24 Months
All booms must end, one day
There are lots of foreclosures in Michigan right now. Banks are literally giving them away. I am going to make a prediction, based on my conversations with several REO brokers and active mortgage lenders who are doing decent to very big numbers (closings) in Michigan right now.
My prediction:
You have maybe 2 years to make as much money as possible in Michigan real estate, build a massive black book of contacts, lined up money – after that the game will change considerably and it will be “tougher” for new real estate investors to break into the business. The countdown starts now, in 2009.
Why is it so easy to get a foreclosure in the cheap even for a new Michigan real estate investor in 2009?
The reasons are obvious:
-Too many sub-prime loans, which went bad.
- A horde of homeowners who owe more than what that their house is worth.
- Adjustable rate mortgages that were more like traps with their promises of low rates, flexible payments to folks.
But that is the past. Done and over with.
Here is the present:
All mortgage companies that were putting out these bad credit adjustable mortgages are out of business. Done. Closed shop. Went home. If you cannot document your income by means of current W2 or 2 year tax returns, you cannot get a mortgage in 2009. Period.
The Foreclosure Boom In Michigan Suburbs Will End In 24 Months
Right now the easiest financing still open to a regular income, middle class home buyer are loans guaranteed by FHA, who don’t mind helping even new first time home buyers, even with bruised credit as long as they have stable jobs and documented income (24 month history).
These are couples that are buying houses to live in and raise families. They are buying starter homes ($125,000 range) not some crazy $300,000 homes that they cannot afford once the interest rate changes.
Right now there is a “cleanup” going on in the banking industry where banks are washing away their hands from the bad credit loans and mortgages they have in their inventory because Wall Street and the credit markets will not give them any more money till they clean up this mess that they created.
This INVENTORY CLEANUP from banks will take 2 years till all their dirty bad credit adjustable rate loans are gone. These loans are typically 2 year or 3 year ARMS and till 2006 banks were cheerfully giving these loans out.
Five years from today the ONLY mortgages banks will be left with – FHA loans and conforming / good credit loans. More importantly there will be no adjustable rate or sub-prime mortgages. Almost 99% of FHA loans are good ol’ fashioned 30 year fixed rate mortgages given to folks who have documented income and can actually afford them in most cases.
This foreclosure boom in the suburbs in Michigan where you can buy a house for fifty cents, forty cents on the dollar that requires paint, cleanup, new kitchen cabinets and a new toilet and vanity set will END. And banks will go back to discounting those houses that require more rehab than that.
Will there be foreclosures coming from job losses, divorces, deaths, moving out of State etc? Sure that will never ever go away. That is just part of life and the economic system we live in. But the ease at which you can ask and get big discounts, MLS flush with REO’s in cities around you, Loss Mitigation officers eager to dump houses, is a temporary situation that you should work very hard to profit from during the next 24 months.
For 2009, set yourself up at the expense of banks. Make money in Michigan foreclosures. Build relationships with private investors. Find people who matter in your Michigan city in real estate investing world and let them know you. Learn how to put together LLC's to buy big properties (apartments, storage units, mobile home parks, whatever) that will help you become financially free.
This recession will not last.
This 24 month opportunity will not last either.
Time to start is now.