Spouse Objections to Rehabbing Real Estate
I’ve run across a lot of folks who tell me they’d love to do what I do, but their wife is just not comfortable with it. That’s a powerful objection, and sometimes it’s one that cannot be overcome. Most times, I think it can be, if you really want to. All too often, I get the impression the potential investor doesn’t want to jump into rehab real estate bad enough to work through the spouses objections. It’s the old “it’s easier NOT to” mentality!
The issue is usually not that your spouse doesn’t want the financial rewards that accompany the real estate rehab business. The reasons spouses object is usually good ol’ fear. For example:
fear of the unforeseen
fear of financial loss
fear that you don’t yet know what you’re doing (my favorite!)
The latter two are the big leaders. These fears may come from something they’ve heard, or they may be rooted in them not really understanding the transaction or what you’re trying to accomplish.
For my wife, her fears were that something would come up that I hadn’t thought of, or that a house may sit empty for several months thus depleting the bank account.
How to deal with the fears of your spouse regarding rehab real estate
Sit down and discuss their fears. Find out what they really are. You always want to deal with a known entity.
Be sure your spouse understands the importance of rehab real estate in your long term financial goals, and how it fits into your family’s security.
Always encourage your spouse to ask questions!
If your spouse expresses general fear of the whole thing, that may be because of a lack of understanding of the process or they are very intimidated by it.
Encourage questions!
Explain how the transactions will work
Explain how you are minimizing the risk to your family.
Yes, the numbers might be big, but if you aren’t putting a lot of your own money in it, then your risk of loss is minimal.
Go over the worst case scenarios. Explain that worst case, the property could be quickly sold for SOME profit.
Reveal to your spouse the folks you have working with you, such as your mortgage broker, your wholesaler (flipper), appraiser, and anyone else you’ve identified up to that point.
My wife was very distrustful of these folks in the beginning. I had to explain and show her that these folks had EVERYTHING to gain by my first deals going very well, if they wanted to continue making money with me.
If the fear seems to be of the unforeseen
Explain that while this seems complicated, you’ve done your homework and you’ve learned about all you can learn without actually doing a deal for experience. (You reach a point where this is true!)
Explain that you won’t own the property a minute without enough insurance to cover anything that could happen.
If the fear is financial loss
Depending on your personal financial situation, you should focus your spouse on how real estate can and does improve the lives of investors.
If you’ve already identified a property, reveal your worksheet and how much you stand to make off that property.
Agree with your spouse NOT to take on too much risk. Set your boundaries together. I assure you that you’ll easily revisit these the first time you bring home a large check.
Fear that you don’t have the knowledge
Be sure you are well studied! Remember, knowledge comes before the money! Spend the money on a good course, or book. Don’t rely on just one. Get several author’s take on the subject. There are inexpensive ways to do this!
Explain that you have studied this thoroughly. Heck, you’ve got a head full of knowledge that needs to be put into action in order to move forward.
Agree with your spouse. That’s why you are tapping into the knowledge of those real estate professionals around you! Explain who’s on your team, and what they have to gain from you. Remind your spouse that you are tapping into the knowledge of those around you, those that know your area very well.
When your spouse comes around and is resigned that you are going to do this, they may:
Sign on and dig in beside you for the deal and what follows (throw total support behind you).
Flatly say, they don’t agree, but if you must…
Something in between, like “Honey, you do whatever you think is best.”
This last possibility is what I predict will happen to most. This allows your spouse to give you the room you need, but at the same time not completely agree. That’s where my wife went. It was a safe position for her. And, it’s a safe position for you! You’ve got the go-ahead, so go ahead!
I was in that position myself. If was a good feeling to watch her fears fall away as I complete my first couple of projects. Her eyes got nice and big when I refinanced my first two properties at the same time and brought home more money in one day than I’d ever held in my hands before. I also watched her understand the benefits more completely while sitting in my CPA’s office and having him say to her “These properties are saving you big time on your taxes.” I dare not say, I told her so, but I told her so
Sure, there are challenges, but the paydays are great.
So, over time, my bride is my full partner taking on whole aspects of the business freeing me up to do the parts I do best.
Spouse objections can be show-stoppers, but these suggestions will hopefully help you deal carefully with them. It’s not enough to merely brush them aside and charge ahead. I recommend a loving, cautious approach because in good time and bad, your spouse is your greatest ally. Keep them close!
Friday, December 28, 2007
Saturday, December 8, 2007
Investor Apprentice Program
There is a famous old story about a company that had a
problem, and they called out a repairman to fix it.
The entire company was on the verge of shutting down production because
no one at the company had been able to identify this problem,
let alone fix it.
The repairman soon arrived, checked out the situation, went over
to one of the many miles of pipes running through the building,
and started banging on one particular pipe. He banged for about a minute.
He then ordered the crew chief to restart the machinery. Production
was restored and everyone was happy.
A few days later, the company received the bill for the repair.
The company manager was shocked to see that the amount due for the
repair was $10,000. The manager called the repairman and shouted
in the phone, "This repair bill is for ten thousand dollars! Where
do you get off charging me $10,000 for what amounted to banging on
a pipe for all of about 1 minute?!"
The repairman calmly replied "Oh, I only charged you $50 for banging
on the pipe. The other $9950 was for knowing precisely what pipe
to bang on."
And so the moral of this story is...experience is everything.
The fact is there are major investing opportunities all around you,
but can you see them? Do you know how to read the fundamentals of
your market to help you develop a strategic advantage? Do you worry
that your deals might not be profitable?
Are you an agent or broker who is wondering how to cope with a
down market, searching for ways to stabilize or increase income?
Would you like to discover how to go from killing yourself for a lousy
$5000 commission, to making a $100,000 commission for the same amount
of work with less hassle?
You may not know it, but there is a world of big opportunity out there
if you only know where to look and what to do when you find it.
You don't have to be licensed to break into high dollar real estate.
But if you are, it is even better. You can make a few thousand bucks
a year or you can make a few HUNDRED thousand bucks a year. It's all
in the choices you make.
Would you like to implement multiple income strategies that are
synergistic with your existing business model, and enable yourself
to make money all the time in any market?
If you are serious about your real estate career and your financial
future, and you have some resources for real estate investing and
business growth, you may be a candidate for our Investor Apprenticeship
Program.
If accepted, you'll be working one-on-one with Donna Robinson and
Peter Vekselman; two experienced real estate investors with more than
1000 transactions and years of on the street know-how and insight.
If you are wondering how to take advantage of the current housing
market, and drive your investing business or real estate brokerage
business to the next level, keep reading...
The fact is that todays housing market crisis is largely the result
of inexperienced investors who used bad loans to finance good properties
and today they are going down the financial drain by the thousands.
Many well meaning, honest investors are in financial ruins today
simply because they did not know what they were doing, and failed to get
advice from experienced experts who could have easily identified their
mistakes BEFORE they were made. This one simple step could have
saved them years of turmoil, financial hardship and bad credit.
It is a fact that some of our apprenticeship clients come to us
for damage control. They have already made severe, costly mistakes.
Mistakes that will affect their lives for years to come. Some went from
having perfect credit to credit that has been ruined, due to bad
investing decisions. If only they'd gotten professional advice from
us first.
The most common mistake new investors make is to try and
cut costs by neglecting things like professional advice that can insure
that they know what to do to be profitable and avoid life changing
mistakes.
This investor apprenticeship is a real bargain when compared to the
price thousands of investors are now paying for their failure to
get independent, professional advice from someone who has "been there
and done that".
Todays market is developing into some of the best buying opportunities
in 20 years. But there are also some of the worst opportunities in
20 years. Can you tell the difference? If you want to discover how
to really be profitable in any market while avoiding common and costly
mistakes, you need solid professional advice with over 20 collective
years of experience.
One of our current clients is learning how to take his brokerage
business to new levels by focusing on market opportunities in his
area that he thought were beyond his reach and expertise.
Another investor client is learning how to increase his volume from
struggling to do 1 or 2 deals a month, to building a business that
will allow him to double his volume with the same or even less work
than he is doing now. He was focusing on the wrong market. In just
one session we changed the way he looked at his business and corrected
several mistakes he was making but did not even realize.
Here's how you can find out if an Investor Apprenticeship is right
for you...
Donna Robinson and Peter Vekselman are planning a live teleconference
on Monday, December 10th, at 1 PM Eastern Time.
To register for the call please click the link below and a
confirmation will be emailed to you very quickly with complete
details on how to dial in.
http://www.reiuonline.com/coaching/freecoachingcall.htm
We will be discussing true stories of things that happen to real investors
and some actual case histories of Apprenticeship clients and how they
are using our strategies to increase income, build new income streams
and avoid big mistakes along the way.
If you are serious about growing your real estate business, this may be
just what you need to put the pieces all together and drive
your business into high gear.
problem, and they called out a repairman to fix it.
The entire company was on the verge of shutting down production because
no one at the company had been able to identify this problem,
let alone fix it.
The repairman soon arrived, checked out the situation, went over
to one of the many miles of pipes running through the building,
and started banging on one particular pipe. He banged for about a minute.
He then ordered the crew chief to restart the machinery. Production
was restored and everyone was happy.
A few days later, the company received the bill for the repair.
The company manager was shocked to see that the amount due for the
repair was $10,000. The manager called the repairman and shouted
in the phone, "This repair bill is for ten thousand dollars! Where
do you get off charging me $10,000 for what amounted to banging on
a pipe for all of about 1 minute?!"
The repairman calmly replied "Oh, I only charged you $50 for banging
on the pipe. The other $9950 was for knowing precisely what pipe
to bang on."
And so the moral of this story is...experience is everything.
The fact is there are major investing opportunities all around you,
but can you see them? Do you know how to read the fundamentals of
your market to help you develop a strategic advantage? Do you worry
that your deals might not be profitable?
Are you an agent or broker who is wondering how to cope with a
down market, searching for ways to stabilize or increase income?
Would you like to discover how to go from killing yourself for a lousy
$5000 commission, to making a $100,000 commission for the same amount
of work with less hassle?
You may not know it, but there is a world of big opportunity out there
if you only know where to look and what to do when you find it.
You don't have to be licensed to break into high dollar real estate.
But if you are, it is even better. You can make a few thousand bucks
a year or you can make a few HUNDRED thousand bucks a year. It's all
in the choices you make.
Would you like to implement multiple income strategies that are
synergistic with your existing business model, and enable yourself
to make money all the time in any market?
If you are serious about your real estate career and your financial
future, and you have some resources for real estate investing and
business growth, you may be a candidate for our Investor Apprenticeship
Program.
If accepted, you'll be working one-on-one with Donna Robinson and
Peter Vekselman; two experienced real estate investors with more than
1000 transactions and years of on the street know-how and insight.
If you are wondering how to take advantage of the current housing
market, and drive your investing business or real estate brokerage
business to the next level, keep reading...
The fact is that todays housing market crisis is largely the result
of inexperienced investors who used bad loans to finance good properties
and today they are going down the financial drain by the thousands.
Many well meaning, honest investors are in financial ruins today
simply because they did not know what they were doing, and failed to get
advice from experienced experts who could have easily identified their
mistakes BEFORE they were made. This one simple step could have
saved them years of turmoil, financial hardship and bad credit.
It is a fact that some of our apprenticeship clients come to us
for damage control. They have already made severe, costly mistakes.
Mistakes that will affect their lives for years to come. Some went from
having perfect credit to credit that has been ruined, due to bad
investing decisions. If only they'd gotten professional advice from
us first.
The most common mistake new investors make is to try and
cut costs by neglecting things like professional advice that can insure
that they know what to do to be profitable and avoid life changing
mistakes.
This investor apprenticeship is a real bargain when compared to the
price thousands of investors are now paying for their failure to
get independent, professional advice from someone who has "been there
and done that".
Todays market is developing into some of the best buying opportunities
in 20 years. But there are also some of the worst opportunities in
20 years. Can you tell the difference? If you want to discover how
to really be profitable in any market while avoiding common and costly
mistakes, you need solid professional advice with over 20 collective
years of experience.
One of our current clients is learning how to take his brokerage
business to new levels by focusing on market opportunities in his
area that he thought were beyond his reach and expertise.
Another investor client is learning how to increase his volume from
struggling to do 1 or 2 deals a month, to building a business that
will allow him to double his volume with the same or even less work
than he is doing now. He was focusing on the wrong market. In just
one session we changed the way he looked at his business and corrected
several mistakes he was making but did not even realize.
Here's how you can find out if an Investor Apprenticeship is right
for you...
Donna Robinson and Peter Vekselman are planning a live teleconference
on Monday, December 10th, at 1 PM Eastern Time.
To register for the call please click the link below and a
confirmation will be emailed to you very quickly with complete
details on how to dial in.
http://www.reiuonline.com/coaching/freecoachingcall.htm
We will be discussing true stories of things that happen to real investors
and some actual case histories of Apprenticeship clients and how they
are using our strategies to increase income, build new income streams
and avoid big mistakes along the way.
If you are serious about growing your real estate business, this may be
just what you need to put the pieces all together and drive
your business into high gear.
Monday, December 3, 2007
Do you need a Partner?
Business Partners
Donald Trump said that if not for a prenuptial agreement, his divorce would have buried him in the late 1980s.
A business divorce can also bury you. You are not necessarily going to have a prenup agreement for your business partner, but if you do take on partners, here’s what I recommend:
· Take on business partners only on a deal-by-deal basis.
· Use partners for money, credit or to acquire properties.
· Never give anyone authority over your money.
· Make decisions on a financial basis first.
· Make sure you, your partner and partner’s spouse share the same goals.
People ask me, “Should I have a partner in business?” And my answer is, “Should you get married?” Because both of those require a commitment.
No one really knows what a partner is going to be like until you hit tough times and you disagree. You have to create assurances that you are both going to be solvent and liquid.
Use money or credit partners, but only on a deal-by-deal basis. It’s easy enough to get out of one deal if you have to, but it is much more difficult to get out of 100 deals with a partner.
Make sure that you and your partner share the same goals and work ethics. (Here in the book I talk about one of my early partnership deals! I also address how to do business with family, spouses and spouses of partners.) Most importantly, I talk about how to protect yourself. This section will be available when the book is released!)
…if you go into business with family, the same rules apply.
If you are married to your business partner, make sure you define clear roles and boundaries in your business and marriage. In my business, I am the president and my wife is vice-president, so I have final say. She trusts my decisions based on my experience. But in our marriage, we are equal partners and consult each other on decisions and problem solving.
Donald Trump said that if not for a prenuptial agreement, his divorce would have buried him in the late 1980s.
A business divorce can also bury you. You are not necessarily going to have a prenup agreement for your business partner, but if you do take on partners, here’s what I recommend:
· Take on business partners only on a deal-by-deal basis.
· Use partners for money, credit or to acquire properties.
· Never give anyone authority over your money.
· Make decisions on a financial basis first.
· Make sure you, your partner and partner’s spouse share the same goals.
People ask me, “Should I have a partner in business?” And my answer is, “Should you get married?” Because both of those require a commitment.
No one really knows what a partner is going to be like until you hit tough times and you disagree. You have to create assurances that you are both going to be solvent and liquid.
Use money or credit partners, but only on a deal-by-deal basis. It’s easy enough to get out of one deal if you have to, but it is much more difficult to get out of 100 deals with a partner.
Make sure that you and your partner share the same goals and work ethics. (Here in the book I talk about one of my early partnership deals! I also address how to do business with family, spouses and spouses of partners.) Most importantly, I talk about how to protect yourself. This section will be available when the book is released!)
…if you go into business with family, the same rules apply.
If you are married to your business partner, make sure you define clear roles and boundaries in your business and marriage. In my business, I am the president and my wife is vice-president, so I have final say. She trusts my decisions based on my experience. But in our marriage, we are equal partners and consult each other on decisions and problem solving.
Do you need a Partner?
Business Partners
Donald Trump said that if not for a prenuptial agreement, his divorce would have buried him in the late 1980s.
A business divorce can also bury you. You are not necessarily going to have a prenup agreement for your business partner, but if you do take on partners, here’s what I recommend:
· Take on business partners only on a deal-by-deal basis.
· Use partners for money, credit or to acquire properties.
· Never give anyone authority over your money.
· Make decisions on a financial basis first.
· Make sure you, your partner and partner’s spouse share the same goals.
People ask me, “Should I have a partner in business?” And my answer is, “Should you get married?” Because both of those require a commitment.
No one really knows what a partner is going to be like until you hit tough times and you disagree. You have to create assurances that you are both going to be solvent and liquid.
Use money or credit partners, but only on a deal-by-deal basis. It’s easy enough to get out of one deal if you have to, but it is much more difficult to get out of 100 deals with a partner.
Make sure that you and your partner share the same goals and work ethics. (Here in the book I talk about one of my early partnership deals! I also address how to do business with family, spouses and spouses of partners.) Most importantly, I talk about how to protect yourself. This section will be available when the book is released!)
…if you go into business with family, the same rules apply.
If you are married to your business partner, make sure you define clear roles and boundaries in your business and marriage. In my business, I am the president and my wife is vice-president, so I have final say. She trusts my decisions based on my experience. But in our marriage, we are equal partners and consult each other on decisions and problem solving.
Donald Trump said that if not for a prenuptial agreement, his divorce would have buried him in the late 1980s.
A business divorce can also bury you. You are not necessarily going to have a prenup agreement for your business partner, but if you do take on partners, here’s what I recommend:
· Take on business partners only on a deal-by-deal basis.
· Use partners for money, credit or to acquire properties.
· Never give anyone authority over your money.
· Make decisions on a financial basis first.
· Make sure you, your partner and partner’s spouse share the same goals.
People ask me, “Should I have a partner in business?” And my answer is, “Should you get married?” Because both of those require a commitment.
No one really knows what a partner is going to be like until you hit tough times and you disagree. You have to create assurances that you are both going to be solvent and liquid.
Use money or credit partners, but only on a deal-by-deal basis. It’s easy enough to get out of one deal if you have to, but it is much more difficult to get out of 100 deals with a partner.
Make sure that you and your partner share the same goals and work ethics. (Here in the book I talk about one of my early partnership deals! I also address how to do business with family, spouses and spouses of partners.) Most importantly, I talk about how to protect yourself. This section will be available when the book is released!)
