December 30, 2009
Full Speed Ahead To 2010
I'm excited for 2010. My pipeline is beginning to fill up, and potential deal-making is all around me. Opportunities are ripe for the picking, and I plan to plop myself down right in the thick of them.
My business partner (Matt) and I will be starting the year out by buying two pieces of land for our portfolio. We're not typically looking for land, considering the limited marketability, especially in markets where there are plenty of empty houses and not much need to build new ones. However, if you knew the kinds of prices we're paying, you would think us crazy to NOT jump on these.
In addition to the low entry prices to purchase these properties, our carrying costs will be minimal (less than $250/yr in taxes for both properties combined). One property is 1.5 acres of unimproved land, with trees covering most of it. The second is a city lot in a nice neighborhood, with all utilities to the street. (To give you a sense of my optimism, the city lot sold for $115,000 in 2006; our cost is less than 1/100th of that.)
I was just beginning my career when the RTC started liquidating all the assets left over from the savings & loan crisis of the early '90s. I participated in some due diligence trips for the company I was working for at the time, and I remember thinking that great deals were there for the taking for anyone that had the capital.
I see that same situation now, and truth be told, the capital needed for entry isn't that significant. More important is being in the right place at the right time, and working hard enough to ensure I'm there as often as I possibly can be. Matt and I now set aside a percentage of every REO package we trade for the express purpose of putting that money to work acquiring more assets at bargain basement prices.
In speaking with several friends in the REO/asset management business, we're only in the infancy stage of the current wave of foreclosures. I'm not happy for those who are at risk of losing their homes, but I am excited about the opportunities that will be out there once the banks/lenders have written these assets off and are ready to ship them out the door for whatever bit of chump change they can get for them.
Too all my readers - Happy New Year! I hope 2010 ushers in a new season of hope, happiness, and prosperity to you.
Make it a great YEAR!
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