US market - distressed sellers

[GDE]

I would be interested to hear the thoughts of members on purchasing in the US at the moment. With this credit crisis they are having, there is a massive foreclosure rate at the moment, and many distressed sellers.
A good few years ago I read a few books by a guy called Russ Whitney who has built a property empire worth 100's of millions at this stage. He started out getting huge discounts from distressed sellers going direct to them and making offers at the door.
What Im interested to hear is, is it now a good time for this kind of strategy - or will another impending interest rate drop have further effects on the market?

 

[Slim]

Hi GDE

If you do a search on AAM or Google about Russ Whitney you will find a wealth of information and opinion about him and his methods. Might be interesting. I agree there may be opportunities in the US but - I am not interested in buying in a depressed area[what I mean is the foreclosed mortgages may not be in areas in which I want to buy] and I have some concerns about future direction of the $. It might be possible to but Florida condos from distressed Irish sellers too!

Slim

 

[GDE]

Hi GDE

If you do a search on AAM or Google about Russ Whitney you will find a wealth of information and opinion about him and his methods. Might be interesting. I agree there may be opportunities in the US but - I am not interested in buying in a depressed area[what I mean is the foreclosed mortgages may not be in areas in which I want to buy] and I have some concerns about future direction of the $. It might be possible to but Florida condos from distressed Irish sellers too!

Slim

just read that thread on Whitney, very surprised I was too. I got some great knowledge from his books years ago and it surprised me posters were so dismissive -One thing I thought was hilarious - one guy said, if its that easy why arent all the real estate agents sitting at home doing it - he gives a lot of credibility to the average real estate agent there!

Its an interesting one, the depressed area scenario - lots of peoples houses are foreclosing, so they loose their house. But they still have to live somewhere and rent. If the US drops interest rates again, and borrowing is cheaper then its easier to pay back your loans, so your yield can be lower. I'm not an expert on the US market, but I cant see rent payments crashing like the purchasing prices.

Then when the economy starts to recover and demand begins to rise again, you can make a nice capital appreciation on the knock down prices you negotiated, or at least leverage if your able to cover your loan repayments with rental.

Ive almost convinced myself to go and buy a load of property now in the US!, but I think values may drop a bit more in the next few months...

 

[thomsk]

It appears to me that the majority of the owners of US houses are not accepting the fact that prices are falling, and that they should accept this fact and reduce prices accordingly.

I guess it's a bit like looking back at the dot.com boom, when share owners wouldn't accept that the market was dropping - and thought holding out for months would do the trick, but of course it didn't - they lost more the longer they left it !

I would say that there will undoubtedly be a US recession. Those that have to sell their houses are going to have a reality check sooner or later!
I, for one, am prepared to wait up to another year before buying US property.I think some of the biggest falls are yet to come.

 

[webtax]

A good few years ago I read a few books by a guy called Russ Whitney who has built a property empire worth 100's of millions at this stage. He started out getting huge discounts from distressed sellers going direct to them and making offers at the door.

but was he buying in a generally rising market, or one where there was a widespread housing recession?

 

[ringledman]

I read in the FT a couple of months back that the US is 1/2 way through the correction and there is another 12-18 months of falls left.

They reckoned 10% has come off since the peak and another 10% still to come off.

I'm hanging on...

 

[Thomas22]

For all you know the US property market could fall another 30% before it hits wrong bottom. What looks like a bargain now could look like stupid in a couple of years time

 

[ringledman]

For all you know the US property market could fall another 30% before it hits wrong bottom. What looks like a bargain now could look like stupid in a couple of years time

My sentiments exactly.

Why try to catch a falling knife???

 

[thomsk]

Indeed - I think I would rather buy after the dust has settled on subprime, and that there is evidence of housing starting to bounce back ( or at least have reached a very long period of stablising ).

 

[GDE]

but was he buying in a generally rising market, or one where there was a widespread housing recession?

i know he had stategies for depressed areas ie. certain towns, I suppose it depends on how closely you can equate that to a depressed economy in general

I agree with the other posters, that its going to keep going down, the key to jump in just before talk of a revival comes. Tricky to predict

 

[Murt10]

Here's something that might encourage you to hold out for a bit longer (maybe a lot longer?).

American houseprices are nowhere near the bottom and even when this is reached, because of the lack of confidence etc, people afraid to move, licking their wounds etc., it will take years before it takes off again. We will have many false dawns in the meantime

http://www.msnbc.msn.com/id/21921214/


Murt

 

[GDE]

Here's something that might encourage you to hold out for a bit longer (maybe a lot longer?).

American houseprices are nowhere near the bottom and even when this is reached, because of the lack of confidence etc, people afraid to move, licking their wounds etc., it will take years before it takes off again. We will have many false dawns in the meantime

http://www.msnbc.msn.com/id/21921214/


Murt

Very interesting article Murt, a lot of good points. I always feel a crisis also brings opportunity hopefully I can figure out some opportunity in this market in the near future. At the moment im thinking, Bush has only a year left in his term and the next candidates will surely have to have the economy and housing as a priority in policy and take measures to improve things and election time could be it for investing. however as you say false dawns etc - could go hand in hand with false policies!