Struggling real estate investors present
another opportunity in a market that's headed south.
"I've sometimes made more money in a down market
because that means people have to get out," says
Weiss. With stock investments, one can simply hold in
a down market. But properties are expensive. From needing
a new boiler to sitting on vacant apartments with no
rent coming in, "It's expensive to hold a piece
of property if all the cards are not lined up right."
Sure about foreclosures
Sometimes there's no saving a falling house of cards.
Worzala points out that many people who got themselves
into risky mortgages, like ARMs and no-money-down deals,
can no longer afford their property when interest rates
rise. It doesn't take long for them to fall behind on
payments and go into default.
"A lot of people are sitting on the
sidelines right now, waiting for properties to come
down to a reasonable level," she says.
McClain agrees. "Foreclosures are
rising every day in some markets. We will hear a whole
lot more about them, especially with the amount of people
who came in with ARMs."
Investing in foreclosures takes a true
understanding of the strategy and a stomach for risk,
"You can't get title insurance on
them," says Reed, who calls those who push foreclosures
in their real estate seminars "criminal con men."
And, investors who attend foreclosure auctions must
have the cash to complete the transaction in pocket.
Some experts suggest forgoing the auctions
and waiting until the bank takes the property back,
then making an offer directly to the bank.
||Rules of real estate
Melissa Ezarik is a Connecticut-based