Foreclosures - how to play the game?

[holden125]

Originally Posted by DonnaReed

ON FORECLOSURES

In this market, I would not buy anything, including foreclosures, which by the time you remodel and/or repair (in most cases) are market value in a terrible market.

There is a lot of truth to this. In the mid-90's a friend of my uncle's bought two Gerritsen Beach bungalows on foreclosure, I think for a combined 130K. As people said above, it's sight-unseen. He also had to pay cash. Since he was a small timer, that meant a loan at a fairly high interest rate. He hired my uncle to fix them up and that was an intense time since he wanted the work done fast. These places were small, tiny LR and two small BR, and he spent almost 60K fixing them combined. Gutted everything. So it was about 65K each for the houses, another 5K per house on interest since it took a while to fix and sell, and 30K per home on repairs. That's a total of 100K paid per house, and he sold them for about 135K each. He spent 200 and made 270, which was not bad. He was also lucky b/c there was no issue getting the previous owners out. But the market was rising then. Market value on comparable places was maybe 120 when he bought and it went up to 135 in the six months before they sold. If it had gone down 20% he would barely have broken even. And there are a lot of predictions that things will go down 20% or more around here, though I don't expect 50% either in most areas.

[Wild Style]

seventh

This is from the 90s but it is the same thing that is happening now with real estate. You should read it because the second page talks about foreclosures and some of the things involved in it.

link

[Guywithacause]

Thanks for the great link WildStyle..It is important to inform people that what is happening in the RE market is not new to the city, it is just a cycle we are going through. I don't believe the decrease in RE pricing will be significant to make a real difference in affordability. At the end of the day, demand to live in this city continue to escalate, rents are high and going higher, and the decrease/softening in prices will only lead to slightly less unaffordable homes, NOT more affordable homes...there is a difference.

[SeventhFloor]

thanks for all the contributions.

[Wild Style]

Originally Posted by Guywithacause

Thanks for the great link WildStyle..It is important to inform people that what is happening in the RE market is not new to the city, it is just a cycle we are going through. I don't believe the decrease in RE pricing will be significant to make a real difference in affordability. At the end of the day, demand to live in this city continue to escalate, rents are high and going higher, and the decrease/softening in prices will only lead to slightly less unaffordable homes, NOT more affordable homes...there is a difference.

I don't agree in the home prices decline. I believe it will be significant. Inventories are piling up, NYC is not immune to this because homes are not inelastic. But we shall see what happens. Interesting times, indeed.

[dolphin13]

Great post. I am so glad i read it before going out and trying to purchase foreclosue homes thinking i will get a good deal. I recently became a sales agent in new york and wanted to go back and get some training in loans and foreclosing. What do you think?

[Wild Style]

dolphin

the amount of foreclosures going on around the country (most of which will be resetting from 2008 all the way to 2010) it would be a good look for you. And yes, NYC is no exception. We are just in the warm up game for foreclosures right now, everyone is focused on the sub prime loans. The prime exotic loans haven't even reset yet, so now would be a good time. Good luck.