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Are buyers, sellers ready to get back into housing market?
Date published: 2/20/2011
Jack Carr figured the time was finally right to start investing in real estate again.
He found a short sale in the Olde Greenwich townhouse development in Spotsylvania County that he knew he could rent for more than the mortgage payment.
Carr, who is a property manager at Landmarc Real Estate in Spotsylvania, signed a contract and was about to go to closing when the bank foreclosed. He ended up buying the property on the courthouse steps last November for $1,000 more than he'd originally intended.
"The value was still there," he said. "That's mainly what I look for, a positive cash flow. If my mortgage payment for a rental is $800 and I can rent it for $950, that's positive cash flow."
It also didn't hurt that Carr, who had been buying rental property until real estate prices began skyrocketing in 2003, already had a renter lined up.
"The rental market is very good right now," he said. "There are a lot of people who lost their houses, good people, and there's a demand for rental property. I try to provide for that need."
The majority of today's buyers are investors such as Carr, who are buying short sales, foreclosures and bank-owned properties because they see the chance to get a good return for their money.
"We're having a tremendous amount of investors taking money out of the stock market and mutual funds and buying property to rent or resell," said Jim Smith, co-owner of Century 21 AdVenture in Spotsylvania.
Not only can they make more money by renting the properties, he said, but the houses will grow in value as prices begin picking up.
At Coldwell Banker Carriage House in Fredericksburg, broker Sabrina Anderson said that the bulk of her office's business is in short sales and bank-owned properties. She said many are paying cash for the properties, fixing them up and flipping them once the repairs are done.
One problem that they're running into, as Carr discovered, is that many of the short sales on the market are going to foreclosure before the deal can go to closing.