With no apparent end in sight for foreclosure moratoriums, how are investors finding deals now?
Foreclosures have been a staple for real estate sector investors since 2008. With few coming to market, how can investors keep up their deal flow and find real deals?
Investors are often looking for distressed assets and discounts. Foreclosures filled a lot of that demand for over 13 years. It’s all that some green investors know.
That flow has been changed by new policies over the past 18 months, with almost no REOs in the single family space to bid over.
If borrowers no longer have to worry about any consequences for not making payments, and are not under any financial pressure to do so, or won’t end up in foreclosure, where can investors find deals now?
Find Other Forms Of Distress
It is important to note that not all borrowers are covered by the current foreclosure moratoriums and new mortgage servicing regulations. All should be offered a fair chance at help and saving their homes. Yet, some properties will end up as foreclosures and REOs anyway, whether it be because properties were vacant, loans weren’t federally backed, or borrowers defaulted during forbearance plans.
Another option is adjusting where in the process you are sourcing deals. Instead of waiting for them to become REOs, you may look for pre-foreclosures and even participate in investing in non-performing loans instead of directly in the properties themselves.
There are many other reasons that people are at risk of losing their properties than falling behind on mortgage payments too. This can also happen due to judgements, past due taxes, and divorce settlements. There are many reasons owners are simply motivated to sell, such as when relocating, downsizing, wanting to clear up their credit, and dealing with large unexpected bills and job losses.
That’s in addition to veteran landlords who are just ready to hand the baton on to the next generation.
Diversify & Expand
Another option is to focus on diversifying and expanding instead of digging deeper in the same place. Sooner or later, if you aren’t striking water, gold or oil in one spot, or you’ve mined it all out, it just makes sense to go search elsewhere right?
One part of this is that you can diversify into other asset classes. Instead of single family homes you might look into multifamily and commercial real estate. If you invest in mortgages, you might look at nonperforming loans, second mortgages, or commercial mortgages.
Or literally expand into new markets, whether that is another city, state or country.
There are deals out there if you know where and how to look for them. If you are still coming up dry, then expand your network to connect with those who do have the deals.
Find out more about investing in secured debt and real estate, go to NNG Capital Fund