I hope you are sitting down. In case you haven't heard through the REI grapevine, Real-Estate-Investing.com has relocated its business and social headquarters to Phuket, Thailand.
If there's one word
that describes this place better than most, it would have to be MAGICAL.
My wife, little Matteo and I are here for six months. That did not happen by accident. This took careful planning and most of all the ability to walk away from our life in Bogota (I know, not so ordinary in and of itself) and fly 21 hours to Bangkok and then on to Phuket.
I rallied the troops to start out the trip with me and things got a little nuts.
Left to right is Colin Egbert of RealEstateInvestor.com, Arturo the 5th (aka The Matador) whose family owns the European version of NetJets, Myself and Josh Perez, our REO and foreclosure insider at Fannie Mae.
Friends being able to join you reminds you of the choices you have made in life. Money, to me means Options. But not so much the amount of money but the type of money.
Over 26 close friends and probably another 50 colleagues were informed about the trip and urged to come join us. Out of all those invites, only 2 could make it.
Now an insecure person might take that personally but COME ON, we're talking about Thailand. This isn't asking for help moving your apartment or troubleshooting a plumbing issue.
Just about everyone I know has Southeast Asia on their goal list somewhere, with a loose time frame in mind called, "someday". Truth is, 90% of those people will never realize that dream. They will carry it to the grave with them. I know that's tough talk but we're talking about changing your entire life here, we really are. Besides, if you are reading this, you are a doer. Why else are you reading about real estate investing on the internet.
So now that we have established that you are a doer, the question I want to throw out to you guys is "when is someday"? Can you see it in your future? When are you going to have the income, the stability, the curiosity and the guts to come join me.
We would love to have you here. We have a Thailand dance that I made up that I'd LOVE to teach you. After you have been here for just 4 or 5 days you will completely understand it in about 30 seconds.
Just the other day my cousin was telling me, for a guy with no job you seem to live a pretty amazing life. You should write a book. To which I told him, I DID, DON'T YOU REMEMBER!
He says Oh yeah, that's right. You did. What was that link again. To which I heavily sighed, Ummm...it's MattGerchow.com
That's where you can pick up a copy of my "how to run it from anywhere" book that's an "real estate investor" version of the Four Hour Workweek. If you are ready for the lifestyle and ready for everything about your life to change for the positive, keep reading.
This is so much more than real estate investing. This is a way of life and a way of thinking. BECOME GEOGRAPHICALLY INDEPENDENT
. You are no longer tied to any location in the world. No longer tied to your desk, your laptop, your car, city, state or boring stay in the same place life.
Happiness is the opposite of boredom or better stated, BOREDOM IS THE OPPOSITE OF HAPPINESS
If you are ready to end boredom forever, it's probably time to get you moving in the right direction. Grab a copy of the book that started it all. Click to END Boredom Forever
Learn to live the life without borders. Keeping things changing will allow you to grow what is probably a pretty stagnant existence.
There are about three people in the Real Estate Investing world that I know of that walk the walk on an International level. The top players in the industry will back me on that. It's been over two years now since I made the choice to live this lifestyle. No looking back.
I cured my fear of the dark here in a 300 foot ascent into a pitch black statue guarded by the same statues in Raiders of the lost ark. I pushed through 2 foot cavities into the unknown with nothing but a candle.
We are growing every single day. This is the first time in my entire life that I am doing what I feel I am supposed to be doing. ARE YOU?
Do you feel like you are treading water or worse, swimming upstream? Do you feel that there's something more you are supposed to be doing with your life?
Do you work a full day, earn great money and still feel empty?
Maybe it's time you started going somewhere with your life again. Maybe it's time to learn a little something a little different. Something a little more counter-intuitive to what you have previously been taught.
Before we can worry about travel and living the life of a multi-millionaire, we need to get your bills covered. My goal is to have you there within the next 8 weeks.
Most of my life changing decisions started with an ounce of curiosity..
Click only if you are READY FOR A NEW LIFE
See you on the other side.
Matt Gerchow, CEO
Real Investor Software, Marketing Manager
RealProspect REI Business Management
RealWebsite Investor Websites
blog of Matt Gerchow | strategies, tips and general know how
The results are in...and after three months of intensely hard work we are listed in first place on Yahoo! Other companies (our competitors) have been working at this for five years or more and are not even on the first page.
Thank you all for your support over the past several months.
We have been working around the clock to grow the site and bring better and better content to you.
