Real Estate investment opportunities may be on the rise, perhaps not immediately, but in the next two years or so. Why? There are tell-tale signs to the effect that the foreclosure outlook is “positive”, albeit sadly that is not a good forecast for those who might be affected. Regrettably, the current “easy mortgage” environment is one such indicator and once again the victims may be caught unaware… and others may be gaming the system… also once again.
Many lenders proudly proclaim that they can now underwrite mortgages with very low down payments, in the order or 3.5%, or even “zero down” alongside previously unacceptably low credit scores in the 500-600 range. These parameters are eerily reminiscent of the recent real estate downturn that led to the “great recession”, aided by banks and Wall Street. Banks are notorious for repeating their mistakes, so here we are again with relaxed lending practices not too different from the “sub prime” or “no doc” loans of yesteryear.
How can real estate investors take advantage of what seems to be on the horizon? Get ready with available cash!
The interest rate atmosphere in the US may be changing somewhat with the impending announcement from the Federal Reserve Bank in mid December as to a possible (or probable) Fed Funds rate increase. The Fed Funds bench rate is not expected to exceed 2.0-2.2 percent; still not bad for borrowers.
So, REAL ESTATE INVESTORS, rather than waiting until the “buy low” opportunities in real estate are at your doorstep, it’s a good idea to start lining up sources of cash and it doesn’t mean knocking on uncle John’s or cousin Joe’s doors. Banks very likely would be most happy to accommodate, as that is how they make money - by lending it out and charging interest.