…if you go into business with family, the same rules apply.
If you are married to your business partner, make sure you define clear roles and boundaries in your business and marriage. In my business, I am the president and my wife is vice-president, so I have final say. She trusts my decisions based on my experience. But in our marriage, we are equal partners and consult each other on decisions and problem solving.
Wednesday, November 28, 2007
Real Estate Investing
Real Estate Investing
“Real estate investor seeks apprentice, 10k a month.” This might sound familiar to some- the token real estate investing advertisement feeding off the ideas of those wanting a piece of a lucrative industry. And it’s well-founded! Real estate investing is a very profitable business but only to a very lucky few does it come in the form of a simple phone call. Investing in real estate requires knowledge and fervor in order to make a serious return. The savvy investor will take advantage of the tools available and exercise every entrepreneurial bone in their body.
There are several avenues to take within the rather large realm of real estate investing. Whether you execute more traditional types of real estate investing such as buying low and flipping or investing in tax liens, there are several profitable routes to take. Another trend forecasted for the coming years is the rise of foreclosure investing. With all the resources available online, foreclosure investing is much easier than once considered. Some services contain listings for foreclosures and tax liens making them a one-stop real estate investment shop.
One truth is that real estate investing will always be a safe bet. With current savings rates as low as they are most investors are scurrying for other investment opportunities. Despite current rumors of the real estate market’s supposed down turn, real estate investing sill provides lucrative profits for those willing to do their homework. Sure, the real estate market may be slow but all these unfounded theories of a crash are better left on the prophesier’s tablet. Certain fluctuations in the real estate market are followed by subsequent market corrections. Whether the entire economy directs these fluctuations or they are triggered by some local cause, there are balances to come.
Look at Florida, for every 10,000 families that leave the sunshine state due to the battering of recent hurricanes there are 15,000 families willing to take their place and bask in the sun. Real estate like any other product of society is still subject to the basic laws of economics- supply and demand. As long as people are seeking to fulfill what Maslow considers one of the most basic and necessary needs then the housing market, and real estate investing, will certainly be a stable sanctuary for your money.
“Real estate investor seeks apprentice, 10k a month.” This might sound familiar to some- the token real estate investing advertisement feeding off the ideas of those wanting a piece of a lucrative industry. And it’s well-founded! Real estate investing is a very profitable business but only to a very lucky few does it come in the form of a simple phone call. Investing in real estate requires knowledge and fervor in order to make a serious return. The savvy investor will take advantage of the tools available and exercise every entrepreneurial bone in their body.
There are several avenues to take within the rather large realm of real estate investing. Whether you execute more traditional types of real estate investing such as buying low and flipping or investing in tax liens, there are several profitable routes to take. Another trend forecasted for the coming years is the rise of foreclosure investing. With all the resources available online, foreclosure investing is much easier than once considered. Some services contain listings for foreclosures and tax liens making them a one-stop real estate investment shop.
One truth is that real estate investing will always be a safe bet. With current savings rates as low as they are most investors are scurrying for other investment opportunities. Despite current rumors of the real estate market’s supposed down turn, real estate investing sill provides lucrative profits for those willing to do their homework. Sure, the real estate market may be slow but all these unfounded theories of a crash are better left on the prophesier’s tablet. Certain fluctuations in the real estate market are followed by subsequent market corrections. Whether the entire economy directs these fluctuations or they are triggered by some local cause, there are balances to come.
Look at Florida, for every 10,000 families that leave the sunshine state due to the battering of recent hurricanes there are 15,000 families willing to take their place and bask in the sun. Real estate like any other product of society is still subject to the basic laws of economics- supply and demand. As long as people are seeking to fulfill what Maslow considers one of the most basic and necessary needs then the housing market, and real estate investing, will certainly be a stable sanctuary for your money.
Friday, November 23, 2007
Black Friday Foreclosure Shopping
The foreclosure market continues to boom as no relief appears in sight for stretched subprime mortgage holders. As the economy shows more signs of a slowdown, this trend is likely to continue.
Although the real estate industry would prefer otherwise, foreclosures continue to make headlines. The latest data showed superficial relief, with September foreclosures down 8% from some 243,000 in August, but still more than double last year -- and still with more to come.
It may be a harsh analogy, but I often think of foreclosure buyers as the forest-floor ants consuming the dead wood to clean the forest.
That means three things. First, as I see it, the sooner we get through this credit mess, the better. Second, the faster properties get through the foreclosure process and find buyers, the sooner we'll get through the mess. So third, foreclosure buyers clean out the dead wood (I like) and get great bargains in the process (I also like).
I can save how much?
My recent column broadly covers the discount you can expect from market value if you buy a foreclosure. It varies by region, but using information published by real estate portal and foreclosure specialists RealtyTrac, I saw discounts ranging from 15% in Hawaii to 40% in Alabama, with 20% and 25% being a rule of thumb.
Not bad. So then the next question, incidentally raised by several readers, is "how do I find those bargains in my area?"
Finding the for sale signs
To locate specific foreclosures in your area, RealtyTrac is a good place to start. Visit the nations #1 site for foreclosures and find homes for half the price.
The site lists foreclosures by ZIP code and foreclosure stage, ranging from preforeclosure property to bank-owned real estate. It's a broad and fairly deep picture of foreclosure availability in your area.
Some have found RealtyTrac less than precise, as the task of keeping up with foreclosure listing activity across the company is large, to say the least. And to get specific information on the property, RealtyTrac requires a $49.95/month subscription after a seven-day free trial.
But realize that RealtyTrac sits behind other real estate sites, so sooner or later you'll probably run into RealtyTrac. If you're serious about foreclosure shopping, you might want to sign up.
Combining sources
If you aren't ready to make the financial commitment or "come out of the closet" as a registered foreclosure buyer, there are several other paths which work surprisingly well:
Bank sales. To their chagrin, banks and financial institutions are going into the real estate business in a big way. Too bad for them, but you can find a lot of bargains on their Web sites: Bank of America, Countrywide and U. S. Bank have good listings, to name a few. Countrywide, for example, has 300 listings in California alone priced under $170,000.
Agency sales. Banks sell their "REO" (Real Estate Owned) but often hire agencies to do the job. Such agencies include Keystone Asset Management, Lenders Asset Management Corporation and HomeEq Servicing. Some of these agencies may operate bank sites, so you may see a similarity.
Government and government-backed lender sales. Government agencies ranging from FHA and VA to HUD and the Department of Justice sell real estate, visible through a single portal. And government-backed Fannie Mae and Freddie Mac also operate sites. The variety of properties available is, shall we say, wide, but Fannie Mae in particular lists a lot of solid mainstream real estate values.
Auctions and auction houses. Local and regional auctions are becoming bigger as banks and others pile up inventory. A real estate auction specialist will announce an auction of dozens, maybe hundreds of properties in a large region or metro area. Auctioneers include Real Estate Disposal Corporation (REDC) and Williams & Williams. Experience helps in playing this game, although the auctioneer sites walk you through the process.
Local real estate specialists. A lot of agents know about action in a particular area and can hook you up with the sellers. Good agents have their eyes and ears to the ground at all times, and get tips and hear about stuff coming on the market. You can often Google "foreclosures (area)" to get local listings.
Don't forget: reward comes with risk
Remember that, while foreclosure properties often sell at a healthy discount, you may run into poorly maintained properties. There may be other foreclosures in the immediate area, hurting the quality and value of your investment. Double check other adjacent listings and visit the area if you can.
Remember: Good value investors buy assets at the right time in the right place at the right price. Real estate is no different.
Although the real estate industry would prefer otherwise, foreclosures continue to make headlines. The latest data showed superficial relief, with September foreclosures down 8% from some 243,000 in August, but still more than double last year -- and still with more to come.
It may be a harsh analogy, but I often think of foreclosure buyers as the forest-floor ants consuming the dead wood to clean the forest.
That means three things. First, as I see it, the sooner we get through this credit mess, the better. Second, the faster properties get through the foreclosure process and find buyers, the sooner we'll get through the mess. So third, foreclosure buyers clean out the dead wood (I like) and get great bargains in the process (I also like).
I can save how much?
My recent column broadly covers the discount you can expect from market value if you buy a foreclosure. It varies by region, but using information published by real estate portal and foreclosure specialists RealtyTrac, I saw discounts ranging from 15% in Hawaii to 40% in Alabama, with 20% and 25% being a rule of thumb.
Not bad. So then the next question, incidentally raised by several readers, is "how do I find those bargains in my area?"
Finding the for sale signs
To locate specific foreclosures in your area, RealtyTrac is a good place to start. Visit the nations #1 site for foreclosures and find homes for half the price.
The site lists foreclosures by ZIP code and foreclosure stage, ranging from preforeclosure property to bank-owned real estate. It's a broad and fairly deep picture of foreclosure availability in your area.Some have found RealtyTrac less than precise, as the task of keeping up with foreclosure listing activity across the company is large, to say the least. And to get specific information on the property, RealtyTrac requires a $49.95/month subscription after a seven-day free trial.
But realize that RealtyTrac sits behind other real estate sites, so sooner or later you'll probably run into RealtyTrac. If you're serious about foreclosure shopping, you might want to sign up.
Combining sources
If you aren't ready to make the financial commitment or "come out of the closet" as a registered foreclosure buyer, there are several other paths which work surprisingly well:
Bank sales. To their chagrin, banks and financial institutions are going into the real estate business in a big way. Too bad for them, but you can find a lot of bargains on their Web sites: Bank of America, Countrywide and U. S. Bank have good listings, to name a few. Countrywide, for example, has 300 listings in California alone priced under $170,000.
Agency sales. Banks sell their "REO" (Real Estate Owned) but often hire agencies to do the job. Such agencies include Keystone Asset Management, Lenders Asset Management Corporation and HomeEq Servicing. Some of these agencies may operate bank sites, so you may see a similarity.
Government and government-backed lender sales. Government agencies ranging from FHA and VA to HUD and the Department of Justice sell real estate, visible through a single portal. And government-backed Fannie Mae and Freddie Mac also operate sites. The variety of properties available is, shall we say, wide, but Fannie Mae in particular lists a lot of solid mainstream real estate values.
Auctions and auction houses. Local and regional auctions are becoming bigger as banks and others pile up inventory. A real estate auction specialist will announce an auction of dozens, maybe hundreds of properties in a large region or metro area. Auctioneers include Real Estate Disposal Corporation (REDC) and Williams & Williams. Experience helps in playing this game, although the auctioneer sites walk you through the process.
Local real estate specialists. A lot of agents know about action in a particular area and can hook you up with the sellers. Good agents have their eyes and ears to the ground at all times, and get tips and hear about stuff coming on the market. You can often Google "foreclosures (area)" to get local listings.
Don't forget: reward comes with risk
Remember that, while foreclosure properties often sell at a healthy discount, you may run into poorly maintained properties. There may be other foreclosures in the immediate area, hurting the quality and value of your investment. Double check other adjacent listings and visit the area if you can.
Remember: Good value investors buy assets at the right time in the right place at the right price. Real estate is no different.
Thursday, November 15, 2007
Is Flipping houses a lucrative investment?
Flipping houses is one of the most lucrative investment strategies you can make. I stress that statement with one caveat, though: You absolutely must do your due diligence and your homework before you invest. Contrary to conventional wisdom, the hardest part about flipping houses is not the financing. (That's actually the easy part, because you don't even need to use your own credit or your own money.) The hardest part is not even doing the actual rehab work to fix up the foreclosure property and getting it back on the market. The hardest part is not even the negotiation or the bidding process. If you've done your homework, negotiation is really a matter of having the interpersonal communications skills to convey to the seller that you want to help them out.
The hardest part about flipping houses is doing the research and making the determination whether or not a particular property is worth investing in. Once you make the decision to either pass on a particular house or to go forward with the negotiation process, it becomes a matter of statistical numbers, salesmanship, and a bit of luck.
Many a time have foreclosure real estate investors been burned by neglecting to do their homework before investing in a particular parcel of real estate. Novice investors have a tendency to get emotionally attached to particular deals for some reason. Perhaps they like the house. Perhaps they think this house is a guaranteed home run and will net them with a nice decent five- or even six-figure profit. But when they actually sign the paperwork and handover the money to do the deal, the nightmare begins.
The house may need far more repairs than originally anticipated, and the investor had not bothered to do a visual walk-through of the house, or did not buy the house with a low enough loan-to-value (LTV) margin to leave room for repairs before flipping it. Or, the house is in a neighborhood or market where homes are sitting for upwards of six months at a stretch before being sold, and the investor ends up making monthly payments on the house that eat into his or her profits, and ends up having to rent out the place for less than the monthly payments on the mortgage are.
The house may have had an encumbrance on it such as a judgment lien or a second or third mortgage, and the investor didn't bother to conduct a title search to ensure clean title.
Or quite simply, the homeowner just didn't do a CMA (comparative market analysis) properly and didn't buy the house at a low enough percentage below market value in order to make the deal profitable.
You may have heard the expression from various foreclosure gurus that you make your money on an investment when you buy it, not when you sell it. In other words, what that means is that you should only be buying assets that have equity that can be realized.
Research is one of the single most important aspects of the foreclosure investing business. When done properly, you will find riches beyond your wildest dreams. When done improperly, you are digging a deeper hole for yourself financially. I know from personal experience, having done foreclosure investing, the sad reality of this fact. As a rookie investor, my first couple of deals I barely made a few pennies on. I was lucky that I didn't end up losing my shirt. I walked away with a few bucks. This was because I hadn't done the math right in my calculations because more was owed on the house than I previously thought. On another deal, I ended up paying more in repairs than I had anticipated, because I had never been inside the house before the homeowner deeded the house over to me. But then on my next deals, because I had done my homework properly (having learned from my mistakes with my previous deals), I was able to get into deals with a much healthier profit margin. A healthy profit margin is very important to maintain when doing your calculations. You can almost always expect that, due to factors beyond your control, you have the potential to make less on a deal than the numbers tell you that you will on paper. If you think you will net $20,000 on a particular property, you might end up only making $10,000 or $15,000, or who knows, maybe even less.
That is why research is important. That is why it is important to use a reliable foreclosure listing service that provides reliable and accurate data. Yes I could go to the courthouse and research the deals myself, but rather than spend countless hours looking through files from 8am to 4pm on weekdays, I would rather use my valuable time to evaluate pre-researched deals, make go / no-go decisions on each deal based on the researched information, and then focus more of my time on the actual process of making offers. If you want to be a successful real estate investor, you will learn that if you want to do a volume of deals, you will need to outsource some of your tasks. The easiest one to outsource is the compilation of foreclosure listings and researching of the deals. (You don't have to train anyone to do it, because there are services out there that already do this for you.)
Learn more about foreclosures and get access to all the tools you need to get started investing today at http://www.thenoteservice.com
The hardest part about flipping houses is doing the research and making the determination whether or not a particular property is worth investing in. Once you make the decision to either pass on a particular house or to go forward with the negotiation process, it becomes a matter of statistical numbers, salesmanship, and a bit of luck.
Many a time have foreclosure real estate investors been burned by neglecting to do their homework before investing in a particular parcel of real estate. Novice investors have a tendency to get emotionally attached to particular deals for some reason. Perhaps they like the house. Perhaps they think this house is a guaranteed home run and will net them with a nice decent five- or even six-figure profit. But when they actually sign the paperwork and handover the money to do the deal, the nightmare begins.
The house may need far more repairs than originally anticipated, and the investor had not bothered to do a visual walk-through of the house, or did not buy the house with a low enough loan-to-value (LTV) margin to leave room for repairs before flipping it. Or, the house is in a neighborhood or market where homes are sitting for upwards of six months at a stretch before being sold, and the investor ends up making monthly payments on the house that eat into his or her profits, and ends up having to rent out the place for less than the monthly payments on the mortgage are.
The house may have had an encumbrance on it such as a judgment lien or a second or third mortgage, and the investor didn't bother to conduct a title search to ensure clean title.
Or quite simply, the homeowner just didn't do a CMA (comparative market analysis) properly and didn't buy the house at a low enough percentage below market value in order to make the deal profitable.
You may have heard the expression from various foreclosure gurus that you make your money on an investment when you buy it, not when you sell it. In other words, what that means is that you should only be buying assets that have equity that can be realized.
Research is one of the single most important aspects of the foreclosure investing business. When done properly, you will find riches beyond your wildest dreams. When done improperly, you are digging a deeper hole for yourself financially. I know from personal experience, having done foreclosure investing, the sad reality of this fact. As a rookie investor, my first couple of deals I barely made a few pennies on. I was lucky that I didn't end up losing my shirt. I walked away with a few bucks. This was because I hadn't done the math right in my calculations because more was owed on the house than I previously thought. On another deal, I ended up paying more in repairs than I had anticipated, because I had never been inside the house before the homeowner deeded the house over to me. But then on my next deals, because I had done my homework properly (having learned from my mistakes with my previous deals), I was able to get into deals with a much healthier profit margin. A healthy profit margin is very important to maintain when doing your calculations. You can almost always expect that, due to factors beyond your control, you have the potential to make less on a deal than the numbers tell you that you will on paper. If you think you will net $20,000 on a particular property, you might end up only making $10,000 or $15,000, or who knows, maybe even less.
That is why research is important. That is why it is important to use a reliable foreclosure listing service that provides reliable and accurate data. Yes I could go to the courthouse and research the deals myself, but rather than spend countless hours looking through files from 8am to 4pm on weekdays, I would rather use my valuable time to evaluate pre-researched deals, make go / no-go decisions on each deal based on the researched information, and then focus more of my time on the actual process of making offers. If you want to be a successful real estate investor, you will learn that if you want to do a volume of deals, you will need to outsource some of your tasks. The easiest one to outsource is the compilation of foreclosure listings and researching of the deals. (You don't have to train anyone to do it, because there are services out there that already do this for you.)
Learn more about foreclosures and get access to all the tools you need to get started investing today at http://www.thenoteservice.com
Monday, November 12, 2007
Secrets to Finding Foreclosure Deals
Secrets to Finding Foreclosure Deals
With experience comes knowledge. And Louis Butler certainly has the experience to give him ample knowledge about how to find foreclosure bargains. After purchasing more than 25 foreclosure properties in the Little Rock, Ark., area, Butler can spot a deal from more than a thousand miles away — literally.
