Home Foreclosures Spell Bargains for Intrepid Real Estate Investors
The number of homes receiving a foreclosure notice fell in November.
Dec. 10, 2009 — -- A surging home foreclosure rate across the U.S. means only one thing to Jeremy Burgess: financial opportunity.
Burgess is part of a growing cavalcade of intrepid real estate investors who are capitalizing on the housing meltdown. They're buying up astoundingly cheap homes in foreclosure and reselling them at a profit.
In Michigan, where Burgess has been snapping up homes for more than a year, the number of default notices, scheduled foreclosure auctions and bank repossessions remain at record numbers.
That means some homes can be bought in places like Detroit for as little as a few thousand dollars, says Burgess, 34.
"If you know where to buy and how much to pay, you can do very well," says Burgess. "I've been here long enough to know that every foreclosed property presents an opportunity."
Unlike during the housing boom, today's property flippers don't need to use bank financing to secure sales. These investors typically work in cash and need only a little local market knowledge to secure a cheap property, say experts. In the states hit hardest by foreclosure rates, such as California, Michigan and Florida, investors have infiltrated the market.
Banks and mortgage investors have 639,000 foreclosed homes for sale across the U.S., largely concentrated in Florida, California, Arizona and Nevada, according to an estimate by Barclays Capital.
"You have some depressed towns and cities where almost half of the people buying properties are investors," says Florida real estate economist Lewis Goddkin, who says flippers typically stalk public auctions of foreclosed homes where minimum bids are low.
"In places like Detroit or Miami, you could have 80 percent of homebuyers be investors," Goddkin said.
The influx of property investors comes as foreclosure numbers are easing a bit.
A report out today shows the number of homes receiving a foreclosure notice fell for the fourth consecutive month in November compared to the previous month.
The report, released by RealtyTrac, shows a nearly 8 percent decrease in the number of foreclosures from October to November.
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