Forecasts of Years of Foreclosures Ahead!

When is the right time to buy? With so many people north of the 49 that have purchased property in the US, have you missed the boat? No worries, read on...

The housing market faces several more years with 800,000 to 1 million new foreclosed properties per year, according to Rick Sharga, an executive vice president with Carrington Mortgage Services.  Sharga recently left RealtyTrac, where he helped build a network that tracked foreclosure filings across the country.

Recently, analysts at Bank of America Merill Lynch estimated REO sales would peak until 2013 when nearly 1.5 million properties would be sold.  According to RealtyTrac, there have been 8.9 million homes lost to foreclosure since 2007, the height of the credit crisis.  Sharga said based on lender behavior, he doesn't see a spike happening, rather a slow, steady burn in order to spare home prices from further reductions. Today, roughly 4 million homes sell per year. If 1.5 million REO sold, that would be almost 40% of the market, which would be double the current market share of these properties.  "I think it’s less likely that we’re going to see a 'peak' year in REO sales that looks dramatically different than what we’ve been seeing over the past few years. This is partly due to relatively weak demand, partly due to what I’d call 'inventory control' being executed by the lenders and servicers, and partly due to the fact that foreclosure processing, evictions and redemption periods have all become extended, and often appear to be in a state of flux," Sharga said.

The largest delay came when servicers were found to be improperly foreclosing on homeowners last year. RealtyTrac said the delays, investigations and ongoing attorneys general settlement talks pushed more than 1 million foreclosures that were supposed to occur in 2011 to 2012.  According to Lender Processing Services, mortgages facing foreclosure are delinquent an average of 611 days. Once a foreclosure is initiated, Sharga said it can take as long as 400 days to complete. So, he said, a loan entering foreclosure in December 2011 won't hit the market as an REO until January or February 2013.  "Sales volume will be high in 2012, 2013 and probably 2014 as well," Sharga said. "But it still seems more probable that we’ll see consistently high – yet closely managed – numbers of these sales over several years than it is that we’ll see a huge spike followed by a precipitous drop."

Basically it amounts to your risk tolerance, and not over extending oneself. But I truly believe that most of us, in our lifetime, will not see another opportunity to purchase property for a fraction of even it's replacement costs. I am presently involved with putting together investors in fractional ownerships, let me know if I can help you or if you need more information.

We want to invest, where do we start? PREPARATION!!!!

Here is a bit of a breakdown based on our most recent purchase:

We decided that we wanted to purchase in the East Valley and South areas of Metro Phoenix. We felt that the general area offered lots of great amenities, parks, water areas, shopping, lower crime rates and well reported schools. It is also reasonably close to both of the international airports (Sky Harbour and Mesa), which is handy for us Canadians...not a deal breaker, just handy. We set out ten days for this visit, allowing a few hours to relax by the pool and plan our day of property searching. I am going to write this blog in several parts, let's start with the Preparation:

First off, you must define what you want to accomplish. Are you looking for your own place that you can visit or live for up to 6 months of the year? Is it a vacation rental, furnished and rentable on a weekly or monthly basis? Or, is it a longer term investment, unfurnished, and rented on a yearly lease?

Secondly, you must determine your budget and that is based much on your goals. If it is straight home ownership as a 'snowbird' then you have to set out what your needs are:
type of home (condo, townhome, house), bedrooms, pool, parking (garage, carport, open), and PRICE. If it is a rental, what are your expectations for rent. If is a vacation rental, then you have to look at the area nearby...is it close to golf courses, hiking, parks, water sports, shopping, entertainment? If it is a long term lease, then you want to find an area with good schools, safe and low crime stats, nearby basic shopping, parks, sports fields, a good income based area with good employment.

Thirdly, how are you planning on financing your investment? Many Canadians find that the easiest method is cash. Either a healthy draw from savings, rob from your kid's college fund (maybe they're not bright...sorry, just kidding!), or draw from your Line of Credit (Home Equity Line of Credit, HELOC or LOC). Just recently, since September of 2010, it has become next to impossible to find lenders in the Arizona and Nevada areas that will offer mortgages to foreign nationals. Mostly due to the fact that they can't verify Canadian credit histories very well, and with the mass of properties at all time low costs, it simply doesn't make financial sense for them to tie up their manpower to assist in a low mortgage (many of the properties are in the $70-95,000 range). They used to have a minimum of $100,000 mortgage, that was after putting 30% down, but now their appears to be mostly 'hard money loans' which I will get into a later post.

