| "In devastation, there's opportunity." (Carlton Brown, | | | | But it was really worth waiting. Foreclosures are |
| commodity broker) | | | | everyday business now and there are so many |
| When I first heard this from a commodity broker, | | | | wholesale priced houses available (some houses and |
| Carlton Brown in the movie The Corporation, I was | | | | apartments are traded 25 - 30 percent below their |
| more than surprised. I found this statement so | | | | real value), that one can hardly find enough dough to |
| strange that I wanted to investigate into this a little | | | | purchase them all. Sure, financing these investments |
| further. How could there be any opportunity in | | | | has become more problematic as banks and private |
| devastation? | | | | lenders are closing the money taps. But a little |
| I do not know a single real estate investor who has | | | | creativity can easily resolve money shortage. Joint |
| not yet heard the term "subprime mortgage crisis" at | | | | ventures are on a rising trend (mainly with people |
| least a thousand times, and most of us have seen | | | | you know quite well and with whom there is a solid |
| adult people crying over the ruins that used to be | | | | foundation of mutual trust) and investors having a |
| their lives before. How could such terrible things ever | | | | track record of paying their debt well will certainly be |
| happen? | | | | preferred by banks and lending institutions. In fact, |
| Well, it's something I call the no-brain factor. This | | | | banks will be very happy to have good customers as |
| consists of two things. First of all, there have always | | | | they have to recover the horrible amounts of |
| been people who tried to live beyond their financial | | | | write-offs they had suffered due to the crisis (I |
| capabilities. I'm talking about underpaid employees | | | | wouldn't dare to estimate the amount of loss |
| making hardly enough to pay their monthly bills, | | | | incurred as I'm sure there are some skeletons to fall |
| though buying huge, zero-mile cars and affording | | | | out of the vaults). So, you see, everybody needs |
| cruise-ship excursions and houses for which every | | | | you. |
| middle-class intellectual would turn green of envy. | | | | Saviors are urgently wanted. Lots of foreclosures - |
| Why? Because they thought they could easily afford | | | | with tremendous extra costs for both lender and |
| such luxury they had never experienced before. I | | | | borrower - can be avoided by finding an investor |
| mean, who hasn't yet dreamed about spending a | | | | who is willing to buy beforehand. For us, investors, |
| month or two in the Caribbean? | | | | this means motivated sellers and nicely low prices |
| But how can somebody who is just earning $1 500 a | | | | with high returns on investment. So the best piece of |
| month spend so much money? That's where we find | | | | advice I can give you: put an ad in your local |
| the second key factor to the ongoing crisis: banks | | | | newspaper and let everybody know that you are |
| willing to lend to people who did not even have a | | | | the one who can help. Believe me, your phone won't |
| chance of paying back their loans. But this raised the | | | | stop ringing. And you can get very popular by helping |
| bet for banks, so they had to find a solution for | | | | people in trouble: your sellers can rearrange their lives |
| getting rid of that extra risk involved in these | | | | and get rid of their financial misery and you can get |
| transactions: the magic word is securization. However, | | | | prime investments at bargain rates. |
| these mortgage-backed securities have become | | | | The best thing is: you don't have to do much |
| worthless or at least have lost most of their value as | | | | yourself. Due to the above mentioned multiplier |
| people having to pay down the mortgage have gone | | | | effect all governments around the world are eager |
| bankrupt and thousands of foreclosures have blown | | | | to bring the crisis to an end. So all you have to do is |
| up the real-estate bubble. | | | | invest wisely and wait. |
| So, how to proceed now? What can and should a | | | | To sum up: if you are interested in real estate, now |
| really savvy real-estate investor do? First of all, we | | | | is the best time to start investing. Everybody is on |
| have to know that real estate business is a little | | | | your side, and you can become very popular in your |
| different from any other business sector. | | | | community. It will be easier to find tenants, too, since |
| Homeowners use to buy lots of other stuff from | | | | people loosing their homes will certainly want to live in |
| appliances to gardening services, thus real estate has | | | | a home they can afford. This goodwill can be very |
| a multiplier effect on the whole economy. Clever | | | | useful later, too, when you need new partners for |
| investors and I mean the really clever ones have | | | | other ventures. So never stop learning and keep an |
| foreseen this crisis many years ago. Real estate | | | | eye open for great opportunities - there are really |
| prices had touched the sky and there was no chance | | | | lots of them now. Markets will recover as everybody |
| for finding a bargain. Thus lots of dollars, probably | | | | is interested in their recovery. Let's be part of this |
| billions had to wait in money market investment | | | | recovery and earn a nice profit - happy investing! |
| vehicles for better times to come. | | | | |