“I don’t need a spreadsheet or software to spot a deal,” said the San Dimas, Calif., native who buys foreclosures in a town that is nearly 1,600 miles from where he lives and works. “I have a local real estate agent in Little Rock, and local title and loan people that help put together my foreclosure deals.”
Butler originally lived in the Little Rock area, so he knows the good locations and neighborhoods. He said he looks for properties with 30 to 40 percent equity. Then, he puts together wholesale deals that are 20 to 30 percent below market value in certain areas and zip codes that he is familiar with.
“I pencil it out, look at the comps, search for liens and rely on my local realtor to send me photographs,” he explained. “Then, I contact the owner and negotiate a price. A lot of my deals I don’t even inspect the property. I look at photographs sent to me from my realtor and study the comps.”
To accommodate his long-distance investing, Butler sometimes receives closing documents via overnight couriers and has to sign the documents and ship them back immediately. The mailing costs are a small price to pay for the benefits of investing in a market that produces so many good deals for him.
Targeting a less-expensive housing market across the country has helped Butler locate a plethora of bargain buys, but that’s not the only way to find great deals on foreclosures. There are as many strategies for finding great deals as there are foreclosure investors. Below are a few key strategy secrets from experienced investors across the country.
Handwritten letters stand out
While many investors use printed form letters to contact homeowners in default, investor Michelle Mangione relies on handwritten envelopes to drive her foreclosure business. Mangione’s letter-writing strategy got her the dream home she currently lives in four years ago when she first started investing in foreclosures. She purchased her Fallbrook, Calif., home in 2003 for $655,000. In March and April 2007, two homes down the street sold for more than $1.5 million.
“I target pre-foreclosures and send out handwritten envelopes with a form letter inside,” said Mangione, a licensed realtor who invests in foreclosures full-time. Mangione mails 500 to 1,000 letters at a time to homeowners in the early stages of default. Typically, she gets a response rate of about 1 to 3 percent per mailing. Many conversations with distressed homeowners go nowhere, she said. “When I get a telephone call back, then I check out the property and start the dialogue with the owner.”
Auction deals can amaze
Like Mangione, Michigan real estate investor Nancy Levin also purchased her dream home in foreclosure. Levin found a foreclosed home in an affluent Detroit community.
“The property was in pre-foreclosure when I first saw it online,” explained Levin. “I kept tracking it on the Internet. My agent didn’t even know the property was in foreclosure. Finally, it went to auction — and to my surprise — I was the only one who showed up at the auction. I paid cash at the auction and bought the house for $260,000.”
Levin said the 2,800 square foot Bloomfield Hills home, which appraised for $430,000, was totally remodeled and featured three baths and three bedrooms. She bought the redemption rights from the previous owner for another $20,000 and moved in.
“I got this place for a steal,” Levin said. “Right now, Michigan is foreclosure heaven. It’s raining foreclosures here. I’m looking to do another one soon. If I can find a deal like the one I’m living in, I’ll definitely buy it.”
Strike while the iron is hot
Glen Miller, a 39-year veteran of foreclosure investing, believes now is a great time to buy foreclosures.
“After I look at the properties on RealtyTrac, I then go the courthouse and look for properties that have low mortgage balances and I look for any outstanding liens,” said Miller, who currently owns 20 foreclosure properties in and around Vero Beach, Fla. Miller owns eight duplexes, four single family homes, a condo unit and has just flipped five foreclosures. Now, Miller is finishing rehabbing another foreclosure that he will sell soon.
“I’m putting on a new roof on this four-bedroom, two-bath home in Fort Pierce I bought for $60,000,” Miller said. “I’ll invest another $20,000 and put it on the market in the next three weeks and list it for $130,000. I should sell this one fast because the other homes on the market are listed for $160,000 and more.”
While there’s no one secret to buying foreclosure property at discounted prices, Miller and the other investors agree that it’s important that investors jump in and find out what works for their personality and target market. Once they find a strategy that works, investors should stick with it.
“You got to have common horse sense. This isn’t rocket science,” Miller said. “You just have get off your behind and go out and attack the market.”
With experience comes knowledge. And Louis Butler certainly has the experience to give him ample knowledge about how to find foreclosure bargains. After purchasing more than 25 foreclosure properties in the Little Rock, Ark., area, Butler can spot a deal from more than a thousand miles away — literally.
“I don’t need a spreadsheet or software to spot a deal,” said the San Dimas, Calif., native who buys foreclosures in a town that is nearly 1,600 miles from where he lives and works. “I have a local real estate agent in Little Rock, and local title and loan people that help put together my foreclosure deals.”
Butler originally lived in the Little Rock area, so he knows the good locations and neighborhoods. He said he looks for properties with 30 to 40 percent equity. Then, he puts together wholesale deals that are 20 to 30 percent below market value in certain areas and zip codes that he is familiar with.
“I pencil it out, look at the comps, search for liens and rely on my local realtor to send me photographs,” he explained. “Then, I contact the owner and negotiate a price. A lot of my deals I don’t even inspect the property. I look at photographs sent to me from my realtor and study the comps.”
To accommodate his long-distance investing, Butler sometimes receives closing documents via overnight couriers and has to sign the documents and ship them back immediately. The mailing costs are a small price to pay for the benefits of investing in a market that produces so many good deals for him.
Targeting a less-expensive housing market across the country has helped Butler locate a plethora of bargain buys, but that’s not the only way to find great deals on foreclosures. There are as many strategies for finding great deals as there are foreclosure investors. Below are a few key strategy secrets from experienced investors across the country.
Handwritten letters stand out
While many investors use printed form letters to contact homeowners in default, investor Michelle Mangione relies on handwritten envelopes to drive her foreclosure business. Mangione’s letter-writing strategy got her the dream home she currently lives in four years ago when she first started investing in foreclosures. She purchased her Fallbrook, Calif., home in 2003 for $655,000. In March and April 2007, two homes down the street sold for more than $1.5 million.
“I target pre-foreclosures and send out handwritten envelopes with a form letter inside,” said Mangione, a licensed realtor who invests in foreclosures full-time. Mangione mails 500 to 1,000 letters at a time to homeowners in the early stages of default. Typically, she gets a response rate of about 1 to 3 percent per mailing. Many conversations with distressed homeowners go nowhere, she said. “When I get a telephone call back, then I check out the property and start the dialogue with the owner.”
Auction deals can amaze
Like Mangione, Michigan real estate investor Nancy Levin also purchased her dream home in foreclosure. Levin found a foreclosed home in an affluent Detroit community.
“The property was in pre-foreclosure when I first saw it online,” explained Levin. “I kept tracking it on the Internet. My agent didn’t even know the property was in foreclosure. Finally, it went to auction — and to my surprise — I was the only one who showed up at the auction. I paid cash at the auction and bought the house for $260,000.”
Levin said the 2,800 square foot Bloomfield Hills home, which appraised for $430,000, was totally remodeled and featured three baths and three bedrooms. She bought the redemption rights from the previous owner for another $20,000 and moved in.
“I got this place for a steal,” Levin said. “Right now, Michigan is foreclosure heaven. It’s raining foreclosures here. I’m looking to do another one soon. If I can find a deal like the one I’m living in, I’ll definitely buy it.”
Strike while the iron is hot
Glen Miller, a 39-year veteran of foreclosure investing, believes now is a great time to buy foreclosures.
“After I look at the properties on RealtyTrac, I then go the courthouse and look for properties that have low mortgage balances and I look for any outstanding liens,” said Miller, who currently owns 20 foreclosure properties in and around Vero Beach, Fla. Miller owns eight duplexes, four single family homes, a condo unit and has just flipped five foreclosures. Now, Miller is finishing rehabbing another foreclosure that he will sell soon.
“I’m putting on a new roof on this four-bedroom, two-bath home in Fort Pierce I bought for $60,000,” Miller said. “I’ll invest another $20,000 and put it on the market in the next three weeks and list it for $130,000. I should sell this one fast because the other homes on the market are listed for $160,000 and more.”
While there’s no one secret to buying foreclosure property at discounted prices, Miller and the other investors agree that it’s important that investors jump in and find out what works for their personality and target market. Once they find a strategy that works, investors should stick with it.
“You got to have common horse sense. This isn’t rocket science,” Miller said. “You just have get off your behind and go out and attack the market.”
Thursday, November 8, 2007
How To Dramatically Increase Your Credit Score
Of course, one of the obvious ways to increase your credit score is simply to pay your bills on time, which of course you need to do. However, there's a more proactive approach to raising your credit score that's easy to do and makes the process quicker!
Let's say you have a Visa card with a $1,000.00 credit limit. Starting today you can use your $1,000.00 line of credit to increase your credit score and it doesn't matter if the credit card is secured or non-secured. The only thing that matters is that your credit card payments are reported to the credit bureau.
Each month you probably pay an electric bill, phone bill, water bill, car insurance and other types of bills which are generally not reported to the credit bureau unless you have an outstanding balance and refuse to pay it. The trick is to pay all these bills each month using your credit card, which does report to the credit bureau. Remember, you can even pay your groceries and fuel purchases for your car using a credit card. As long as the bill can be paid using a credit card you're ok. The next step is to apply the same money you were going to spend for the bills directly to your credit card bringing the balance to zero each month. Each month you charge your credit card then pay it off to reflect a positive payment history and you'll increase your credit score.
If you have a credit card with a large enough credit line, you can easily pay your car payment or even a mortgage payment. Even if you don't have a large enough credit line or can't get a non-secured credit card, you can still get a secured credit card from your local bank. Once this is done, deposit the same money you were going to use to pay your bills into your secured credit card account and simply use your secured credit card to pay your bills.
When using this method you can also use two credit cards showing more accounts with positive activity, which can work in your favor. However, don't get carried away! Having too many active credit card accounts or open lines of credit will also work against you.
Note: Debit cards with the Visa logo that come directly out of your checking account don't count. The credit card you're using must be set-up as a true credit card with the payments reported to the credit bureau.
Now your bills are being paid on time and you're maximizing your credit score with every bill you pay using your credit card reflecting a positive payment history for both your bills and your credit card.
Remember, this costs you very little to accomplish. All you may end up paying is a few dollars in interest, if that. The benefits you'll receive as your credit score increases will far outweigh a few dollars per month.
THE KEY HERE IS TO ALWAYS USE THE MONEY YOU WERE GOING TO ALREADY USE TO PAY YOUR BILLS TO PAY THE CREDIT CARD YOU'RE NOW USING TO PAY YOUR BILLS, BRINGING THE BALANCE TO ZERO EACH MONTH. NEVER MAKE THE MISTAKE OF THINKING YOU HAVE ALL THIS MONEY AT THE END OF THE MONTH AND ONLY PAYING THE MINIMUM PAYMENT TO THE CREDIT CARD. PAY THE CREDIT CARD DOWN TO A VERY SMALL BALANCE EACH MONTH! I CAN'T STRESS TO YOU ENOUGH HOW IMPORTANT THIS STEP IS. BY NOT DOING SO, YOU'LL END UP MORE AND MORE IN DEBT.
Note: The reason it is important to leave a small balance every month on your credit card is that banks like to see that you are paying interest, which helps raise your credit score. A $20 or $30 balance will work fine.
Of course, the only bills this will work on are those you can use a credit card to pay. I believe you'll find you can pay most of your bills with a credit card.
Once again let me remind you AS STATED THROUGHOUT OUR WEBSITE YOUR CREDIT HISTORY HAS NO IMPACT ON ACQUIRING REAL ESTATE WHEN YOU WORK WITH US.
This information is provided as a gift to you with no strings attached.
I hope to hear from you soon.
Let's say you have a Visa card with a $1,000.00 credit limit. Starting today you can use your $1,000.00 line of credit to increase your credit score and it doesn't matter if the credit card is secured or non-secured. The only thing that matters is that your credit card payments are reported to the credit bureau.
Each month you probably pay an electric bill, phone bill, water bill, car insurance and other types of bills which are generally not reported to the credit bureau unless you have an outstanding balance and refuse to pay it. The trick is to pay all these bills each month using your credit card, which does report to the credit bureau. Remember, you can even pay your groceries and fuel purchases for your car using a credit card. As long as the bill can be paid using a credit card you're ok. The next step is to apply the same money you were going to spend for the bills directly to your credit card bringing the balance to zero each month. Each month you charge your credit card then pay it off to reflect a positive payment history and you'll increase your credit score.
If you have a credit card with a large enough credit line, you can easily pay your car payment or even a mortgage payment. Even if you don't have a large enough credit line or can't get a non-secured credit card, you can still get a secured credit card from your local bank. Once this is done, deposit the same money you were going to use to pay your bills into your secured credit card account and simply use your secured credit card to pay your bills.
When using this method you can also use two credit cards showing more accounts with positive activity, which can work in your favor. However, don't get carried away! Having too many active credit card accounts or open lines of credit will also work against you.
Note: Debit cards with the Visa logo that come directly out of your checking account don't count. The credit card you're using must be set-up as a true credit card with the payments reported to the credit bureau.
Now your bills are being paid on time and you're maximizing your credit score with every bill you pay using your credit card reflecting a positive payment history for both your bills and your credit card.
Remember, this costs you very little to accomplish. All you may end up paying is a few dollars in interest, if that. The benefits you'll receive as your credit score increases will far outweigh a few dollars per month.
THE KEY HERE IS TO ALWAYS USE THE MONEY YOU WERE GOING TO ALREADY USE TO PAY YOUR BILLS TO PAY THE CREDIT CARD YOU'RE NOW USING TO PAY YOUR BILLS, BRINGING THE BALANCE TO ZERO EACH MONTH. NEVER MAKE THE MISTAKE OF THINKING YOU HAVE ALL THIS MONEY AT THE END OF THE MONTH AND ONLY PAYING THE MINIMUM PAYMENT TO THE CREDIT CARD. PAY THE CREDIT CARD DOWN TO A VERY SMALL BALANCE EACH MONTH! I CAN'T STRESS TO YOU ENOUGH HOW IMPORTANT THIS STEP IS. BY NOT DOING SO, YOU'LL END UP MORE AND MORE IN DEBT.
Note: The reason it is important to leave a small balance every month on your credit card is that banks like to see that you are paying interest, which helps raise your credit score. A $20 or $30 balance will work fine.
Of course, the only bills this will work on are those you can use a credit card to pay. I believe you'll find you can pay most of your bills with a credit card.
Once again let me remind you AS STATED THROUGHOUT OUR WEBSITE YOUR CREDIT HISTORY HAS NO IMPACT ON ACQUIRING REAL ESTATE WHEN YOU WORK WITH US.
This information is provided as a gift to you with no strings attached.
I hope to hear from you soon.
Wednesday, November 7, 2007
Mortgage rates fall to May 2007 levels
Mortgage rates fell last week to their lowest point in nearly six months according to the results of Freddie Mac's Primary Mortgage Market Survey for the week ended November 1.
The average rate for the 30-year fixed-rate mortgage (FRM) dropped to 6.26 percent with an average 0.4 point from the average the previous week of 6.33 percent with 0.5 point. This was the lowest average rate for the 30-year FRM since the week ended May 17 when it averaged 6.21 percent. One year ago this product carried an average rate of 6.31.
The 15-year FRM was down eight basis points to 5.91 percent with an average 0.4 point, a decrease of 0.2 point from the week ended October 25. This was the lowest rate for the 15-year FRM since the week ended May 10 when the average was 5.87 percent. One year ago the average was 6.02 percent.
The five-year Treasury-indexed hybrid adjustable rate mortgage (ARM) averaged 5.98 percent with 0.4 point compared to the previous week when it averaged 6.03 percent with 0.5 point. This is the lowest rate for this category of loan since May 17 when the average was 5.92 percent.
The one-year Treasury-indexed ARM averaged 5.57 percent, nine basis points lower than a week earlier. The average point was unchanged at 0.6. This rate tied with the last low that was recorded during the week ended May 31.
"October's consumer confidence fell to its lowest level since October 2005 as mortgage rates continued to decline this week to their lowest level in almost six months," said Frank Nothaft, Freddie Mac vice president and chief economist. "Continued market concerns about weaker economic growth and further declines in the housing market have kept mortgage rates low over the last few weeks.
"Although the third quarter gain in real gross domestic product (GDP) of 3.9 percent was stronger than market forecasts, the housing market has subtracted from GDP growth over the past twenty-one months ending in September. In its most recent policy announcement, the Federal Open Market Committee (FOMC) noted that the rate of expansion in the economy will most likely slow in the near term, due in part to a reflection of the intensity of the housing correction."
The survey of lenders conducted weekly by the Mortgage Bankers Association (MBA) showed a very slight increase in average rates for two of the three categories of loans it tracks.
The 30-year fixed rate mortgage had an average contract interest rate of 6.16 percent compared to 6.15 percent a week earlier. Fees and points, including the origination fee, increased to 1.08 from 1.05.
The average rate for the 15-year FRM decreased from 5.79 percent to 5.77 percent with fees and points unchanged at 1.10.
The one-year ARM also increased one basis point to 5.94 percent with points decreasing to 0.9 from 0.93.
All MBA figures are for 80 percent loan to value originations.
Mortgage loan applications decreased 1.6 percent on a seasonally adjusted basis from a week earlier and 2.4 percent on an unadjusted basis. Application volume was 8 percent higher than that recorded during the same week in 2006.
Applications to refinance represented 49.1 percent of all mortgage applications compared to 49.6 percent a week earlier while the market share of adjustable rate mortgages decreased to 14.2 percent from 14.7 percent.
The average rate for the 30-year fixed-rate mortgage (FRM) dropped to 6.26 percent with an average 0.4 point from the average the previous week of 6.33 percent with 0.5 point. This was the lowest average rate for the 30-year FRM since the week ended May 17 when it averaged 6.21 percent. One year ago this product carried an average rate of 6.31.
The 15-year FRM was down eight basis points to 5.91 percent with an average 0.4 point, a decrease of 0.2 point from the week ended October 25. This was the lowest rate for the 15-year FRM since the week ended May 10 when the average was 5.87 percent. One year ago the average was 6.02 percent.
The five-year Treasury-indexed hybrid adjustable rate mortgage (ARM) averaged 5.98 percent with 0.4 point compared to the previous week when it averaged 6.03 percent with 0.5 point. This is the lowest rate for this category of loan since May 17 when the average was 5.92 percent.