We were very fortunate that our home bank institution has branch offices in the US and we received an excellent referral to a broker in Atlanta, Georgia. We had to have at least a $50,000 mortgage, which meant that we needed to find at least a $71,000 home. Then, when you calculate your mortgage, add in your taxes, your HOA (Home Owner Association) fees, and utilities, it gives you an idea of where you should start looking. If you are going to rent the property long term, you want to research various rent expectations in the areas and the deduct approximately 8-10% for Property Management fees. By the way, you will not be able to find a Canadian based bank that will finance your purchase directly, and it is a long process to deal with the American process (remember what they've gone through, they DO NOT want a repeat, so they have many loopholes, BUT, it is a WORTHWHILE in the end!). Once you have your bank's approval, they will supply you with a document that shows that you are pre-authorized...you will require this when you present offers on REO (foreclosure or Bank Owned Properties)...it is a MUST!

Lastly, you MUST have an excellent realtor! Somebody that has experience with investment properties, is an investor themselves, and knows the hurdles that a foreign investor faces. They must have a huge knowledge of the area and know what is going to fill their client's needs based on their budget. Phoenix is the 5th largest metropolitan area in the US, and it is not unreasonable to find a realtor that has a great knowledge of the majority of the areas. We are fortunate that we have such a realtor, and being in the business myself it is easy to spot a good one!

Ok, so this may take a month or so to get in place (especially if you need a pre-authorized mortgage)... you know what you want, you know what your budget is, now we need to find that perfect investment!

Stay tuned....

Where should Canadians invest in Real Estate?

If I was to invest out of Canada, where would I invest?

Why not go somewhere where you might retire one day? Or, a place you want to call home a few times a year, that is also affordable to fly or drive to. Living in the Vancouver area, we have easy access to cheap cheap CHEAP flights to Vegas, Phoenix and Palm Springs. In fact, when the Canucks make the playoffs, it is actually cheaper to fly to Phoenix to watch a playoff game than it is to watch the Canucks at home.

I feel that Nevada and Arizona are hot markets, and I am not talking just temperature here. Some facts relayed from John Kell's recent article, Nevada posted the top foreclosure-filing rate for the 38th consecutive month despite a 30% year-over-year decrease. Get this...one in every 102 Nevada homes received a filing, more than four times the national rate.

Even with a 9% decline in February from the prior month, Las Vegas was the worst metropolitan area, with one filing for every 90 homes. I have personally viewed a large gated townhome complex, all two bedroom units with two community pools, priced in the $65,000 range; one in 8 units were listed but I can say that I observed a lock box (keybox) on just about every door!

Arizona and Florida followed with nearly identical foreclosure rates, with one in every 163 homes receiving a filing in both states. Despite a nearly 21% decrease in foreclosure activity from January, Arizona's rate was fractionally higher than Florida's. Of course monthly increases and declines are really based on very short intervals, and in my view should not be used as a viable trend. They can be manipulated by so many factors including weather and local activities.

We are also interested in the Palm Springs area, a regular hot spot for BC investors. Interesting that California posted a 15% year-over-year decline in February. Six California and Arizona metro areas were in the top 10 nationally, while Florida again had two.

In absolute terms, six states—California, Florida, Michigan, Illinois, Arizona and Texas—accounted for 61% of the national total in February. But the total of foreclosure filings in those states fell 5% from January and 15% from a year earlier. Does that mean that foreclosure fillings are slowing down? Too soon to tell in my view, and based on recent comprisons of sales to listings that I made in the Phoenix MLS market yesterday, there is basically 7 months of foreclosure supply if not a single foreclosed property is listed.

So, keep on top of the stats, watch the loonie strengthen, and get off the fencepost and get make those real estate investments while interest rates remain low. The time to build your wealth is now!


If you would like to learn more about investing in Real Estate and growing your retirement wealth opportunities...EASY! simply visit http://www.wealthybyinvesting.com/ or call direct at 604-626-5486.

If you wish to purchase in Arizona or Nevada, I have excellent realtor contacts that I use and would be happy to put you in touch with, just visit and email me through http://www.welshfamilysells.com/ or call Top Producing Keller Williams Realtor John Welsh at 604-852-2234

Where should you make your first Real Estate Investment?

Where is the best place for you to invest? I believe that all depends on your level of experience. Your first investment you usually do by accident...that is, when you purchase your first home! But beyond that, a favorite vacation destination that you are well acquanted in certainly is a start. Usually these vacation or summer (or winter escapes), are a great way to make your first investment and enjoy for years to come.

Rental properties in a local area would be the next best bet. Something that you are familiar with, areas that you know, schools that you can verify, and it's handy to drive by to check on things. This gives the first time investor a chance to property manage and get a taste of the landlord's resposibilities.

