Good to see you! Have you written anything lately that you might like to share with the group. Your previous guest posts were excellent! I’m going to give my quick answer to your questions and then pass this along to Jeff, the author, and invite him to respond. It seems obvious to me (what can I say? I would summarize my entire economics degree in three words: supply and demand) that bulk sales of REO properties to investors will at the very best initiate a turn-around by driving prices up (simple supply and demand logic) and at the very least, provide a much needed buffer to ease these properties onto the market (thus avoiding or minimizing the chance that the market is flooded with a glut of properties and no real buyers). I believe that many of these buyers are fat cats with large sums of money to invest and are prepared to sit on the properties for the long-term hold. This is the best case scenario in my opinion. This may provide the spark that is needed to get real estate economies across the nation going in the right direction. On the other end of the scale, we have fix and flip investors who will buy the properties REO, fix them, and put them back on the market. Even here, the average turn time should be at least a year, providing some much needed buffer. Time is our friend (in my opinion). Mind you I am not arguing in favor of government intervention. I believe that all of this can happen without the government getting involved. See my post, As Goes Miami if you would: http://privatemoneysource.com/blog/real-estate-market-general/as-goes-miami/. Okay, now I will go looking for the right man to answer these questions. See you shortly. Clay

Thank you for this very encouraging and generous response. I hope that we do have the opportunity to work together at some time in the future. I have to agree with your conclusion that you are not in a unique situation. The last four years were tough on lenders. And in particular, the lenders I work with who are tight on funds in this way are the ones who had money invested when the tsunami hit (so to speak)–that is those who had had funds invested into a number of loans at the time when the sub-prime market collapsed and the banking sector virtually diapered. The good news is that I see those folks working, in most cases, successfully through the recovery process (via extensions, workouts, or foreclosures/re-sales). Not all of these folks will come out whole, but a fair number it seems will come recover quite successfully (given the patience to do so). It also seems that new investors who have entered the market in the past 2 years (or so) are doing much better, as they went in with full knowledge of the potential issues, and thus (a) had a better opportunity to assess the new price trend of the target markets, (b) made the loans at a slightly more conservative LTV, and (c) ensured to the best of their abilities that the borrower had a solid exit strategy. Thanks again Frank. Let me know when you are ready to place recovered funds, and we can explore further at such time how we might work together. Best, Clay

I have been reading and enjoying your posts since day one. I am a private hard money investor who might now be investing with your company if all my money wasn’t now tied up in being a landlord because of the collateral properties I had to foreclose on and take back because of the tight lending market preventing my borrowers from being able to re-finance, or going under for various other reasons.

I think many investors are in a similiar situation of wanting to invest now but having their money tied up in properties that were once collateral and which cannot be unloaded in this real estate market. So I bide my time (years) until I can free up cash again.

I have enjoyed posts in the past that were first person stories of other investors/borrowers such as that guy from New York you did quite a while back or your story of doing underwriting on the California property in the Malibu area.

Keep writing but not too frequently so you don’t get burned out.

Frank

Thanks,
Clay

I don’t know. I am not a general investment adviser and I’m sure the answer to that question would depend on many factors.

Clay