Getting rich off sub-subprime foreclosures

[Olav23]

Caught this guy on nightline.

Basically buys a bunch of small homes sight-unseen for pennies on the dollar. Does no fixing-up, just sticks a sign on them that says down payment amount and monthly cost. People buy as-is, he gives them a 12% interest rate.

Bargain Basement: Foreclosure Rise Boosts This Investor's Bottom Line

[mathjak107]

foreclosures can be tough. i was once a partner in a tax lien purchase which paid off.

we had to evict the old owner which took almost 2 years ,so we paid back taxes and 2 years of current taxes.we are talking 7,000 a year .... we had to pay to remove and store all his furnature which was 20,000 bucks . the house was a shamble from neglect. when all was said and done we made a profit but id never do it again.

[samclem]

Quote:

Originally Posted by Olav23 Caught this guy on nightline. Basically buys a bunch of small homes sight-unseen for pennies on the dollar. Does no fixing-up, just sticks a sign on them that says down payment amount and monthly cost. People buy as-is, he gives them a 12% interest rate. Bargain Basement: Foreclosure Rise Boosts This Investor's Bottom Line

Even without any fix-up, this should be recognized for what it is: a job, not an investment. Except that this job requires an investment. And dealing every day with folks in tough economic straits. Peopel that have made poor decisions in the past. About an issue of survival to them (shelter). There will be big emotions and possibly violence. Your money and property will constantly be at risk, and there will e gobs of paperwork (evictions, back taxes, insurance). Other than that, it is fairly worry-free.

[al_bundy]

my wife used to date a guy who bought a bunch of apartments in NYC back in the 1990's when prices were so low that instead of a 3 to 1 mortgage to income ratio it was like 1 to 1 or less than 1 to 1. he is renting them out and making a killing.

RE cycles last years and in a few years they will be giving a lot of houses away in some areas

[Delawaredave]

Quote:

Originally Posted by samclem Even without any fix-up, this should be recognized for what it is: a job, not an investment. Except that this job requires an investment. And dealing every day with folks in tough economic straits. Peopel that have made poor decisions in the past. About an issue of survival to them (shelter). There will be big emotions and possibly violence. Your money and property will constantly be at risk, and there will e gobs of paperwork (evictions, back taxes, insurance). Other than that, it is fairly worry-free.

Great post above. I saw the Nightline clip- he does have an interesting "interim participation window" in the whole foreclosure process.

He creates value for himself through:
1. Lowballing on the property initially
2. Setting up the "$500 down, $400 month" financing package

He whips these together and then sells/dumps the paper to groups of investors.

It is more of a j*b than investing. I'd much rather "click click click" from my couch and buy index funds....