The REO Market-How to Approach It
May 15, 2008 Real Estate No CommentsREO is short for “Real Estate Owned.” These are properties that have been foreclosed upon by a bank or other lender.
The REO department is staffed by “asset managers.” Their job is to inspect the properties, make the necessary repairs and operate them until they’re sold.
As an independent investor, you can find great opportunities in this area. However, you have to be willing to learn the written and unwritten rules and be prepared to deal with tough-minded REO departments. This article provides you the guidelines for doing just that.
Guideline 1: Understand the Lenders’ Attitudes Toward REO Properties Banks and lenders detest having REO properties on their books. Instead of assets, they have liabilities. Obviously, they want to get rid of these properties; however, they’re not willing to do it at a loss if they can possible prevent that from happening.
Not only do you, as an investor, have to deal with this attitude, but you also have to deal with the fact that banks often don’t like to publicize the fact that they have REOs on their books. They have three reasons for this.
The first reason is that they don’t want federal regulators breathing over their shoulders, questioning their business practices or solvency.
Second, they don’t want their depositors knowing about REOs. Depositors want security above all and if-rightly or wrongly-they see REOs as evidence of questionable practices, they may pull their money out. Banks want to protect their image.
Third, if lenders have a large inventory of REOs, they don’t want the market at large to know about it. If the information leaks out, prices could drop dramatically.
So, how do you find out about REOs? That’s our next topic.
Guideline 2: Present a Professional Image to the REO Department REO asset managers don’t want to deal with amateur investors, so you need to approach them as a knowledgeable professional.
First, call the lender and ask for the REO department. Once in contact, explain that you’re an independent, professional investor and are interested in buying REO properties and would like an appointment with a decision-maker.
Then, use that appointment to present your case and convince the decision-maker that you have the assets and experience of a committed professional. If you do your sales job right, then you can ask for a list of REO properties.
Note: Sometimes, REO departments handle the properties themselves; sometimes, they use a broker. So, you should be prepared to deal with both.
Inspecting REO Properties As you might expect, many of these foreclosed properties aren’t in great condition. The former owners aren’t happy campers so they may not take care of the property or even damage it to vent their anger. So, you’ll definitely need to do due diligence and inspect any properties that you’re considering.
In some cases, lenders will do cosmetic repairs to a property since they know a more attractive home will bring a higher price. To counter this possibility, I recommend that you try to show up as soon as the property is acquired and offer to take it “as-is” to get a lower price.
Buying REO Properties-the Mechanics There’s no great secret to buying these properties. You buy them just as you would any property. First, you make an offer. Then, the lender either accepts it, rejects it, or makes a counter-offer. In the case of a counter-offer, you negotiate.
In terms of payment, most lenders prefer cash because they want to be rid of these properties cleanly and quickly. If this is the case, you’ll need to go to a different lender to get your financing. Just don’t expect a great deal; that lender may want 10% or more down plus closing costs. However, some REO departments realize that they’ll get less from a cash offer so they may offer you financing. The advantage of this is that you may be able to pay a lower down payment, get easier terms, and also obtain some money for improvements. The disadvantage is that you’ll pay more in interest and fees than you would on a strictly-cash basis.
Typical Problems to Expect As I said earlier, many of these properties are in bad condition and may not be worth the money, so inspect them carefully before you commit to a purchase.
Also, as I said earlier, REO properties are sold “as-is.” This means there is no warranty of any kind. Therefore, if you buy a property that later requires very expensive repairs, you’re stuck with that expense. The lesson-perform due diligence!
In the case of federally-chartered lenders, you may not get a disclosure statement (most states require these now). That means there’s the possibility you could get stuck with a property that has severe and expensive problems (e.g., lead paint, etc.).
Finally, if after a home inspection, you find repairs that need to be done, don’t expect the lender to pay for them. Their attitude is, “It’s your problem to solve.”
Key Concept: When approaching an REO department, be a fully-prepared professional.
Lease Option & Subject-To - Strategies for Experienced Investors
May 13, 2008 Real Estate No CommentsThis article explains advanced strategies for well-experienced real estate investors who want extra protection for their investments. Keep in mind that the strategy chosen will depend on the type of investment strategy followed. In other words, not every strategy applies to a particular situation. Also, they some solutions may not be ones an investor commonly used. However, knowledge of those solutions may come in handy in the future.
