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I know of entire real estate investment companies that have gone under, and those were supposedly the experts. These are companies that started even after the real estate crash and were building or buying properties in areas where the outlook was supposedly good (job growth expected to grow, and the areas had good public transportation).
But the money just dried up and credit requirements increased. Those no down payment deals were gone, but so too were the 10% to 20% down payment deals – large down payments quickly became required. Investors didn’t want their money tied up in a real estate deal that wasn’t going to cash flow for years to come. They were willing to lose their down payment and move on to another type of investment that would give them a faster return. Even as hard as that was, throwing away a down payment of $25,000 to $75,000 when they’d signed a contract to buy a duplex, condo, or single family home, it appeared better than taking a regular loss for years to come. And the turnaround time wasn’t clear.
The only real way to make money was to buy a property on a short sale, a foreclosure, or an REO, and there were and are plenty of those, so why buy a new condo, duplex or single family home that was still over priced?
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