By: Dennis Norman
In part one of this story I gave some history of sources I have found for “good deals” in my 29 years as a real estate investor. I also talked about how as times changed those good sources went away. I left off with the S&L Crisis of the 80′ that resulted in the formation of the RTC. Now, to pick up where I left off:
During the 80′s and into the 90′s another good source of property for me was foreclosures. I researched 
properties being published for foreclosure and purchased them either directly from the owners that were facing foreclosure, prior to the foreclosure sale, or at the courthouse steps at the foreclosure auciton itself. This also proved to be a good source of property and, when we were able to purchase the home direct from the owner, made me feel good that we had helped the owner avoid foreclosure and protect their equity in the home. Initially, and for several years afterward, this was a source of good deals with competition limited to other professionals in the business. This was largely a result of several things:
- Information – Us professionals in the business subscribed to the legal newspapers, knew how to look up addresses from legal descriptions, knew how to research titles and understood the foreclosure process….these were things that novices or amateurs did not have access to at the time.
- Financing and other financial resources – Again, professionals in the business had an edge…we had cash and lines of credit that enabled us to move quickly and close deals within a matter of days…
As time went on and the internet grew in popularity information of all kinds became available to anyone with access to the internet. This included not only information on property in foreclosure but also how to purchase these, title information etc. in addition, during the 90′s banks became much more aggressive and dependant on real estate loans for their growth. This resulted in financing to purchase foreclosures becoming much more available as well as being available to novice’s and amateurs and not just professionals. Once again, another source of “good deals” gone….
Finally the millenium comes along and we find ourselves dealing with, thanks to the internet, information that was formerly only available to real estate “insiders” available to everyone. Investing in real estate suddenly became sexy and something that it seems almost everyone was doing. The real estate industry enjoyed about a 5 year run from 2001 through 2006 where prices were appreciating and demand was outpacing supply. Then, aournd the 4th quarter of 2006 or the 1st quarter of 2007 the real estate “boom” was over and the market cooled…rather rapidly.
This market slow down, along with an rapidly increasing rate of delinquencies as well as a general melt-down of the economy led to a rapid increase in foreclosures and ultimately REO’s. Finally we arrive at REO’s! Stay tuned for part three of this series to read more about that..
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