Consumers are seeing the end of the ever increase real estate values with year over year double digit gains. This new market looks to have signaled the end of the housing boom. The foreclosure rate is now skyrocketing to the highest levels seen in a decade. There is bad news everywhere or at least this is so for many who stretched beyond their financial means. But not everyone will suffer. For those with cash, real estate buying opportunities are plentiful and the margins below market pricing that they can purchase the property are getting bigger and better. There are several sources investors can turn to for bargain basement deals. In almost any listing service, banks are marketing foreclosure properties (real estate owned) for 3% to 5% below market prices in most Orange County California markets. In other areas of the country such as North Carolina, banks may be discounting as much as 10% off market pricing. In Colorado, builders are having such a hard time moving inventory that they have slashed prices and are offering incentives. In these markets, you may be able to buy a brand new home in rent ready condition with break even on cash flow for as little as 20% down. The builder may even guarantee you rent for x number of months or find a tenant for you. Such is the case in many Florida communities where prime golf course property can be purchased for a similar deal. Short sales are abundant in the California marketplace, but the banks are so swamped with the onslaught of problem loans that it is often months before they get back to you. (A short sale is when the bank agreements to accept less than the outstanding loan on the property.) Tax sales can prove profitable, but there is a lot of competition at these auctions for very few properties. Most California counties hold tax sales a minimum of 2 times per year and auction the property off for the unpaid taxes due on the property. Properties typically go to sale after 4 years of unpaid taxes.
Truste sales may be your best bet to make serious cash. I have attended many Truste sales and have seen incredible properties sold at margins sometimes 20% or 30% below market. These are lucrative deals and you can earn hundreds of thousands of dollars purchasing these properties. Buyer beware, you must do your homework prior to bidding as not all liens are wiped out in this type of auction. Property taxes, IRS liens, special assessments, and Hoa dues may all be payable and you may still have fix up costs. But at margins like this, if you do your homework, it will pay off.
So if you are an investor, now is the time. The mother of all deals may just be around the corner and it was once said "fortune favors the prepared mind." Perhaps they should have said fortune favors the prepared wallet. For investors with cash that like to buy heavily discounted properties, this may be the time you have been waiting for. Ready your cash and keep your eyes wide open.
The author John Daniel is a licensed real estate broker and investor in Orange County California