Real Estate Investing

Some of the housing markets hardest hit by the foreclosure epidemic are seeing small signs of new life, thanks to eager bargain hunters seeking to capitalize on a golden opportunity. Home buyers in Detroit, Las Vegas, and Chicago are saving 30% to 50% by buying foreclosures, according to USA Today.

The article tells the story of Ruth Ahlbrand, a Las Vegas realtor who capitalized on her city’s tremendous foreclosure rate. Ahlbrand trained her agents in foreclosure deals, transformed her marketing campaign and even purchased a 40-seat bus to escort deal seekers around the city. Not only will bus tour participants see actual foreclosures available on the market, they will have the added bonus of hearing an agent on a loudspeaker lecture them on the ins and outs of buying foreclosures.

“It’s like a seminar on wheels,” Ahlbrand told USA Today. “Buyers are saving up to 30% or 50%. People are really looking for a deal. I’d almost call it a frenzy. We’ve hit the bottom, and Las Vegas is growing.”

Leading the pack in terms of reduced housing costs are Las Vegas and Miami with more than 19% reduction, Phoenix with around 18% reduction, Los Angeles and San Diego with more than 16% reduction and Tampa and Detroit with over 15% reduction. If ever you’ve thought of owning a home, now’s the time. Just don’t be afraid to wait out the seller or even pitch a low-ball offer. Amber Gilmore, one home buyer mentioned in USA Today, played the waiting game and earned a reward of $100,000 off her foreclosure purchase. While many buyers are still tentative about dipping their foot in the real estate waters, content to wait out the deals, it’s good to see that the really hard-hit cities could start seeing a turnaround soon.

Commercial real estate is where it’s at. Financial Week today referred to the “credit crunch” as a “speed bump” for the commercial market, even though it proved a major setback for the residential real estate market. Commercial space is primarily leased rather than owned, which only helps the market conditions. After all, even with residential real estate, the rental market has surged and it’s not a bad time to be a landlord.

Unlike the residential real estate market, commercial real estate is healthy across all sectors. Commercial real estate is enjoying its highest occupancy rates since late 2001, and lease rates are at a record high. Sales volume in the commercial real estate market cannot be denied, for it is also at a record high.

For the purposes of illustration, take a look at Las Vegas. The area’s residential market is seeing soaring foreclosure rates, tremendous inventory surplus and falling prices. Meanwhile, the commercial real estate market is robust, particularly in industrial and multi-tenant retail complexes. The Nevada Business Journal recently quoted David Goldwater, founder and president of private lender Goldwater Capital, LLC.

“You remember last year how everyone wanted to turn retail into single-family housing? Now they want to go the other way around,” Goldwater said.

Investors will want to avoid jumping the residential real estate ship completely, because most analysts say that ship will be righted within a year. At any rate, commercial is worth exploring in most markets, and it’s a relief to know that some property deals can still bring prosperity.

This is a great time to be a landlord. There is so much doom and gloom about the subprime mortgage fallout (although lenders are doing what they can to survive) that we shall focus on the positive today. The good news is that landlords are quite fat and happy right now. As foreclosures abound and mortgage lenders circle the wagons, the rental market has surged.

Yes, in most markets, it’s a great time to own rental property — but that doesn’t mean you should run out and buy some cheap property on the shadier fringes of downtown just for the heck of it. Thanks to author Lisa Moren Bromma for taking the time in yesterday’s post to highlight just how much work is involved in landlording.

However, Lisa also had some great tips for how to do it right, for those who have the time and can find the money. She mentioned open houses as a fast-track to finding good renters willing to pay top dollar.

One of the top complaints of landlords has historically been the trouble they must endure with bad-credit renters. Granted, many of those entering the rental market have been foreclosed upon, meaning their credit is tarnished. However, at least landlords have a lot more demand for their product and a plethora of people from which to choose.

Of course, with more demand comes less supply and that means higher prices. Las Vegas is seeing it, where rental rates have gone up nearly $100 since January. Manhattan is seeing it, where second quarter reports showed rental rates nearly nine percent higher than a year earlier.

Congratulations, landlords. Brother, can you spare a dime? If you’ve got the property, hold on to it. Forget flipping. Now more than ever before, love the one you’re with.