Posted by Celeste-fl on February 21, 2010 at 07:37:45:
Clearwater is close to my area. To me there is stress dealing with tenants and rehabs .With a rehab you first you have to find a deal. Then you have to deal with workers fixing it up. Then you have to find a buyer and deal with banks. Then it starts all over again.
The deal you speak of sounds good,but how much did you clear? I have had deals like that,but after closing costs and realtors fee plus minor fix up I ended up with about 7k. I love wholesale flips like the numbers in your deal. They are sweet.
The tip of the iceberg is what I called the initial meltdown in the so called housing bubble. If you hear from any Relators or people that think the worst is over and now is the time to invest, show them this, from a recognized R.E. Lawyer and investor.
There are no specific numbers on how many option ARM loans there are. But analysts estimate that as many as 1.3 million borrowers took out $389 billion in option ARMs in 2004 and 2005 alone. Many of those option ARM loans have already re-adjusted to higher payments, but more are on the way. Some 88 percent of Option ARMs originated between 2004 and 2007 are going to adjust higher between now and 2012. Those option ARM borrowers could see their housing bills go up as much as 63 percent, according to Fitch ratings. “It’s going to kill off housing,” warns Patrick Pulatie, CEO of Loan Fraud Investigations, a predatory lending audit firm. “We have pretty close to 500,000 option ARM payments going higher in California over the next couple of years. The impact of the higher payments will be devastating for homeowners who are having trouble now making ends meet.”
As the terms of those mortgages now readjust, homeowners are facing much higher mortgage payments at a time when the value of their house has plummeted and many are out of work. In some cases, homeowners who chose a very low starting interest rate have actually seen the overall amount of their mortgage increase?known as negative amoritization?putting them even deeper in debt. “Option ARMs have been a disaster from day one and a lot of them have already defaulted,” says Greg McBride, senior financial analyst with Bankrate.com. “This is a very big issue because interest rates are rising.”
And there’s more misery. If the Fed increases rates in the months ahead to fight inflation, rates tied to option ARM indexes will rise further?causing more payments to adjust up even sooner. And while Option ARM borrowers might want to re-finance, they often can’t because of falling home values and tighter credit restrictions. “I don?t see how the option ARM problem is not a huge issue,” says Sylvia Alayon, vice president and director of operations for the Consumer Mortgage Audit Center, which provides auditing services to advocacy groups. “This is a major hit for housing. It will continue to feed the excess supply of housing with more foreclosures.”
Re: So You Think it is Bad Now? - Posted by Celeste-fl
Posted by Celeste-fl on February 20, 2010 at 10:10:02:
I’m doing great with my rentals. The first course I ever got was CS. My units are all paid off,which was my plan from the start.I took rehab and flip profits and bought free and clear assets year after year.
Re: So You Think it is Bad Now? - Posted by Matt Fletcher
Posted by Matt Fletcher on January 24, 2010 at 11:16:50:
I agree except they exactly how many alt-a, option arm and other exotic loans are out there and they expect 70% of those loans to default.
see the video
So, all you Carleton Sheets buy-and-hold investors, out there, how will this affect the rental market?
One thing I’ve noticed past few months on this website is fewer people posting on this “guru” forum - so why is that??? Many of you who advocate buy-and-hold. You folks who followed Carlton Sheets, Robert Allen, David Schumaker (Author of “Buy and Hold”) where are you now?
This is a serious question. Based on your post, if landlords can’t pay, cash flows now negative, then is buy-and-hold still a viable option any more?
It will help it as long as you have medium to upscale properties. People who lose their houses have to live somewhere. If they have a job, they are good prospects as renters.
Actually those who followed Carleton Sheets from the start are doing just fine. Carleton Sheet’s course core was about “creative” finance not “over leveraged bank financing”. When Carleton started with his informericals, he taught the techniques of “lease options”, “subject to”, “wraparound mortgages” and “creating notes to sell for cash”, buying REOs. So what is now popular after the housing bubble has burst? Lease options, subject to, creating mortgages and buying REO’s. The old saying goes "the more things change the more some things stay the same. When you get right down to it. The gurus of today are just just teaching what Sheets presented 25 years ago. The gurus of today just want to act like they created the wheel.
Re: So, how will this affect the rental market? - Posted by -Steve-
Posted by -Steve- on February 04, 2010 at 22:02:23:
I started with Sheet’s a couple of decades ago and I always thought he relied on banks to much.
Yes, he did introduce “creative techniques” as you mention, but it was just an introduction really and some of his agreements offered no protection for the investor. Sheet’s also taught to get properties at a break even cash flow and you would profit from appreciation. Well we all know that you make your money when you buy. The gurus of the resent past have singled out many of those techniques and have gone into more detail, offering more protection and knowhow for the investor. It has been a benefit for the investor at least for this one.
As far as the rental market. I guess I don’t understand why it would be flat. People have to live somewhere; and if they can’t buy, they have to rent. Real estate is “undervalued” in many markets. If you can buy and hold you may be sitting in a good position 5 to 10 years from now.
We haven’t gotten to the point of tent cities, ?yet
I disagree with your post. The operative words in your reply are “…from the start.”
But the question was, “How will this affect the rental market … TODAY.” Of course those of you who started buy-and-hold when Carlton Sheets & the others first started pitching will be ok - because you have had time to pay down mortgages, & increase rents.
But the question pertains to buy and hold investors starting today. It looks like the current rental market is showing itself much more elastic than folks like Carlton Sheets or David Schumacher ever imagined, which means a newer landlord starting today will have it much rougher. Rehabbing, wholesaling, flipping may still work, but it looks like landlords will have trouble. Which may explain in part why we see fewer posters here and in the chat room.
Re: So, how will this affect the rental market? - Posted by Bob in NJ
Posted by Bob in NJ on January 19, 2010 at 11:28:31:
All of us Buy & Hold Landlords are still here. Over the years I have paid down my mortgages or paid them off. So here I am sitting pretty with all this cash coming in. Cash is king.
Well have a great day
KING BOB in NJ
Just another rock to kick out of the road! Those who are in trouble did not look far enough beyond their nose. That would have allowed them a back door. I don’t consider myself a smart business person, but, I didn’t bite off more than I could chew by pretending I was a Guru. I was taught to use common sense. Don’t try to be someone or something your not. You will bury yourself. Too many believed once your in over your head, what’s a few more feet? Now they know.
Hi King Bob. I too have been fortunate enough to pay off all my mortgages and have a good income machine, although, I would still like to sell off what I have and get away from rentals, retire and perhaps do six or eight flips a year. I think one could make the same money without the stress, depending on the number of rentals you now have. The income is good but I believe I could do just as good on flipping and not have as many people to deal with??
Re: So, how will this affect the rental market? - Posted by bob davis
Posted by bob davis on February 21, 2010 at 07:12:09:
Thanks for your response Celeste. I’m sure the amount of repairs needed on a flip have a lot to do with the stress? I purchased a property last fall for 15K, sold some of the furniture, gave some away, and sold the property within five weeks for 30K. This was a rare find I admit, but they are out there and this is what I’d look for. P.S. Headed for Clearwater Tuesday!
