory and not nearly enough buyers to make a dent in it.
As a conservative strategy that normally generates returns far exceeding the stock market, income property investing is about as good as it gets, in our humble opinion. The basic play is to finance the purchase of rental properties with enough cash flow that the monthly rent paid by a tenant covers the mortgage payment and, in the best case scenario, leaves a little extra in your pocket too. But don’t make the mistake of thinking that this method of real estate investing is the only game in town because offering a rent to own contract to a tenant can be pretty good as well.
We’re all perfectly aware that mortgage companies caused the sub-prime meltdown all by themselves. They sent armies of loan officers out into their communities, located unqualified people who had no intention of owning a home, held them down and twisted their arms until they signed on the dotted line. As most readers will be able to detect, despite relentless rumors to the contrary, the preceding sequence of events has never been proven to have actually happened even once. Not to detract from the grievous mistakes, stupidity and outright criminal behavior on the part of America’s lending institutions, it should not escape out notice that there are two sides to a mortgage fraud.
You might say, what the heck does avoiding office nut cases have to do with selling income property? The harsh reality is that some people reading this blog work in an office with other actual human beings. Any time you have two human beings together, there’s a good chance at least one is a certifiable nut case. Add more people to the mix and the odds go up considerably. If you’re not prepared to identify and neutralize this wacko, your work life could become incredibly miserable. Here’s what to watch for:
As a professional, it’s sometimes hard to remember that selling a house is something most people do precious few times in their life, and they really don’t have much of a clue about how to “increase the curb appeal,” to borrow a phrase from HGTV. Here’s where you can step in and generate some of that all important good will from a client. Not only are you helping them get the best price they can from a house but you’re also ingratiating yourself so that if they decide to become an income property investor down the road – they’ll pick up the phone and call you.
Jason Hartman talks with Christy Crouch on The AIPIS Show. As a sales and life coach who has been in the real estate sales business for over nineteen years and has been selling an average of 100 homes per year for the last eight years, Christy will share some valuable...
The late night infomercials and real estate investing ads would have you believe that it’s an easy thing to get rich quick in real estate. Listening to them, one would think that at least a handful of millionaires are made every few seconds, especially once they’ve seen the wisdom in purchasing whatever high price seminar the “guru” is selling. If only it WERE so easy. One reality in this life is that a sure way to tell if the sales pitch is nothing more than a load of warmed over crap is a promise of amazing, immediate wealth at any point in the spiel.