As with many areas around the country, St. Louis neighborhoods have been hit hard by foreclosures. In a letter I received recently from Kit Bond, he states that nationally mortgage delinquencies are at their highest rate in 23 years and that more than 57,000 homeowners are delinquent on their mortgages in Missouri alone. According to data from RealtyTrac, there were 3,398 Missouri foreclosures on the books of the nations financial institutions in the third quarter of 2009.
What does all of this mean for St. Louis foreclosures? Well, there are two ways that homeowners and homebuyers view these statistics.
Many homeowners are in trouble and searching for solutions or a way out. It might be worthwhile for them to look into a short sale or to call their current lender and request a loan modification. Despite what you may see in the news, there are many lenders that are willing to work with homeowners that are in trouble. It doesn’t matter if they are trying to save their public image or don’t want to add more foreclosures to their books, the bottom line is that some are still willing to help you get caught up and back on track.
On the other hand, there are investors lining up to purchase St. Louis foreclosures in hopes of rehabbing and reselling the property or even holding onto it as a rental property while waiting for the market to rebound. These investors are discovering that their are homes currently selling for 50-70% of the what they were selling for during the market highs of 2005 and 2006. Ideally, these investors are restoring the properties to good condition and helping to stabilize and rebuild the neighborhoods hit hardest by St. Louis foreclosures.
My advice to each of the two parties would be this:
If you are having trouble keeping up with your mortgage payments, contact your lender first. Try to work out a loan modification to help manage your payments if at all possible. If your lender will not work with you, call a real estate agent knowledgeable in short sales and attempt to complete one in an effort to protect your credit rating and future opportunities.
If you are an investor or would like to be, now is the time to get in. With properties selling between 50% and 60% of what they were selling for just a few years ago, you have a tremonous opportunity to create wealth if you are positioned well and patient enough to ride out the tough times.
Thursday, December 10, 2009
Thursday, August 13, 2009
The State of Real Estate Investing in St. Louis Part 1: Choosing An Area
Homebuyer’s and real estate investors are becoming increasingly aware of the opportunities for real estate investing in St. Louis. With the demise of the sub-prime mortgage market along with the faltering economy and unemployment rate increases, many people are beginning to realize that now is a great time to begin investing in real estate in St. Louis. Properties are routinely selling for 50-60% of the value they sold for during the boom years of 2005 and 2006. This provides an excellent opportunity to purchase properties, perform minor (or major) repairs and place them into a rental property management program. Our approach is to hold these properties for a minimum of 3-5 years to allow the economy and the St. Louis real estate market to rebound and begin to appreciate again.
One of the first things to address as a beginning real estate investor in St. Louis is where do you want to be? Where do you work and live? Many St. Louis real estate investors prefer to own rental properties near their place of employment or home. Theoretically, this allows the investor “to keep an eye” on the property. Other St. Louis real estate investors like to pick one area that provides good opportunities and purchase several investment properties in that area. When we began real estate investing in St. Louis, we chose the latter of the two approaches. We are currently focusing on neighborhoods in Florissant and St. Ann, primarily in the Ritenour, Pattonville and Hazelwood School Districts. Once each week (sometimes more) we make the 30 minute drive from our office to these areas. This allows us to keep up with the neighborhoods and the condition of our properties. This approach has served us well and we believe that in order to avoid the “horror stories” and pitfalls of real estate investing in St. Louis, you must be hands on and treat it as a full-time business. If you don’t have the time, it will suit you well to hire a professional property management firm that does. Check back here often for future parts of this series on real estate investing. Best of luck!
