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Is there a way to profit from coming forclosures??
Old 09-18-2009, 06:04 AM   #1
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Is there a way to profit from coming forclosures??

OK, I posted this in Other topics and got 70 views but no responses. [The other thread has been deleted by moderator.]

So Ill try it here...

Is there an investment vehicle (does one even exist) that could potentially profit from all of these people that will be walking out on their upside down houses when the rate resets on thier ARM's?

I don't have the statistics handy but something to the tune of "between now and 2011 $100 Billion in option ARMS are going to reset"

If this happens and their payment goes from 800 to 2500 on a house that they owe 200k more than its worth there will be a lot of "walkers"

And not to mention the Commercial RE troubles ahead.

Is there anyway short of purchasing the acutal buildings at forcolsure prices to profit from this?

Any ideas...

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Old 09-18-2009, 09:09 AM   #2
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I'm no finance expert and therefore am unclear about the cause and effect here but I bought some shares of GNMA at $9.95 that can be sold today at $10.74. My zero coupon bond fund is also doing very well, somewhere north of 10%.

How about profiting by renting in this down RE market, I've heard you can negotiate the asking rent during this disaster. So far (nine months) living in a foreclosed apt. bldg. is pretty much the same as living in one that is leveraged to the hilt. This is a little out there, but I can tell you that the new owners of my bldg. haven't gotten around to raising my rent, I figure that has already saved me $300, money in the bank, so to speak.

Edit: to clarify, the "new owners" are actually the bank.

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Old 09-18-2009, 09:26 AM   #3
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I know some investor groups (hedge funds maybe) have been formed to buy this kind of debt. I even heard a program on NPR about one group. I can't remember names or location and the tough job may be finding a group to invest with. They likely do not advertise because of security laws concerns and likely you will have to be a qualified investor to invest.

For a number years we have invested with a small group that buys rental properties. It was a way to stay in the rental market without owning our own buildings. Recently we invested in a large rental property in Arizona, purchased at a seriously distressed price. The developer is good at this particular niche and good at his due diligence.

No more lawyer stuff, no more political stuff, so no more CYA

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Old 09-18-2009, 09:35 AM   #4
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Not to answer the question, but won't some of those ARMs reset at unexpectedly attractive rates given the mortgage rates today and some people see a drop in their mortgage payments?
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Old 09-18-2009, 09:36 AM   #5
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It does seem like there might be trouble ahead for ARMs
Calculated Risk: Iowa Attorney General: "Option ARMs are about to explode"
but I don't know how one might profit from it other than buy a REO at a discount. I believe that some hedge funds have started making bulk purchases of REOs. N.B. I do not know anything about the previous link, and include it just to show that a niche industry based on this already exists.

CRE may also be headed toward a cliff.
Wells’ Commercial Real Estate “Ticking Time Bomb” And Coming CRE Woes « naked capitalism
If you are brave, you could short big banks or REITS, but you know the old saying: if we are reading about it, then it is already too late.
The Coming Commercial Real Estate Crisis - Contrarian Stock Market Investing News - Featuring Bargain Stocks
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Old 09-18-2009, 12:47 PM   #6
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nnkrealtor: While I think your late to financial side of the situation, you might look into the MBS insurance policy purchase / sale, or underwater / defaulted mortgage purchase.
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Old 10-16-2009, 08:45 PM   #7
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Yes you could invest in shares for a company that specialises in forclusres sales or litigation....

Not sure on your status of short selling or options at present, but if that ban has been lifted, which i think it has, you could buy or right some options in some finacers you think have bad loans looming and bet on the downside.....

I would guess with your market jumping this quater, most analysts rightly or wrongly belive the worst is over....

The IMF is still saying 3.6 Trillion worth of debt problems to be resolved in short term......and if thats true then theres just as big a correction to come for the US/UK share markets... One wonders why the market is pricing this out of the market so suddenly...??
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Old 10-18-2009, 06:21 AM   #8
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What's wrong with just saving your money and not investing ? I know many older people that had to go back to work this year because they were investing. If they would have just plain saved their money then they would still be retired.

I refuse to hand over my hard earned money to some fast talking so called money manager. I once asked one of these people how much money they had and if they were investing where they told me to. He answered that of course not, he did not have the money ??

I made it through all these troubled times just fine. I use my skills to make money and then I save what I make.

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