The one-year Treasury-indexed ARM averaged 5.57 percent, nine basis points lower than a week earlier. The average point was unchanged at 0.6. This rate tied with the last low that was recorded during the week ended May 31.
"October's consumer confidence fell to its lowest level since October 2005 as mortgage rates continued to decline this week to their lowest level in almost six months," said Frank Nothaft, Freddie Mac vice president and chief economist. "Continued market concerns about weaker economic growth and further declines in the housing market have kept mortgage rates low over the last few weeks.
"Although the third quarter gain in real gross domestic product (GDP) of 3.9 percent was stronger than market forecasts, the housing market has subtracted from GDP growth over the past twenty-one months ending in September. In its most recent policy announcement, the Federal Open Market Committee (FOMC) noted that the rate of expansion in the economy will most likely slow in the near term, due in part to a reflection of the intensity of the housing correction."
The survey of lenders conducted weekly by the Mortgage Bankers Association (MBA) showed a very slight increase in average rates for two of the three categories of loans it tracks.
The 30-year fixed rate mortgage had an average contract interest rate of 6.16 percent compared to 6.15 percent a week earlier. Fees and points, including the origination fee, increased to 1.08 from 1.05.
The average rate for the 15-year FRM decreased from 5.79 percent to 5.77 percent with fees and points unchanged at 1.10.
The one-year ARM also increased one basis point to 5.94 percent with points decreasing to 0.9 from 0.93.
All MBA figures are for 80 percent loan to value originations.
Mortgage loan applications decreased 1.6 percent on a seasonally adjusted basis from a week earlier and 2.4 percent on an unadjusted basis. Application volume was 8 percent higher than that recorded during the same week in 2006.
Applications to refinance represented 49.1 percent of all mortgage applications compared to 49.6 percent a week earlier while the market share of adjustable rate mortgages decreased to 14.2 percent from 14.7 percent.
Tuesday, October 23, 2007
CT Foreclosure Process Rules
FORECLOSURE BY SALE STANDING ORDERS
1. Committee will be appointed by the Court from a list of approved attorneys.
2. Sale will take place at 11:00 am on the premises unless otherwise ordered by the court.
3. Inspection will occur one hour prior to the sale on the date of sale unless otherwise
designated.
4. The deposit is 10% of the fair market value as found by the Court. The deposit is waived for
the plaintiff unless requested otherwise. Deposit is to be paid by either bank or certified
check. Purchaser is to close within 30 days of the Court’s approval of the committee deed.
The deposit shall be forfeited if the purchaser fails to close within 30 days of the approval of
the committee deed.
5. Advertisement is to be published twice in a newspaper as directed by the court.
6. The sign is to be placed on the premises as directed by the court.
7. The size of the sign is to be approximately 3 feet wide and 2 feet high and must contain the
following statement: DO NOT REMOVE; VIOLATION SUBJECT TO PUNISHMENT BY
THE COURT.
8. Cost of the sign is not to exceed the amount customarily authorized by the court including
preparation, erection and photograph for inclusion in committee report.
9. Committee is authorized to replace the sign once without court approval, provided the sign
can be erected at least ten days prior to sale. DO NOT ERECT THE SIGN YOURSELF.
10. A disinterested appraiser will be appointed and will, under oath, appraise the property and
make return of the appraisal to the Clerk of the Court at least seven days prior to the sale. The
court will retain this appraisal.
11. Committee is to obtain liability insurance for the date of the sale in the amount of $1,000,000.
Premium not to exceed $275.00.
12. Except for filing an appearance, if the sale is more than two months in the future, the
committee should incur no fees or expenses until directed by the court.
13. The Committee is authorized to conduct a title search of the property. The expense incurred
in connection with the title search shall not exceed $200.00.
14. If the sale is cancelled for any reason after publication or erection of the sign, a written
announcement of cancellation should be posted on the site. The committee is to remain on
site in that event.
15. The following information is to be contained in the Court ordered letter to the nonappearing
defendant owner of the equity: a.) Clearly state at the beginning that the letter is being sent at
the direction of the Court; b.) State the results of the foreclosure judgement; c.) Inform the
nonappearing equity owner that he/she/they risk loss of the equity if he/she/they fail to take
steps to protect that equity AND THAT HE/SHE/THEY SHOULD CHECK WITH THE
COURT AFTER THE SALE TO LEARN IF THERE IS ANY MONEY THAT IS
DISTRIBUTABLE TO HIM/HER/THEM; d.) State that the nonappearing party should either
file his/her own appearance or have an attorney file one on his/her/their behalf in order to
protect his/her/their interest in the equity. This letter is to be sent by the plaintiff via certified
mail, return receipt requested. A copy of the letter and later the return receipt should be sent
to the Clerk of the Court. NO SALE WILL BE APPROVED OR FUNDS DISBURSED
WITHOUT PROOF OF MAILING.
16. The sale is subject to and an all liens choate and inchoate which are prior in right to the
encumbrance being foreclosed.
17. The committee is to follow the Uniform Procedures for Foreclosure by Sale Matters except as
modified herein. (JD-CV-81 Rev.1-03). Committee deed to be prepared on form JD-CV-74
only.
18. Standing orders regarding Standard form Newspaper Ads, Model Notice To Bidders and
Plaintiffs Bid at Foreclosure Sale are incorporated herein by reference.
1. Committee will be appointed by the Court from a list of approved attorneys.
2. Sale will take place at 11:00 am on the premises unless otherwise ordered by the court.
3. Inspection will occur one hour prior to the sale on the date of sale unless otherwise
designated.
4. The deposit is 10% of the fair market value as found by the Court. The deposit is waived for
the plaintiff unless requested otherwise. Deposit is to be paid by either bank or certified
check. Purchaser is to close within 30 days of the Court’s approval of the committee deed.
The deposit shall be forfeited if the purchaser fails to close within 30 days of the approval of
the committee deed.
5. Advertisement is to be published twice in a newspaper as directed by the court.
6. The sign is to be placed on the premises as directed by the court.
7. The size of the sign is to be approximately 3 feet wide and 2 feet high and must contain the
following statement: DO NOT REMOVE; VIOLATION SUBJECT TO PUNISHMENT BY
THE COURT.
8. Cost of the sign is not to exceed the amount customarily authorized by the court including
preparation, erection and photograph for inclusion in committee report.
9. Committee is authorized to replace the sign once without court approval, provided the sign
can be erected at least ten days prior to sale. DO NOT ERECT THE SIGN YOURSELF.
10. A disinterested appraiser will be appointed and will, under oath, appraise the property and
make return of the appraisal to the Clerk of the Court at least seven days prior to the sale. The
court will retain this appraisal.
11. Committee is to obtain liability insurance for the date of the sale in the amount of $1,000,000.
Premium not to exceed $275.00.
12. Except for filing an appearance, if the sale is more than two months in the future, the
committee should incur no fees or expenses until directed by the court.
13. The Committee is authorized to conduct a title search of the property. The expense incurred
in connection with the title search shall not exceed $200.00.
14. If the sale is cancelled for any reason after publication or erection of the sign, a written
announcement of cancellation should be posted on the site. The committee is to remain on
site in that event.
15. The following information is to be contained in the Court ordered letter to the nonappearing
defendant owner of the equity: a.) Clearly state at the beginning that the letter is being sent at
the direction of the Court; b.) State the results of the foreclosure judgement; c.) Inform the
nonappearing equity owner that he/she/they risk loss of the equity if he/she/they fail to take
steps to protect that equity AND THAT HE/SHE/THEY SHOULD CHECK WITH THE
COURT AFTER THE SALE TO LEARN IF THERE IS ANY MONEY THAT IS
DISTRIBUTABLE TO HIM/HER/THEM; d.) State that the nonappearing party should either
file his/her own appearance or have an attorney file one on his/her/their behalf in order to
protect his/her/their interest in the equity. This letter is to be sent by the plaintiff via certified
mail, return receipt requested. A copy of the letter and later the return receipt should be sent
to the Clerk of the Court. NO SALE WILL BE APPROVED OR FUNDS DISBURSED
WITHOUT PROOF OF MAILING.
16. The sale is subject to and an all liens choate and inchoate which are prior in right to the
encumbrance being foreclosed.
17. The committee is to follow the Uniform Procedures for Foreclosure by Sale Matters except as
modified herein. (JD-CV-81 Rev.1-03). Committee deed to be prepared on form JD-CV-74
only.
18. Standing orders regarding Standard form Newspaper Ads, Model Notice To Bidders and
Plaintiffs Bid at Foreclosure Sale are incorporated herein by reference.
Friday, October 19, 2007
Foreclosure Filings Double
Foreclosure filings across the United States nearly doubled last month compared with September 2006, as financially strapped homeowners already behind on mortgage payments defaulted on their loans or came closer to losing their homes to foreclosure, a real estate information company said Thursday.
A total of 223,538 foreclosure filings were reported in September, up from 112,210 in the same month a year ago, according to Irvine-based RealtyTrac Inc.
The number of filings in September was down 8 percent from August’s 243,947, the firm said.
Despite the sequential decline, the September figure represents the second-highest total for filings in a single month since the company began tracking monthly filings two years ago.
"August was an extraordinarily high month for foreclosure activity, so some falloff was almost predictable," said Rick Sharga, RealtyTrac’s vice president for marketing.
The filings include default notices, auction sale notices and bank repossessions. Some properties might have received more than one notice if the owners have multiple mortgages.
Typically, borrowers must be 60 to 90 days past due on their mortgage payments before their lender will consider them in default, the first stage of the foreclosure process. If a homeowner can’t find a way to get current on payments, the home is then often put up for auction, and if it doesn’t sell, it eventually goes back to the bank.
In all, 39 states saw a decline in foreclosure filings, the firm said.
Sharga noted that there was a spike in the number of bank repossessions in August that did not occur in September.
It’s likely that the sequential decline in foreclosure activity between August and September was just a blip, not a bellwether of lessening foreclosure filings.
"We don’t see September as the beginning of the end in this cycle of foreclosures," Sharga said.
The foreclosure rate for the nation in September was one foreclosure filing for every 557 households, the firm said.
The U.S. housing market has seen sales decline and home prices fall or remain flat, making it harder for homeowners who can’t afford to make mortgage payments to sell their homes or seek refinancing.
Many of those troubled homeowners were among those who took on adjustable-rate mortgages that are now adjusting to a higher interest rate, translating into payments they cannot afford to make.
The rising delinquencies and foreclosures this year have led the mortgage industry to tighten lending standards, further narrowing options for homeowners struggling to pay their mortgage.
Nevada, Florida and California had the highest foreclosure rates in the country last month, the firm said.
Rounding out the states with the Top 10 foreclosure rates last month were Michigan, Arizona, Georgia, Ohio, Colorado, Texas and Indiana.
A total of 223,538 foreclosure filings were reported in September, up from 112,210 in the same month a year ago, according to Irvine-based RealtyTrac Inc.
The number of filings in September was down 8 percent from August’s 243,947, the firm said.
Despite the sequential decline, the September figure represents the second-highest total for filings in a single month since the company began tracking monthly filings two years ago.
"August was an extraordinarily high month for foreclosure activity, so some falloff was almost predictable," said Rick Sharga, RealtyTrac’s vice president for marketing.
The filings include default notices, auction sale notices and bank repossessions. Some properties might have received more than one notice if the owners have multiple mortgages.
Typically, borrowers must be 60 to 90 days past due on their mortgage payments before their lender will consider them in default, the first stage of the foreclosure process. If a homeowner can’t find a way to get current on payments, the home is then often put up for auction, and if it doesn’t sell, it eventually goes back to the bank.
In all, 39 states saw a decline in foreclosure filings, the firm said.
Sharga noted that there was a spike in the number of bank repossessions in August that did not occur in September.
It’s likely that the sequential decline in foreclosure activity between August and September was just a blip, not a bellwether of lessening foreclosure filings.
"We don’t see September as the beginning of the end in this cycle of foreclosures," Sharga said.
The foreclosure rate for the nation in September was one foreclosure filing for every 557 households, the firm said.
The U.S. housing market has seen sales decline and home prices fall or remain flat, making it harder for homeowners who can’t afford to make mortgage payments to sell their homes or seek refinancing.
Many of those troubled homeowners were among those who took on adjustable-rate mortgages that are now adjusting to a higher interest rate, translating into payments they cannot afford to make.
The rising delinquencies and foreclosures this year have led the mortgage industry to tighten lending standards, further narrowing options for homeowners struggling to pay their mortgage.
Nevada, Florida and California had the highest foreclosure rates in the country last month, the firm said.
Rounding out the states with the Top 10 foreclosure rates last month were Michigan, Arizona, Georgia, Ohio, Colorado, Texas and Indiana.
Wednesday, October 17, 2007
Top Ten Reasons For A Title Search
Top 10 Reasons to Check Your Property Title Search
The real estate "bubble" market of the past 5 years has caused millions of documents to be recorded on property titles. This volume has increased the number of errors, and opened loopholes for document fraud. Because of this, more homeowners are becoming interested in checking their property title records, like they might check a vehicle history or their credit report. We are more often finding some common title errors. When clients check the title search on their property, they are often surprised to find old liens, incorrect ownership, and even mortgages taken out without their knowledge.
1. Unreleased mortgages
Even though the financial account for a prior refinanced mortgage may be paid off, the lender also has to file a lien release with the county records office to remove the old mortgage from your property title. The extreme volume of mortgage refinance activity over the past 5 years has resulted in lenders becoming less careful in filing these documents.
2. Incorrect liens
Liens can become recorded on a property due to county clerk error, or misfiling of property tax payments.
3. Property vesting - family events
A title search will show the current ownership structure, if it is owned individually, jointly, as tenants-in-common, tenants by entireties, or even as a corporation. A death in the family, or divorce are also reasons to verify title search records.
4. Document fraud
Increasingly, criminals are using property records fraud to commit financial crimes, and identity theft, without notice to the property owner.
5. Prior owners records
The gap between the contract and closing dates allows a loophole where liens or mortgages from a prior owner may not be cleared from property records.
6. Assessed value
The counties assessed value may not represent the true taxable value of property in today's changing market, resulting in an inflated tax bill.
7. Deed copy
A title search will provide a stamped recorded copy of the property deed, which can be valuable as proof of ownership, or residency.
8. Other party mortgages
By using loopholes in the recording system, third parties can take out a mortgage against one property and have it recorded against another property, resulting in a lien on the title.
9. Pre-purchase research
The title search shows the original purchase price and date of the current owner, listing mortgages and liens. The buyer knows the sellers current financial situation before making an offer.
10. After sale verification
After purchasing a property, the title search is checked, to verify that the correct names are on the title, and that all records are recorded properly.
The real estate "bubble" market of the past 5 years has caused millions of documents to be recorded on property titles. This volume has increased the number of errors, and opened loopholes for document fraud. Because of this, more homeowners are becoming interested in checking their property title records, like they might check a vehicle history or their credit report. We are more often finding some common title errors. When clients check the title search on their property, they are often surprised to find old liens, incorrect ownership, and even mortgages taken out without their knowledge.
1. Unreleased mortgages
Even though the financial account for a prior refinanced mortgage may be paid off, the lender also has to file a lien release with the county records office to remove the old mortgage from your property title. The extreme volume of mortgage refinance activity over the past 5 years has resulted in lenders becoming less careful in filing these documents.
2. Incorrect liens
Liens can become recorded on a property due to county clerk error, or misfiling of property tax payments.
3. Property vesting - family events
A title search will show the current ownership structure, if it is owned individually, jointly, as tenants-in-common, tenants by entireties, or even as a corporation. A death in the family, or divorce are also reasons to verify title search records.
4. Document fraud
Increasingly, criminals are using property records fraud to commit financial crimes, and identity theft, without notice to the property owner.
5. Prior owners records
The gap between the contract and closing dates allows a loophole where liens or mortgages from a prior owner may not be cleared from property records.
6. Assessed value
The counties assessed value may not represent the true taxable value of property in today's changing market, resulting in an inflated tax bill.
7. Deed copy
A title search will provide a stamped recorded copy of the property deed, which can be valuable as proof of ownership, or residency.
8. Other party mortgages
By using loopholes in the recording system, third parties can take out a mortgage against one property and have it recorded against another property, resulting in a lien on the title.
9. Pre-purchase research
The title search shows the original purchase price and date of the current owner, listing mortgages and liens. The buyer knows the sellers current financial situation before making an offer.
10. After sale verification
After purchasing a property, the title search is checked, to verify that the correct names are on the title, and that all records are recorded properly.
Monday, October 15, 2007
Best Places For Real Estate Deals
Best Places For Real Estate Deals
By Matt Woolsey, Forbes.com
October 8, 2007
Home sales have sunk to their lowest levels since 2001. Investors are jumping ship, foreclosures are mounting and lenders are exercising caution.
Still, there are areas of the country where it makes sense for some to buy. That's because, in a market slump, sellers eager to unload their homes often accept less money from buyers. New construction also slows. Both bode well for buyers hoping to score a deal--if the market in which they are buying is expected to experience increased sales.
To find such places, we paired with Moody's Economy.com to research current home sales patterns and sales projections in the country's 40 biggest real estate markets. Based on models that estimated housing inventory, sales rates and turnover for 2008, we arrived at a list of markets that are experiencing price stalls or declines, but where over the coming year are expected to provide deals for buyers.
In Pictures: Best Places For Real Estate Deals
A buyers' market in the purest sense is one where there are far more sellers than buyers, creating a supply and demand dynamic that benefit those looking to invest in a home. However, by that definition, a floundering market like Detroit is a good buyers' market because prices are dropping and inventory is high.
"A market with declining prices and few sales is a strong buyers' market," says Anthony Sanders, professor of real estate finance at Arizona State University. "But it is also a risky market given that prices could decline further."
With that in mind, we required the slumping or neutral markets on our list to have expected volume and turnover increases, based on sales and inventory models run by Moody's Economy.com.
The results turn out three types of markets and three types of deals.
Attractive Arrangements
The first are undervalued, affordable markets like Fort Worth, Texas, which haven't felt huge post-boom price corrections, but where there is an expected acceleration in sales volume, making now the time to buy.