I have found success in grouping smaller numbers of investors in single purchases of properties that they have equal shares in the title and perhaps have a business plan in place to sell for fair market values in a given time frame. They can either rent these properties out, or save them for themselves with visitation rights...similar to a timeshare.

Once you have started with one or two properties, you can expand to other markets, even out of country investments, but be very careful to check out the tax and revenue implications.

You should engage the use of a local realtor that is also a real estate investor. Let's face it, why would you purchase a property from a realtor that doesn't own their own home? Why then would you make an investment with a realtor that doesn't in fact own their own investments?

If you would like to learn more about investing in Real Estate and growing your retirement wealth opportunities...EASY! simply visit http://www.wealthybyinvesting.com/ or call direct at 604-626-5486.


If you wish to purchase investment properties in the Lower Mainland/Vancouver area or in Arizona or Nevada, I have excellent realtor contacts that I use and would be happy to put you in touch with, just visit and email me through http://www.welshfamilysells.com/ or call Top Producing Keller Williams Realtor John Welsh at 604-852-2234.

No Better Time to Invest in Real Estate!

I was recently involved in a large investors conference in Vancouver, BC. I have been focusing on investors, particularly between Canadian purchases of Arizona and Nevada properties, and it was exciting to see the buzz from the 550 or so in attendance!

For those that are thinking of entering into this market, here are a few tips!

For Condos: look for foreclosures, not only individual units, but whole buildings. Many good investments can be found in the Scottsdale area, but, ensure that you find a building that is at least 70% complete.

For Homes: there really is a softening in the amount of good quality homes, many of them sell in a normal fashion, i.e., before going to a short sale or into foreclosure. There is still a demand for quality, and the old rule of 'you get what you pay for' applies!

Arizona Trustee Sales - It is not well known to most consumers/investors that many properties actually never make it to the auction. The banks control these properties and assign them to an Asset Manager (who is often the Bank Manager). Brokers then prepare CMA's and give the Asset Managers a value or list price. Basically if 1,000 properties are destined for the auction, only 30% actually make it, and out of that, only 10% are any good.

Auctions - If you do happen to lock into a great auction investment, you must have $10,000 down and you have within 24 hours to come up with the rest otherwise you will forfeit your deposit. As a result, there is on about 1 in 5 properties purchased at the auction actually close. There are ways to get around this...but, the investor usually does not get a chance to inspect the property prior to the auction...so really, they are bidding sight unseen.

Bank owned vs Auction - Some of the biggest advantages of Bank Owned (also known as REO) is that the investor has a chance to inspect the property. In addition, it is not uncommon to ask for repairs to be made!

As far as financing of these properties, financing is available...the banks are open for business! You can obtain financing up to 75% of the purchase value with rates between 4.5-5.5% on a FIXED 30yr rate. We have some banks familiar to Canadians that will finance your Arizona or Nevada investment...Royal(RBC), HSBC, and local banks that are familiar with Canadian investors, Bank of America, Wells Fargo.

There are all kinds of scenarios that a purchaser or investor from Canada may be tempted by this amazing opportunity. As a snowbird, you may own real estate that you may frequent easily...flights out of Bellingham, WA offers incredible deals for those of us that live in the Vancouver/Lower Mainland area. You MUST be aware that you CANNOT do any repairs, painting, you name it that could be otherwise hired out to an American citizen. So if you are thinking of renting out the property, even allowing employees to use it, and do any work yourself, you could be in big BIG trouble!

My wife and I treasure our regular jaunts to Las Vegas and Scottsdale/Phoenix. I really believe that now is the opportunity for many Canadians to invest in the HOT market that can be found in Arizona and Nevada. It should be a buyers market for the next 18 months, and most feel that it will be at it's prime time for purchase in the next 6 months. If you are thinking of investing or know someone that is, it is extremely important to find an professional real estate agent that knows the product, knows the areas, and puts your best interests as the number one priority. I am blessed to know and deal exclusively with top agents from the Keller Williams family in these top investments markets. Let me know if you need any assistance or if you have any good investment stories.

If you would like to learn more about investing in Real Estate and growing your retirement wealth opportunities...EASY! simply visit http://www.wealthybyinvesting.com/ or call direct at 604-626-5486.
 
If you wish to purchase in Arizona or Nevada, I have excellent realtor contacts that I use and would be happy to put you in touch with, just visit and email me through http://www.welshfamilysells.com/ or call Top Producing Keller Williams Realtor John Welsh at 604-852-2234.