The Fundamental Protection of the Memorandum of Option A primary negative of lease options concerns financial difficulties of sellers. These problems can result in liens, delinquent property taxes and other similar hassles. For the investor, this can result in a considerable amount of time and money spent on resolving these issues before the property can be sold.
One basic protection for you is the “memorandum of option.” This document is a record against the title of the property and definitely should be recorded. It lets the public know that you have an interest in the property.
The purpose of the memorandum is to prevent an unethical seller from refinancing and selling the property to someone else. It also provides you protection from bad faith sellers who try to squirm out of their obligations. With lease options, always record a memorandum of option!
Advanced Strategy 1-the Deed in Escrow You may think that the term escrow refers only to the deposit of funds by one party for delivery to another party upon completion of a specific event or condition.
But, the definition also refers to the deposit of deeds and other written financial/legal instruments. Here’s my suggestion–place the deed in escrow at the same time the memorandum of option is filed. When this happens, the seller signs the deed along with the other contracts. The deed isn’t recorded on the title at this point however; it’s held in escrow by an attorney or title company, and they’re provided with instructions for its release.
Now, this action doesn’t protect against the filing of liens against the property. But, its effect is to reinforce to sellers that they’ve actually sold the property. This, in turn, creates reluctance on their part to try to back out on a lease option agreement.
It also has another advantage: It allows you to close on the property without the seller being present! With the deed in escrow, you should specify how and when the deed is to be released and recorded. The instructions can be simple, such as this example: “When Sam Smith pays $200,000 in certified funds to John Jones, the deed will be released to him. By (date), these funds must be paid.”
Advanced Strategy 2: The Performance Mortgage With this method, the seller pledges the property as collateral for the lease option agreement, and, therefore, ensures good faith performance by that seller. Once the mortgage is assigned to the buyer, it prevents the seller from selling the mortgage to other people. (It replaces the memorandum of option filing.)
The performance mortgage allows the seller’s insurance company to put the buyer’s name on the owner’s policy as another insured. It also shows that the buyer is a lien holder and requires that he or she be notified if any type of foreclosure action is taken.
I’m sure it’s no secret to you that many sellers dislike the idea of a performance mortgage and won’t agree to such an arrangement! However, if you do find a customer who agrees, your attorney should review the terminology of the mortgage to make sure the appropriate clauses are included.
Advanced Strategy 3: The Land Trust Land trusts are formed by organizations established to hold land and to administer use of that land. You’ll find that this technique is very useful with subject-to’s because a land trust minimizes your exposure to litigation.
It achieves this by hiding true ownership. The actual owner or beneficiary is not recorded in the public records, only the trust’s name. In other words, it’s difficult to get sued because litigants find it hard to identify anyone to sue.
Keep in mind that land trust contracts tend to be complicated and long so you’ll definitely need an expert lawyer to draw them up.
Advanced Strategy 4: Form a Partnership There are times when investors may want to consider subject-to high-end properties (in terms of rapidly appreciating value). There’s more risk with these properties, and since there is more risk, you can spread that risk by taking on the seller as a partner. With this method, the buyer and the seller share the profits.
Here’s an example: Assume a property is worth $800,000 and the monthly rental is $3,500. Under normal circumstances, you’d more than likely back away from this deal. However, let’s assume you discover that this home might be sold for $200,000+ in profits. This deal makes good financial sense for you and the seller. So, you agree on a 50-50 partnership (or another percentage arrangement), and you’re both happy.
My recommendation: If you take this course, require that the seller cover all the risks.
Advanced Strategy 5: Refinancing This is a tax-deferment strategy. Here’s an example: Assume you have a house worth $300,000 and $230,000 is owed on it. Through a new mortgage, you can take out some or all of the $70,000 in equity, and it’s not a taxable event. That means you can use that money to reinvest in other properties while still holding on to the original property.
It’s a good idea to check with lenders and brokers in your area to find out what refinancing programs are available.
