How I found the holy grail of investing in our down market!
Fellow Investor, I have been investing in real estate since 1999. I really started investing when I first bought my fixer-upper home in 1993. My wife and I started our first company doing Engineering in 1992. We realized that our industry was in decline back in early 1999, closed our business and sold our fixer-upper house. Next we moved out of state to a great upward market location and started buying cosmetically challenged houses in good areas for rentals. Also started to buy boarded-up duplexes in Florida about the same time(1999).
After a few years it became evident that living in one state and owning in another was creating some issues. We had to fire all the property management co's in Florida and hired some “local talent” to over see our daily out of state needs until we could relocate to Florida (about a year).
In 2002 we were relocated to Florida and buying huge amounts of property (at least for us it seemed like huge amounts), (apartment buildings, many duplexes, many single family homes, and some empty lots). I still remember having to plan each day with what tools, supplies and meetings would need to be scheduled. Don't forget we had driven our business to take on everything in house: Maintenance, notice notifications, rental interviews, evictions, and meeting with local human services groups to assist tenant needs.
In 2004 we were hit with the idea that “things can not continue as usual”. We started to pull back. By 2005 we had sold everything in Florida and relocated to the Pacific North West as this region has always held on to economic stability and has good water. In 2006 my issue was getting low interest loans with ease was difficult. The changing R.E. market was already winding down.
I bought an old commercial building and did something I always wanted to do “I opened a Restaurant in 2006”. Oh what a story I can tell you about owning a restaurant!!!!
Now lets fast forward to 2009–I realized that I needed to get back into Real Estate, but everything had changed!!! “Foreclosure properties available everywhere” and “Short sale opportunities” were flooding the market. However, most investors are having to HOLD & rent and that seems like a poor exit strategy to me???? Sales are stagnant and market time is rising to over 170 days plus.
It has taken me over 8 months to create a great exit strategy and this is my key to success for the down market. I have found that more people can get into an “Owner Financed” property then they can get into a typical FHA Loan. This opens-up property sales to a whole new group of people that want homes (often times the sales price is higher as so few property sellers offer Owner Financing). After a new buyer is found and a contract is created, I can sell a Owner Financed Mortgage or Note at a discount for “Cash in hand” (many times we can close on the note at the same time the property contact buyer closes, this is a double close and is easy to do).
I now specialize in acquiring private notes and getting cash offers for my deals as well as others that want to move their properties. I am working with local REI Clubs as well. [Please understand current restrictive loan regulations has put a pinch on many good buyers that need Owner Finance Options or they don't get to have a house] Basic idea is 10-20% down, Interest rate of 6-7%, 20-30 year loan term and adjust the %rate depending on credit score numbers (low credit score means more equity and/or higher % rate).
After being a property manager for so many years, I don't want to be limited to holding a property with rent or lease option until the market turns. I am used to being able to get my cash out when I want it! I have started to work on a affordable housing project to transform renters into owners.
Good luck and keep sharing new ways that work in this market.
Fred Pollard / Real Estate Specialist Investor (res. – land – commercial)