You're a decade late for that particular bogeyman.

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I completely understand your viewpoint and a year ago, I would have been saying the same exact thing. I recommend visiting pragcap.com. It is a very enlightening website, much like this one regarding real estate investing, on the topic of the economy with stress on the operations of currency with our system. Some of the operational potential in our current system is hampered by our outdated laws that are based on our previous monetary system, the gold standard. Thanks for the reply.

When a property gets foreclosed on, and it's the first lien holder that is doing the foreclosing, then the second and third and fourth (etc.) will get wiped out at the foreclosure auction. What an investor will do is to buy/tie up the property from the defaulting owner and see if he can discount the first and second. The second will most likely agree to a small amount (usually 7-10 percent) because they will lose everything once the property gets foreclosed on. The first will usually accept a 20 percent hit.

Now what you quoted is that the second note holder was stating that he will own the property by buying it from the person in default and take over the first position's loan payments and make it current. Therefore, he is not interested in selling his note to the investors. The investors in that example were idiots for not controling the property first or the owner didn't want to sell. The investors were hoping to buy the second note at a discount and bid at the auction and own the property with at least 15 k equity plus whatever the homeowner had in equity.

You can buy any note by approaching the lending institution that holds the note and making an offer to buy it. You will need cash to do so.

Also, to clear up the quoted reference, you can purchase property "subject to" existing liens/loans. Taking property "subject to" means that you will take over the payments, but the old owner is still responsible for the loan(s). So if you stop paying the mortgage/trust deed, the lending institution will go after the old owner and start foreclosing on the property. Buying property "subject to" existing loans is one way where someone with no money and/or credit can get into a home and own it. The second note holder was buying the property from the defaulting owner using the "subject to" clause.

I either confused you or helped you. Either way, I just saved you hundreds of dollars in late night real estate infomercials!

E-mail me if you have any questions.

Regards

Las Vegas real estate isn't going to be increasing in value anytime in the next 5-10 years. If you have the cash burning a hole in your pocket and you know that finding good tenants to rent to is going to be easy, and you don't need to see an increase in property values for a long time, then Las Vegas is great.

Real Estate can be a great investment, if you do it right. If you are going to be mortgaged up to your eyeballs without a property manager and don't know how to run the numbers correctly, it can be a complete nightmare.

Too many people forget to add in things like closing costs, mortgage interest, upkeep, utlities, HOA fees, property taxes, etc, and when they see a $10,000 return without counting all that, they get hooked. Then suddenly they don't understand why they aren't making their mortgage payments and dread that next property tax bill.