Tax Concerns With any of the strategies I’ve just described, IRS regulations have to be met. So, you and your tax person should stay up to date on those regulations. They do occasionally change, and those changes can affect the legality and profitability of deals. One area to really be on top of is capital gains.
Capital gains are the profit on the sale of a property. At the present time, you can sell your primary residence (the one actually lived in, not investment properties) every two years.
If a person is single, he or she can keep the profits up to $250,000; if a person is married, he or she can keep up to $500,000. In both instances, the profits are tax free. If the seller of a property lives in his or her home for two out of five years, then that property qualifies for a tax-free gain. The seller can rent the home out for three years - and not a single day more.
My Advice Study advanced strategies and keep them in mind as you grow your investment portfolio. More than likely, you won’t need them for the majority of investments (especially early in a career), but, as is often said, knowledge is power. With that knowledge, you’ll be able to apply it quickly and easily when the right situation arises.
Key Idea: Always get the Lender’s written permission first. Study advanced strategies diligently, so you can make use of them at the appropriate time for maximum protection of your investments.
Finding Great Value Costa Blanca Real Estate
May 13, 2008 Real Estate No CommentsEuropeans really like to invest money in Costa Blanca real estate. Lots of Europeans have purchased holiday homes along the coast line. The prices can be extremely high in the tourist areas. To get a better value house then you should look in different areas, perhaps those which are not quite as attractive to tourists. You should be able to find plenty of cheaper locations which are still located close to all of the amenities which you need. A quieter location is also much better to help you unwind and relax.
Things to Consider when Purchasing Costa Blanca Real Estate
The first thing that you need to think about whenever purchasing Costablanca real estate is to set a budget. Decide how much you can afford to spend comfortably without overstretching yourself. You should make sure you choose properties which are below your price range.
When you are setting your budget you need to think about all of the costs involved, not just the price of the property. You need to allow for the taxes, lawyer costs and real estate costs. It is vital that you have a Spanish lawyer look over the contracts before signing. Allowing an extra 10% of the property price should be enough to cover these extra expenses.
You should then think about why you are deciding to purchasing the home. How do you intend to use the home. Do you want to use it just for your own vacations? Or do you intend on renting it out to other people to make some extra income? Also think about whether or not you plan on keeping the property for a long or short period of time. By finding the answers to these questions you will be able to decide which property you should purchase.
If you are only planning on using the property for your own holiday needs then you should think about what you personally want. You will be spending lots of time there. You don’t need to only think about the rental value of the property, you also want to enjoy your time spent there.
Check out how close the property is to transportation links. Particularly how close is it to the airport and public transport? Flying into Alicante airport is the most popular route into the country. Having a property close to the airport will make it much more convenient. If you are renting out the property then this is very beneficial.
Finding Costa Blanca Real Estate
There is no doubt that the Costa Blanca location is a very popular tourist destination. Many foreigners own property in this region which is either used for vacations or as an investment. You can find property for sale by looking on the internet. Get an idea of the property prices before you visit the region to look into it.
You should then visit the region off season as well as during the peak season. You want to see what the location is like during the winter. If everything closes down in the winter then you might not like the property.
Vacation Rental In Orlando
May 8, 2008 Real Estate No CommentsFor those of you who want to enjoy a more private stay in Orlando, you can try going for a vacation rental. Since housing has increased in central Florida, including Orlando, you can be sure that getting a home to rent will be much easier than you will initially imagine. You can choose from a wide range of selections, too; villas, townhouses, apartments, chalets, condo’s and even cabins are all ready for your occupancy.
Villas, apartments, townhouses, condos, chalets and cabins are all available for you to rent. Renting allows you to have a lot more space than a regular hotel room. This gives you the comfort of being able to walk around and even cook if you’d like. It also works out cheaper than staying in a hotel; this is especially good if you plan on spending more than a few nights in Orlando.
Also, if you have a larger family or a bigger group of people staying with you, it saves you the cost of booking extra rooms. You can get places with 3 rooms generally up to 7 rooms.
Both points two and three are especially useful if you have a large family in tow since size is essentially taken out of the question.
