PERSPECTIVE: NOTE INVESTING
ing these distressed assets into rentals, land contracts or providing owner financing to new home buyers who are recovering from the downturn. The Hoosier State continues to surprise investors with results throughout the state (and you don’t have to be from Hickory to have a winning investment). #4 TENNESSEE Memphis has long been an attractive market for landlords looking to improve their rental portfolios (85 percent rental market). But as the Tennessee markets have recovered (average home values of $162,000) and rents have increased to an average of $1,039, the Volunteer State is attracting more than just hopeful musicians. With over $302 million in HHF, an ARM ratio of 7.7 percent and a fast nonjudicial foreclosure time frame, Tennessee has note investors singing to a tune of high returns and avoiding the real estate blues. #3 ILLINOIS Illinois has had its fair share of prob- lems for note investors, but the market has changed for the better. While problems with Cook County continue to plague note inves- tors in the Windy City, the state’s expedited foreclosure time frame for noncontested foreclosures is helping note investors capitalize on the recently awarded $269 million in HHF and the appreciating home values in the $127,000 range. While one out of 878 homes is still in foreclosure, many note investors are buying outside of Chicago and using the average rent rate of $1,188 to increase their returns above the ARM ratio of 11.2 percent. Now if only the Cubs could win the World Series, all would be well in the Prairie State. #2 MICHIGAN The state once known as the ground zero of the foreclosure meltdown, this nonju- dicial foreclosure state has risen from the ashes. With the help of state legislatures attracting new business, General Motors rebounding and an average appreciation in the Motor City of 24 percent over the past couple of years, it’s no wonder why many foreign investors are capitalizing on cheap real estate (average value of $124,000) and tapping into the above average rent rates of
$1,146 to keep distressed owners in their homes and working to walk borrowers through the process of the HHF ($761 million given to Michigan including $262 Million just recently awarded) to score win- ning results. With an ARM ratio of 11.06 percent, you don’t have to be a Lions fan to score a touchdown—okay, so maybe just a Wolverine’s fan! Just avoid drinking the water in Flint! #1 OHIO The Buckeye State has definitely had an upswing in the past few years. Columbus, Akron, Dayton and Cincinnati are all showing appreciation and improvements in the housing markets. Add Cleveland into the mix (who knows what will be the effect of LeBron James bringing a title home) and many note investors are picking up multiple assets (average home values of $115,500). With one out of every 977 homeowners across the state still in trouble, there is plen- ty of opportunity for investors to leverage an
ARM ratio of 11.1 percent to keep borrow- ers in their homes. The judicial foreclosure time frame can drag things out, but with the recent addition of $192 million in HHF, many investors are turning their attention to Ohio to drive up their returns. Cheap real estate, higher rental rates, government funds and appreciating values have created a perfect storm for note investors looking to invest outside their home state. •
Scott Carson is founder and CEO of Inverse Investments, a Tex- as-based real estate investment
company that focuses on buying pools of distressed assets on residential and commercial properties directly from banks and hedge funds. Carson also is a featured speaker and educator at dozens of in- vestment clubs and real estate workshops across the country. www.WeCloseNotes.com | 512-238-3018
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