ModE98
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Post by ModE98 on Mar 20, 2011 16:32:42 GMT -5
"If a person were to add up all the debt owed on home mortgages in the US ..."  Doubt even the government would have an accurate figure... But I would go along with the previous "guess".  |
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ModE98
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Post by ModE98 on Mar 20, 2011 16:33:18 GMT -5
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ModE98
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Post by ModE98 on Mar 20, 2011 16:34:16 GMT -5
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Post by Deleted on Mar 22, 2011 7:11:22 GMT -5
Horatio, That's like buying a 30 year bond at the bottom of the market. If you had a lot of money perhaps as part of a greater diversification process it would be ok but if you don't have a lot of money I would be looking at an all bond mutual fund rather than buying a mortgage. With your skills I think you would do better with fixing up foreclosures and renting them out for a stream of income. |
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Post by yclept on Mar 22, 2011 11:43:55 GMT -5
The price of the CDO or CDS (credit default obligation, credit default swap), which are the instruments one would use (directly or more likely through an ETF or a Mutual Fund) has already adjusted to represent current interest rates. The actual amount of interest the underlying mortgage payers are paying is not the return that the owner of the CDO is getting. Here's a link to an article about an ETF that holds mortgage backed securities: www.etftopics.com/mortgage-etf/ I have done no investigation of this ETF and have no idea whether it is properly valued. I include the link only to show that instruments exist to partake of the market in which you expressed "interest" -- a pun folks! If you know of a privately held mortgage that you can buy for the face value which is paying interest significantly higher than market rates, that might be a good investment. But the person who sold you such a mortgage at face value would have to be a fool. Only the mortgage holder him/herself has the right to pay off a loan (and thus "buy" the mortgage) at face value. In any secondary market the price of the paper is going to reflect current interest rates. I expect interest rates to go up, which implies that buying fixed return instruments priced to reflect today's interest rates is likely to be a bad investment. As interest rates rise, the price of the bond, CDO, etc. will fall. |
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2kids10horses
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Post by 2kids10horses on Mar 22, 2011 12:32:49 GMT -5
Horatio,
I purchased a foreclosure for $60,000 cash, and sold it to a Buyer for $105,000, taking back owner financing. They put $8,000 down, and I'm getting 7% interest on the mortgage amount of $97,000.
My return is about 13%, because my investment is only $52,000.
If you are thinking about doing something like, this, I say go for it, dude!
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