A recent report from real estate industry data clearinghouse and analysis firm RealtyTrac says that foreclosures are up nationwide. Way up.
Overall, RealtyTrac’s analysts report that over 125,875 homes were in foreclosure last April – a 9 percent increase over the twelve months ago. Housing repossessions were also up by 25 percent in just the last month.
True, both foreclosure starts and repossessions are still well below their highs in the dark days of 2009 (then again, if you were a cash-rich ‘deep-value’ vulture investor, these may have been the best days of your life!). But the sharp and sudden increase in repossessions spells good news for buyers – including Real Estate IRA investors.
What it means
When a bank takes possession of a home in foreclosure, it becomes an “REO” property. “REO” in this case, doesn’t stand for something involving a Speedwagon. Instead it stands for “Real Estate Owned” by a bank, credit union, mortgage company or other lender. All their attempts to collect on the original mortgage have failed, they went through a lengthy legal process that can take months or years, and finally they own the property.
But they don’t want to keep the property. They aren’t in the real estate business. They’re in the lending business. They don’t want to deal with repairs, or paying property taxes, or lawn maintenance or trying to find a renter. That’s your job!
Instead, these lenders want to sell these houses as fast as possible, recover as much of their loss on the loan as they can, and turn that cash back into loans.
That’s an opportunity for you.
The more homes that are being repossessed and turned into REOs, the more homes are on the market. These repossessions create a temporary glut of inventory on the market and hold prices down until they are sold off and inventory levels.
If you have an IRA and an interest in real estate, you may well have a ready source of cash that you can use to take advantage of the opportunity. As a cash buyer, you would have a substantial speed advantage over anyone in the market who has to sign purchase agreements “contingent upon financing.” In fact, you may only have a day after the auction to come up with purchase money if you buy property through the foreclosure auction process at the courthouse.
But that’s not the only opportunity in the market. When foreclosures go up, so do “short sale” opportunities: That is, opportunities for you to purchase the house before it goes into foreclosure, saving both sides the time and expense of the foreclosure and auction process.
A short sale is simply this: An agreement to purchase a home for somewhere less than the outstanding loan on the property. The bank, of course, must agree to the short sale – which they will often do if they don’t think they can recover the full amount of the loan balance via a foreclosure.
In either case, when you choose to self-direct your IRA or other retirement account, your self-directed retirement account can serve as the ready source of cash you can use to buy these assets.
From there, you can hold the property as an income property or rental, or fix and flip the property for tax-deferred profit (tax free if you own the property within an Roth IRA).
If you are comfortable with real estate investing and have an IRA with sufficient funds to acquire good properties in your market (you can borrow up to about 65 percent of the purchase price of investment properties within the IRA, if you choose to use leverage), you can easily get started now acquiring properties to help secure your income in your retirement years.
To get started, open an account with American IRA, LLC, transfer the required balance from your IRA to an IRA with American IRA, LLC, and tell us where to send how much money for what property.
It’s that simple.
To get started, call us today at 866-7500-IRA(472). Or visit us on www.americanira.com, where we have an extensive informational library on real estate IRA investing and related topics. We look forward to working with you.