Second are markets like Long Island, N.Y., and Washington, D.C. These are traditionally strong markets that are recovering from speculation, especially in the D.C. condo market and by Long Island's second-home buyers. Once these areas stabilize, the market as a whole should return to health.
"Long Island is continuing to slip, but a modest amount," says Jonathan Miller, president of Miller Samuel, a New York-based real estate appraisal and consultancy firm. "In [Long Island] the upper-end market was the market of choice for speculation and tear downs."
But economists caution that while over the next year the dust may settle in these 10 spots, buyers should be prepared for future swings. This is especially true in the case of riskier markets like Orlando and Las Vegas, where the expected increase in sales volume and housing turnover doesn't necessarily mean that the price trough is imminent.
"Housing market activity revives when house prices decline sufficiently to restore housing affordability and entice buyers to step up and make a purchase," says Mark Zandi, chief economist at Moody's Economy.com. "Some markets are already approaching those price points, in many others prices will have to decline much more to get to that point."
By Matt Woolsey, Forbes.com
October 8, 2007
Home sales have sunk to their lowest levels since 2001. Investors are jumping ship, foreclosures are mounting and lenders are exercising caution.
Still, there are areas of the country where it makes sense for some to buy. That's because, in a market slump, sellers eager to unload their homes often accept less money from buyers. New construction also slows. Both bode well for buyers hoping to score a deal--if the market in which they are buying is expected to experience increased sales.
To find such places, we paired with Moody's Economy.com to research current home sales patterns and sales projections in the country's 40 biggest real estate markets. Based on models that estimated housing inventory, sales rates and turnover for 2008, we arrived at a list of markets that are experiencing price stalls or declines, but where over the coming year are expected to provide deals for buyers.
In Pictures: Best Places For Real Estate Deals
A buyers' market in the purest sense is one where there are far more sellers than buyers, creating a supply and demand dynamic that benefit those looking to invest in a home. However, by that definition, a floundering market like Detroit is a good buyers' market because prices are dropping and inventory is high.
"A market with declining prices and few sales is a strong buyers' market," says Anthony Sanders, professor of real estate finance at Arizona State University. "But it is also a risky market given that prices could decline further."
With that in mind, we required the slumping or neutral markets on our list to have expected volume and turnover increases, based on sales and inventory models run by Moody's Economy.com.
The results turn out three types of markets and three types of deals.
Attractive Arrangements
The first are undervalued, affordable markets like Fort Worth, Texas, which haven't felt huge post-boom price corrections, but where there is an expected acceleration in sales volume, making now the time to buy.
Second are markets like Long Island, N.Y., and Washington, D.C. These are traditionally strong markets that are recovering from speculation, especially in the D.C. condo market and by Long Island's second-home buyers. Once these areas stabilize, the market as a whole should return to health.
"Long Island is continuing to slip, but a modest amount," says Jonathan Miller, president of Miller Samuel, a New York-based real estate appraisal and consultancy firm. "In [Long Island] the upper-end market was the market of choice for speculation and tear downs."
But economists caution that while over the next year the dust may settle in these 10 spots, buyers should be prepared for future swings. This is especially true in the case of riskier markets like Orlando and Las Vegas, where the expected increase in sales volume and housing turnover doesn't necessarily mean that the price trough is imminent.
"Housing market activity revives when house prices decline sufficiently to restore housing affordability and entice buyers to step up and make a purchase," says Mark Zandi, chief economist at Moody's Economy.com. "Some markets are already approaching those price points, in many others prices will have to decline much more to get to that point."
Friday, October 12, 2007
Short Sale Negotiation Basics
Short Sale Negotiation
Negotiation through the loss mitigation department will be the key factor in getting your new home at a deep discount.
If opportunities emerge in which lenders can sell distressed properties without registering big losses, they will do it.
For example, consider that a homeowner with a $200,000 mortgage is late on his or her loan payments and is facing foreclosure. With the consent of the homeowner, you offer his or her lender $150,000 as full payment for the loan, which is accepted. That means you instantly save $50,000 on a real estate investment.
This is a short sale.
Getting started
Negotiating a short sale with a lender can be a complicated. But with careful research and patience, it is possible for you to earn big profits with short sale deals. Naturally, closing the first one will be the most challenging.
The first step in this process is to identify potential investment opportunities on Foreclosure.com, which offers more than 1.2 million listings across the nation.
Preforeclosure properties are ideal because you can make more money with them versus homes that are already bank-owned.
To be most successful, we recommend reaching out to homeowners who are more than three payments behind on their mortgages. At this point, each of these homeowners has received a Notice of Default (NOD) and is very close to losing their home. Time is running out and the chances of them curing the loans and making up the back payments are slim.
The homeowners understand this and may be grateful for your assistance. The lenders understand this, too, and are motivated to recoup their losses as soon as possible.
Calling lenders
It’s important to gather as much information as possible about the properties and the homeowners prior to getting on the telephone with lenders. Because when you do get a lender representative on the line, he or she will have questions.
Using the contact information contained within the listings you have targeted from Foreclosure.com, it’s time to call a lender and inquire about the possibility of a short sale agreement. Traditionally, the “Loss Mitigation Department” will handle these types of requests.
If you can’t get in touch with anyone, move onto the next listing. The negotiating can begin only when you get in touch with the right person.
Once you have reached a representative for the lender, inform him or her that you represent the homeowner. This is all you need to say — avoid revealing that you are an investor. The representative will usually want basic information about the property, the homeowner and the proposed deal. He or she will also want to know the value of the property and the financial situation of the homeowner (borrower).
Aside from making the initial introduction, the goal of this conversation should be to request a short sales or workout packet. This packet will provide you with everything you need — instructions, forms and procedures — to close a successful short sales deal.
Broker’s Price Opinion (BPO)
Lenders generally hire local real estate brokers or appraisers to evaluate properties in the foreclosure process prior to selling them at public auction. These are referred to as a Broker’s Price Opinion (BPO).
Essentially, a Realtor® — based on the condition of the home and current market conditions — provides the lender with an estimate for the value of the property. The BPO is the key piece of information that a lender will rely on to make a decision regarding a short sale.
The lower the estimate, the better it is for you.
Lenders want to get rid of distressed properties as soon as possible, but they aren’t going to sell them for ridiculously low prices Many short sales, in fact, fall through if the BPOs come in too high. When properties are in good condition, it is hard to convince lenders that they are worth much less than the appraised values.
Hardship letter
Most lenders will request a hardship letter that details the reasons a homeowner has not made his or her mortgage payments. This is a bit strange because the borrower who is in default must prove that he or she is broke and unable to afford the payments.
This is a fairly extensive request, which may require the homeowner to submit pay stubs, tax records and other personal financial records, along with the letter. It is essential that you submit everything that is requested.
Otherwise, your offer will not be accepted.
Creating an effective and compelling hardship letter requires creativity. Without lying, the letter should paint a very bleak picture of the situation. If neither you nor the homeowner possesses decent writing skills, it may be in your collective best interests to seek the assistance of a professional — it’s worth it.
HUD-1 settlement statement
A lender will generally require a written contract between you and the homeowner. A preliminary HUD-1 settlement statement will reassure the lender that the homeowner isn’t receiving any cash from the deal.
The HUD-1 form requires you to itemize all charges imposed upon you and the homeowner for the real estate transaction. Essentially, it is a complete list of the incoming and outgoing funds.
The contract should be written so that you pay all costs associated with the deal. And, that the “net cash” to the homeowner is the precise amount of the short pay to the lender.
If you have difficulty completing the form, a title or escrow company may help you prepare it in advance of the closing.
Supporting materials
A lender will often agree to a bigger discount if a property requires significant repairs. The more work that needs to be put into the property, the less it is worth and the harder it is to sell on the open market.
Hire a professional(s) to appraise the home and provide you with a bid for repair estimate (the higher the better). This is not a requirement because as mentioned above, the lender will get its own BPO. However, providing independent appraisals and comparable sales information that support your offer are critical.
There are other things you can also do if the home is not in ready-to-move-in condition.
Always remember, it is in your best interests to submit with your paperwork as much negative information about the property as possible. For example, newspaper clippings that discuss “bad news” nearby or in the neighborhood can help reduce the price of the property in negotiations.
Waiting for an answer
It usually takes about three to six weeks to receive an answer from the lender once you have submitted the HUD-1 settlement statement and all of the other supporting materials.
It’s always good to call the lender to ensure that he or she has received the information, as well as make it clear that you are always available to answer questions and provide additional information, especially if something is missing.
If the auction date for the property is approaching, ask the lender to extend it until he or she has had time to consider your offer. If your offer is legitimate, the lender will almost always grant your request.
Negotiation through the loss mitigation department will be the key factor in getting your new home at a deep discount.
If opportunities emerge in which lenders can sell distressed properties without registering big losses, they will do it.
For example, consider that a homeowner with a $200,000 mortgage is late on his or her loan payments and is facing foreclosure. With the consent of the homeowner, you offer his or her lender $150,000 as full payment for the loan, which is accepted. That means you instantly save $50,000 on a real estate investment.
This is a short sale.
Getting started
Negotiating a short sale with a lender can be a complicated. But with careful research and patience, it is possible for you to earn big profits with short sale deals. Naturally, closing the first one will be the most challenging.
The first step in this process is to identify potential investment opportunities on Foreclosure.com, which offers more than 1.2 million listings across the nation.
Preforeclosure properties are ideal because you can make more money with them versus homes that are already bank-owned.
To be most successful, we recommend reaching out to homeowners who are more than three payments behind on their mortgages. At this point, each of these homeowners has received a Notice of Default (NOD) and is very close to losing their home. Time is running out and the chances of them curing the loans and making up the back payments are slim.
The homeowners understand this and may be grateful for your assistance. The lenders understand this, too, and are motivated to recoup their losses as soon as possible.
Calling lenders
It’s important to gather as much information as possible about the properties and the homeowners prior to getting on the telephone with lenders. Because when you do get a lender representative on the line, he or she will have questions.
Using the contact information contained within the listings you have targeted from Foreclosure.com, it’s time to call a lender and inquire about the possibility of a short sale agreement. Traditionally, the “Loss Mitigation Department” will handle these types of requests.
If you can’t get in touch with anyone, move onto the next listing. The negotiating can begin only when you get in touch with the right person.
Once you have reached a representative for the lender, inform him or her that you represent the homeowner. This is all you need to say — avoid revealing that you are an investor. The representative will usually want basic information about the property, the homeowner and the proposed deal. He or she will also want to know the value of the property and the financial situation of the homeowner (borrower).
Aside from making the initial introduction, the goal of this conversation should be to request a short sales or workout packet. This packet will provide you with everything you need — instructions, forms and procedures — to close a successful short sales deal.
Broker’s Price Opinion (BPO)
Lenders generally hire local real estate brokers or appraisers to evaluate properties in the foreclosure process prior to selling them at public auction. These are referred to as a Broker’s Price Opinion (BPO).
Essentially, a Realtor® — based on the condition of the home and current market conditions — provides the lender with an estimate for the value of the property. The BPO is the key piece of information that a lender will rely on to make a decision regarding a short sale.
The lower the estimate, the better it is for you.
Lenders want to get rid of distressed properties as soon as possible, but they aren’t going to sell them for ridiculously low prices Many short sales, in fact, fall through if the BPOs come in too high. When properties are in good condition, it is hard to convince lenders that they are worth much less than the appraised values.
Hardship letter
Most lenders will request a hardship letter that details the reasons a homeowner has not made his or her mortgage payments. This is a bit strange because the borrower who is in default must prove that he or she is broke and unable to afford the payments.
This is a fairly extensive request, which may require the homeowner to submit pay stubs, tax records and other personal financial records, along with the letter. It is essential that you submit everything that is requested.
Otherwise, your offer will not be accepted.
Creating an effective and compelling hardship letter requires creativity. Without lying, the letter should paint a very bleak picture of the situation. If neither you nor the homeowner possesses decent writing skills, it may be in your collective best interests to seek the assistance of a professional — it’s worth it.
HUD-1 settlement statement
A lender will generally require a written contract between you and the homeowner. A preliminary HUD-1 settlement statement will reassure the lender that the homeowner isn’t receiving any cash from the deal.
The HUD-1 form requires you to itemize all charges imposed upon you and the homeowner for the real estate transaction. Essentially, it is a complete list of the incoming and outgoing funds.
The contract should be written so that you pay all costs associated with the deal. And, that the “net cash” to the homeowner is the precise amount of the short pay to the lender.
If you have difficulty completing the form, a title or escrow company may help you prepare it in advance of the closing.
Supporting materials
A lender will often agree to a bigger discount if a property requires significant repairs. The more work that needs to be put into the property, the less it is worth and the harder it is to sell on the open market.
Hire a professional(s) to appraise the home and provide you with a bid for repair estimate (the higher the better). This is not a requirement because as mentioned above, the lender will get its own BPO. However, providing independent appraisals and comparable sales information that support your offer are critical.
There are other things you can also do if the home is not in ready-to-move-in condition.
Always remember, it is in your best interests to submit with your paperwork as much negative information about the property as possible. For example, newspaper clippings that discuss “bad news” nearby or in the neighborhood can help reduce the price of the property in negotiations.
Waiting for an answer
It usually takes about three to six weeks to receive an answer from the lender once you have submitted the HUD-1 settlement statement and all of the other supporting materials.
It’s always good to call the lender to ensure that he or she has received the information, as well as make it clear that you are always available to answer questions and provide additional information, especially if something is missing.
If the auction date for the property is approaching, ask the lender to extend it until he or she has had time to consider your offer. If your offer is legitimate, the lender will almost always grant your request.
Tuesday, October 9, 2007
10 tips to add value to your property
10 Inexpensive Ways to Add Value to Your Rental or Rehab Property
It's easy to fix up your properties if you have unlimited cash. However, you need to keep your repairs to a minimum to stay profitable. You also need to keep your properties in good shape to attract tenants or buyers. There are the basic improvements, such as carpet and paint, but these can still costs thousands of dollars. The following are some inexpensive ways to improve your properties with very little cash.
#1) New Electrical Switch Plates
This is such a minor, yet overlooked improvement. Most rental owners and rehabbers paint a unit and leave the old, ugly switch plates. Even worse, some even paint over them.
New switch plates cost about 50 cents each. You can replace the entire house with new switch plates for about $20. For the foyer, living room and other obvious areas, spring for nice brass plates. They run about $5 each - not much for added class.
#2) New or Improved Doors
Another overlooked, yet cheap replacement item is doors. If you have ugly brown doors, replace them with nice white doors (you can paint them, but unless you have a spray gun it will take you three coats by hand).
The basic hollow-core door is about $20. It comes pre-primed and pre-hung. For about $10 more, you can buy stylish six-panel doors. If you are doing a rehab, the extra $10 per door is well worth-it. For rentals, consider at least changing the downstairs doors.
#3) New Door Handles
In addition to changing doors, consider changing the handles. An old door handle (especially with crusted paint on it) looks drab. For about $10, you can replace them with new brass finished handles. Replace the guest bathroom and bedroom door handles with the fancy "S" handles (about $20 each).
#4) Paint/Replace Trim
If the entire interior of the house does not need a paint job, consider painting the trim. New, modern custom homes typically come with beige or off-white walls and bright-white trim. Use a semi-gloss bright white on all the trim in your houses.
If the floor trim is worn, cracked or just plain ugly, replace it! Home Depot carries a new foam trim that is pre-painted in several finishes and costs less than 50 cents per linear foot. Create a great first impression by adding crown molding in the entry way and living room.
#5) New Front Door
You only get one chance to make a first impression. A cheap front door makes a house look cheap. An old front door makes a house look old. If you have nice heavy door, paint it a bold color using a high-gloss paint. If your front door is old, consider replacing it with a new, stylish door. For about $125, you can buy a very nice door.
#6) Tile Foyer Entry
After the front door, your next first impression is the foyer area. Most rental property foyers are graced with linoleum floors. Consider a nice 12" Mexican tile. An 8' x 8' area should cost about $100 in materials.
#7) New Shower Curtains
It amazes me that many landlords and sellers show properties with either no shower curtain or any ugly old shower curtain in the bathroom. Don't be cheap - drop $40 and buy a nice new rod and fancy curtain.
#8) Paint Kitchen Cabinets
Replacing kitchen cabinets is expensive, but painting them is cheap. If you have old 1970's style wooden cabinets in a lovely dark brown shade, paint them. Use a semi-gloss white and finish them with colorful plastic knobs. No need to paint the inside of them (unless you own a spray gun), since you are only trying to make an impression.
Americans spend 99% of their time in the kitchen (when they are not watching TV). A fancy modern faucet looks great in the kitchen. They can run as much as $150, but not to worry - most retailers (Home Depot, Home Base, etc) often run clearance sales on overstocked and discontinued models. I have found nice Delta and Price Pfister faucets for about $60 on sale.
#9) Add Window Shutters
If you have ugly aluminum framed windows, consider adding wooden shutters outside. They come pre-primed at most hardware retailers and are easy to install. Paint them an offset color from the outside of the house - (e.g., if the house is dark, paint the shutters white. If the house is light, paint them green, blue, etc.).
#10) Add a Nice Mailbox
Everyone on the block has the same black mailbox. Stand out. Be bold. For about $35 you can buy a nice colorful mailbox. For about $60 more, you can buy a nice wooden post for it. People notice these things....and they like them!
It's easy to fix up your properties if you have unlimited cash. However, you need to keep your repairs to a minimum to stay profitable. You also need to keep your properties in good shape to attract tenants or buyers. There are the basic improvements, such as carpet and paint, but these can still costs thousands of dollars. The following are some inexpensive ways to improve your properties with very little cash.
#1) New Electrical Switch Plates
This is such a minor, yet overlooked improvement. Most rental owners and rehabbers paint a unit and leave the old, ugly switch plates. Even worse, some even paint over them.
New switch plates cost about 50 cents each. You can replace the entire house with new switch plates for about $20. For the foyer, living room and other obvious areas, spring for nice brass plates. They run about $5 each - not much for added class.
#2) New or Improved Doors
Another overlooked, yet cheap replacement item is doors. If you have ugly brown doors, replace them with nice white doors (you can paint them, but unless you have a spray gun it will take you three coats by hand).