Thanks to all of your forum posting, great videos and article submissions, Yahoo
! has ranked Real-Estate-Investing.com NUMBER ONE for the search term: real estate investing.
This will move around a little bit, but Today, Sept. 26th is our first day in the number one slot.
Here's a question that came in from one of our students.
"What do I do if my buyer wants an extension? It's my first deal and I'm worried they might be jerking me around."
Oh, do I remember that one.
Okay, this money is driving you crazy because you really need the money. I get it. BEEN THERE.
Now you aren't sure if they will close or not.
First question: Do you have another buyer? If not, get one...you will be able to sleep at night.
Second question: Are they re-assigning it or are they closing it themselves?
Third question: What is the extension for?
Fourth question: How good of a deal is it?
If they are trying to get a 100% mortgage or anything like this...forget it, it's not going to happen.
If they are unwilling to give you an additional $2k deposit (not upping the price), then forget it, they don't have confidence in themselves or the deal.
My advice, "GET AS MUCH OF THE ASSIGNMENT FEE UP FRONT"
Search the blog for "How To Take Deposits", it will help.
Hang in there...that first deal is always the most stressful.
Building Your Buyers List and Finding G.R.E.A.T. Buyers
Your goal as a Wholesaler is to find between 6-10 GREAT buyers. Go ahead and put your hand down, I know what your question is already. But Matt, shouldn’t we try to have as many buyers as possible? Shouldn’t we market all of our deals to everyone? The answer to both of these questions is no, but yes at the same time.
Let’s start by dissecting the word GREAT into the individual letters.G
is for Good
A GREAT buyer is good at what they do. They take their business seriously and want to succeed in real estate.R
is for Ready
A GREAT buyer is ready to buy. They will usually have two or three rehab projects going at a time. Paying one additional month of interest is merely a cost of doing business.E
is for Eager
A GREAT buyer is eager to close. They know that you don’t make any money unless you convert properties into dollars. The sooner they can close the sooner they can get their crew started on it.A
is for Accountable
A GREAT buyer is accountable to their word. You don’t have to wonder if they are going to disturb tenants or homeowners, will forget to order an appraisal or forget to show up for a closing.T
is for Timely
A GREAT buyer is timely and on time. If they say they will meet you there at 10am, they are there. If you schedule them to close at noon and your sellers at 2pm, there will not be a problem.
Now that we know what a GREAT buyer is, there are several reasons we want to work with a limited amount of buyers, many of which we learned the hard way.
You need to watch out for people that try to go around you on a deal. This has to be the lowest form of slime-ball that I have ever seen. If you are one of these people, put the book down and ask for your money back now. I really don’t want you becoming successful in wholesaling or any other type of real estate.
, happens when someone approaches the seller of the property, usually with your email in hand and attempts to undercut your assignment fee by offering them a few thousand more than you did. This started happening especially after we allowed people to automatically enroll themselves as one of our buyers through our website. The more people you advertise to, the better chance you have of this happening.
Here’s a way to fix this in a jiffy. Send an email blast to your entire group about one of your rentals. If you don’t have any rentals, advertise a friend’s house who works from home. If you don’t have any friends, well, that’s a different book.
Here’s what you do. Blast out a real juicy deal with lots of equity that will be hard for them to pass up. Make very clear instructions, “Do Not Disturb, Owner Living in House.” Instruct your tenant or friend to act like the owner and listen to everyone that stops by and tries to intervene in “the contract.” Pay them $20 for every name, phone number and email that they get. For a hundred bucks you’ll weed out your list in a matter of a week.
In addition, to “go-arounds,” working with many buyers requires you to educate each new buyer on how you do business. When I first got started Paul would hammer home the fact that whatever terms we agreed to on the first deal would set the precedent for every deal that followed with that Investor. This would include; the percentage of the assignment fee up front, who held the escrow and which title company conducted the closing.
