Although the economy seems to be (slowly) getting better, we’re going to see an increase in foreclosures soon. There are three major reasons:
- Many people “held on” as long as they could, but just can’t do it anymore. They’ve tapped out their retirement funds, sold all the “toys,” quit the private clubs and borrowed everything possible from relatives. Winter has lasted too long, and even though Spring is around the corner, there’s no food left.
- The re-default rate of loan modifications is now topping 50%. We’ll see that climb, ending in the inevitable foreclosure.
- Cash is coming out of the woodwork to invest in real estate. Prices are low enough that investors feel they can buy with confidence. They can SEE that better times are coming, and they have the cash to take advantage of record low prices. This emboldens lenders, who are more willing to foreclose because they anticipate a ready market for the ORE.
If you haven’t started yet, now is the time to get into foreclosure investing. Got time, but no cash? Get it from partners, or transaction lenders. Got cash but no time? Find the people who have time but not cash. How do you find each other? I’m reminded of an article in GQ years ago. The title was: “How to find women.” The advice: “Read women’s magazine articles about where to find men. Go there.”