The increase in foreclosures we are experiencing this year poses a challenge that our economy simply cannot afford to ignore. For real estate investors, the deal is always to find ways to create value out of seemingly bad situations.
I say apparently because there is no cloud without a silver lining and the foreclosure crisis is the perfect example. Take the worst-case scenario: the number of foreclosures in the coming months manages to hit new records, which means the housing industry will take a slump and mortgage lenders will suffer significant losses.
Despite the Fed’s interest rate cut (indeed, the biggest single cut in 25 years), the crisis of confidence that money markets are experiencing is enough to affect much more than just the housing industry. , which means that suddenly the dreaded ‘R’ word becomes a lot more plausible and it looks like a recession could be on the cards.
Left to his own devices, this is exactly the scenario that will play out. What becomes a saving feature is the fact that real estate investors act as a catalyst by buying properties that are crippled due to foreclosure and putting them back on the market while crafting deals that free up cash for mortgage lenders and, possibly, for existing homeowners. .
In the process, they create movement in the lifeblood of the housing market: new homeowners who suddenly find they can buy properties at prices they couldn’t afford before. These properties that if left without the intervention of real estate investors would have become black holes in the local (and national) economy suddenly become sources of greater wealth, helping money flow through purchases, repairs and development.
Foreclosures are part of our economic model and when they get out of control they can seriously damage the economy. However, at this stage it has become apparent that they are one of the symptoms and not the cause. By being as active in foreclosures as possible, real estate investors help do one of the hardest things possible in the housing market: break the logjams and move things forward, helping everyone along the chain to earn the money they deserve.
It all starts with finding the right foreclosures to market to and the right market to market them to and the right kind of buyers to take these properties off your hands and as lucrative as that is, it’s also the right kind of thing for our economy. need at this time to recover.
jeff adams