Beachside rentals are popular, so if that’s what you want, you will have to book well ahead of time. Of course, if you do plan on renting, you will probably need to have or rent a car so you can be slightly more flexible.
The joy of spending a more personal time with your family far outweighs any small downsides of getting your own temporary vacation home.
Get To Know The Easiest Way To Avoid Foreclosure
May 8, 2008 Real Estate No CommentsForeclosure can be defined as a situation in which a mortgagee is unable to pay of his debts and fails to comply with the agreement between mortgager. When a foreclosure takes place, the mortgagee’s financial situation is out of control and ends up finally consulting a counselor who agrees to help him, but most of them turn out to be fake and neither help them nor try to resolve the situation.
Foreclosures have been climbing steadily nationwide. The main reason that gives rise to foreclosure is the generosity of the mortgage companies, where mortgager is liberal towards you; it is easy for you to take advantage to buy a home or property at ease with a hope that you pay the debts when you have enough money. But you end up facing foreclosure failing to make payments.
It is not difficult to stop foreclosure as some people think. If you really want to know the absolute method to stop foreclosure, the solution is to act immediately. Most people ignore this and fail to stop foreclosure at a very early stage. Your only solution is to find a way so that will help you change your situation.
If you loose your house or property in the foreclosure, then there are some things that you need to do in order to keep your home out of foreclosure. You can contact your lender and discuss options with him. There are several counseling agencies approved by the governments that may offer you up-to-date information on the various programs that are designed specially for the individuals facing foreclosures. There are also some books about foreclosure which contain vital information about the facts of foreclosure dealings which may be of great help in preventing you from losing your home or property. Reading these books will increase your confidence and give you the ability to avoid foreclosure.
You can browse through the internet if you want any suggestions to avoid foreclosure. You can stop foreclosure at ease.
Sometimes, foreclosure can happen to anybody without any fault of their own. Find the right solution to resolve foreclosure by taking immediate action. Develop the ability to make timely decisions and save your home and property. Take necessary steps immediately when trouble arises. You can always attempt to survive a foreclosure instead of predicting your future. You need to act quickly before you suffer the devastating effects of foreclosure to save your property. Negotiate reasonable foreclosure help plan and avoid foreclosure at an early stage.
The Economy and Real Estate, The Perfect Storm.
May 6, 2008 Real Estate No CommentsThe price of diesel is now upwards of $4.00 a gal.at some truck stops in the North East of the USA. The ripples this is sending through the other sectors of our economy is just now starting to become visible. The trouble started much earlier but it seemed invisible to the everyday folk, that really just saw this as a “Gas Price Problem”. Now the secondary and terciary industries are obviously showing the strain. The airlines (never fully recovered from 9/11) are in an Emergency Room, the trucking industry is in chaos and the support industries for these giants are being beaten down to levels that they have not seen before!
Consider: .the entire State of Florida’s work force is threatened almost everyday with job cuts and loss of benefits and positions. the Tampa bay mortgage base now has double the homes in the ranks of foreclosure as it did in 2007 (which was already a horrible year), and I am talking about the non-sub prime loans! Almost 3% of the more strictly underwritten loans are in default (60 days or more). If you factor in that over 20% of the sub-prime loans are in some serious stage of default you can see the effect is going to do more than ripple!
The banks tighten credit in response.
Less people can qualify.
Even those who could qualify are scared that the real bottom is much lower.
This further depresses the buyer pool, thus flattening the market even more.
The buyers that cannot meet their obligations, can’t sell.
The numbers of buyers that can’t meet their obligation soars, because their totals are being fed by dropping prices, tighter credit, and now job loss in peripheral industry.
The foreclosures add to the glut of available properties.
The slow business climate prevents the normal acquisition rate of real estate by business as the climate has them operating in a much more conservative fashion.
The Perfect Storm!
If you’re looking to blame someone read elsewhere I choose not to blame, merely to inform and repair.
The answer must come with immediate legislation offering future credits for the most efficient of the hybrid vehicles.
This legislation must also spread to solar products for the home for both heating and cooling.
The auto industry will take heed that the selling models will be those with credits, and that will sound the death bell for the Giant Gas Guzzling SUV.
