Real estate investing – Opportunities amidst Dire straits

Real estate investing has steadily got the fancy of investors. Globally people have been recognizing the extremely profitable proposition set forth by property investments and as such are scrambling to get their hands on prime property assets. So what made real estate so fanciful?


Good land and plot locations have always been in short supply and hence with ever increasing crowds and tighter population in cities the demand has shot through the roof. This had catapulted property prices to soaring heights. Which isn’t always a good thing. In fact valuations become so overestimated that soon buyers started decreasing and that’s when the bubble burst.

Aftermath: a number of property owners defaulted on their mortgage payments. Once attracting crowds like a ring – fight, real estate investments were no more the main attraction. Soon the equity values of real estate witnessed a steep decline. This coupled with the fact that there was low investor confidence leading to low buyers, the owners started defaulting on their mortgage payments. Now we are witnessing continuous growth in the number of foreclosures, reaching all time high’s in the current fiscal year.

The Silver Lining

So rock bottom realty prices and rise in foreclosures figure, not exactly a good story. Wrong! A successful investor himself, real estate specialist Jeff Adams tells all investors to be alert during these times as in the direst of times you’ll find the best opportunities. So don’t loose hope just yet!

What Jeff Adams was hinting at was foreclosures themselves. Yes they are default mortgage payments and are at their highest this time around, so what! For any smart investor this is nothing short of a golden opportunity.

Foreclosures are generally sold cheap, and with cheap I mean relative to their fair value. These property assets are just lying idle in the hands of lenders and banks, who are just waiting for someone to come and take it off their backs. Now add to this the fact that investors are regaining confidence in the markets and our growth trajectory is coming back on track, and Voila! You’ve got a recipe for turning a few pieces of timber, dirt, bricks etc into gold.

With markets showing a positive response, Real estate, which is closely correlated to the market conditions, can be sure to get a boost. Meaning an upward trend in prices, sentiments and demand. This Ladies and gentlemen is an opportunity which highlights the cardinal rule of investing, buying cheaper selling dearer.

The Fineprint

Foreclosures are a good example of timely investing. But as good as they sound, there is always a cache. In the case of foreclosures it is not easy to come across a good foreclosure property. Foreclosures mainly occur due to reasons such as, Divorce, Bad judgment, Illegitimate claims, downright default, etc. in most of these cases the home equity is already very low and may not sell at high margins in the short-term.

When properties are foreclosed, they come under the possession of the lenders and banks. Not being their main line of business, there is rarely effort put into maintaining the property. Hence most of these properties also require some after buy conditioning and maintenance. These additional costs incurred are a sizable amount and further bridge the profit margin.

Foreclosure properties can be bought during three phases

  1. Pre- Foreclosure: direct transaction with the owner before foreclosure of the property.
  2. Foreclosure: is the main foreclosing auction which can be jurisdictional or non – jurisdictional depending upon whether it is a legal contract or deed respectively
  3. After – foreclosure : also known as REO’s or Real estate owned these properties did not have any bidders at the foreclosure auction and come to be repossessed by the lenders

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