In essence locko you are 100% right.
As I think I said in a previous post, my wife said leaving a property 'well if they won't carry half the paper, we won't buy it - plenty who will!'
And it is true - however:
The 'amazing' buys are clearly foreclosures. Short sales are a pain in the butt and almost a waste of time. I buy the places genuinely for sale from the guy who geared up at the wrong time, got caught in downsizing (watch Company Men 2010) and is selling his place.
I like to buy these, and haven't bought a foreclosure - yet
You will be paying more, no question, but you are (hopefully) buying in a place where only one or two properties are 'distressed' and the neighbours are all AOK with mortgages created 10+ years ago (old money in other words).
Also remember the gearing issue. Say a place is for sale for $900k. Original mortgage of $700k. You immediately know they are really only wanting $200k. You 'assume' the original mortgage and offer them $100k cash and $120k at 6% for five years. That type of thing. You won't be making $800-$1000pm from a $70k property, you will probably be just over neutrally geared only - but have a much 'better' property.
Doing this also inoculated me against subprime. I really didn't lose any value since '06. Rents haven't really risen in about 8-9 years in my little patch, so it isn't a stretch of the imagination to see a 20-30% increase in the short term.
Or, you could always buy from someone who has added a 3-400% markup for painting the bathroom and achieve positive geared status on a $20,000 home. It seems this is a very popular alternative investment strategy.
Be interesting to see what happens!
Instant cashflow or future gains.....???...
BTW its become so second nature to deal with 2nd and 3rd 'notes' that I get a bit miffed when Australians won't do the same thing. Like when they look at me blankly and then say 'umm no!' I think 'gee - thats a bit rude!' Maybe one day...
PS: I'm pretty amazed _anyone_ would read this from start to finish! Well done! Or commiserations
As I think I said in a previous post, my wife said leaving a property 'well if they won't carry half the paper, we won't buy it - plenty who will!'
And it is true - however:
The 'amazing' buys are clearly foreclosures. Short sales are a pain in the butt and almost a waste of time. I buy the places genuinely for sale from the guy who geared up at the wrong time, got caught in downsizing (watch Company Men 2010) and is selling his place.
I like to buy these, and haven't bought a foreclosure - yet
You will be paying more, no question, but you are (hopefully) buying in a place where only one or two properties are 'distressed' and the neighbours are all AOK with mortgages created 10+ years ago (old money in other words).
Also remember the gearing issue. Say a place is for sale for $900k. Original mortgage of $700k. You immediately know they are really only wanting $200k. You 'assume' the original mortgage and offer them $100k cash and $120k at 6% for five years. That type of thing. You won't be making $800-$1000pm from a $70k property, you will probably be just over neutrally geared only - but have a much 'better' property.
Doing this also inoculated me against subprime. I really didn't lose any value since '06. Rents haven't really risen in about 8-9 years in my little patch, so it isn't a stretch of the imagination to see a 20-30% increase in the short term.
Or, you could always buy from someone who has added a 3-400% markup for painting the bathroom and achieve positive geared status on a $20,000 home. It seems this is a very popular alternative investment strategy.
Be interesting to see what happens!
Instant cashflow or future gains.....???...
BTW its become so second nature to deal with 2nd and 3rd 'notes' that I get a bit miffed when Australians won't do the same thing. Like when they look at me blankly and then say 'umm no!' I think 'gee - thats a bit rude!' Maybe one day...
PS: I'm pretty amazed _anyone_ would read this from start to finish! Well done! Or commiserations
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