Where else can you find GREAT buyers? The County Courthouse
Try going to your local courthouse auction and see who is buying. Chances are they have a boatload of bank and private finds behind them. Keep in mind I said “buying.” The newbie Investor that has their heart set on Aunt Jenny’s condo that is in foreclosure is not your buyer.Your Email Inbox
Search your email inbox for the person that originates an email about new properties. You have to be careful because a lot of these people are wholesaling everything and don’t have any real money for a closing.Hard Money Lenders
Call every hard money lender you know. Ask them who currently has money and is looking for properties. Incentivize them by telling them you will direct the hard money loan back their way. They may not want to release the information but they can find out what they are looking for on your behalf.Bandit Signs
We used to put signs out all over town that are totally different from the ones that you normally see. Most signs are yelling at you that they want to “’Buy Houses for Cash!” We have signs that say “We Sell Distressed Properties”. They then call a phone number and are instructed to enter their fax number and a list will be sent to them. Here’s a bit of logic to think about. The people we buy properties from usually do not live in the neighborhoods where we buy properties. They are landlords and what we term “don’t-wanters.” Investors are the ones driving these neighborhoods looking for properties that have the usual distressed markings, such as: overgrown grass, busted windows, bad paint, etc.Website
You take your pick on how you want to gather the information, but the best way I have found so far is to direct them to a website. The reason being is you can squeeze them for information before they see any properties for sale.
Let’s face it in this day and age if someone does not have internet access, they probably are not your Buyer. Even as I write this I am sitting in a hotel room two hours outside of Bogota, Colombia and my high speed access is working just fine.
If you want to include a phone number, I recommend you using Kall8 for 800 numbers as you can reroute them very easily with an internet connection. This way you can easily transfer the calls to an office when your business starts to grow and you won’t have wasted a ton of money on advertising to your cell phone. Trust me on this one, I learned the hard way. Fax-On-Demand or FaxBack
Another service that is great for building a buyers list is Fax-On-Demand. If you use a service to send them the current list of properties they enter their fax number or “opt-in” and then you are able to send them faxes in the future as well. Although I do not use this service any longer, here is a link where you can see a real example of a faxback. Use your bandit signs to promote this number.
Here are a few sites that offer this service. Corporatefax.com, Globalfax.com and Mast-ent.com are a few of the companies that can provide this service for you. This list is just to get you started. Try and find one where you upload a computer file vs. faxing in your ad copy, the quality will be MUCH better. Direct mail to high end apartment complexes
These folks are usually on the cusp of buying their own home. They might have moved to a new location temporarily and have now accepted that they are going to be living in this new location and would like to start earning equity every year rather than dumping it into rent. I am a perfect example of this having lived in Seattle, New York, Miami and Bogota. Each time I move I like to rent before deciding on a property to buy.
This strategy is usually applied once you have implemented several other marketing techniques first. Craigslist.org
Placing ads for investment partners is another great way to build your Investors list. Try something like this:
“Investment company seeks partner for several properties in the [your county] area. We have secured special access to non-listed properties that are direct to seller. If interested, please visit www.homereco.com
and fill out our ‘Buyers’ form to see if you qualify. Serious inquiries only, thank you.”WHAT TO ASK FOR
So what type of information should you collect from a potential buyer? If you have visited several investor sites, you already know what to ask for. If you are like me and are ambitiously lazy, here is the information in concise format.
• Email address
• Company Name
• First and Last Name
• Company Address
• Preferred Phone
• Fax Number
• Type of property they are interested in: Single Family, Multi-Family, Commercial
• Approximately how much capital are they working with?
• Are they interested in loaning money on mortgages?
• What level of Rehab are they comfortable with?
• How many transactions have they completed in their career?Remember...
you only need 6-10 G.R.E.A.T. buyers to have a very successful career as a Real Estate Investor. Finding these 6-10 buyers is the challenge.
If anyone has any additional questions regarding the creation of their buyers list, please feel free to post them on this thread.
Hope this helps,
Matt GerchowCurrently Touring South America for the next 4-months
It looks like the Canooks are getting in on the declining real estate market.
Canadians are scrambling to grab properties in the United States. This comes as no surprise due to affordable house sales and a horrible US dollar valuation against the Canadian dollar.
The National Association of Realtors was quoted as. "Since May 2007, NAR estimates that between 150,000 and 190,000 homes in the U.S. were bought by foreign nationals."
In 2008, Canada leapfrogged Mexico as the #1 country bringing foreign buyers into the U.S..
The NAR also said in its 2008 Profile of International Home Buying Activity survey that,
"Since last year, the percentage of Canadian buyers more than doubled from 11% to 23.5%."
The UK came in behind Canada, followed by Mexico, China, India and Germany.
Click here to read the full article:
So here I am, back in Bogota, Colombia.
It takes some getting used to...living in foreign countries. I have moved around quite a bit over the past ten years. While moving within the US, my friends would ask why am I doing this? I used to joke that it was all part of my gradual world tour. Many years later I have started the world tour and am having a blast at it. It's not all roses as some would have you believe. There are challenges just like living in the states. Sometimes the challenges come unexpectedly and you need to scramble to solve problems.
