Yes, that’s right it’s so T.S. Eliot out there and the turf has certainly turned arid. No more money to be made lapping at the door. Now it is a desert crawl through a landscape cactused with for sale signs. And yes, you may need a guide to get you through to the occasional oasis.
- Short Sales – This can be a job. Yes, you heard me. You can shop Craigslist, or the classified, or just drive your city streets looking for real estate for sale, especially those that are for sale by owner. Then you cold call the seller and ask one simple question. “Would you be interested in a negociated short sale?” Of course, the owner might start crying at that point, so be prepared to listen to a little pain while he or she or they try to explain their story. Be sympathetic but honest. A short sale arrangement will leave some mark on their credit but it is not a bankruptcy nor a failure to make your mortgage payment. It is a way to remove the mortgage from your debit ledger and a way to walk away from the anchor that the house has become. It costs you nothing except time as there are an array of consultants, arrangers, brokers, and downright vulture types ready to help. They get theirs from the resale of the property somewhere down the line. Now doesn’t that make you feel all warm and toasty?
- Appraisals in the new market – Face it, everything is reset. That zillow.com report you ran last fall is so not true anymore. You know this because the news has it that home prices have dropped by more than 10% since then and that’s just on average. Of course, if you had a Line of Credit attached to your property, you know this too, because those wonderful lender folks have probably reset it to $0. What, you didn’t know. Oh, that’s right because in most cases the borrower isn’t finding out unless they try to use it. On top of that, in order to get your property reappraised you will have to find an independent appraiser. Can’t have the mortgage lender do it because there have been incredible laxities in the regulation of appraisers so that the government had to step in and mandate that the appraiser cannot have any affiliation with the lender.
- Sell or holdon – Now here is where the deal gets really tight. Say you bought into this whole Kiyosaki thing. Bought into the cash flowing rental property market. Bought and bought and bought using OPM. You know, leveraged your buys so that now you are stretched across the deals like the ultimate plastic man/woman. (See reset above.) That snapping sound you hear is your own fingers as they have to let go of something because the property value you were counting on has suddenly sunk and that renter you had locked in has suddenly rediscovered the urge to buy for herself at the newly depressed but now equal to her monthly rental payment prices. Oops! So suddenly the question isn’t when can I raise the rent again? It’s what if I raise it and they go shopping? The smart owner at this point has already sent out a letter to all renters stating that the possibilty exists that they might buy from you. The smart owner is facing the fact that this downturn has not bottomed out. Those frustrated renters who have been sitting just outside the candy store window watching everyone else claim the American Dream are now girding their loins, so to speak, and becoming the new wave of home owners. That’s the real Tsunami in the room. Your bankruptees will become your renters while your frugal renters get some justice. Oh man, the free market economy may finally be adjusting in favor of the little guy.
That’s it for today. Tomorrow we will continue this journey with a look into the following water holes:
- Carry Bank Loans
- Credit Union vs Bank
- Retirement real estate and the reverse mortgage