The basic hollow-core door is about $20. It comes pre-primed and pre-hung. For about $10 more, you can buy stylish six-panel doors. If you are doing a rehab, the extra $10 per door is well worth-it. For rentals, consider at least changing the downstairs doors.
#3) New Door Handles
In addition to changing doors, consider changing the handles. An old door handle (especially with crusted paint on it) looks drab. For about $10, you can replace them with new brass finished handles. Replace the guest bathroom and bedroom door handles with the fancy "S" handles (about $20 each).
#4) Paint/Replace Trim
If the entire interior of the house does not need a paint job, consider painting the trim. New, modern custom homes typically come with beige or off-white walls and bright-white trim. Use a semi-gloss bright white on all the trim in your houses.
If the floor trim is worn, cracked or just plain ugly, replace it! Home Depot carries a new foam trim that is pre-painted in several finishes and costs less than 50 cents per linear foot. Create a great first impression by adding crown molding in the entry way and living room.
#5) New Front Door
You only get one chance to make a first impression. A cheap front door makes a house look cheap. An old front door makes a house look old. If you have nice heavy door, paint it a bold color using a high-gloss paint. If your front door is old, consider replacing it with a new, stylish door. For about $125, you can buy a very nice door.
#6) Tile Foyer Entry
After the front door, your next first impression is the foyer area. Most rental property foyers are graced with linoleum floors. Consider a nice 12" Mexican tile. An 8' x 8' area should cost about $100 in materials.
#7) New Shower Curtains
It amazes me that many landlords and sellers show properties with either no shower curtain or any ugly old shower curtain in the bathroom. Don't be cheap - drop $40 and buy a nice new rod and fancy curtain.
#8) Paint Kitchen Cabinets
Replacing kitchen cabinets is expensive, but painting them is cheap. If you have old 1970's style wooden cabinets in a lovely dark brown shade, paint them. Use a semi-gloss white and finish them with colorful plastic knobs. No need to paint the inside of them (unless you own a spray gun), since you are only trying to make an impression.
Americans spend 99% of their time in the kitchen (when they are not watching TV). A fancy modern faucet looks great in the kitchen. They can run as much as $150, but not to worry - most retailers (Home Depot, Home Base, etc) often run clearance sales on overstocked and discontinued models. I have found nice Delta and Price Pfister faucets for about $60 on sale.
#9) Add Window Shutters
If you have ugly aluminum framed windows, consider adding wooden shutters outside. They come pre-primed at most hardware retailers and are easy to install. Paint them an offset color from the outside of the house - (e.g., if the house is dark, paint the shutters white. If the house is light, paint them green, blue, etc.).
#10) Add a Nice Mailbox
Everyone on the block has the same black mailbox. Stand out. Be bold. For about $35 you can buy a nice colorful mailbox. For about $60 more, you can buy a nice wooden post for it. People notice these things....and they like them!
Monday, October 8, 2007
Connecticut Foreclosures - The Real Deal
Connecticut's legal procedure concerning foreclosures offers two options: foreclosure by sale, or strict foreclosure. The appropriate option is determined by the amount of home equity owner has accumulated in the property.
In those cases in which the home owner has accumulated little or no equity, the strict foreclosure rule applies. The bank or lender is entitled to the full amount of proceeds from the property. If the homeowner has accumulated some equity, however, the foreclosure by sale method applies. The judge assigned to each foreclosure case will determine which option is the correct one.
The First Step: The Complaint to Foreclose The Connecticut foreclosures laws require that, when a foreclosure is in order, a set of procedural steps be followed. The first step is the Complaint to Foreclose, in which the bank determines the correct names of all those who hold liens against the property in question. Those parties will be included in the Complaint as defendants.
The Connecticut foreclosures statute requires that the Complaint to Foreclose be filed in the Superior Court of the County in which the property is located, indicating that the mortgage is in default and that the bank is within its rights to ask for repossession of the property, or strict foreclosure.
If the bank suffers a loss from selling a Connecticut foreclosure at auction for an amount less than what it was still owed, the bank is required to send a notification of breach and to follow the mortgage and promissory note provisions.
If you intend to file a Connecticut foreclosure, both the summons and Complaint must be served on all defendants within twelve days. If this is done, and the defendant fails to appear at the Court hearing, the court may award the plaintiff a default judgment; default judgments are also possible if the defendant neither makes no plea nor offers a defense.
A Matter For The Court
Connecticut foreclosures are initiated as soon as a lender files the necessary legal documents against the property owner. From that point the Court makes all the decisions regarding the amount of debt, the property's actual value, and the costs involved in the foreclosure proceeding. And most importantly, the Court determines whether there will be a foreclosure by sale or a strict foreclosure.
In cases of strict foreclosure, the borrowers are given a specific day by which they must either pay off the amount owed or lose their interest in the property. All the other defendants to the foreclosure actins are given similar deadlines, and if nor payment is made, the title to the property vests in the foreclosing lender, usually after one hundred and fifty days. But the time between the judgment of strict foreclosures and the vesting date dictated by Connecticut foreclosure law is discretionary, and if the Court determines that the debtor under financial hardship, it may extend the time for repayment.
If the Connecticut foreclosure is to be a foreclosure by sale, the court will set a sale date which is usually sixty to ninety days in the future. The Court will also, within fourteen days of the actual sale, decide whether or not the terms of the sale are acceptable.
In those cases in which the home owner has accumulated little or no equity, the strict foreclosure rule applies. The bank or lender is entitled to the full amount of proceeds from the property. If the homeowner has accumulated some equity, however, the foreclosure by sale method applies. The judge assigned to each foreclosure case will determine which option is the correct one.
The First Step: The Complaint to Foreclose The Connecticut foreclosures laws require that, when a foreclosure is in order, a set of procedural steps be followed. The first step is the Complaint to Foreclose, in which the bank determines the correct names of all those who hold liens against the property in question. Those parties will be included in the Complaint as defendants.
The Connecticut foreclosures statute requires that the Complaint to Foreclose be filed in the Superior Court of the County in which the property is located, indicating that the mortgage is in default and that the bank is within its rights to ask for repossession of the property, or strict foreclosure.
If the bank suffers a loss from selling a Connecticut foreclosure at auction for an amount less than what it was still owed, the bank is required to send a notification of breach and to follow the mortgage and promissory note provisions.
If you intend to file a Connecticut foreclosure, both the summons and Complaint must be served on all defendants within twelve days. If this is done, and the defendant fails to appear at the Court hearing, the court may award the plaintiff a default judgment; default judgments are also possible if the defendant neither makes no plea nor offers a defense.
A Matter For The Court
Connecticut foreclosures are initiated as soon as a lender files the necessary legal documents against the property owner. From that point the Court makes all the decisions regarding the amount of debt, the property's actual value, and the costs involved in the foreclosure proceeding. And most importantly, the Court determines whether there will be a foreclosure by sale or a strict foreclosure.
In cases of strict foreclosure, the borrowers are given a specific day by which they must either pay off the amount owed or lose their interest in the property. All the other defendants to the foreclosure actins are given similar deadlines, and if nor payment is made, the title to the property vests in the foreclosing lender, usually after one hundred and fifty days. But the time between the judgment of strict foreclosures and the vesting date dictated by Connecticut foreclosure law is discretionary, and if the Court determines that the debtor under financial hardship, it may extend the time for repayment.
If the Connecticut foreclosure is to be a foreclosure by sale, the court will set a sale date which is usually sixty to ninety days in the future. The Court will also, within fourteen days of the actual sale, decide whether or not the terms of the sale are acceptable.
Friday, October 5, 2007
7 ways to flipping properties
"Flipping" is the buzzword of the year in real estate: Flipping books, flipping articles in the newspaper, and even flipping shows on TV! What is flipping, how does it work, and how you can profit?
Flipping Real Estate simply means buying a property and reselling it quickly, as opposed to holding on to a property long term as a rental. Flipping comes in several varieties, most of which are legal and profitable, some of which are not.
Flip Strategy #1: Buy, fix, and flip
Let's start with the most common form--the good, old "fix ?n flip." This involves buying a property that needs work, fixing it up, then selling on the "retail" market, that is, to a person who will live in the house.
This method is tried and true and works very well. You can easily make $15,000 to $50,000 on one deal, depending on your market and how good you are at finding bargains.
The danger in fix and flips is either paying too much or underestimating repairs. Be very conservative in your fix-up costs and length of time it may take to resell. Also, make sure you consider the cost of paying a real estate agent to sell the property.
Flip Strategy #2: Buy, refinance, and lease option
Rather than sell the fixed up property for all cash, sell for terms. Once you have completed the rehab, refinance the property at its new appraised value. If you did the math correctly, you should have little or no money in the deal. Sell the property on a lease with option to buy.
The rent payment from your tenant/buyer should cover your mortgage payment. (If not, consider an interest-only or adjustable rate loan that is fixed for three years.)
When your tenant exercises his option, you reap a larger profit, since you don't have to pay a broker's fee. If the tenant exercises his option after twelve months, you benefit from a lower capital gains tax rate.
Flip Strategy #3: Buy and flip "as is"
Don't like to do fix-up work? Consider selling the property "as is" as a light fixer upper. If the local real estate market is hot, you should be able to sell the property in poor condition just a little below market.
This is especially the case with houses in "transitioning" neighborhoods. Make sure, of course, that you acquire the property cheap enough that you can sell it below market quickly and still profit.
Flip Strategy #4: Wholesale
Strategy #1, the fix and flip, is very popular, which means there are a lot of investors looking for rehabs. You can buy the property cheap and sell it for just a few thousand dollars more to another investor without doing any work. You won't make nearly as much as the rehabber, but you will realize your profit quickly.
Flip Strategy #5: Pre-construction In very hot real estate markets, prices are appreciating as much as 2% per month. If you time things right, you can put a contract on a pre-construction house or condominium, then flip it to someone else when the development is complete.
If it takes 12 months for the development to be complete, and the condo price is $500,000, you could make $100,000 or more in one year! Of course, the opposite is also true. You could end up losing money if the local economy tanks and you end up with a worthless condo that you can't sell for more than you paid. Use this approach very carefully?
Flip Strategy #6: Scouting
The Scout is an information gatherer, so not technically a property flipper. He is the "bird dog" who finds potential deals and sells the information to other investors. Many people get started as a Scout for other investors because it does not take any cash or prior knowledge to look for distressed properties.
The Scout finds a property for sale, gathers the necessary information, and then provides this information to investors for a fee. The fee will vary depending on the price of the property and the profit potential. The Scout can expect to make $500 to $1,000 each time he provides information that leads to a purchase by another investor.
Flip Strategy #7: Illegal flipping
Okay, I am NOT advocating this approach because it is illegal. Illegal property-flipping schemes work as follows: Unscrupulous investors buy cheap, run-down properties in mostly low-income neighborhoods. They do shoddy renovations to the properties and sell them to unsophisticated buyers at inflated prices.
In most cases, the investor, appraiser, and mortgage broker conspire by submitting fraudulent loan documents and a bogus appraisal. The end result is a buyer that paid too much for a house and cannot afford the loan.
Since many of these loans are federally insured, the government authorities have investigated this practice and arrested many of the parties involved. As a result, the public perceives is flipping to be illegal.
The fact is, "flipping" (as I described in the beginning of this article) is NOT illegal. Loan fraud in the process of flipping is what is illegal. So don't confuse the two. The other six ways to flip are very legal, very ethical, and very profitable!
Flipping Real Estate simply means buying a property and reselling it quickly, as opposed to holding on to a property long term as a rental. Flipping comes in several varieties, most of which are legal and profitable, some of which are not.
Flip Strategy #1: Buy, fix, and flip
Let's start with the most common form--the good, old "fix ?n flip." This involves buying a property that needs work, fixing it up, then selling on the "retail" market, that is, to a person who will live in the house.
This method is tried and true and works very well. You can easily make $15,000 to $50,000 on one deal, depending on your market and how good you are at finding bargains.
The danger in fix and flips is either paying too much or underestimating repairs. Be very conservative in your fix-up costs and length of time it may take to resell. Also, make sure you consider the cost of paying a real estate agent to sell the property.
Flip Strategy #2: Buy, refinance, and lease option
Rather than sell the fixed up property for all cash, sell for terms. Once you have completed the rehab, refinance the property at its new appraised value. If you did the math correctly, you should have little or no money in the deal. Sell the property on a lease with option to buy.
The rent payment from your tenant/buyer should cover your mortgage payment. (If not, consider an interest-only or adjustable rate loan that is fixed for three years.)
When your tenant exercises his option, you reap a larger profit, since you don't have to pay a broker's fee. If the tenant exercises his option after twelve months, you benefit from a lower capital gains tax rate.
Flip Strategy #3: Buy and flip "as is"
Don't like to do fix-up work? Consider selling the property "as is" as a light fixer upper. If the local real estate market is hot, you should be able to sell the property in poor condition just a little below market.
This is especially the case with houses in "transitioning" neighborhoods. Make sure, of course, that you acquire the property cheap enough that you can sell it below market quickly and still profit.
Flip Strategy #4: Wholesale
Strategy #1, the fix and flip, is very popular, which means there are a lot of investors looking for rehabs. You can buy the property cheap and sell it for just a few thousand dollars more to another investor without doing any work. You won't make nearly as much as the rehabber, but you will realize your profit quickly.
Flip Strategy #5: Pre-construction In very hot real estate markets, prices are appreciating as much as 2% per month. If you time things right, you can put a contract on a pre-construction house or condominium, then flip it to someone else when the development is complete.
If it takes 12 months for the development to be complete, and the condo price is $500,000, you could make $100,000 or more in one year! Of course, the opposite is also true. You could end up losing money if the local economy tanks and you end up with a worthless condo that you can't sell for more than you paid. Use this approach very carefully?
Flip Strategy #6: Scouting
The Scout is an information gatherer, so not technically a property flipper. He is the "bird dog" who finds potential deals and sells the information to other investors. Many people get started as a Scout for other investors because it does not take any cash or prior knowledge to look for distressed properties.
The Scout finds a property for sale, gathers the necessary information, and then provides this information to investors for a fee. The fee will vary depending on the price of the property and the profit potential. The Scout can expect to make $500 to $1,000 each time he provides information that leads to a purchase by another investor.
Flip Strategy #7: Illegal flipping
Okay, I am NOT advocating this approach because it is illegal. Illegal property-flipping schemes work as follows: Unscrupulous investors buy cheap, run-down properties in mostly low-income neighborhoods. They do shoddy renovations to the properties and sell them to unsophisticated buyers at inflated prices.
In most cases, the investor, appraiser, and mortgage broker conspire by submitting fraudulent loan documents and a bogus appraisal. The end result is a buyer that paid too much for a house and cannot afford the loan.
Since many of these loans are federally insured, the government authorities have investigated this practice and arrested many of the parties involved. As a result, the public perceives is flipping to be illegal.
The fact is, "flipping" (as I described in the beginning of this article) is NOT illegal. Loan fraud in the process of flipping is what is illegal. So don't confuse the two. The other six ways to flip are very legal, very ethical, and very profitable!
Wednesday, October 3, 2007
Where to find foreclosures?
There are a plethora of places to look when you want to find foreclosure properties. The key is finding them before someone else does. You can find foreclosure properties on the web, newspapers, lis pendens lists, seminars, direct mail, word of mouth, friends, real estate agents, real estate offices, and lending institutions just to name a few.
The internet is a good place to search for foreclosure properties. Several foreclosure listing companies actually search out notifications of default and sell a subscription to those who are willing to pay for this information. Just remember, this is the easiest way to find properties, so beware of competition. Also beware that some of these subscriptions are just a way to make money and provide little or outdated information on these foreclosure properties. If you decide to test one out, make sure they give you a free trial period so you can see how current the listings are.
Newspapers are another great way to find foreclosure properties. All states are required by law to post a public notice of auction in a newspaper for all foreclosure properties. You can look up these notices and send a letter to them, call them or stop by. Another option, you have as a creative investor, might be to place an ad in the newspaper yourself to attract those who are in foreclosure. Believe me, if you have a good ad, your phone will begin ringing off the hook. You see, sooner or later the homeowner finally realizes they cannot save their home. Then when time runs out, they have no choice but to call, and during this time they are very motivated.
Direct Mail is one of the best ways to find the "GOOD" foreclosure properties. This is because you can talk to a person who is still in the pre-foreclosure stage and negotiate a nice discount on the property. There will be fewer investors that even know about the property, however, there is more work involved these kind of foreclosure properties.
Real Estate Agents are a good way to find foreclosure properties. Normally, banks that end up with foreclosure properties will hire an agent to represent them. Banks are not in the foreclosure business, they are in the lending business, so they too are very motivated to sell. Agents have connections and can get a list of some "bank-owned" properties.
Word of mouth is a technique that all the good investors use. Let it be known to everyone you come in contact with that you are a real estate investor who specializes in foreclosure properties. You should make some business cards as well that say "I specialize in foreclosure properties" and hand them out to everyone you know. You will be amazed what this will do for you. You may get a call from your friend's, friend's, sister's, friend who needs help avoiding the public auction.
There are so many excellent ways to find foreclosure properties. In fact there are many more than what are listed here. The idea is that it's a numbers game. You've always got to be working to find more deals. Find out which methods of finding works for you and go with it.
The internet is a good place to search for foreclosure properties. Several foreclosure listing companies actually search out notifications of default and sell a subscription to those who are willing to pay for this information. Just remember, this is the easiest way to find properties, so beware of competition. Also beware that some of these subscriptions are just a way to make money and provide little or outdated information on these foreclosure properties. If you decide to test one out, make sure they give you a free trial period so you can see how current the listings are.
Newspapers are another great way to find foreclosure properties. All states are required by law to post a public notice of auction in a newspaper for all foreclosure properties. You can look up these notices and send a letter to them, call them or stop by. Another option, you have as a creative investor, might be to place an ad in the newspaper yourself to attract those who are in foreclosure. Believe me, if you have a good ad, your phone will begin ringing off the hook. You see, sooner or later the homeowner finally realizes they cannot save their home. Then when time runs out, they have no choice but to call, and during this time they are very motivated.
Direct Mail is one of the best ways to find the "GOOD" foreclosure properties. This is because you can talk to a person who is still in the pre-foreclosure stage and negotiate a nice discount on the property. There will be fewer investors that even know about the property, however, there is more work involved these kind of foreclosure properties.
