Auctionrealestatesales
Auction Real Estate Sales

Considering the fact that it was real estate that started the ball rolling toward economic disaster in the first place, its rather ironic that it is in real estate that investors really have the opportunity to capitalize on economic recession and turn what could be a potentially devastating economic downturn into a major opportunity for profit. Why? Because real estate is one of the major assets whose value is plummeting in the face of a never ending stream of foreclosures and bankruptcies, and it is real estate whose value is guaranteed to go up when the recession is over.
Think about it. Will there ever come a time when real estate isnt a desperately needed asset? Absolutely not! People are always going to need places to live and places to work, and because of that there will always be a need for real estate. Thats why a huge percentage of entrepreneurs are jumping on board the real estate bandwagon to grow wealth and increase their net worth. Its one of the only markets out there thats guaranteed to never become obsolete!
A major contributor to the current economic crises and the fact that major players like Freddie Mac and Fannie Mae are going under is the huge number of people defaulting on their mortgages. When the concept of interest only loans and other special programs designed to help those individuals who otherwise would never qualify for any type of mortgage purchase a home first came out everyone thought it was a great idea-and in many ways it was. It placed the power to purchase property in the hands of people who otherwise wouldnt have the ability to do it, and it sent banks into raptures as more and more people came to them for assistance in buying or refinancing their first home.
Then reality struck. The bottom line is that many of these homeowners werent able to get a mortgage in the first place because they didnt have the means to repay it, and while for some people the programs worked like they were supposed to (interest only loans for first time homebuyers still trying to find their niche in the workplace, for example, who later became responsible citizens and were able to shoulder the increased burden of their mortgage payment when the time came to begin making payments on the principle) others just found themselves going farther and farther into debt.
Skip ahead six months to a year, and suddenly a huge percentage of these homeowners are defaulting on their loans. Banks are foreclosing left and right, and theyre struggling to get rid of these properties as quickly as possible to get them off their records. Each property goes to a foreclosure auction, where it sells for less than it would have outright at fair market value, and the bank barely reclaims its investment.
Fast forward a little farther, and suddenly huge quantities of people are out of jobs as the economy continues to slide. You have a huge pool of homeowners whose income, once strong and steady courtesy of major manufacturers and/or the United States government, is now no longer sufficient to meet their financial obligations. They cant pay their mortgages that they took out when their resources were more than sufficient to meet their needs, and the bank has to foreclose on those properties as well.
The real estate market is plunged into chaos, property values are falling rapidly in an attempt to stem the tide of destruction sweeping from coast to coast, and clever investors are rubbing their hands together in glee.
During an economic recession homebuyers simply arent buying homes. Theyre pumping their money into other things. This inspires desperate homeowners to put their homes on the market for far less than theyre actually worth in an attempt to make a sale that will be adequate to allow them to pay off the bank and be free of the mortgage default hanging over their head.
Enter the real estate investor. They soothingly placate the homeowner, assuring them that of course theyre there to put everything to right. They contact the bank to let them know that they will be purchasing the property so that the bank can halt any legal foreclosure proceedings they may have initiated, and then they pay the happy homeowner and send them on their way, holding the deed to the property.
This process is repeated over and over again every day during an economic recession, particularly once that recession has begun to have a positive (or negative, depending on how you want to look at it) effect on the value of the housing market. Its not at all unusual for a clever investor to find a homeowner who has built up some equity in their home and who will gladly sell it for a fraction of the cost it would go for on the open market.

