Just when you thought the market was rebounding and everything was going to be OK, a new threat comes along. The government wants your properties and it will take them.
Just because you have paid your mortgages on time and have done an amazing job rehabbing them it doesn’t mean they can’t be condemned and taken away!
The banks are scooping up REOs and speeding up foreclosures and real estate investing companies have been bragging about the bargains they have been picking up but local governments are no longer sitting on the side lines either. They also know the rebound is on its way and are clearing the way for new developments and expansions that will bring them in more dollars too.
Using ‘eminent domain’ domain your county could condemn your properties and grab the land for what it considers the ‘highest and best use’. It’s happening in Florida right now and there isn’t much that real estate investing companies can do about it. Multifamily buildings in prime locations are being seized for bigger dollar developments and even one $50 million Hilton hotel is soon to be demolished to make way for an expansion of the Fort Lauderdale airport.
Governments are supposed to pay a fair price to owners of properties they want but clearly a ‘fair’ price today isn’t anywhere near what it was a couple years ago or what it could be in a couple years from now. Worse, if contested the county can simply take over property after putting up a deposit and battle out the final price in court later. Then who knows when you’ll see a check. On the bright side it could be the easy way out for some underwater homeowners but unlikely to put profits back in investor’s profits.
This is exactly why flipping houses and flipping them fast makes for one of the best real estate investing strategies. Get in, get out and get paid before big brother decides he wants your corner of the playground.
