WHY WE NEED MORE INVESTORS IN THE MARKET & WHY FLIPPING IS GOOD

We need to have more investors in the market and we need them flipping properties. There, I said it. I know it won't be long until the riotous crowds start descending on me. But before they do, let me explain. Investors aren't the scourge of the earth. Well, at least not most of them. They are looking to buy an under-valued asset. No different than a stock or a bond fund. And here's why investors are helpful in this market:
1. There are hundreds of thousands of REO and short sale properties on the market. Values will not be going up until demand at least equals supply. In the ever tightening lending markets, investors fill a void by paying cash. It's very true that they may take a potential buyer out of a transaction, but that buyer should be putting offers in on multiple homes, thereby taking two properties off the market.
2. Investors buy up a lot of the very distressed (read: completely trashed) properties. These are units that, due to health and safety issues, can not be financed anyway. Investors buy these up cheap, and fix the inherent problems. At this point,the unit is now gone from total disrepair to some form of turn key for a buyer. That subsequent buyer will get into a home and not have to spend thousands doing repair work they would other wise need to. And I'm pretty sure the neighbor living next door doesn't mind a lawn that actually has grass and windows not made of plywood.
3. Investors buy/sell or buy/rent repeatedly. One by one, that gets more properties out of the hands of the REO listing agents and non-responsive banks we've all grown so fond of dealing with.
When you put all of that together,investors help stabilize the market. Since I see the agitated crowd starting to mill outside now, I will make one more point before the horse mounted,riot police descend. In an effort to quell investor purchases/flips ,FHA, Fannie Mae & Freddie Mac(the latter two having made repeated, brilliant decisions to the point of government receivership) have mandated that no property can get a loan on it if title has changed within the previous 90 days. In fact, an offer can not even be written prior to the 90th day. Hmmmmmm. That law might have worked really well 3-6 years ago, BEFORE the appreciation horse left the barn.THAT'S the time investors needed to be reigned in. THAT was the time when demand far outstripped supply. THAT'S when everyone was on Easy Street. It would have made great sense to calm the market by making "flippers" hold their investments for 90 days. But in the market today, it makes no sense. If your house is worth less that it was 3 years ago, raise your hand. 1...2...1,453,312. I count fast. The point is, why take away a tool that can actually help stabilizeand start to appreciate an asset that you are either living in, or hope to buy? I think it's time to conclude this post. It's some what unnerving to see yourself burned in effigy.

BUYING A HOME AT A COURT HOUSE AUCTION

Have you ever thought about buying a foreclosure on "the court house steps"? The process is a public auction that lenders sometimes hold at the county court house. I recently attended one in Florida. Thankfully, if was held in a nicely air conditioned room. Florida, in late July, can be a bit on the tropical (read: so humid the mosquitoes can't breath) side. But I must warn you, that road to riches is paved with some bus-sized pot holes.

I have worked with a local broker in Florida who was nice enough to take me along and explain some of the ins and outs. There were two glaring ones. The first is the property itself. When buying at any kind of auction, it is the biggest case of "buyer beware" you will ever encounter. You can be the lucky winner of a property that seems well under market. But (there's always one of those, huh?), if you don't do your homework, you may also be the lucky recipient of all kinds of previous tax liens, mechanics liens, IRS liens and various other hidden problems. You need to research these through a local title company, and possibly a real estate attorney. Then you have the physical condition of the property. Keep in mind, this is not only a home that was probably in some state of disrepair when the previous sellers left, it has sat for an extended period of time since then. Homes tend to die when left vacant. The roof, plumbing, electrical, appliances are but a few things that can rapidly deteriorate when a house is left vacant. Throw in mold, vandalism and vagrancy and you have a potential money pit.

The other gem in all this is the auction process. I was in a room with 40-50 other bidders, an interesting lot to say the least. Of all the people in the room, there were 5 or 6 "players". Basically, these were brokers that had a lot, I mean a LOT, of investor money behind them. They all know each other and, to some degree, work in concert. To say most of them were anything but cordial to the rest of the folks in the room would be an understatement. Let's just say that Southern hospitality was not a concept these folks were familiar with. So, if you as an eager, prospective home purchaser are interested in 1 or a few homes, know who you are going into battle against. You are not just bidding against those particular guys. You are bidding against them and all of their clients as well.

That is a short version of four hours spent in a public auction. There is money to be made buying property this way. There's a bunch of money there. But, (there's that pesky "but" again), if you are unfamiliar with the process, be very careful. You may end up with a nightmare instead of your dream home. Please have a look at this article. It will give you some more information: http://www.realestatewebmasters.com/blogs/gulf-coast-associates/5166/show/