Another contrarian success story

Ok I have been talking about a bunch of downer shit lately. Time for a success story. I have some friends. I absolutely love them to death. One day we will be fishing off the back of some BIG BOAT(big boats suck unless you have a big boat) and reminisce about these days. I am about to go work with them on flipping short sales. They have spent the last few years putting a system in place. They are on the cutting edge of the great RE clearinghouse. I truly believe they are a contrarian riches story. They have short sale negotiation to a science, and are putting a system in place to handle the volume. 1 in 8 loans are in the crapper right now. Currently foreclosures are down, but defaults are at a scary level. I know some peeps that can't cover their nuts right now. It's in my world so it's real. If you build the right relationships, there are fortunes to be made. Loss mitigators want files off their desks. They get paid bonuses to clean up files. They are also overwhelmed, and really don't give a crap about the screwed borrower. To them it's just a file, and they are overworked.

I've been told that being sweet, and constant follow up is the skill needed. It can take 4 months to negotiate thru the muck, then you have 3 days to close once you get approval. It's a numbers game and not all work out. You better have impeccable contracts, a kick ass title person, and a marketing force to get rich. If you do you just might. These guys are on to something. If your in a jam and need short sale help it's http://www.shortsalespa.com/ . Good people who really care about the seller. They have an 80% close ratio. If it was baseball, they'd be all stars.

Wrestling with Appraisers On short sales

I almost had a short appraisal kill a deal for myself recently. The appraiser used a few low ball comps. I pulled a few of my own retail comps to try to help dispute his appraisal. He wouldn't even look at them, and at the end of the conversation I proceeded to curse him out. I am sure he was a part of all the fraud over the previous few years, and now he wouldn't even make a few thousand dollar adjustment on an FHA deal which was the buyers dream home. I guess he's afraid of something. Once again it is government intervention, too little, too late. I always said appraisers should never see an agreement of sale, so we could get a true opinion. Now that all the damage has already been done they change the rules. Now they are killing deals of people just trying to buy a place to live. What a crock of $hitit this is. One of these days I will have something good to post. Believe me I am searching hard for an opportunity to benefit from this trainwreck. Everyday I search the web for info, this is what I find. This could get real ugly. The 2nd wave is out at sea building right now. Don't let the stock market or media fool you. We are in for a long hard road to recovery.

I saw some really crazy stuff today

I was looking at some short sale opportunities today. It's a rather large portfolio with a pretty typical trainwreck story. Today I looked at 20 properties in some old industrial cites of SE PA. It's amazing the decay of what was once some amazing housing stock, as far as craftsmanship goes. It is really sad what it has become, and the destitution of the population living here.

I must admit sometimes I wallow in my own self pity of how a failing business can bring me down. I had a wake up call today. I may have some financial struggles, but I am not struggling to survive. Looking at these properties today I saw what true struggles are. The 1st building we went in to was obvious that people were breaking in to drink, do drugs, and crash. There was no power or water in the house, and it appeared they used candles for light. The next property around the corner was quite startling. The front door was open, and the house was rather clean. The power was on, the water running, and it appeared someone was cooking in the kitchen when we walked in. About 3 trash bags worth of clothing and a few jackets were lying right by the front door. A few dolls and a small doll house were on the living room floor. There was about 3 or 4 days worth of basic food in the fridge. Upstairs there was a single mattress, and a tiny air matress, and TV with DirectTV box hooked up. This is a home that was supposed to be vacant and not cleaned out yet. The tenant was evicted in May. There was even mail sent to the address concerning her food stamps. When we pulled away we saw a woman and small girl appear on the sidewalk from the neighbors. We drove around the block and saw them standing out front. It was obvious they were afraid of what happened.
The next few properties weren't secure either. It appeared all the back doors were pried open, and the locks on the front doors were changed, because none of our keys worked. The one house looked like someone was dealing out of the kitchen since it was tough to get out back, and the train tracks were right out back for a quick getaway. I actually chambered a bullet in the barrel of my pistol. I have never carried it chambered before. The neighbors were all checking us out with concern. Two white guys taking pictures and going in and out of buildings seem to make people nervous. The blight of these areas is worse than ever, yet for one reason or another alot of people still choose to live there. The rent must be really cheap.

These properties were bought between 02 and 04. They were bought pretty well, and it apperars the guy did a lot of cash out refi's(who didn't, I know I raped a few buildings to buy some more) The amount owed on these properties is rather staggering, compared to what they are worth. There was most definetly some fraudulent appraisals pushed through, by greedy underwriters. Our offer prices might be 25% of the debt owed, and even then I don't know if they are worth it. To be quite honest, if these properties go back as REO's I truly wonder if anyone will ever live in these properties again, or will they just be boarded up, and decay to nothing. Slowly but surely a once thriving industrial city will become functionally obsolete, and decay to nothing. I have seen a lot of $hit in the 13 years of being a RE investor and landlord. What I saw yesterday was the worst I have seen.

All About Short Sales

No, not the first picture...the 2nd picture

One of the key tools any contrarian investor, especially one buying real estate, must know is the ins and outs of short sales. Without further adieu, our first in a series of education related posts designed to help bring out the inner contrarian in you:

1) Insider's Guide to short sales
2) 10 FAQ's about Short Sales
3) Short sale secrets
4) Questions to ask about a short sale
5) Short sales- the definitive article
6) Downside of Short Sales
Discuss your experience with short sales in the comments below