Our members have over 20 offers out right now on apartment complexes right now in the city of Houston. The opportunity is there…Are you going to take advantage of this? It’s not a catastrophe for you—it’s an opportunity. The question is: Are you going to take action on it?
Opportunity
Today I want to talk about something—basically opportunity. As I read this article, it’s interesting to me—Trent Yo, who’s a mentor up here, just handed me this article right before the show. It’s interesting because this is written up as if it’s all negative.
So I’m going to read it to you, and then I want you to test yourself to see if you actually have the qualifications to be an investor. Because if after I read this all you hear is the negative, you’re going to have some challenges. But the true investors are going to hear this and go, “Whoa, there’s the opportunity.” Here we go.
“Commercial real estate owners beginning to walk away from properties. Commercial real estate owners are walking away from properties that have become untenable as investments just as homeowners have walked away from houses they no longer can afford to pay off or sell.
“The latest commercial property owner to do so walked away from $235 million worth of assets. The trend is likely to escalate in coming months as more loans mature and refinancing remains difficult and costly. ‘Frankly, I am surprised we have not seen a lot more of this,’ said Rob Little, Chief Investment Officer of Cornerstone Real Estate Advisors, LLC, with $32 billion under his management.
“However, of late, some commercial property owners are finding that it makes more economic sense for them to stop making payments and servicing the debt and walk away from the property. Since most of these commercial loans are nonrecourse, there’s no direct obligations or claim on the owner’s assets.”
Personal Liability
This is really important, you know. A lot of you that are out there, one of your fears is, “Man, what about all this personal liability?” Let me read this paragraph to you again:
“Since most of these commercial loans”—and this speaks to multi-family—“most of these commercial loans are nonrecourse, there is no direct obligation.”
So let’s read to the next thing, a little thing called jingle mail. You ever heard of that—jingle mail? “In the residential market the phenomena is referred to as jingle mail, a reference to homeowners who surrender their property by mailing the keys to the lender rather than going through a formal foreclosure process.
Jingle mail, those little keys jingling in that envelope when they get them and that bank knows they just got another piece of real estate back on their books—which they don’t want.
And this is what’s interesting. There’s some confusion out there by a lot of people that these banks want those properties back, that they’ve got so much equity in them, they wouldn’t have loaned the money if it wasn’t a good deal, blah, blah, blah. No, they don’t want them back.
This is why of late—and I can’t give too much details on this because this is a property under negotiations—but there was a property that sold for $35,000 a unit just within the last five years. It’s now on the market at $12,000 per unit.
Not If, When
Do you think that you and your family couldn’t make money with an investment like that? You bet you could, because it’s not “if” that property’s going to go back up in value, it’s what? It’s “when.”
So the reason Trent wanted me to share this with you, and the reason I wanted to share this with you is because opportunity for you is getting better in 2010. I do believe it will be worse in 2011.
I believe that you’re going to see less and less opportunity to invest in real estate and make these gigantic capital gains, these gigantic equity captures. It will be less in ‘11. But I’ll tell you what, through the rest of ‘10 the opportunities are going to be unbelievable.
Advantage
Our members have over 20 offers out right now on apartment complexes right now in the city of Houston. Twenty of them out right now. The opportunity is there. Now, here’s the question for you the listeners to my show: Are you going to take advantage of this? Are you going to do anything about this? Or are you just going to let these opportunities pass you by?
Or when I read this article about the catastrophe that’s going on, were you unable to twist it around to what it really is? It’s not a catastrophe for you—it’s an opportunity. The question is: Are you going to take action on it?
Or are you going to sit on the sidelines with your excuses, your reasons, your problems, whatever you like to call them saying you don’t have the money, you don’t have the credit, you don’t have the time, rental property goes up, it goes down, it fluctuates, it’s this, that, and the other. All of that stuff can be overcome.
The bottom line is some of you as listeners—‘cause there are member listeners, there are people who are about to become members, there are people who are members of other real estate investor groups listening to this show right now that are literally out there buying single-family houses adding 30 and $40,000 to their net worth every time they buy one.
Helpless
There are listeners who are out there buying 200-, 300-unit apartment complexes and they’re just like the other listeners, the rest of you who are doing nothing, who are sitting there just getting up, going to work, even though you know you feel helpless and hopeless doing that, even though you know that just going to that job you keep doing—you’ve already done it ten years and it hasn’t gotten you in the financial position you want.
Some of you 15, 20 years—you’ve worked maybe different jobs, still a job. You’ve worked for 10, 15, 20 years and are still not in the financial position that you want to be in.
But you’re convinced that if you keep doing the wrong thing you’ll eventually get the right result. I’m here to tell you that you won’t. You’ve got to change what you’re doing. That’s what this show’s about is changing, actually becoming an investor.
