Paddy Deighan is a real estate investor, attorney and advocate. This blog is dedicated to providing useful information, tips and guidelines for all of your real estate needs.
Friday, June 29, 2012
Is There Really a REO/Foreclosure Home Shortgage??
Is there REALLY a REO/Foreclosure Home Shortage?? According to Realtor Magazine real estate investors are starting to report indications that the housing recovery could be starting to gain some solid foundations. One indication in particular could not only be a positive sign for the market, but could actually spur more investing as would-be investors rush to get in on the bargains before they miss their chance. There may actually be a shortage of REO deals. According to a report in Bloomberg, recovering markets like Phoenix and Miami may have bottomed out, with the result that bulk-REO buyers are starting to have trouble finding the bargain-basement deals that they once snapped up and converted into money-making rentals in no time. In fact, the “shortage” could result in hedge funds and investing firms having some difficulty “get[ting] capital out in an efficient way” if the trend continues.
Of course, there are still plenty of foreclosure and REO properties out there for investors to purchase, but the key to successfully turning them into cash-flow properties quickly is to purchase them in areas that are already recovering. This way, the demand for properties is already present and there are many qualified, would-be renters at the ready. Furthermore, hedge funds prefer to buy in bulk, while many lenders are opting to do short sales or sell off properties via auction and the traditional real estate brokers. As a result, the much-hoped-for mass-auctions are not appearing, with the problem that some investing firms have literally billions of dollars that they cannot invest.
Paddy Deighan, J.D. Ph.D