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4 common questions regarding the 2nd wave of Foreclosures

Is it true, is there actually a 2nd wave of foreclosures coming? I’ve heard about it coming for months but it has yet to arrive. Well it is coming. Some banks are holding back inventory and many foreclosures have yet to go into default. Here is a great article about the next wave of subprime mortgage foreclosures. Here are 4 common questions about this 2nd wave.

1. When is it coming?

Rumor had it was coming in the spring and summer but it is mid September now and yet to arrive. This article here, takes a look and predicts the 2nd wave has started but will not peak until 2011.

2. What are investors to do?

Invest, Invest, Invest some more!! Most people will run for the hills with fear. When people run that means you can get the best deals. Supply vs Demand right? Warren Buffett even says the time to buy is when people are in fear. There will be an oversupply of opportunities and savvy investors will cash in. So all you investors out there, keep on investing in great deals now and position yourself to take full advantage of the 2nd wave.

3. How will this impact the real estate market?

The market has already experienced a drastic correction bringing home values back to more affordable prices. Adding more distressed properties will further reduce home prices and extend the buyer’s market for quite some time. It will be interesting to see the extent of the impact but at the end of the day it comes down to supply vs demand and there will be a large number of properties for sale.

4. How will this impact the economy?

The credit and housing meltdown is at the center of the recession we are facing. Further financial hardship by many home owners, reduction of home values and a large number of foreclosures cannot be good. The worst may be over, but this could easily keep the economy from a quick rebound and maybe cause more of a plateau.

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9 Responses to 4 common questions regarding the 2nd wave of Foreclosures

  1. Bill Brown says:

    latest IRS ruling could encourage many more modifications. That could slow the downturn in value. Yes/no?

  2. Ryan Moeller says:

    That would be good for many homeowners. Many of those loans will be so far underwater that the owners will opt to foreclose, will foreclose in the near future or will get turned down by the banks. It is quite a mess and it needs to hit the fan before the market can get to the other side.

  3. Dave Lewis says:

    So a critical part of this is the lack of financing available, and sky high requirements for credit scores etc. Comments on that and on the commercial foreclosure wave scheduled to start soon?

  4. Josh James says:

    Point #2 frustrates me. You’re saying invest invest invest, while acknowledging that shadow supply will cause homes prices to fall? I would agree with you if you were telling homeowners to buy, as they are benefited with tax advantages and place to live, but investors? You’re basically telling your investors… That you can’t time the market but I need to make a living…so let’s keep buying more and more and dollar cost average your r/e portfolio thru 2011.

  5. Ryan Moeller says:

    Let me clear up a few things Josh.

    I am not an agent, I am not a speculator, I am an active investor.

    You seem to be making a false assumption that I am cashing in on transactions by duping people. We buy right and hold and sometimes flip properties.

    If you buy right with equity, cash flow and multiple exit strategies then you will be just fine. If you buy at retail and speculate for appreciation then you could be in really big trouble. I buy so my properties can withstand surprises or price reduction in the market of 20%. The next 3-5 years are going to be incredible for savvy investors. Speculators could really take a beating.

    I hope this clears up some of your frustration. If you read some on my other articles on my blog it will further clear things up. We practice what we preach. Enjoy your weekend.

  6. Michelle says:

    I understand that there are less foreclosures coming on the market due to the Mortgage Companies who have foreclosed are actually sending groups of properties to Management companies to Lease for them. I guess they are tired of losing money.

  7. Bill K says:

    Interested in your thoughts on the concern of an upcoming commercial crash and it’s effects on the residential market? Nice blog by the way.

  8. Marissa says:

    Ryan, I completely agree with you and your assessment. We also max at 70% (sometimes up to 73%), but all properties have and MUST have more than one exit strategy. We also provide an overview of all exit strategies to any investor interested in our properties. We prefer dealing only with cash buyers, although all of the properties on our site are priced for a retail buyer (much easier to come down than go up in price).
    Our biggest concern is to get the investors off of the sideline

    As with Bill K, I am interested in your thoughts on the effects of the upcoming commercial debacle that we are beginning to see unfold. Nice and informative blog.

  9. Ryan Moeller says:

    Thanks Marissa. Yes, multiple exit strategies are a must.

    It appears we are headed for a ton of commercial foreclosures as well. That will create even more opportunities for savvy investors. It is almost too good to be true. On top of it, interest rates eventually have to go up to avoid too much inflation. That should have a serious impact on property values as well. I believe we are in the best 3-5 year buying period we may ever see. In fact, I hope that is the case because we experienced a really bad up cycle and now a really bad down cycle. A more stable cycle would be nice.

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