The real from-the-streets real estate update

I haven't posted in a couple of months because there wasn't anything positive to say! And those who know me know that I'm an upbeat kind of guy. Better to say nothing than to spread around doom and gloom.

But here I am in the streets doing real estate, and people want to know what the heck is going on with this market? So I figured if I tell you what I'm doing and why, maybe it'll help you get some direction too.

Prices are still dropping and we are not at the bottom yet. My buyer calls have dried up dramatically, except for the "will your seller take $100,000 less?" calls. So until we see some kind of stabilization, buyers don't want to take the risk of buying unless the deal is good enough to cover their downside.

Bank properties and short sales are the name of the game today. So I've started going after business from banks. They have to sell, and they have no "bottom line" that they can't go below. This is who you are competing against if you want to sell a home today. If you have to sell and are underwater, we can do a short sale to get you out of the property without having a foreclosure on your record.

I used to do short sales and REOs (bank-owned properties) in the early 1990s and I really didn't want to do them again. But other sources of business have dried up, so I have to move with the cheese. In the 90s the foreclosures were only 25% of all transactions, so the market was able to absorb them without prices dropping like a rock. What's different this time is that there are as many foreclosures as there are transactions! They are coming on the market faster than the market can absorb them and the banks are competing with each other by seeing who can drop their prices the fastest. Yikes!

I did my first "cash for keys" today. This is where the lender who took a property back in foreclosure pays the old owners to get out and hand over the keys. It's a new world where walking away from your obligations is rewarded.

See what I mean? It's impossible to talk about this stuff without getting negative. So where is the silver lining? Since there are more people walking away from their homes, there are now more tenants and rents are rising. That means that investors are finding it a lot easier to buy property that cash flows. And even though it's not be the exact bottom of the market, financing might be harder to get in the future, so it might be as good a time as any to buy if you have a long-term view.

Speaking of investing, I'm currently researching some other markets where there are significant opportunities for cash flow. There is no appreciation anyplace, so what we did a few years ago doesn't work today. It either gives me a good return from day one or forget it. No more holding on to property in the hopes of future appreciation. Buy it wholesale and get cash flow or don't buy it.

So how about buying homes for 60-70 percent of appraised value, and get $200-300 a month positive cash flow at the same time? With banks liquidating homes today, this is possible in some areas.

What else can you do with your money? Everything is going down, precious metals, oil, the stock market, you name it. People are rushing to safety by buying T-bills that pay zero interest! Why not get a good return on your money, and even if property values did decline by another 30-40% you would still be OK because you bought it low. And if we did this in a market that is probably near the bottom that would be pretty safe, wouldn't it? The old saying goes, "how far can you fall out of a basement window?"

If you're interested in discussing any of this, shoot me an email or give me a call. I'm still in the real estate business and ready to serve you! Many of my peers are leaving the business, or they're physically still there but mentally have given up. I haven't. Maybe you know someone who is facing some real estate challenges and could use some from-the-streets, no B.S. advice. That's why I'm here, so feel free to contact me.