New Foreclosure Wave Creates Opportunities For Wholesaling Houses
Is the U.S. about to experience a new wave of foreclosure? Where are the best opportunities for wholesaling houses appearing now, how can investors find the extra liquid capital to scoop up as many of these deals as they can while they last?
National statistics show foreclosures declining, and the crisis phase may certainly be over, but that doesn’t mean there aren’t millions of distressed properties deals waiting to become fuel for real estate wholesalers.
The crisis may be over and home prices may be rising but there are still millions of distressed homeowners out there with some states and cities seeing 100% rises in foreclosure filings, repossessions and auction activity.
Some have discounted this as being solely due to the massive backlog of properties in the foreclosure process in states like Florida and New York, but that isn’t the whole story. Recent data shows real net surges in brand new foreclosure filings as well as new information revealing around 46% of homeowners receiving loan modifications under the HAMP program are re-defaulting.
With no new help from the top on the way for struggling homeowners the foreclosure pipeline will continue to flow and deliver inventory for wholesaling large volumes of houses for several years. It is true that Fannie Mae and Freddie Mac have rolled out a new streamlined modification offer, but with no transparency on how many will be offered a deal, and still failing to offer principal balance forgiveness it’s unlikely to have any noticeable impact. Adding another decade or more to a borrower’s loan, even at a reduced interest rate often raises over all costs and the true APR, while burying them deeper under negative equity.
So where should investors be hunting for deals today? There are still very appealing bargains to be found all across the country. However, honing in on lists of those that modified loans within the last 5 years and are defaulting again, looking to the most distressed areas, and even tapping into luxury homes where more affluent homeowners are just now giving up can be very fruitful niches to explore.
The best part is that there is even more capital available than ever today and lenders are eager for it to be put to work in real estate. Crowdfunding and private lenders can offer attractive rates and easy processes, while transactional funding and commercial bridge lenders will provide 100% short term financing for securing great deals with virtually no risk.
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