11.28.08

Happy Black Friday

Posted in random musings, real estate tagged , , at 9:42 pm by realestatecash

Happy Black Friday!  For those of you with money, all sorts of assets are for sale at rock bottom prices.  Go forth and buy!

  • In many parts of the country you can scoop up houses for less than the cost of building them.   A friend of mine is buying houses in Florida for $25,000 when just a few years ago they were selling for over $100K.   I challenge anyone to be able to build a home at $25,000 (mobile or pre fab homes don’t count).
  • Stocks are for sale, Warren Buffet is reportedly on a buying spree.  And why shouldn’t he be?  With his knowledge of what constitutes a good company (my guess is that no or low debt on the balance sheet is one criteria) he can get good company stock for cheap.

So those of you with cash that are sitting on the sidelines, buy an asset!  It is almost hard to go wrong.  Invest for the long term and be prepare for prices to dip more .. but if you have the long term view you will be ok.  To me real estate seems more like a sure thing than stocks, but it depends on what you know best and your willingness to manage your asset (stocks don’t stiff you for 2 months rent and then leave a mess to clean up).

And, if on this Black Friday, you insist on being a consumer rather than an investor, you still have great bargains awaiting you.  New cars are selling for thousands less than they did just recently.   The settlement on a wrecked 2006 Prius was enough to buy a brand new 2009 in one case.   Dealers are so desparate that there are buy one and get one free deals out there.   Anyone up for two Dodge Rams for the price of one?

11.05.08

loan modifications, alternative to foreclosure

Posted in financial, real estate tagged , , at 2:49 pm by realestatecash

Loan modifications are becoming a popular alternative to foreclosure.  A loan modification, sometimes called a workout, is where the lender changes the terms of the loan, such as the interest rate, the amortization type, or even the principal balance (dropping  the principal balance is still not common but it does happen). The idea is by changing the terms of the loan to lower the payments the borrower can continue to make payments on the loan and prevents loan from becoming non performing.

Here’s what I have heard so far on loan modifications:

  • They are not working with investors
  • They won’t talk to you unless you are behind on your payments
  • The customer service folks won’t help you, you have to talk to the actual decision makers

Of course this is all hearsay.  However I do believe there is some truth to the buzz I’m hearing.  Navigating the bank hierarchy to get agreement on a loan modification is hard.  That is why there are a number of companies that will help you do just that.

According, to the Loan Modification Handbook the first step is to draw up a hardship letter and a budget. What can you afford? And why do you need a loan modification? Banks are numbers businesses and if you can show them that the new numbers make sense you might have a good chance of getting a loan modification.