While most places have technology these days, in the third world one has to learn not to fully rely on it. On my last expedition here I was without power for at least five hours at least three separate times. We were WITHOUT INTERNET and cable for a week one time. To top it off on my last day we had a 5.9 earthquake. While a 5.9 quake is really not that big of deal, it just so happened to be the same day that Manuel Marulanda, the leader of the FARC (guerrilla) died. If the guerrilla were going to make a statement they were still strong by blowing something up, that would have been the day.
So let's talk a little bit about Real Estate.
Have you seen this site? www.youwalkaway.com
They claim that people can walk away from deficiency judgments in five different states. Sounds a little too good to be true. I am curious if anyone knows about this company?
The Housing Assistance Act of 2008 was passed by both houses and signed into law by Senor Bush this week. It contains a few not so nice surprises for the unexpecting taxpayer according to an article by Eva Rosenberg published this week in MarketWatch.
Rosenberg is the founder of www.TaxMama.Com, and is licensed to argue on behalf of taxpayers before the Internal Revenue Service. She has just written a new e-book entitled "The 100% Home-Based Business Tax Solution."
According to Rosenberg, the bill, which is intended to assist homeowners on the verge of losing their homes, "is likely to cause more upset
than calm" for taxpayers.
She outlines several areas where the tax law was changed along with housing law and warns that there are pitfalls with each.
The bill grants tax credits of up to $7,500 to those purchasing new homes. Those eligible are people who have not owned a homestead residence for three years. The credit can represent up to 10 percent of the purchase amount and couples can each purchase a home although they have to split the credit.
Read the full article here http://www.mortgagenewsdaily.com/812008_Housing_Bill_Tax_Implications.asp
And that's a wrap.
From Bogota Colombia
Wachovia Corporation, according to Bloomberg.com, announced Tuesday, July 22, that it was posting a record $8.9 billion quarterly loss, slashing dividends to five cents per share, and cutting 6,350 jobs. Coming on the heels of the recent Indybank collapse in California, Wachovia's news was not welcome on Wall Street, and the value of the dollar has suffered as a result as well. Almost a billion dollars of the loss came from paying a charge from a tax court ruling that involved Wachovia's leasing transactions. Part of the loss was a $6.1billion decline in asset values, which is due in part to the current mortgage crisis and Wachovia's recent acquisition of Golden West Financial. Declining property values in California and Florida, which comprises around 70% of Golden West's mortgages, has staggered Wachovia. This latest setback, accompanied by the scandal reported by the New York Times last year that telemarketing companies had bilked the elderly of hundreds of millions of dollars and that, according to documents obtained in the subsequent lawsuit, Wachovia bank executives had actually solicited business from companies that had been accused, has dropped Wachovia's stock to trading barely above $10 per share ($13.18 at Monday's close).Wachovia, through acquisitions and mergers, has grown to become one of the nation's leading financial institutions, and, with the absorption of A. G. Edwards in May, 2007, is the second-largest retail broker (behind Merrill Lynch) in the United States.Should these losses, dividends and job cuts have people in a panic? Click here for full article: http://tinyurl.com/5lhja2 Just what do you think of the mortgage crisis? Panic or Pressure? Feel free to comment below...I want to hear from you.
The Four Hour Workweek...if you have been trapped in Guantanamo Bay for the past three years, is a book that started a revolution amongst the Young Upwardly Mobile Mindset or YUMMy's. The thought process behind the book is that you can run a business on 4 hrs per week and travel the world full time.
At the time that I first read this book I bought into the plan hook line and sinker. I wanted to believe that it was true. I wanted to think that I could have my cake and eat it too. (make money and travel the world)
When I was 19 I bought the farm, the bridge and whatever else they were selling when someone pitched me Amway. I worked the 3-5 Year plan like there was no tomorrow for 2 years and in the end...drumroll please...spent MUCH more than I made and was working tremendous hours past my normal day job trying to get "freedom", as they say.
I watched people quit their jobs only to go back to work later on. I watched people stay in a business model that they had to feed money every week for more than ten years
. I don't know about you...but that's just not good business sense.
I mention this for one reason.
Just like Amway, the majority of the people I talked with about the Four Hour Workweek were very skeptical, listened for a minute and then went back to their daily lives.
We've all heard the saying, "If it sounds too good to be true...it probably is."
So now my second time around trying an entirely different mindset...one might ask, so what are the results so far?