In dollars and cents, it means that its not at all unheard of for an investor to purchase a 350,000 home for under 200,000 during an economic recession. The value of the property has fallen so far and the homeowner is so far behind on their financial obligations that they are willing to let the property go for a song just to dodge the stigma of bankruptcy or foreclosure that would otherwise be lingering over their heads.
After the investor has the property in his hands he has a choice. He can either choose to turn right around and sell it to a rehabber or private homeowner. He can hold on to it, rehab it himself and rent it out (since affordable rental property will be highly in demand in the face of the rapidly failing housing market, with hundreds of families ousted from their homes and left to find another place to live), or simply sit and hold on to it.
As an investor during an economic recession its vitally important that you understand the basic framework of a recession. THE RECESSION IS NOT GOING TO LAST FOREVER! Sooner or later the economy is going to start getting back to normal, and when it does the value on your investment is going to rise back up. That 200,000 home is suddenly going to sell for 350,000 again-more if it happens to be in an area that sees a tremendous boom as a result of the ending depression.
That means that if you can afford to do it, the best thing you can do at this point is play a waiting game. You know the value of your property is only going to rise, and if you rehab it while youre waiting you can watch the value rise even more. Lets take that 350,000 house and use it for an example again. Lets assume for a moment that the house is sitting on a lightly wooded lot with a big backyard an easy commute away from a major, booming industrial area.
Lets also assume that the industrial area saw a major boom as a result of the ending recession, and that because of that boom property values in the area were jerked back up. That house that was worth 350,000 and sold for 200,000 is suddenly worth 400,000; however, while they were waiting for the end of the recession the homeowner also took the opportunity to rehab the property, doing some landscaping, adding a pool and a spa room and installing all new plumbing and appliances.
Suddenly that property that the investor bought for 200,000 and invested 40,000 to fix up is worth over 500,000. Even with the additional 40,000 investment for the rehabilitation the real estate purchaser is going to walk away with a tidy 100,000 in their pocket-more than many executives make in two years, and all because they were clever enough to take advantage of an opportunity when one presented itself on the back of an economic recession.
If youre looking for a way to take advantage of the recession and you have the time and the money to do it, I strongly recommend real estate. The good thing about real estate is that if you know the ins and outs of the business you can enjoy a return from this career whether you choose to think in the short term or the long term-although, for the sake of this book, Im going to encourage you to put at least a little bit of thought into the long term.
Remember, long term when youre talking about an economic recession isnt the same as when youre talking about the long term anywhere else. A recession usually lasts less than a year. A years worth of stockpiling for a lifetimes worth of profit. Hmmm

While the state of the economy has made numerous potential investors skittish, many with years of experience in real estate are bullish about today’s investment opportunities. “While great real estate investment opportunities exist in every economic environment, today it’s especially important to find niches that are low risk and more likely to bring in a higher return on investment,” says Lee Meekcoms, President of Parkbridge Capital Group (www.parkbridgecapital.com), a privately held real estate investment, acquisition, and brokerage firm. “Despite what we hear in the news, real estate continues to be a sound investment, when undertaken with the correct, risk-adjusted approach.”

Today’s oft-repeated economic narrative is that, with encouragement from Wall Street investment bankers, lenders started playing fast and loose with credit risk and mortgages, enabling an unprecedented number of Americans to buy homes at prices beyond their means. Lenders packaged and sold these subprime mortgages, allowing banks to minimize the risk and resulting in individual and institutional investors gobbling up inadequately underwritten and rated mortgage-backed securities. As mortgage defaults rose, the ripples in the economy turned to shockwaves, and the Federal Reserve had to step in as giants like Bear Stearns began to topple.

While Meekcoms acknowledges the country’s economic downturn, his 25 years of experience in the real estate industry greatly aid in capitalizing on societal trends. “One of the best bets in real estate today is the Baby Boomer side of life,” says Meekcoms. “The industry has recognized that Baby Boomers represent a huge demographic, but not all venues of real estate benefit equally from these prosperous individuals.”

Meekcoms asserts that resort and retirement communities are advantageous Boomer-related real estate investments. His company, Parkbridge Capital Group, specifically focuses on RV resort properties and retiree-oriented manufactured home communities. “We’re seeing that an increasing number of cost-conscious Boomers are tweaking the ‘snowbird’ concept, and opting to vacation or live part-time in areas that are two or three hours from major metropolitan areas,” he says. “In addition, higher gas prices mean that people are spending less time on the road and more time at their destinations of choice.”

Traditional Sunbelt destinations, such as Florida, Arizona, and Southern California remain popular, but other areas are open as well. “We’re seeing more ‘Winter Texans’ migrating to the Rio Grande Valley,” says Meekcoms, “as well as interest in summer resorts in New England, the upper Midwest, and the Pacific Northwest.”

