Article of the Month
“The Shadow Market” by Tony Youngs
2016 has been a year of real estate recovery. The rental market holds strong in most areas around the nation, and Wall Street has their hedge fund investors in some major cities buying everything they can get. They have been to Phoenix AZ, Atlanta GA, Tampa FL, Los Angeles, CA, San Francisco, CA, and many areas that you may not even know. They buy hundreds of houses at Foreclosure Auctions, and contact realtors to make offers. They are paying upwards of 95 cents on the dollar, and it is pushing the smaller local investors out of the market.
Their goal is to rent these properties for a while, and they plan to sell sometime in the future. Some suspect they are planning to package all the rents, and sell them on Wall Street. As I attend the foreclosure auctions all over the nation, I talk to many local investors that say they can’t compete with these guys, and they don’t know what to do.
Well, my take on it is you don’t have to compete with them. Ever since the foreclosure crisis of 2007 began, we investors have constantly had to learn to adapt to the market. Things are always changing. This is no different. As I meet and talk with these hedge fund investors, I found out what they are looking for. In my area of Atlanta GA, they say they like any house that is $150,000 or less, for a good positive cash flow. I have seen them buy 200-400 properties at one auction. They have a certain price range they like in any city. You can use the courthouse records to figure out their strategy if you are afraid to ask them.
There are several things you can do this year that will make you a lot of money. First, go out find deals for these investors in “The Shadow Market”. There are thousands of properties in large and small cities all over the nation that have no for sale signs, no ads in the paper, not on the internet, or MLS, and some are vacant, and some are occupied. The hedge fund investors can’t find them, but you can. I know because I’ve been doing it in every state over the last six years. No matter where I go, I plot a course of 12-15 recently repossessed bank owned properties to go, and make offers on. While I’m out looking at those, I find additional 20-30 “Hidden Market” properties, and find who owns them, and offer to buy. I get some fantastic deals that no-one else knows about. Then, I wholesale some to the hedge fund investors, or the local investors that can’t get any deals because of the big boys.
Sometimes, I will fix them up and sell retail as many homebuyers are having trouble finding homes also. You should be really excited for what this year has to offer. The market is showing healthy signs of recovery, and it is the best time to be actively working your market. I personally have not seen this many money making opportunities as I’m seeing today.
If you happen to see the hedge fund guys in your town, find deals for them, or find your niche in the houses they don’t want. Like in my area, they want $150,000 or less, so local investors should go for the higher price homes, and they can do well. Some investors are even taking loans subject to, on underwater houses, and still getting a positive cash flow. Even this will payoff in the long run.
In Summary, for 2014, you should be working the “Hidden Market.” The Hidden Market properties will be probate, bankruptcy, and upside down properties. So, brush up on those techniques including how to discount liens and second mortgages. With 11 million people that have not made a payment in over two years, I suspect the banks will be offering incentives to homeowners to sell their homes so they don’t have to foreclose and flood the market.
Tony Youngs has been a real estate investor for 25 years, and has been through all the ups and downs of market cycles. He can be found at www.tonyyoungs.com He is the author and creator of the “Hidden Market” system, and he also teaches many live training events all over America, and has several “hands on Training” classes in your state.