subject: Investors Lining Up For Foreclosure Properties [print this page] Investors lining up for foreclosure properties
Source: Bloomberg (March 31 2010)
Flipping is back and there is a very high competition for buying foreclosure houses in some states of U.S. such as Arizona, California, Florida and Nevada. When the housing market was booming many new real estate investors spent on house flipping and now the process is known to many real estate investors. Make changes in the look, spending on new paint and sell the house at a higher price.
House flipping increased in U.S. in 2009 by 19% to reach 197,784 and the result may rise further because the record of fourth quarter has not been included. According to the data released by RealtyTrac Inc., in Phoenix, in six months of buying, 4,661 foreclosed homes were sold, which shows an increase in value by 81% .In California, flipping rose in San Bernardino and Riverside by 45% to 17,203. In Las Vegas, foreclosures were highest and flipping rose by 38% to 8,042.
One year waiver of anti flipping
Flipping is not a problem until the mortgage loans are paid and one year waiver of anti -flipping started on Feb. 1 , which allowed the Federal Housing Authority to buy foreclosure homes, which was held for less than ninety days. The first time homebuyers got an opportunity to buy renovated homes and the feature helped in clearing properties inventory.
A high number of flippers and investors planning to give the properties on rent are gathering at auctions of foreclosure homes. Many investors subscribe to auction service through a real-estate company and as the auction is carried out, they are provided with photos and description of the houses, through mobile phones.
Mayfair Group provides foreclosure properties in Detroit to investors and it also provides asset management features on the properties. Investors can subscribe to the companys offer through online resources and avail the benefit of cheap foreclosure properties without visiting the city Detroit. The company provides a list of properties to make choices and the investors can bid to get the properties of their choice. Mayfair local partners in Detroit take care of the property and relocate a reliable tenant into the house.
Many amateur flippers invested in real estate in the year from 2000 to 2005.The prices of U.S. homes rose by an average of 8.1 percent a year, during this time and now, the market has many qualified flippers. There are investors who feel this is time, which can benefit more than the boom period as you can get pricey homes at a low cost and then, you can get profit on selling the house at half the market price.
Flipping and job market
Flipping provides jobs to carpenters, home inspectors and construction workers, and until the house a sold; the owner has to spend on maintenance.
Impact on market
One of the investors from Phoenix said flipping helps in improvement of housing market because government do not have enough funds to invest in the improvement of foreclosure homes and the policy of FHA of flipping waiver benefitted the investors, who improved the condition of homes to sell it at higher price.
FHA waiver may not have impact on buyers, who are buying in cash, but for FHA borrower, some additional paperwork is needed and two appraisals are required, in case, the property is sold for 20% more than the cost price.
International buyers in U.S. Housing
There are many international buyers who are interested in buying rehabilitated houses as per the information given by real estate agent Brad Cozza. There are many wealthy investors from Germany, Israel and Spain who are buying properties along the Florida coast and many foreign investors are vacation buyers, who have a considerable saving. Florida had the second highest rate of foreclosure in U.S. after Nevada and international buyers are trying to benefit from foreclosures.
About 925 Israeli investors participated in a conference organized by America Israel Investments LLC, who were interested in buying the foreclosure homes. The homes are flipped for a cost of around $80,000 and the houses can pay about $1,300 a monthly rent. Israeli investors feel this is right time to find something good in U.S.