For instance, many view Florida as pricey; Meekcoms recognizes that the state’s geography makes even inland areas appealing. “Florida is, for the most part, a long, narrow peninsula, so you can be in the middle of the state and have only an hour and a half drive to the coast,” he says. “While the property prices are higher in the coastal areas, resorts are more favorably priced in the Panhandle, Ocala, Leesburg, and areas south of Orlando, all the way to the region surrounding Lake Okeechobee.”

He notes that the return on investment doesn’t depend entirely upon the appreciation of property values. “These resorts and communities are income producing properties. Because many residents have year-to-year seasonal agreements, as demand in the marketplace increases, rents can concomitantly increase. Residents continue to receive an outstanding value, while investors get the return they seek,” Meekcoms concludes.

In the past twenty years, newly constructed communities have seen a rise in golf course property. In the past, these homes were found only in the luxury home market, appealing to the executive class. However, with an ever aging population, many affordable golf course properties have been developed to appeal to retirees. These developments are especially popular in the U.S. sun belt, where the climate is conducive for ideal conditions year around. Additionally, a golf course has also been added to many newly constructed neighborhoods that appeal to middle class homeowners.

One major homebuilder estimates that ten percent of their new construction projects are golf course properties. That number is even as high as twenty percent in Southern states, with the majority being built in Nevada, Arizona, Texas and Florida, prime retiree destinations. A change in tradition has also occurred in the types of homes being built on golf course property. Whereas golf courses were lined exclusively with single family homes, there has been increased demand to construct condominiums, apartments and duplexes to cater to the senior population. Additionally, these alternate golf course properties are very popular in the time share industry.

Golf course communities are not immune to basic economic principles of supply and demand, however. Recent reports suggest that the market may have been overbuilt in response to initial demand and golf course property has become more affordable in recent years. Developments outside of major metropolitan areas have had a difficult time luring buyers away from the city for a full-time residence. Some communities have even turned to late night infomercials to lure customers, offering free airfare, gifts, and even discounted sale prices for potential buyers.

Homes on a golf course property may include large, bay windows with outstanding views of the golf course. They may even include extra large garages to accommodate the owners automobiles and a golf cart. Some communities include, or require, golf club membership fees within the dues for the homeowners association. Golf course properties are now a lot more affordable and can be a good option for those who are golf enthusiasts or retirees who want to be near a golf course.

If you owe money and have a below average credit score you may find it difficult to get a mortgage loan. In view of these facts, you may find interest in asking a qualified real estate agent help you find a home. These agents have a database full of houses that stream from land contracts, bad credit approval, and so on. The real estate agent may help you find a home you can buy despite how bad your credit maybe.

If you have outstanding debt, the lender will inquire about your credit history and debts incurred. The lender will ask if you have any outstanding loans, and if so, what amount do you pay monthly. In other words, if you have car loans, you will need to supply the balance owed and the amount paid monthly toward the loan.

Lenders will ask about credit card debts. If you reply yes, then the lender will ask how much do you pay monthly. Overall, the lender will ask how much monthly do you spend on incurred debts that come from your pretax salary on credit card repayments etc.

You will need to answer questions pertaining to assets, which includes cash on hand. The underwriters will investigate information relating to the questions. For example, they will examine and ask, “What is the estimated amount in your banking account?” How much funds will be available in your account after you have paid closing fees, down payment costs, and other fees applicable to mortgage loans. Do you have a saving account?

The lender will ask how much cash do you intend to apply to the loan. The lender may ask also if the down payment is money coming from your pockets. If the answer is no then the lender will ask where the money is coming from…

Loan Purpose

The loan purpose is of interest to the lender. Accordingly, you will respond to questions relating to the purpose of the loan, which includes, are you refinancing a current home, or are you an innovative buyer?

Refinancing Mortgage

If you respond to the question pertaining to the loan, letting the lender know that you intend to refinance a current home with the money lent; the lender will ask, “Do you require cash at closing to repay debts? Of course, the question that follows will be, “How much” cash will you need to pay the debts in full?

Property Purpose

The lender will require information pertaining of the home’s purpose. Do you intend to use the home for work or dwelling? Is the loan intended to invest in the property?

Type of Property

The mortgage lender will also need to know if the home is duplex, condominium, or single-family housing.