Real estate investors can buy foreclosures, of course, and they can also benefit from the displaced owners of the foreclosures. They now have "tenants" for their new purchases and their existing properties.
For the most part, from 2000 until early 2007, if you could fog a mirror you could qualify for a mortgage. This easy qualification process lead to two things:
1. The tenant base decreased causing higher vacancy rates and lower rental rates
2. It put so many people in a situation they couldn't afford
Many people had no savings and barely squeezed into a home with minimal down. Many people got put into the interest only adjustable rate mortgages. They qualified when it was interest only or a negative amortization loan, but when it adjusted, they found themselves way over their heads financially.
Also, now many renters are looking for a new place as the home they are living in is suddenly being pulled out from under them because the owner is in foreclosure. Many of them have little or no time to move. Some have only a few days notice, since they didn’t know the owner was even in foreclosure.
I ran into a lady at the carwash who told me she just bought a house in Soledad for $150,000 as an investment. With 20% down, her payments are $650.00 a month, rent is $1200. Nice profit.
So what does all this mean? It means that now is the time to invest in rental properties and we have some great ones, even for first time buyers to look at today.
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