1) The couple featured in the story were not the only investors doing this. There are plenty of solidly middle class folks in that boat. Expect to see must-sell properties from those investors hitting the market next year.
2) They have not even taken a loss on the investment properties yet. However, the holding costs are killing them. How long can investors ride out a bad market. Even this couple believe that things will get better and would be looking to invest more in real estate if it weren’t for these bad deals.
Most investors will not last in a protracted downturn. Their staying power will vanish and must-sell properties will hit the market.
3) Do you think that their daughter who is also a real estate agent is also in the same boat? After all, it’s the daughter who found those investment properties and they all thought they could make an easy $100k. What about other friends and relatives of this family? They are most likely real estate investors as well.
Yeah, this couple still have the equity in the vacation house to bail them out. But what about the investors who thought that the could be buying vacation homes from the profits of real estate?
4) These people are real estate agents so they can be considered “professionals.” Do you think that other agents throughout the country have invested in real estate as well? You betcha.
5) This couple have real money tied up in the investment houses so they’ll do their best to recoup it. But what about the investors who are 90% – 100% financed? They are likely to walk away from their real estate.
The subprime buyers are causing the foreclosures now but the investors will cause even more foreclosures later.
6) Greed causes otherwise reasonable folks to throw caution out the window. Unfortunately, when things go south, they don’t come back to reality but keep thinking positive for a come back later. I’m waiting ’til 2008/2009 to see where those type investors stand on their properties.
