If you listen to some of the cheerleaders in the real estate industry, they have concluded that the housing industry has "stabilized." One of the reasons given is that speculators have left the market, and now the market only consists of people buying homes for themselves.
A quick glance at the Arizona Republic classifieds yields a different story. Here are some of the funding ads from last weekend:
$$$ Private Real Estate Loans That Don’t Cost an Arm & leg Call Dennis 520-XXX-XXXX
12% "Hard Money" RE Equity Loans 602-XXX-XXXX
Bridge Loans $200,000 to 10 million. Direct lenders National/International. 5-day closing/No advance fees. Lowest rates and Best terms. Brokers fully Protected and Respected. "since 1985" 917-XXX-XXXX
Fast $ Loans Any purpose Real Estate BK, Pend TDS, Bad Credit: OK Conv & Private Programs Five day COE possible! Req. LTV (Equity) a Must. Visit www.epifund.com 480-XXX-XXXX
Fast Mortgage Loans Call 602-XXX-XXXX
FAST REAL ESTATE LOANS Any Credit, Call 480.XXX-XXXX
Hard Money Real Estate Loans, Improved Residential Property 70% LTV max, Call 602-XXX-XXXX
Investment Real Estate Hard money loans $100k to $5 Million Jim @ 602-XXX-XXXX
Mortgages-Low Rates, Fast Closings. NO-DOCS, Good & Poor Credit. Call Tim: 480-XXX-XXXX
Private Lender-immed money for any real estate. Best rates flex terms 480-XXX-XXXX
Real Estate Loans Purchase – Refinance Equity Loan – Construction Rehab. – Existing Notes Credit Ratings A to D Bad Credit O.K. NEED MONEY FAST? Private Loans for Special or Unusual Circumstances Funded in 5 Days or Less* (480) XXX-XXXX
Real Estate Private Money Loans Specializing in Residential, Fix/Flips, Rehab, Commercial From $100k. 480-XXX-XXXX
That’s just the mortgage offers. Check any area of the real estate listings of the Republic and see ads that say "Lease Purchase any home" or "Rent-to-own." Apparently some of these folks like the idea of a guaranteed renter, and will purchase a home to rent – I mean "Lease Purchase"- to you for the right terms. [Granted some of these speculator/flippers who already own property would LIKE to be out of the market- they just haven't managed it yet.] And then there is this brand of speculator, with an ad [apparently removed] in Craigslist:
I have a [sic] area of Scottsdale I am investing in with my team of investors. We are 100% leveraged out right now with over a dozen new spec homes going up. My company XXXXXX, LLC is looking to partner up with new, like-minded investors.I have the whole operation structured and the land targeted. One of my partners is holding a few lots for me at a discounted price ($239k) and is willing to help with our closing costs. My contractor is building at $130/sq foot. I have the same real estate agents, engineers, loan specialists, contractors, title officers helping me on each transaction to insure a smooth process.
Here’s the deal in a nutshell….
land- $239,000
construction- 4,000 sq feet house @ $130/sq foot= $520,000
total- $759,000My company XXXXXXX, LLC partners up 50/50 with you. We lay out the deal and manage it from beginning to end including monitor construction. We put everything in written contract form to clarify all points. You use our team to qualify for a "deferred interest construction loan" (which means NO PAYMENTS MADE DURING CONSTRUCTION). When house is finished (approx 8-10 months) our team markets and sells it then title company will pay you back all your expenses first, then 50% of the profit. These houses are appraising for around $1,000,000 to 1,100,000 on average and sometimes more depending on what upgrades you may choose.
I am always happy to answer your questions and setup a personal meeting to further discuss this. Please email me your contact info.
Let’s have a great New Year……..Join our wealth building team today.
Don’t think for a minute that all hope has been crushed in the hearts of flippers. There might be fewer of them, but they are still out there wheeling and dealing.
UK House Bubble
Ohio Fraudclosure
Bubble Meter
Mish's Global Economic Analysis
Northern Virginia Housing Bubble Fallout
Breaking News Relevant Articles© Copyright 2012 Housing Doom | Copyright© 2011, AuthentiCraft, Inc.
I couldn’t pass this one up:
“We put everything in written contract form to clarify all points.”
That is just tremendously swell of those guys to do that for someone pledging 3/4 of a million dollars to a (most likely) doomed project.
Perhaps to conserve resources they’ll just print it on the back of some of the subprime scrap paper that their “team member” the mortgage broker has stacked up in the manilla folders.
I think I’m seeing this ‘deal’ pretty clearly already.
Beyond that comment, I think you’re right about a lot of flippers and investors trying to get out… but even when the term “real estate” is being used as profanity at social gatherings & company breakrooms, there will still be investors getting into the biz.
In fact, if they could show me that this property would garner a true market rent for a number that would throw off positive cash flow on a 15 or 20 year old fashioned amortization and all other expenses, I’d throw $ 750K at it.
(Not expecting THAT spreadsheet in my email box anytime soon
On second thought… no I wouldn’t!
I’d just buy one down the street for a 20-50% discount, and build equity, paydown debt and all that other old fashion asset growth ‘stuff.’
It would be a huge head start just to carve a few hundred thousand dollars off the first day.
Sorry… my typing got ahead of my thinking.
Asset Hunter-
I was at the gym last week and overheard the conversation of a couple of women. One was telling the other “The builders are just GIVING homes away in Queen Creek now- the deals are SO good- we just had to pick one up to use as a rental.”
Either she’s found a development in QC I haven’t, or she didn’t run the numbers like you did- and/or she hasn’t looked at how much competition there is for renters at the moment.
We laugh at Lereah’s “recovery in 2H”- but there are people out there who think he knows what he’s talking about, and invest accordingly.
“we just had to pick one up to use as a rental”
Now THAT is just:
a. funny
b. scary
c. insane
d. all of the above
Tom Barrack had some great comments about people like your QC buying gym member not long ago…
http://money.cnn.com/magazines/fortune/fortune_archive/2005/10/31/8359143/index.htm
I would love to hear her answer to this question:
“Ma’am, in your opinion, what is it exactly that makes this QC house such a good investment?”
We board our horses in Cave Creek. About a month ago I started talking real estate with a couple. They told me they bought a new Pulte home in Queen Creek and bragged about how they got Pulte to drop the price another $50K AFTER they were in escrow. Their plan was to flip the unit in a year. Last weekend I saw them again and asked if they moved into the new home. Yeah, they did. Unfortunately, Pulte has now dropped the price on their model $50,000 below their discounted price. Oh well.
There are a lot of brokers still looking for investors. When the market fully sours, many of these same brokers will be serving time in jail. The greedy investors will be suing them. I saw it happen in the past two downturns. One fellow I know actually died in jail. Along with the brokers in jail will be the bankrupt builders and the class action suits against the builders for shoddy workmanship. Unfortunately they will also go bankrupt and the reserve funds of the state will end up paying the claims.
SteveC-
What a great time to be a RE attorney- RE lawsuits have got to be the industry’s fastest growing segment.
I expect “The devil made me do it,” (the “devil” being the agent, mortgage broker, homebuilder, seller, buyer just fill in your favorite culprit)is going to be the main accusation. (and defense)
SteveC-
We always appreciate rational thought from people who actually have experience in the industry- we hope you keep stopping by!