The crazy-low home prices have finally begun to lure real estate investors into the market.
Sharon Restrepo, a broker in South Florida, where home prices have dropped nearly 27% over the past 12 months, recently bought a three-family home from a very motivated seller for a mere $65,000. It listed for $195,000. She can rent the three apartments out for about $1,500 and turn a profit, while she holds on to the property until the market recovers.
If you fancy yourself an investor, the down times are when you truly make your move.
Some of these deals are not obvious. People are not necessarily listing their lowest price and your negotiating skills could come into play. No one wants to sit on inventory that is worth less than they owe. That loan is still outstanding regardless of value.
There are some companies out there flipping homes. They are getting a deal because they buy in bulk and then turn around and sell but sometimes without any improvements at all. The flipper is also buying any liens on the property but still manages to come out ahead.
Some have complained about the lack of renovation but this is how money is made. Not to mention a community full of neighbors is better than an area full of squatters and drug dealers. Home owners simply care more and take care of their community.
Some are still waiting to hit the very bottom. It is thought that there is still some falling to do. This is because there is still a discrepancy between what people are willing to pay and what banks are willing to sell for.
The lenders are holding their prices up as long as they can hoping someone will come along. Eventually they'll have to admit to themselves that buyer's will not pay it, not anymore.
But the end of the year will come, and they will still be sitting on a pile of inventory. Those properties simply cannot stay on the books through to next year. Then, game on.