Are Natural Disasters for Real Estate Investors?

Every Age of Mankind is faced with problems of survival. In the Mercantile Society each movement in time creates new challenges to the participates. Indications of major changes in capital usage are the first signs of economic shifts. To day I wish to examine such a function that has occurred in The Here and Now. I do not wish to point the finger of rebuke at any governmental policy, you dear readers, Real Estate Investors, may draw your own conclusions. We will merely examine a situation in which some interesting investments can be made with rather large returns.



OK, that is the Academic stuffy person approach, it replaces sleeping pills very non effective when you are standing in front of a class of graduate students who are hung over and not interested in the subject matter, they just want to cut to the grade to be awarded. You are a little ahead of them. You want to cut to the real point. How do we make money?



On January 17, 1994, the ground shook in and around the Northern Part of Los Angeles California. An Earthquake, the Media reported an 8.2 but the true measurements were about 6.8 to 7.2 depending on what MLS you belonged. A lot of properties were damaged and a few people killed and hurt.



The population responded at once and called for Federal Assistance, dear old Uncle Sam. We seem to think he is our Father instead of our Uncle. The Government responded and FEEMA came to the rescue. Money, money for repairs. Loans were made quickly based on a Contractors Estimate and of course the property owners and the contractors got together and produced some interesting high ball bids. A $100,000 house ended up with a loan of $250,000 when the actual repair work was $30,000. The difference was in some cases split between the Contractor and the Property Owner. A few morally challenged types of course bought up the properties and then applied for the FEEMA loans thus creating an immediate profit some of rather large dimensions.



Now let us examine the present investment situation created by the above series of actions. Time: Monday morning October 6, 2003.



AN EXAMPLE



A 34 Unit Multi Dwelling built in 1964 by Gypsies. In North Hollywood on a major street. Still standing and in good repair. It was purchased by the present owners in 1989 for the sum of: $433,500. It now has a FEEMA loan on it placed in 9/22/94, amount, $1,252,900. It is in the FEEMA non performing portfolio. It has been asigned to Beal Bank in the wilds of Plano Texas. Seems some politically correct type persons purchased something like $200,000,000 to $400,000,000 of non performing loans. My understand is that they paid or pledged the sum of 16% to 18% of face value. This bank then put the property into foreclosure which started on or about 8/07/2003. It is Tax delinq to the tune of $21,654, and oh yes guess what there is a second on it in the amount of $100,000 held by a local broker. This loan recorded on about 7/29/98.



Other then joining the Republican Party, sending your son to Yale with instructions not to get over a C in any subject or joining Skull and Bones and learning all the words to We are poor little lambs, I suggest an offer to the Bank of Beal to buy their note and continue on with the foreclosure after substituting Trustee. I also suggest the offer to buy should be in or around the sum of 20% of the face of the note.



This is about $250,000. Yes I would go higher. True value of the property about $900,000.



I utilize a private lender who puts up the money to buy the note, I pay him a very high interest rate of 12% and one point for his idiot son who at the age of 34 has not learned to write but is taking the Brokers Examination for a Real Estate License. I think it is his girl friend who is really taking the examination, I wonder how she looks with a mustache.



At this point you can Flip/Flop, ivy mop, to someone who wants to collect rents, or you can arrange financing from Western Mutual or whoever and add it to your long portfolio of rentals.



I selected this one as it is close to where I live and I can skate board over and check on the tenants. But there are an awful lot just now coming into Foreclosure. Most of the Assignees seem to be little private banks, with, really great political connections. talk about history repeating it self, the Gracus Brothers in old Rome. The roaring 100's way back in AD. Right out of the history book. Lets see AD, that stands for After Dominos, before Chess. Lucius