Why Is An Economic Recession Such A Great Time To Wholesale Real Estate?
As with any economic recessionary period there comes a wave of financial "hard-times" for many home owners
. These hard-times bring about an increase in foreclosure rates that are the result of many home owners no longer able to keep-up with the mortgage payments.Lending institutions in tough economic times are forced to foreclose on delinquent borrowers and will take back thousands of properties that they really DO NOT want keep as bank-owned inventory. The banks will often unload these properties to real estate investors at dramatically reduced payoff amounts. These properties are then purchased and then immediately resold at a profit by real estate wholesalers. This Investing style is called a "Short Sales".
Aside from the banks swelling with bank-owned or REO (Real Estate Owned) inventories, wholesalers also will see a big spike in "Private Sellers" drastically reducing the prices of their home in an attempt to avoid any foreclosure woes that may be headed their way!
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A recession will generally cause a wave of both "Private" and "Bank Owned" real estate that floods the marketplace all at once. This sudden influx of available inventory of real estate will kick-off a serious "Buyers Market" situation. Sellers who are in any type of crisis and who need to sell very FAST are forced to sell their homes at deep discounts just to avoid losing their homes to the bank in a foreclosure situation. Its a vicious cycle that just 'snowballs" as the recession worsens. Welcome to "2009"!
Experienced Wholesalers find it very easy to find incredible bargains in these HOT "Buyers" markets. A lot of people believe that wholesalers are just "capitalizing on others misfortunes", and some folks will conclude that the wholesalers are somehow evil! I see it completely different, whereas, I believe that the wholesalers are doing a justice for both the Banks and the Private Sellers. The wholesalers are buying up all of the banks dead weight and helping the banks "cut their losses" and are keeping thousands of private home owners from going into foreclosure and possibly even into bankruptcy.
Long story short, great priced real estate inventory is plentiful in recessionary times, making it the perfect time for savvy wholesalers to make a boatload of quick cash. Booya!
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by: Eddie Case