Real Estate Agents are a good way to find foreclosure properties. Normally, banks that end up with foreclosure properties will hire an agent to represent them. Banks are not in the foreclosure business, they are in the lending business, so they too are very motivated to sell. Agents have connections and can get a list of some "bank-owned" properties.
Word of mouth is a technique that all the good investors use. Let it be known to everyone you come in contact with that you are a real estate investor who specializes in foreclosure properties. You should make some business cards as well that say "I specialize in foreclosure properties" and hand them out to everyone you know. You will be amazed what this will do for you. You may get a call from your friend's, friend's, sister's, friend who needs help avoiding the public auction.
There are so many excellent ways to find foreclosure properties. In fact there are many more than what are listed here. The idea is that it's a numbers game. You've always got to be working to find more deals. Find out which methods of finding works for you and go with it.
Tuesday, October 2, 2007
Flippings profits from the computer
You know the value of your computer and how it saves you time and effort.
What if there was a product that taught you how to flip real estate using
your computer? For the first time ever there is a product that will teach you
how to find real estate deals, get money for your deals, fix your deals and
sell them for BIG PROFITS using your computer and the internet.
Never before has real estate been so easy to flip as now! Even if you don’t know
anything about real estate, this product can change your future!
Armando Montelongo of the hit reality show on A&E Flip This House
Invites you to launch his hit product Flip It Now! I would love to extend
you an exclusive invitation to become one of my Joint Venture Partners.
Learn from Armando Montelongo how to flip houses and gain maximum profits. Unlike others, Armando Montelongo has a national tv show, not paid advertisement, to show you he is the real deal.
What if there was a product that taught you how to flip real estate using
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Armando Montelongo of the hit reality show on A&E Flip This House
Invites you to launch his hit product Flip It Now! I would love to extend
you an exclusive invitation to become one of my Joint Venture Partners.
Learn from Armando Montelongo how to flip houses and gain maximum profits. Unlike others, Armando Montelongo has a national tv show, not paid advertisement, to show you he is the real deal.
Monday, October 1, 2007
A & E meets internet marketing
How would you like to partner with the most influential partner
in the world… TELEVISION!!! The Offline World of Real Estate and
Reality Television is here to make you BIG MONEY ONLINE!
Armando Montelongo of the hit reality show on A&E Flip This House
Invites you to launch his hit product Flip It Now!
Flip It Now is already growing MASSIVE INTEREST!
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Earn HUGE Commission Checks Promoting an Incredible Product that your
customers cannot refuse - backed by the celebrity of Reality Television!
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in the world… TELEVISION!!! The Offline World of Real Estate and
Reality Television is here to make you BIG MONEY ONLINE!
Armando Montelongo of the hit reality show on A&E Flip This House
Invites you to launch his hit product Flip It Now!
Flip It Now is already growing MASSIVE INTEREST!
“Never Before has there be an online Ground Floor Opportunity like this.
Earn HUGE Commission Checks Promoting an Incredible Product that your
customers cannot refuse - backed by the celebrity of Reality Television!
http://thenoteservice.armandomontelongo.com
Tuesday, September 25, 2007
Finding Hard Money Lenders
Finding hard money lenders isn't really a mystery. At least it isn't a hard mystery to solve. You just need to get out there and take the right steps toward uncovering them.
There are many different ways their investors, attorneys, accountants, insurance agents, etc., who are generally to locate hard money lenders or private lenders. When talking with other professionals, I tend to refer to my lenders as "private lenders" simply because not everyone is familiar with the term "hard money lender."
I have found most of my lenders by asking for referrals from o willing to help me because I do what I can to help them. Some of my favorite people to ask are settlement/closing attorneys. They usually prepare the loan documents for hard money lenders and most attorneys will be able to give you at least one name. In fact, on a number of occasions the attorney whom I asked for a referral was a hard money lender themselves.
Accountants are also a good source for hard money lenders since they have clients who are sitting on a lot of cash and need to do something with it. In some cases, they even have clients who already hold paper. Such people are great to approach about lending money since they already understand the business of lending. They have either taken back paper upon selling a property or they have lent their own funds to someone.
Real estate paper is a very secure investment, and people who understand the business of lending don't mind doing real estate loans, especially when the LTV is low and the interest rate is high. If someone trusts their accountant enough to let them handle their finances, then a referral from an accountant should carry a lot of clout.
Another method of finding hard money lenders is to write down the addresses of homes undergoing renovation. With few exceptions, if I go to the courthouse with ten addresses to uncover the lender involved in each of these renovation projects, you will find that a private lender is funding at least one of them. Contact the lenders that you discover and get to know them, especially if they have already lent money on a home in an area where you want to invest.
Insurance agents who sell hazard insurance policies (particularly those that specialize with investment properties) have to put a "loss payee" on all of the policies where a lender is involved. The loss payee is the lender, so the insurance agent can tell who are private lenders and which ones are not. An active agent could probably go through their records and come up with dozens of names of people who have lent money privately on policies they have written.
Mortgage brokers can also be a good source for locating hard money lenders, particularly those that work with investors on a routine basis. I personally feel that any mortgage broker that deals with investors should have a hard money lender in their bag. If they don't, I wouldn't consider them a good mortgage broker. You may have to pay the mortgage broker a fee for the referral, but it is worth it if it means getting a deal done.
Increasing your chances of finding a hard money lender has to do with the circles that you run in, the people whom you ask, and the number of people you ask. Chances are if you are asking the cashier at your local convenience store if they know of any hard money lenders, the answer you get is going to be, "Huh?".
If you ask an attorney or title company who works with a number of investors in your area, it is much more likely that you will find someone who will be able to provide you with the names of several lenders. If you don't get anywhere the first time, don't stop asking people until you find one.
There are many different ways their investors, attorneys, accountants, insurance agents, etc., who are generally to locate hard money lenders or private lenders. When talking with other professionals, I tend to refer to my lenders as "private lenders" simply because not everyone is familiar with the term "hard money lender."
I have found most of my lenders by asking for referrals from o willing to help me because I do what I can to help them. Some of my favorite people to ask are settlement/closing attorneys. They usually prepare the loan documents for hard money lenders and most attorneys will be able to give you at least one name. In fact, on a number of occasions the attorney whom I asked for a referral was a hard money lender themselves.
Accountants are also a good source for hard money lenders since they have clients who are sitting on a lot of cash and need to do something with it. In some cases, they even have clients who already hold paper. Such people are great to approach about lending money since they already understand the business of lending. They have either taken back paper upon selling a property or they have lent their own funds to someone.
Real estate paper is a very secure investment, and people who understand the business of lending don't mind doing real estate loans, especially when the LTV is low and the interest rate is high. If someone trusts their accountant enough to let them handle their finances, then a referral from an accountant should carry a lot of clout.
Another method of finding hard money lenders is to write down the addresses of homes undergoing renovation. With few exceptions, if I go to the courthouse with ten addresses to uncover the lender involved in each of these renovation projects, you will find that a private lender is funding at least one of them. Contact the lenders that you discover and get to know them, especially if they have already lent money on a home in an area where you want to invest.
Insurance agents who sell hazard insurance policies (particularly those that specialize with investment properties) have to put a "loss payee" on all of the policies where a lender is involved. The loss payee is the lender, so the insurance agent can tell who are private lenders and which ones are not. An active agent could probably go through their records and come up with dozens of names of people who have lent money privately on policies they have written.
Mortgage brokers can also be a good source for locating hard money lenders, particularly those that work with investors on a routine basis. I personally feel that any mortgage broker that deals with investors should have a hard money lender in their bag. If they don't, I wouldn't consider them a good mortgage broker. You may have to pay the mortgage broker a fee for the referral, but it is worth it if it means getting a deal done.
Increasing your chances of finding a hard money lender has to do with the circles that you run in, the people whom you ask, and the number of people you ask. Chances are if you are asking the cashier at your local convenience store if they know of any hard money lenders, the answer you get is going to be, "Huh?".
If you ask an attorney or title company who works with a number of investors in your area, it is much more likely that you will find someone who will be able to provide you with the names of several lenders. If you don't get anywhere the first time, don't stop asking people until you find one.
Monday, September 24, 2007
Webinars - Flipping Foreclosures on the Internet
Webinars - Flipping Foreclosures on the Internet with Mike Collins
Tuesday, September 25 @ 9 p.m. ET/6 p.m.
Build a booming online real estate business with thousands of foreclosure and rehab deals! Find out how to flip foreclosures on the Internet for serious profits with Mike Collins — Mike will reveal how to become the "middle man" in hundreds of real estate deals. That means you never actually own properties, but receive big commissions when you find the right investors for them! Find amazing foreclosure deals on the Internet — up to 50% off! Create a money-making real estate business that achieves HUGE profits Build a cost-effective and cutting-edge lead generation machine Generate amazing leads with search engines such Google, Yahoo! and MSN Typically, wholesaling properties means that you never actually own them. The wholesaler may be the "middle-man" between the homeowners and the investors. Put simply, the wholesaler finds good deals on properties and then finds investors to buy the properties from the homeowners and receives a fee or percentage for securing the deals. Rehabbing properties means buying homes that are in need of repairs at discounted prices. Repaired or "rehabbed" properties are either sold for a significant profit or used as a rental property. And Mike will tell you about the benefits of both during this exciting real estate training session.
Tuesday, September 25 @ 9 p.m. ET/6 p.m. PT Mike Collins has more than 20 years in the real estate investing business. He has found hundreds of single-family homes and flipped them for serious profits, resulting in the best-selling program, "Wholesaling Houses for a Living." Read more More recently, Mike has turned his attention to the Internet. Over the last four years, in fact, he has created lead systems that have resulted in the purchase of countless homes for his own personal benefit. His new passion for Internet lead generation resulted in the founding of RehabList.com, RehabHardMoney.com and YouSell.com. This combination has resulted in the generation of hundreds of thousands of leads for wholesalers, rehabbers and hard money lenders.
How to register Registration is simple. Reserve a space now before it is filled — seats are limited! Click the banner then go to webinars to register
Tuesday, September 25 @ 9 p.m. ET/6 p.m.
Build a booming online real estate business with thousands of foreclosure and rehab deals! Find out how to flip foreclosures on the Internet for serious profits with Mike Collins — Mike will reveal how to become the "middle man" in hundreds of real estate deals. That means you never actually own properties, but receive big commissions when you find the right investors for them! Find amazing foreclosure deals on the Internet — up to 50% off! Create a money-making real estate business that achieves HUGE profits Build a cost-effective and cutting-edge lead generation machine Generate amazing leads with search engines such Google, Yahoo! and MSN Typically, wholesaling properties means that you never actually own them. The wholesaler may be the "middle-man" between the homeowners and the investors. Put simply, the wholesaler finds good deals on properties and then finds investors to buy the properties from the homeowners and receives a fee or percentage for securing the deals. Rehabbing properties means buying homes that are in need of repairs at discounted prices. Repaired or "rehabbed" properties are either sold for a significant profit or used as a rental property. And Mike will tell you about the benefits of both during this exciting real estate training session.
Tuesday, September 25 @ 9 p.m. ET/6 p.m. PT Mike Collins has more than 20 years in the real estate investing business. He has found hundreds of single-family homes and flipped them for serious profits, resulting in the best-selling program, "Wholesaling Houses for a Living." Read more More recently, Mike has turned his attention to the Internet. Over the last four years, in fact, he has created lead systems that have resulted in the purchase of countless homes for his own personal benefit. His new passion for Internet lead generation resulted in the founding of RehabList.com, RehabHardMoney.com and YouSell.com. This combination has resulted in the generation of hundreds of thousands of leads for wholesalers, rehabbers and hard money lenders.
How to register Registration is simple. Reserve a space now before it is filled — seats are limited! Click the banner then go to webinars to register
Learn how to Flip and Rehab
Learn how to Flip and Rehab from Armando Montelongo from the hit A&E show , Flip This House.
Internet millionaire Armando Montelongo of armandomontelongo.comlaunched a new site called Armando Montelongo.com.
This site is catered to one market,entrepreneurial people and business opportunity seekers.
"The site is there for all types of people who want tomeet with other who have some of the same business interests. It caters to any type of opportunity, investment clubs, franchises, Network opportunities, Day traders, you name it and the site caters to it.
With so many filters on the internet, even legitimate subscriberemail is getting blocked, which unfortunately rendering newsletters somewhat ineffective leaving opportunity seekersno valid or cost effective way to find or communicate with each other.
ArmandoMontelongo.com is very different in that it allows people to communicate in real time audio and video conferencingin a secure environment.
People can join free knowing that others on the site will enjoyhearing about their opportunities.
You can visit the site at http://thenoteservice.armandomontelongo.com
Internet millionaire Armando Montelongo of armandomontelongo.comlaunched a new site called Armando Montelongo.com.
This site is catered to one market,entrepreneurial people and business opportunity seekers.
"The site is there for all types of people who want tomeet with other who have some of the same business interests. It caters to any type of opportunity, investment clubs, franchises, Network opportunities, Day traders, you name it and the site caters to it.
With so many filters on the internet, even legitimate subscriberemail is getting blocked, which unfortunately rendering newsletters somewhat ineffective leaving opportunity seekersno valid or cost effective way to find or communicate with each other.
ArmandoMontelongo.com is very different in that it allows people to communicate in real time audio and video conferencingin a secure environment.
People can join free knowing that others on the site will enjoyhearing about their opportunities.
You can visit the site at http://thenoteservice.armandomontelongo.com
Thursday, September 20, 2007
Free Connecticut Foreclosure Auctions
Free Connecticut Foreclosure Auctions is serving New Haven County with listings of upcoming home and land foreclosure auctions.
In all foreclosure auctions, a notice must be published locally. Although your county clerk's office is a great real estate resource in identifying foreclosures, it can be very time consuming and not worth the headaches when this information is readily available here. Foreclosure Times.com offers the largest real estate database of foreclosure homes in the country, including Bank REO, Pre-Foreclosure, Government Foreclosures including the Federal Deposit Insurance Corporation (FDIC), HUD, Government Services Agency (GSA), and even the Internal Revenue Service plus bankruptcy and by owner properties.
BIDDING AT AN AUCTION:
If you think you want to purchase a foreclosure property, you must check the title, get a true value for the property if it is sold on the open market, and allow for sales costs, fix up cost etc., when deciding to bid.
If you win at auction, you do not become the owner of the property. You get a "Certificate of Purchase." This certificate entitles you to receive interest money, at the rate of the first mortgage. However, a Certificate of Purchase is subject to redemption by the owner or by junior creditors.
AFTER THE FORECLOSURE SALE
Once a Certificate of Purchase has been issued, you must then present cash or certified funds in the exact amount of your property bid. The Public Trustee will then obtain a redemption amount. If an owner wants to keep their property, they must pay the redemption amount in cash or certified funds to the Public Trustee. The present owner still owns the property until their redemption period ends. That period is normally 75 days (or six months for agricultural property), during which time they can pay off the Certificate of Purchase amount, plus interest and fees. In this case, no Public Trustee's Deed is issued.
During the owner's redemption period, any junior lienors, or creditors, with a recorded interest in the property can also file their "Notice of Intent to Redeem." The junior lienors who file these Intents have specific time periods (after the end of the owner's redemption period) in which they're allowed to redeem if the owner does not.
If no one redeems and all the redemption periods expire, the Certificate of Purchase holder (potentially you) can be issued a confirming Public Trustee's Deed. In this case, the title vests free and clear of all liens and encumbrances junior to the foreclosed lien except omitted parties, or parties that were not notified of the foreclosure but who have an interest in the property.
And the property belongs to you!
- BUYING FORECLOSURES
- HOW TO PURCHASE AT A FORECLOSURE SALE
- FIND PROPERTIES THAT WILL BE SOLD AT AUCTION:
In all foreclosure auctions, a notice must be published locally. Although your county clerk's office is a great real estate resource in identifying foreclosures, it can be very time consuming and not worth the headaches when this information is readily available here. Foreclosure Times.com offers the largest real estate database of foreclosure homes in the country, including Bank REO, Pre-Foreclosure, Government Foreclosures including the Federal Deposit Insurance Corporation (FDIC), HUD, Government Services Agency (GSA), and even the Internal Revenue Service plus bankruptcy and by owner properties.
BIDDING AT AN AUCTION:
If you think you want to purchase a foreclosure property, you must check the title, get a true value for the property if it is sold on the open market, and allow for sales costs, fix up cost etc., when deciding to bid.
If you win at auction, you do not become the owner of the property. You get a "Certificate of Purchase." This certificate entitles you to receive interest money, at the rate of the first mortgage. However, a Certificate of Purchase is subject to redemption by the owner or by junior creditors.
AFTER THE FORECLOSURE SALE
Once a Certificate of Purchase has been issued, you must then present cash or certified funds in the exact amount of your property bid. The Public Trustee will then obtain a redemption amount. If an owner wants to keep their property, they must pay the redemption amount in cash or certified funds to the Public Trustee. The present owner still owns the property until their redemption period ends. That period is normally 75 days (or six months for agricultural property), during which time they can pay off the Certificate of Purchase amount, plus interest and fees. In this case, no Public Trustee's Deed is issued.
During the owner's redemption period, any junior lienors, or creditors, with a recorded interest in the property can also file their "Notice of Intent to Redeem." The junior lienors who file these Intents have specific time periods (after the end of the owner's redemption period) in which they're allowed to redeem if the owner does not.
If no one redeems and all the redemption periods expire, the Certificate of Purchase holder (potentially you) can be issued a confirming Public Trustee's Deed. In this case, the title vests free and clear of all liens and encumbrances junior to the foreclosed lien except omitted parties, or parties that were not notified of the foreclosure but who have an interest in the property.
And the property belongs to you!
Monday, September 17, 2007
Free Lis Pendens Listings West Haven
We are offering free lis pendens listings for West Haven, CT.
Come check us out at http://www.thenoteservice.com
60 Swampscott
$185,010 Assessed Value
8/15/07 Date of Lis Pendens
33 4th Ave.
