Struggling with an oversupply of homes, a growing number of foreclosures and falling home prices, the housing market is ripe for investors like Andy Baker, who is buying distressed properties and renting them out at a profit. Baker — and his twin brother
“We start our day by pulling the new pre-foreclosure data off the RealtyTrac site,” explained Andy, who started buying foreclosures in 2005. “Then, my brother and I split the leads and we start knocking on doors.”
The door-knocking campaign has paid big dividends for the Baker twins. The 28-year-old duo has amassed 14 single family homes and six multi-family units. Andy, who is a licensed real estate agent in
The Baker twins and other investors have found a booming niche working foreclosures while the standard real estate market is stagnant. For homeowners, Baker says, it’s a financial catastrophe. But investors can step in and save the homeowner from foreclosure while still purchasing a home below market value. Then they can rent it out or resell it at a profit.
Nowhere are foreclosures surging more than in
“In some areas, you can buy a home for the 1997 value,” he said. “We’ve lost 10 years of appreciation. Everybody is trying to figure out if we’ve bottomed out. I think we’re close.”
Bommarito — who has a growing business handling bank-owned foreclosures, also known as real estate owned, or REO properties — said Rust Belt states such as Michigan, Ohio and Indiana are struggling because of mass layoffs at the big three automakers, coupled with the subprime mortgage meltdown.
“The subprime market propelled the real estate economy in
With more than 430,000 foreclosure filings nationwide in the first quarter of 2007 — up 35 percent from a year ago — more homeowners are losing their homes to foreclosures because they can’t afford to pay the mortgage. And many are predicting a continued rise in foreclosures over the remainder of the year as lenders clamp down on what mortgages they approve.
Like the Baker brothers, investor Les Lazarus is busier than ever. Lazarus is currently working on selling10 foreclosure homes in various stages of repair. Unlike Andy and Chad Baker — who purchase and hold their foreclosure properties — Lazarus buys and flips foreclosures for a living.
“Before I bought my first foreclosure, I spent one year going to auctions,” said Lazarus, who started investing in foreclosures in 1998.
Lazarus, who now buys 10 to 20 foreclosures a year in
“Buyers are finding it tougher to get financing,” Lazarus said. “Today it’s harder to sell my properties because all the subprime loans are going away. Mortgage companies are stricter now with their loans. It’s harder on the selling end. But our market here in the
Because buying foreclosed properties at the auction is more risky, and negotiating with distressed homeowners is time-consuming, some foreclosure experts recommend buying bank-owned foreclosures.
“The word is out.
Jon Callaway, a
Asked if the subprime fallout was slowing his business, Callaway said: “Absolutely not. Business is great. It’s not hurting me. Greed pushes crummy financing. Until the lending institutions make corrections, foreclosures will continue to rise.”