DEAN GRAZIOSI: DEAN GRAZIOSI REVIEW – REAL ESTATE FEED BY DEAN GRAZIOSI

The facts are overwhelming.  Never before have so many real estate properties been either in foreclosure or been in delinquency.  Delinquent mortgages are mortgages that have missed one installment. 

Well-intentioned state governments have launched protective programs designed to save homeowners the heartbreak of foreclosure.  The statistics from these states are not reflected in the latest Mortgage Bankers Association delinquency and foreclosure report that states a whopping 13.16% of mortgages are non-performing. 

One might ask how experienced mortgage lenders created the current phenomenon.  The answer is recklessly.  Imagine approaching an auto dealership with no down payment, no job and no prospects for overcoming either of those shortcomings.  Incredibly, you are approved for a loan and are shortly driving away with a new car.  The beaming auto dealer could not be happier.  After all, he could notch up another sale.

Well, that is what happened in the freewheeling mortgage lending industry from 2001 to 2006.  By the time regulators caught on, the current crisis had emerged.  This crisis is far from over.  Due to new regulatory adjustments, the reality of the current real estate financing crisis is yet to be fully disclosed.  Thanks to new latitudes in the mark-to-market accounting, many banks are able to disguise the extent of the problem.

Real investors take note.  These institutions know they have problems and they know that the non-performing loan crisis is expanding not contracting.  Currently, prime mortgage failures are beginning to kick in and the depth of the problem has just touched the surface.

With national unemployment headed beyond 10%, prospects for more failure are stout.  This crisis has created a wide path of opportunity for real estate investors.  Real estate agents know where these distressed assets are and have connections to lenders that can provide great investment opportunities for qualified buyers.  Let’s face it.  Banks do not want to take over vacant real estate properties.  Banks want to sell these properties before they take title. 

With all investment, the goal is to buy low and sell high.  If you subscribe to that formula for success, contact a real estate agent today.  The time is now!

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The most distressed real estate markets in the country are located in Nevada, Florida and California.  Sunbelt cities, Las Vegas, Cape Coral- Fort Myers and Stockton, California, are posting the largest number of foreclosures. 

Real estate investors from around the country are retaining real estate agents in these areas to keep them abreast of local activity.  One seasoned agent in Cape Coral-Fort Myers reports attending 8 foreclosure auctions a month.  In Lee County, Florida, 2009 foreclosures are expected to top 40,000. 

The real estate agent reports that today his typical sale is under $200,000.  During the market’s peak in 2006-2007, the same agent said that his average sale price was $600,000.  Initially, the majority of foreclosures were from subprime loans.  As unemployment has jumped in the Sunbelt, foreclosure activity is affecting all levels of housing and prime real estate loans as well as subprime loans.

Investors in these markets will find very active markets.  2009 has been a record year for closed transactions.  In August, 2009, foreclosures accounted for 37% of all closed real estate transactions.  Foreclosures in the Sunbelt account for close to 50% of all real estate activity.

Investors expecting a quick turnaround are likely to be disappointed.  However, for investors who can find tenants or who are willing to wait for employment to gear up, the medium to long-term returns should be outstanding.  Residential housing in these areas is down as much as 50% from June 2007 highs.

Investors from other areas have learned to perform extensive due diligence before considering short sales or foreclosure purchases.  Many of the Sunbelt properties have preemptive liens from homeowner’s association dues and various tax liens.  Real estate agents in these areas can arrange for structural inspections in advance of foreclosure auctions as well suggest an attorney to search the title.

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Foreclosure gauges are beginning to sound a lot like those ominous unemployment statistics.  They are exhausting.  They are emotional.  In an era where 514,000 new applications for unemployment benefits is considered good news, the fact that 343,838 homes entered the foreclosure market in September 2009, is somehow seen as an improvement in the rate of decline.

Believe it or not, it is!  But like all numbers reported in this recession, it deserves a closer look.  While the September foreclosure activity is less than August, which was less than July, it is still the third highest number of monthly foreclosures on record with RealtyTrac. 

“Bank repossessions, or REOs, jumped 21 percent from the second quarter to the third quarter, corresponding to jumps in defaults and scheduled auctions in the previous two quarters,” said James Saccacio of RealtyTrac.

For today’s qualified real estate investors, the game is on.  Dispelling the adage that real estate investors cannot make money in a down market, buyers with cash can go a long way as banks get creative when looking to get out for under REOs.  Florida investors are buying large blocks of homes from banks and at public auctions.

These investors are banking on their ability to lease properties to “snowbirds” and other displaced homeowners until the market turns.  Residential real estate prices are down as much as 50-60 percent in some Florida markets and the weather has not changed, so rental appeal remains strong.  While seasonal visitors are pulling back from purchases, they are still looking to rent.

“REO activity increased from the previous quarter in all but two states and the District of Columbia, indicating that lenders may be starting to work through some sort of the pent-up foreclosure inventory caused by legislative delays, loan modifications efforts and high volumes of distressed properties,” added Saccacio.

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When we read Dean Grasiozi’s investment strategy for buying real estate from a foreclosure event, we were sceptical. Although his arguments sounded plausible, we are cautious people.  We usually follow the old adage, ‘if it sounds too good to be true, it probably is’, so we did some investigating.  We checked the listings in and around our area for foreclosures.  To our surprise, we discovered a listing of properties designated for foreclosure by accessing public records which is where, according to the law, a property destined for foreclosure must be announced.

We found 4 different properties all listed at less than 30 000 dollars. One looked like it needed a lot of work; another was too far away from the city for our personal tastes, but the other two seemed like nice properties in good shape so we decided they were certainly worth checking out.

While we realized that we would have to keep constant vigil over the foreclosure announcements to find one that would fit our geographical preferences, we were pleasantly surprised to find verification that Dean Grasiozi’s strategy for becoming a real estate overlord could be put into practise.  We also realized that most real estate agents would have ready access to the same foreclosure information as we did, so the competition for desirable properties would be dense, but in theory, we believe the Dean is telling it like it is. 

It takes diligence and commitment to make it work, but what successful financial venture doesn’t?  There is no such thing as a pot of gold at the end of the rainbow, but there is often a good dollar to be gained from hard work.  Thanks, Dean for the head’s up.

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