B>Don't Try to Catch a They even have a little song
Falling Knife they and the passengers sing as
This is stock broker's they tootle around Sin City, "All
phrase telling investors not to aboard the Foreclosure Express,
try to buy "bargains" when the Climb aboard and get your houses
market is in a free fall.
for less"
In order to lower your risks,
Less than what?
you let the market bottom out,
Less negative cash flow than
even bounce once or twice before caused the last owner to crap
buying. Just don't think you can out?
catch that falling knife without
The example quoted in the
getting hurt in the process.
article looks like this
The Residential Property
3 bed
Knife
2 bath
Residential Real Estate "granite counters and a small
Markets are in a free fall in bricked yard"
many areas and I am going to go $235K in 2003
out on a limb here and say ... $395K in 2006
don't buy into this first wave of for sale now by the bank at
bargain hunters.
$285K
The thing that triggered
What a bargain ....
this thought is an article in the
Head's up... There's no
WSJ about the "Foreclosure Bus" Bounce in sight...
in Las Vegas.
The problem here is you are
Seems a local Real Estate looking at a falling knife with
Agent couple have purchased a bus no bounce in sight. This
and dolled it up to tour residential splat is not due to
prospective buyers around to the bottom out until mid 2009! This
foreclosed properties in is not even the midpoint of the
town.
projected meltdown in single
family houses. bargains that will start showing
If you do buy a "bargain" up as more time passes and we
now, here are some questions that drop deeper into the slump.
you might want to answer before
Your "Green Light"
you sign the contract...
Another analogy from the world
- What lender are you going to of stock brokers is that you are
use?
not at a market bottom until you
Don't believe what they are see signs of "Capitulation". The
telling you about loan terms. We Foreclosure bus is not one of
are in a major credit crunch. those signs.
Until you get to the closing
When the owners of the
table their rates and LTV's are foreclosure bus have completely
very fluid and they may drop you given up ... certain that the
altogether at any point in the market is so bad no one will ever
process.
buy another house again ... when
- What rent will you expect to you see the Foreclosure Bus sold
collect?
for scrap and mashed into a
Your's is not the only new little cube by the car crusher
rental on the market so watch for ... THAT is Capitulation. That is
falling rents and lower quality your buy signal ... your green
renters.
light.
- Will that "bargain" continue
That's when you take that
to drop in value along with the pile of cash and start snapping
rest of the market?
up the real bargains.
There is another
In the meantime...
way
There's always Texas
I would suggest that if you multifamily...
are a determined single family
investor you hold all the cash
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About the Author:
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Article Tags: bounce, bus, real