One of the first things to address as a beginning real estate investor in St. Louis is where do you want to be? Where do you work and live? Many St. Louis real estate investors prefer to own rental properties near their place of employment or home. Theoretically, this allows the investor “to keep an eye” on the property. Other St. Louis real estate investors like to pick one area that provides good opportunities and purchase several investment properties in that area. When we began real estate investing in St. Louis, we chose the latter of the two approaches. We are currently focusing on neighborhoods in Florissant and St. Ann, primarily in the Ritenour, Pattonville and Hazelwood School Districts. Once each week (sometimes more) we make the 30 minute drive from our office to these areas. This allows us to keep up with the neighborhoods and the condition of our properties. This approach has served us well and we believe that in order to avoid the “horror stories” and pitfalls of real estate investing in St. Louis, you must be hands on and treat it as a full-time business. If you don’t have the time, it will suit you well to hire a professional property management firm that does. Check back here often for future parts of this series on real estate investing. Best of luck!
Selecting a Reliable Contractor
Whether you are interested in rehabbing houses, maybe remodeling your own house or just wanting to make some minor improvements you've encountered the following questions: Who should I hire to do the work? Should I pick the cheapest, most professional, or something in between? What should I ask them during the interview? Hopefully the following will help relieve some of your concerns during what can be an extremely stressful time.
1. Ask friends and family about experiences
2. Interview several contractors
3. Ask for references (and actually call them)! Ironically, I was doing some work on a condominium unit and had a contractor that I was quite impressed with and thought I would be selecting for the job. Just to be safe, I called the first reference on the list he gave me. The reference actually said he was currently in a lawsuit with the contractor over unsatisfactory work. Needless to say, I chose not to with this contractor and am very glad I did some research on him before getting started. Not to say the exact same thing would happen to me, but if he is not even concerned enough to make sure his references are "good" references, I'd rather not have him doing work for me.
4. Request certificates of insurance
5. Be sure YOU are the one who selects the materials (tile, carpet, paint, etc.)
6. Make yourself available during the job and check on progress daily
7. Do NOT pay in full until the job is 100% complete to YOUR satisfaction. Be prepared to pay in portions (ex. 1/3 up-front; 1/3 mid-way through the job; 1/3 upon completion).
8. Ask for copies of all applicable licenses/certifications
9. Check records with the Better Business Bureau (BBB)
10. Take a look at past jobs
11. Ask who will be supervising the workers
12. Ask if they use sub-contractors. If so, check references and BBB records for them as well.
13. Make sure bids and contracts are in writing and spell out details of job and specific time-frames.
14. Ask about policies for incidental damage and warranties for the work they perform.
Most importantly, go with your gut. If something seems too good to be true, it probably is. Make sure you are selecting a contractor that you are comfortable working with for several months.
1. Ask friends and family about experiences
2. Interview several contractors
3. Ask for references (and actually call them)! Ironically, I was doing some work on a condominium unit and had a contractor that I was quite impressed with and thought I would be selecting for the job. Just to be safe, I called the first reference on the list he gave me. The reference actually said he was currently in a lawsuit with the contractor over unsatisfactory work. Needless to say, I chose not to with this contractor and am very glad I did some research on him before getting started. Not to say the exact same thing would happen to me, but if he is not even concerned enough to make sure his references are "good" references, I'd rather not have him doing work for me.
4. Request certificates of insurance
5. Be sure YOU are the one who selects the materials (tile, carpet, paint, etc.)
6. Make yourself available during the job and check on progress daily
7. Do NOT pay in full until the job is 100% complete to YOUR satisfaction. Be prepared to pay in portions (ex. 1/3 up-front; 1/3 mid-way through the job; 1/3 upon completion).
8. Ask for copies of all applicable licenses/certifications
9. Check records with the Better Business Bureau (BBB)
10. Take a look at past jobs
11. Ask who will be supervising the workers
12. Ask if they use sub-contractors. If so, check references and BBB records for them as well.
13. Make sure bids and contracts are in writing and spell out details of job and specific time-frames.
14. Ask about policies for incidental damage and warranties for the work they perform.
Most importantly, go with your gut. If something seems too good to be true, it probably is. Make sure you are selecting a contractor that you are comfortable working with for several months.
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