Credit Crunch Turning Screws on High-Equity, Free-and-Clear Sellers
Wednesday, October 29th, 2008You don’t need any cash or credit to buy in today’s down-turning markets. There are some especially hot, moneymaking strategies right now, depending on where you are and how you like to approach your deals. One of my personal favorites for making tons of cash is high-equity of free-and-clear real estate investing.
Why? Because by definition, properties that are owned “free-and-clear” have no mortgage debt and, as a consequence, fewer complications that can complicate or slow a deal down. Another reason I like this strategy is that the bulk of these homes are held by the most rapidly growing segment of the U.S. population: Retirees and Baby Boomers.
Experts Say Even Free-and-Clear Homeowners are Feeling the Crunch
“In the world of household balance sheets there are two Americas. Roughly two-thirds of homeowners have mortgage payments to worry about and are, to a large degree, tapped out. The other third own their homes free and clear and a lot of them have money in the bank. But they are hesitant to spend it on either a new fridge or shares of General Electric,” Forbes reported earlier this month. That’s about 24 million homeowners, many of whom are feeling the pressure of tightening credit markets — and options for when the going gets tough.
Credit Shortage Ups the Ante on Seller Motivation
Even among the 24 million free-and-clear homeowners, one-third of them are soon likely to find themselves underwater in these properties and, due to the credit crunch, they’re also facing new challenges in obtaining the easy credit to help them through the rough spots as the uncertain economy struggles for a lifeline to recovery, predicts A. Gary Shilling in an editorial slated to Appear in Forbes’ November issue.
Follow the Snowbirds to Real Estate Bargains
In a post-hot, down-turning market, such as what we’re seeing now in Florida for example, prices are dropping and properties are staying on the market for a long time. In such areas, high-equity, free-and-clear properties are a no-brainer investment bargain.
Free and Clear Market Research & Strategy
The real estate markets with the highest concentration of free and clear properties often are in areas with especially high senior citizen populations because so many of them have reached a point in their lives where their homes are completely paid off. More often than not, desire or need to downsize comes with this phase of life. These factors stimulate seller motivation to make a great deal.
In terms of geography, investors usually can find the best selections of hot free and clear properties in coastal areas. Some great current examples include:
- California,
- Florida,
- Oregon,
- Washington and
- Boston.
Free-and-Clear Markets Are Springing Up
Although they’re not coastal areas, it’s definitely worth noting that we’ve been finding that Arizona and Utah have strong emerging — and virtually untapped free-and-clear markets just waiting for investors to come along and reap the profits.
The trick with free and clear is to go into the deal and pay 100 percent of the seller’s asking price, but do it on your own terms. For example, the owners want $200,000 for their home and I’ll agree to that price, but pay maybe $500 per month on a zero-interest loan over the next 10 - 15 years, and I can cash flow that deal.
High-Equity Real Estate Investment Tools of the Trade
SalesTeamLive’ Free-and-Clear Done-for-You Marketing Campaigns are perfect tools for investing in high equity, free and clear properties because we’ve got the best lists for virtually any market segment and we’re constantly working on adding new technologies and refinements to ensure we’ve got the best lists out there. We’ve also got legendary real estate genius Richard Roop writing the marketing copy that’ll make prospective clients putty in your hands.
Hedge Your Bets with Free-and-Clear Investing
Investing in properties that have no mortgage burden also a great inflation hedge, an attraction that’s growing in appeal for a growing number of Americans who’ve been watching the markets –and been feeling the gravity of our economic roller coaster ride this year.
Think about it. If we’re hitting huge amounts of inflation, milk isn’t going to be $4 per gallon; it’s going to be $10 per gallon. At that point, there are only a couple of places lefts where you can safely hedge your bets. Generally, when you have inflation, gold, silver, platinum and those types of things go up in value, but you can’t generate any income off of them. With real estate investments, not only do you have a great hedge, you’ve got cash flow. Especially if you BUY RIGHT.
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