$144,830 Assessed Value
8/7/07 Date of Lis Pendens
23 Warner Ave.
$137,270 Assessed Value
8/13/07 Date of Lis Pendens
Come check us out at http://www.thenoteservice.com
60 Swampscott
$185,010 Assessed Value
8/15/07 Date of Lis Pendens
33 4th Ave.
$144,830 Assessed Value
8/7/07 Date of Lis Pendens
23 Warner Ave.
$137,270 Assessed Value
8/13/07 Date of Lis Pendens
Thursday, August 23, 2007
Sub Prime Lending
Subprime Lending
Typically, subprime loans are for persons with blemished or limited credit histories. The loans carry a higher rate of interest than prime loans to compensate for increased credit risk.
Many have questioned why minorities appear to be over-represented in the subprime lending market. Studies reveal that even in upper-income African-American neighborhoods one is one-and-a-half times as likely to have a subprime loan than persons in low-income white neighborhoods. In neighborhoods where Hispanics comprise at least 80 percent of the population, they were 1.5 times as likely than the nation as a whole to have a subprime mortgage loan.
Some allege this disparity to be attributed to subprime lenders purposefully marketing to African-American communities-what some have called reverse redlining. They allege lenders will provide loans to these communities, but at a higher cost and with less favorable conditions.
Typically, subprime loans are for persons with blemished or limited credit histories. The loans carry a higher rate of interest than prime loans to compensate for increased credit risk.
Many have questioned why minorities appear to be over-represented in the subprime lending market. Studies reveal that even in upper-income African-American neighborhoods one is one-and-a-half times as likely to have a subprime loan than persons in low-income white neighborhoods. In neighborhoods where Hispanics comprise at least 80 percent of the population, they were 1.5 times as likely than the nation as a whole to have a subprime mortgage loan.
Some allege this disparity to be attributed to subprime lenders purposefully marketing to African-American communities-what some have called reverse redlining. They allege lenders will provide loans to these communities, but at a higher cost and with less favorable conditions.
Some facts about subprime lenders:
- Home refinance loans account for higher shares of subprime lenders' total origination than prime lenders' originations
- Subprime lenders originate a larger percentage of their total originations in predominately black census tracts than prime lenders
- Subprime lenders are more likely to have terms like "consumer," "finance," and "acceptance" in their lender names
Proponents of subprime lending
Individuals who have experienced severe financial troubles are often labelled as higher risk and therefore cannot obtain conventional financing. These individuals may have had job loss, previous debt or marital problems, or unexpected medical issues. Often, these events were unforeseen and cause a major setback in finances. As a result, late payments, charge-offs, repossessions and even foreclosures may result.
Due to these previous credit problems, these individuals may be precluded from obtaining any type of loan for an automobile. To meet this demand, lenders have seen that a tiered pricing arrangement, one which allows these individuals to pay a higher interest rate, may allow loans which otherwise may not occur.
From a servicing standpoint, these loans have higher collection defaults and experience higher repossessions and charge offs. Lenders use the higher interest rate to offset these anticipated higher costs.
Provided a consumer will enter into this arrangement with the understanding that they are higher risk, and must make diligent efforts to pay, these loans do indeed serve those who would otherwise be underserved. The consumer must purchase an automobile which is well within their means, and carries a payment well within their budget.
Criticisms of subprime lending
Capital markets operate on the basic premise of risk versus reward. Investors taking a risk on stocks expect a higher rate of return than do investors in risk-free Treasury Bills, which are backed by the full faith and credit of the United States. The same goes for loans. Less creditworthy subprime borrowers represent a riskier investment, so lenders will charge them a higher interest rate than they would charge a prime borrower for the same loan.
To avoid the initial hit of higher mortgage payments, most subprime borrowers take out Adjustable-rate mortgages that give them a very low initial interest rate of around 4%. But with annual adjustments of 2% or more per year, these loans typically end up charging around 10%. So a $500,000 loan at a 4% interest rate for 30 years equates to a payment of about $2,400 a month. But the same loan at 10% for 27 years (after the adjustable period ends) equates to a payment of $4,470. A 6-percentage-point increase in the rate caused slightly more than an 85% increase in the payment.
Friday, August 10, 2007
Alternatives To Foreclosure
Alternatives To Foreclosure
Mortgage foreclosure is a tragic and traumatic event for any homeowner. It is the legal process whereby property rights to one's home are stripped away due to inability to maintain the obligations of a mortgage loan. The actual process varies by State of residence, and can take anywhere from 6 weeks to 18 months, depending on the jurisdiction.
In almost every State, foreclosure involves the auction of a property by a representative of the county court or the lender in order to satisfy the debt on the house. The investor usually gives instructions to the loan servicer to bid at or near the value of the debt. The servicer usually wins the bid because foreclosure generally occurs only when the debt is greater than the value of the property. The servicer or investor must then manage the house, provide repairs, and sell it through normal real estate channels, hoping to lower the final loss from what would otherwise have been realized if a third-party bidder had purchased the property at the foreclosure auction.
Foreclosure is then not only a costly experience for the family losing a home, but can be a lengthy and expensive procedure for the loan investor, the servicer, and any insuring agency that is also involved. Contrary to popularly held beliefs, these mortgage market participants lose money on nearly all foreclosures. Fortunately, these firms have discovered they can benefit themselves and homeowners if foreclosure can be avoided. A forthcoming HUD report to Congress examines various strategies now used to protect borrowers while mitigating the loss experienced by the lenders.
Lessons from the private sector
By 1985 the mortgage industry was feeling the effects of several overlapping events: high interest rates from the Federal Reserve Board's October 1979 decision to allow interest rates to freely rise; foreclosures coming out of the national recession in 1981 and 1982 and the ensuing farm- and industrial-belt depression; a new economic environment in which rapid inflation could no longer be counted on to support troubled homeowners with low-downpayment mortgages; and a bevy of new and untested mortgage products developed to help portfolio lenders cope with volatile interest rates, but whose default risks appeared to be higher than those of traditional level-payment mortgages. All of these circumstances led to higher loan defaults. With the collapse of the oil-patch economy in 1986 came more defaults and foreclosures and even the insolvency of several private mortgage insurers. Then the stock market crash of 1987 and the retrenchment of the financial industry led to an escalation of foreclosures in the Northeast. These events sparked the beginning of large-scale efforts by national institutions to understand and mitigate the problem of single-family home foreclosures. By 1991, as the foreclosure rates of the oil-patch and Northeastern States were passing their peaks, mortgage finance institutions were establishing serious and wide-sweeping loss-mitigation policies with loan servicers. These basic approaches continue to undergo fine-tuning, but the changes that took place in the early 1990s truly ushered in a new era in how the mortgage industry treats financially troubled homeowners.
Industry sources suggest that 70 to 80 percent of all loans at 90-day delinquency can still be reinstated without assistance. Borrowers must be encouraged to proceed in that direction; the greatest danger is that borrowers will give up hope or panic and either walk away from their properties or use the legal system to forestall what they believe to be inevitable foreclosures. When a borrower's delinquency extends past day 90, the servicer must change from delinquency management to loss mitigation. After 3 months of loan delinquency, the organization bearing the credit risk faces a potential for some type of loss, and foreclosure with the associated property management and final sale, is the most costly option. Loss mitigation means finding some resolution short of foreclosure. These resolutions are typically called loan workouts. The least costly workout options are those that keep borrowers in their homes, and the next best are those that assist borrowers in getting out of the now burdensome financial responsibilities of homeownership in a more dignified and less costly manner than foreclosure.
The option used for homeowners with truly temporary, one-time difficulties is the advance claim. In this case the insurer pays the servicer the amount of the delinquency in return for a promissory note from the borrower. The mortgage loan is then made whole, and the insurer can collect part or all of the advance from the borrower over time.
The next option for keeping borrowers with temporary problems in their homes is a forbearance plan. This option is used for borrowers who have temporary reductions in income but have long-term prospects for increases in income that could again sustain the mortgage obligations. It is also used when troubled borrowers are working to sell properties on their own. The forbearance period can extend from 6 to 18 months or longer, depending on the borrower's circumstances. During this time borrowers may be initially permitted to make reduced monthly payments, working to eliminate the delinquency through increased payments during the latter part of the forbearance period. Because insurers, Fannie Mae, and Freddie Mac typically consider forbearance plans a servicer matter, they are rare in practice, leading some homeowners to lose their homes unnecessarily.
For permanent reductions in income, the only way to assist troubled borrowers to keep their homes is through loan modification. Loan documents can be modified in any way, but the two most common are interest-rate reductions and term extensions. Loans with above-market interest rates can be refinanced to the market rate and borrowers charged whatever portion of the standard origination fee they can afford. If the interest rate is already at or below the current rate, then monthly payments can be permanently reduced by extending the term of the mortgage, even starting a new 30-year amortization schedule.
Such modifications can be done quickly and inexpensively for loans held in portfolio, and in recent years they have become easier to implement for those loans in mortgage-backed security (MBS) pools. Fannie Mae and the U.S. Department of Veterans Affairs readily agree to allow servicers to buy qualifying loans out of MBS pools, modify them, and then sell them back to the agency to hold in a retained portfolio. Freddie Mac, which has a security structure different from that of Fannie Mae, performs the purchase itself after the servicer completes negotiations with the borrower.
In many cases borrowers are better off getting out of their existing homes. There may be a need to find employment elsewhere, a divorce settlement that requires selling the property, reductions in income that necessitate moving to lower cost housing, or a deceased borrower with an estate to be liquidated. Whatever the reason, there are three options currently available for borrowers who must give up their homes. The first is selling the home with a loan assumption. This is valuable if the mortgage carries a below-market interest rate that would make its sale more attractive, and in cases in which the assumption permits the purchaser to obtain a higher loan-to-value ratio than could otherwise be attained. Credit agencies will waive the due-on-sale clause of fixed-rate mortgage contracts as needed to assist troubled borrowers sell their properties and avoid foreclosure.
Borrowers who must move and who have negative equity in their properties may be eligible for preforeclosure sales in which the insurer or secondary market agency (Fannie Mae or Freddie Mac) helps the borrower market the home and covers any loss at the time of settlement. Borrowers can be asked to contribute to the loss according to their financial abilities. This has become the number one loss-mitigation tool of the 1990s. Industry sources indicate that preforeclosure sales prices are generally at least 5 percent higher than those for homes with foreclosure labels on them, and all of the costs and uncertainties associated with foreclosure and property management are eliminated. Borrowers benefit by avoiding the indignity of a foreclosure.
The last option short of foreclosure is for the borrower to voluntarily convey property rights to the lender/servicer. This is an old technique and, as it involves the homeowner signing over the deed to the property, is called a deed in-lieu-of-foreclosure, or simply a deed-in-lieu.
Win-win opportunities
Attempting loan workouts is risky; if they succeed, there are cost savings over foreclosure, but if they fail and foreclosure must be pursued anyway, default resolution has greater costs. That means that the entire decision about whether or not to offer foreclosure alternatives, from the creditor's perspective, comes down to understanding two probabilities: the break-even probability of workout success and the probability of an individual borrower succeeding in a workout. A break-even probability indicates how many workout offers must succeed in order for the total cost of all workouts (successes and failures) to equal the cost of immediate foreclosure on all loans. If the individual's success probability exceeds the break-even level, then it is financially prudent to offer that person a workout. This concept was formalized by Ambrose and Capone.
The Ambrose-Capone study is instructive as it simulates break-even probabilities for four major types of workouts: loan modifications, forbearance, preforeclosure sales, and deeds-in-lieu. It also takes into account uncertainties with respect to the time it takes to foreclose on and sell a property, considers a number of economic environments and initial loan-to-value ratios, and accounts for borrower opportunities to cure defaults. In circumstances in which housing prices are either stable or have experienced some decline,modifications have the lowest break-even probabilities (18 to 25 percent). That means that lenders can take the most chances with these workouts. Each success can cover losses from between four and five failures. In areas where there has been no housing market downturn, pre-foreclosure sales have the lowest break-even probability (20 percent), and modifications have the highest (42 percent). Deeds-in-lieu and forbearance break-even rates are each around 30 percent.
Since there is strong evidence that break-even probabilities tend to be well below 50 percent, borrowers whose chances of success are 50 percent or better certainly should be given workout opportunities. Even borrowers whose probability of success is somewhat less than 50 percent still should be given a workout opportunity. Of course, how low a probability of success the credit-risk bearer can accept depends upon its having enough defaulted loans to take advantage of the law of large numbers. That is, to ensure that offering alternatives to foreclosure will reduce the cost of loan defaults, one must have enough defaults to know that the probabilities on each loan will turn into certainties in the aggregate. Thus, national insurers and agencies are in prime positions to remove this risk from small lenders and servicers. By dealing with larger total numbers of defaulted loans, the national organizations can profitably offer workouts even to households with success probabilities very near the break-even levels.
Successes and failures at FHA
The Federal Housing Administration (FHA) has had a difficult history with respect to loss-mitigation and foreclosure-avoidance measures. Its original neglect of the issue was not unlike other mortgage insurers and guarantee agencies. At 90-day default, servicers would turn accounts over to foreclosure attorneys for immediate collection or foreclosure. But in 1974 the courts ruled (Brown v. Lynn) that HUD's insured borrowers were a protected class under the National Housing Act and required post-default assistance. In response, FHA developed its Single-Family Mortgage Assignment Program. Under the assignment program, FHA pays full insurance claims to lenders/servicers and becomes both the investor in and servicer of the loans. Borrowers are granted a period of reduced or suspended payments, which create long-term accounts receivable with FHA. The forbearance period can last up to 36 months after which borrowers have up to 10 years beyond mortgage contract maturity to pay off their entire debt.
From the perspective of borrowers, the assignment program has been a mixed success. Only a minority have cured their default, while many more families have postponed foreclosure for long periods of time. Some families simply avoid foreclosure but never fully recover. Based on FHA's experience from 1984 to 1993, a reasonably accurate distribution of outcomes can be constructed. During the first 10 years after families enter the assignment program, approximately 15 percent fully recover; another 25 percent sell their homes, many at prices insufficient to pay off the entire debt; and roughly 50 percent lose their homes through foreclosure.
The remaining 10 percent retain possession after 10 years but are so heavily in debt that it is highly unlikely that they will ever fully reinstate the mortgage. From a narrow financial perspective, the assignment program has been a failure for FHA. Because the program allows many families who eventually will lose their homes to remain in them for long periods without making regular mortgage payments, losses from carrying these mortgages are high. The expected loss on each assigned loan is roughly 48 percent of the outstanding loan balance, while outright foreclosures without assignment incur an average loss of 38 percent. That is, with an average loan balance of $58,000, the dollar loss per assigned loan is $28,000, which is $6,000 more than the cost of a direct foreclosure from the insured portfolio (without the use of an assignment option). The assignment program only affects a small part of the seriously delinquent loans handled by FHA each year. Only 15 percent of all serious defaults qualify for the single-family assignment program. Many loans fail to qualify because the default is judged not to have been beyond the control of the borrower or because the borrower is judged not to have reasonable prospects of resuming full payments within 36 months and repaying all accrued arrearages within 10 years past the mortgage maturity date. Because of a combination of statutory, budget, and judicial restrictions, HUD has been limited in its abilities to offer other options to borrowers who have become seriously delinquent but who do not qualify for assignment. Therefore, FHA has missed some important opportunities for loss mitigation and possibly some opportunities to help distressed borrowers avoid foreclosure.
Recently, however, FHA has begun to provide one alternative to families who are ineligible for assignment or who waive their rights to assignment. The Stewart B. McKinney Homelessness Assistance Amendments Act of 1988 authorized FHA to pay insurance claims on mortgagor house sales in lieu of property foreclosures. FHA avoids expenses related to foreclosure processing and subsequent property management and disposition and homeowners are released from an unmanageable property. FHA conducted a demonstration of the value of preforeclosure sales from October 1991 to September 1994 in three cities--Atlanta, Denver, and Phoenix.
A HUD evaluation studied the experience of more than 1,900 cases that entered the demonstration program through March 31, 1993. Successful sales rates varied across demonstration sites, but in total averaged 58 percent across sites. Another 5 percent of participants used the reprieve from foreclosure processing to cure their loans, and an additional 8 percent voluntarily transferred property deeds to FHA after failed sales efforts. Only 28 percent were referred back to servicers for foreclosure. Each successful sale generated $5,900 in savings on claims and avoided property management expenses. In contrast, properties that were either returned for foreclosure or had titles deeded to FHA cost HUD $2,600 in time cost during demonstration participation. Overall, each program participant saved HUD an expected net cost of $2,900. Subsequently, FHA has extended the preforeclosure sales option to all cases where foreclosure is a likely outcome, and HUD now expects even higher savings on each sale due to improvements in program design. Based on an expectation of 10,800 participants per year, national implementation would generate a total annual savings of $58 million.
Conclusion
FHA and the private mortgage market are still learning from the experience of the last 10 years -there is room for more improvements. While the private sector has been successful in applying loss-mitigation and borrower-protection techniques, it has failed to take full advantage of them. Servicers must generally prove to insurers and credit agencies that they have provided a good faith attempt at helping borrowers to cure loan defaults before initiating foreclosure, but not that they have made a good-faith effort in loan workouts. This asymmetry is also apparent in the workout approval process. Insurers and credit agencies generally must approve servicer applications for workouts but not servicer denials of workouts to borrowers in default. Fannie Mae has been the first to reverse this policy, as it now requires servicers to provide a recommendation on all noncured loans.
Uneven application of these techniques is further demonstrated when institutions concentrate their loss-mitigation efforts in areas of the country experiencing the worst problems, so that servicers in other areas have less incentive to pursue workouts. There are some notable exceptions to this situation, such as Fannie Mae grading servicer performance in curing defaults against regional averages, and both Fannie Mae and Freddie Mac waiving approvals if there will be no cost to them.
FHA has not taken full advantage of cost-saving foreclosure-avoidance techniques. The pending report to Congress cited at the beginning of this article lays out a potential framework that would allow FHA to catch up with the private market in this important area of foreclosure avoidance and loss mitigation.
What does the future hold? Certainly, the entire mortgage industry hopes that it does not have to face another long series of regional housing market declines like those experienced over the past 15 years. But if it does, the now standard practice of looking at foreclosure as a last resort will help strengthen homeownership, reduce house price declines, and maintain a healthier system of lending and insuring home mortgages.
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