Nationwide property values have declined an average of 22 percent. One in eleven houses is in some stage of foreclosure. Almost 60 percent of all properties sold this year have been bank REO (real estate owned property). The number of loan originations has declined by more than 2 billion dollars compared to last year. These are the signs of the current housing market in the United States. What should you do? You should BUY! Here are 4 strategies to profit from the current distressed housing market in 2010.
Buy Foreclosed Property for your Personal Residence
For the past two years banks have been inundated with foreclosed properties. Banks are required to keep a percentage of cash reserves for every non-performing asset they hold and these foreclosed properties are directly hitting at their bottom line. In response banks have started to dump properties to get them off their books. In some areas of the US it is possible to buy a bank foreclosure as low as 22% of current market value. Buy one and make it “Home Sweet Home.”
Long Term Rentals
Savvy real estate investors are able to pick up some home for as low as $10,000 dollars and then turn around and rent these properties out for $600 per month. These investors are able to recoup their initial purchase price in as little as 18 months. The goal is to keep these properties as long term rentals to have positive cash flow for the next decade or longer.
Banks are selling properties for as low as 22% of their current market value. You can purchase a $100,000 home for $22,000. It is not unusual to spend $10,000 to rehab the current property to get it ready to be sold. You can then sell this property for $80,000. Buyers would be interested because they have $20,000 in equity and you have just made an almost $50,000 profit.
Even if you already own a primary residence, 2010 is a perfect time to pick up a second home at the beach or the mountains or both. Vacation homes have a higher foreclosure rate than primary residences as people are willing to lose a second home if it means keeping their primary residence. You can easily snatch up a great deal for a second home.
2010 is bracketed by the worst housing market since the Great Depression. Despite the doom and gloom it is possible to make a fortune investing in the housing market in 2010.