The first thing I think I have to precaution people on is that IT IS NOT EASY!
The concepts are simple and if you follow a plan for setting things up, great, but it still will take a GREAT DEAL OF WORK to put a business model into place that brings you passive income so you can travel the world full time.
When I am having a particularly frustrating day setting something up or trying to understand how something works, I have to remind myself, "If it were really easy, everyone would do it."
That's the bad part.
Initially my goal was to be on the 4HWW. I found that I was not getting things done and I have quite a bit to bring to the market that simply cannot be done in 4hrs per week.
Those of you that have written a book know that it takes more than four-hours-per-week to write, publish and promote a book. I have done it and it literally consumes you.
I would like to setup the four hour workweek for everyone that wants it in their life but simply there is not enough time to do this for people, they have to do it for themselves.
Your current plan has you spending the next say 20-25 years working in the same city, trying to put money away so you can do what? I think if you answer honestly you will say something like, "Make some trips to Tahiti, visit China or retire in Costa Rica.
Lets say it took you FIVE YEARS to set yourself up on a plan that let you travel the world full-time and make mailbox money (or laptop money) while you are gone.
My work schedule has transformed into something other than the Four Hour Workweek. It's a much more tailored plan for me that seems to be keeping me happy. I like to call it a...
Currently I work about 30hrs per week. I know I know, that's way too much. Here's the thing. My business is not developed as far as I would like to be.
A Tim Ferriss works MANY hours promoting his "Business Philosophy" for a simple reason, he is a revolutionary. Frankly, I am REALLY glad he does.
The trick is this. I have let go of all of my tie-downs that kept me a prisoner of my possessions here in the United States. No car payment, no house payment and no cell phone when I am traveling. I know that sounds absolutely crazy but humor me for one minute.
Do you know that feeling when you wake up on vacation and you hear birds chirping and the waves crashing outside your window. At that moment you don't have a care in the world as you turn over and snuggle with your honey for another hour or so.
Now imagine you could wake up like that every day for the rest of your life. That is my current life. No bills, no worries. The first of the month is just a signal to me that another month has started.
Today is Tuesday (I actually had to think about it) and I am sitting in my brothers million dollar house in Bellevue, WA (near Microsoft, Google, Amazon, Nintendo, Costco and oh yeah, Boeing). His wife is a kick ass real estate agent known as Eastside Lee at www.bellevue-real-estate.com
I mention this because he has two sons, Cameron(5) and Tristen(2). They are amazing boys, full of life and Tristen...full of mischief. I have the means to stay in a nice hotel and have done so many times when I come to visit but I prefer to stay in their spare bedroom so the boys can wake me up early in the morning when they get up.
I have been here since June 5th and today is July 22nd. I extended my trip three times while I have been here and my schedule truly is "Free-Forming" at this point. Once was for my brothers birthday, once for my mom's surgery and once for myself because the weather has been fantastic.
In case you are counting, that's 52 days that I will have been here. Before Bellevue I was in Miami for 10 days and before that Bogota for 56 days. I leave Friday for Miami for a week on my way back to Colombia.
If I had not listened to Tim Ferriss one year ago I would not be able to spend 52 days with my nephews, getting to know them much more than if I had two weeks on a traditional vacation.
Every day I work a little on something. But if something comes up that I would rather do (like batting practice for Cameron) I drop everything and go do that. Work should become more like a hobby than a job. You work on the items where you see results, and nothing else.
I am a very normal guy. I like movies at home with popcorn, bicycle rides through the city streets with friends and good food at fun (but not too fancy) places. I'm not trying to set the world on fire but I do want to enjoy the life that I have.
If a very normal guy like me (with slightly above average intelligence(like you)) then rest assured this lifestyle can be yours as well.
A public thank-you to Tim Ferriss and to all of the people out there creating technology products that make this lifestyle finally possible for average folks.
From Bellevue, WA
Choosing real-estate-investing.com was a tough decision and I do not recommend you take it lightly. You really need to get in there and find out what is working and what is not.Real-estate-investing.com presents: how to choose your domain name.In selecting a domain name for your website...the first thing you need to do is search out what the most popular searched keyword phrase is for your area.
Create a free trial on Wordtracker.com, then research to find out what people are searching for in your area and then drop yourself right in their way so that they cannot get around you. This is how I was able to determine that “Real Estate Investing” is searched over 3,000 times per day and captured the domain name. Google says it is searched over 300,000 times per month.
Chances are you typed this search phrase to find this blog
If you had to choose what name to use for a mortgage you probably wouldn’t type the search phrase “mortgage calculator” but guess what, that term is searched over 100,000 times per day. I was able to get www.a-mortgage-calculator.com for a friend Jay Reyna. Feel free to run a ‘who-is’ on either name.
The same technique works for real estate. I was able to force feed 200 plus pairs of eyeballs per day to www.bellevue-real-estate.com
The top marketers in the world use this tactic to find out what rushing rivers they want to divert towards their websites. Before you spend a dime on a website you have to know what people are looking for so you can give it to them
I learned this technique from John Schroeder who will probably author a book some day on ‘Search Engine and Keyword Optimization.’ Until then, thank God he is sticking around the real estate world to help us with great products like software and websites.
From Miami FloridaMatt Gerchowwww.real-estate-investing.com
Often times I will get asked how I run my cell phone overseas. Fact is, I'm not. I turn the dang thing off when I get on the airplane and then maybe turn it on to play solitaire or to listen to an Audio book when I'm having trouble getting to sleep.
Plugged into the side of my computer or stealthily hidden away in my briefcase is a little device called the magic jack.
People call it, then they leave a message and it is sent on over to my email.
Here's a trick. You want people to call you in South America on your cell phone but you not have to pay anything but local rates...
Forward your cell to your magic jack and then you can answer on a regular landline down there. If you're ambitious, there are some tricks you can do with forwarding a US ip number (magic jack) to a colombia based IP number so you can pay local charges for cell phones even out of the country. I'll leave that one to you...haven't gotten that far with it yet.
Anyway, the best use I have for this service is using the number for business communication. I route all of the calls to a special gmail account magicj111(at)gmail.com
If you are a fan of Tim Ferris' check email once a week lifestyle then you can catch up on those messages whenever you decide to check that email.
All calls to Canada, Mexico and the United States are free. Cost of all this...drum roll please...$20 Anually!!!! First year is $40 cus you have to buy the little box...after that it's cheap, cheaper if you are willing to pay for more than one year at a time.
During the day I usually shut my phone off so I can get all of my work done.
For instance, today I knew I had to sign up for a directory submission service so people could find my website. Problem is, I had kids (nephews) all around.
The solution was I had to get out of the house to a Starbucks so I could focus in on my work. Starbucks had internet issues so I went over the freeway to Tully's Coffee and started working there. Phone rang a few minutes after I had settled in and it turns out someone had thrown up all over my brothers couch sometime during the night. HUGE interruption.
After dealing with that issue, I turned my phone off for the remainder of the day and was able to finish very efficiently.
I try to limit cell phone calls to just one or two per day. In the past I used to make a ton of calls to pretty much anyone who'd listen. Now I aim to talk to as few people as possible throughout the day.
couple of resources to check out: www.magicjack.com
($20 annual VOIP phone) www.gmail.com
(for free email setup) www.skype.com
(skype to skype calls are free)
That's it for now...
Good luck out there.
From Seattle Washington
The Next Real Estate Crisis
By April, 2009, hundreds of thousands of option ARM mortgages will begin resetting, bringing on a fresh wave of foreclosures
Summary of article from Business Week July 15, 2008
It's starting to happen all over again. Right after the first wave of Foreclosures has hit a now secondary wave of foreclosures is beginning to heat up.
Adjustable rate mortgages are starting to reset. Reset means they will be at their full interest rate making it impossible for people to make their monthly payments.
The general thought when people agreed to these self-destructing loans was that they could resell the property before the arm was due. When properties were appreciating by 20%+ per year, this made sense. Now-a-days, when people are lucky if properties appreciate, period, buyers are not willing to pay an inflated rate for properties, just so the seller can get out without losing money.
Many people are saying that they didn't quite understand the complicated loans when they signed up for them. Many others are just walking away because they do not see the point in maintaining the increased payments where there is no equity to protect.
Much like the dot com boom of the late 90's, most folks just really didn't want to get left behind. The difference here is that was real money in the stock market and the current housing crisis involves money potentially owed.
About 13% of option ARMs that were issued in 2006 were delinquent by 60 days by the time they were 18 months old, according to Credit Suisse.
A lot of homeowners are just walking away. They really don't have much to lose if their property is foreclosed on.
For the complete article, click here. http://www.businessweek.com/lifestyle/content/jun2008/bw2008065_526168.htm?chan=investing_investing+index+page_real+estate