Congress must resist the urge to help out those that recklessly signed up for sub-prime loans that are now in trouble; rather they (the lawmakers) must show courage and let the market forces of supply and demand work themselves out.
The real estate market must be allowed to work as it was created, freely and without the well intentioned but usually ineffective direction of the Government.
If all of the above takes place we can slowly work ourselves out of this debacle we now find ourselves in.
I have the utmost confidence that we will; but I hope the lessons will be learned:
Fossil fuel is running out, we must shift to other sources, and this shift can only be accomplished by incentive programs so that there are concrete bankable reasons for doing so immediately.
Bailout of the banker ( do you remember the Savings and Loan Crisis?) begets bailout of the banker!
Incentives to do the right thing, are the right thing!
The Radical Islamics does not need weapons of mass destruction to hurt us.
A Vessel Sink Vanity Adds Unique Looks
April 28, 2008 Real Estate No CommentsVessel sink vanities, offering a artsy aesthetic to a room, have become pretty popular. What amounts to the appearance of having a bowl on top of a piece of furniture or cabinet offers unique design flexibility. This article is going to discuss all of the different kinds of vessel sink vanities as well as best practices to install vessel sinks on your vanity.
Two major styles that vessel sinks are available in are the vessel sink vanities and the bathroom vessel sinks. Another popular name is bathroom vanity cabinet sinks. The common characteristic of any type of vessel sink vanity is that it sits on top of a surface. For example, a vessel sink can sit on top of your bathroom counter or it can be a stand alone sink. You may see a sink that sits inside of a bathroom countertop that is called a vessel sink by the manufacturer, in most cases this will not be what you are interested in.
If different is what you want vessel sink vanities allow you to achieve just that while adding a touch of your personality to your home’s design. Vessel sinks show your home’s personal style in a much more direct way than a simple sink that is a basic basin, just sitting there inside the bathroom counter.
You will find many vessel sink vanities to choose from. The fact is, there are as many vessel sinks to choose from as there are people’s personalities. Your choices are numerous, vessel sink vanity colors, designs and materials cover almost any designing idea you could conceive. The vessel sinks for the bathroom are sometimes just a basin that is made to sit on top of your existing countertop (which will have to be remodeled when you take out the old sink) and sometimes they are a freestanding bathroom cabinet sink.
We hate to say it, but the installation of a vessel sink, like the installation of any other sink is a complicated undertaking. There are several websites dedicated to the step by step instructions for installing a vessel sink, but our suggestion is to follow the instructions given to you by the sink manufacturer. Remember, installing a sink isn’t simply the building of the countertop and the attachment of the sink basin. There are also pipes and plumbing involved in making sure that your vessel sink is functional and not just pretty.
Yes, you will be able to design your own functional work of art to mirror your personal style. The cookie cutter sink that comes with your home’s bathroom, unless you are actually building your house yourself, will be a distant memory once you install your vessel sink. But if you plan a DIY vessel vanity installation make sure to acquire at least basic plumbing and construction knowledge and skills before attempting the installation. As simple as is it looks plumbing can be somewhat complicated. Once installed, every time it is used marvel at the vessel sink vanity that reflects your personality.
What To Consider When Decorating Your Home
April 11, 2008 Real Estate No CommentsHome decorating is all about turning a living area into a personalized environment where you feel at peace and at home. Home decorating is an excellent way of taking a out dated interior and transforming it into a sophisticated and elegant space. It is not only about creating the design space, organizing your living space, adding color with paint and manual labor. It’s about accenting the decor which makes home accents just as crucial, if not more so.
Decorating your house is something you can do with confidence. Decorating on a budget can be exciting if you approach it creatively. Decorating room by room, and collecting a few interesting pieces at a time makes decorating your home easy and takes the strain off your wallet. Decorating your home should be a fun experience when you use your home accents to reflect your style style and taste. This also assist in making your life in your living space more carefree. Decorating is a wonderful, creative way to express some of your personal style and flare, as well as displaying personal styles of you fellow family members.
It’s always best to have a strategy ahead of time, before you decide to begin a home decorating project, if it is a massive or little, it will be a good idea to understand what your project involves and to plan in detail how it will be accomplished. Before you begin decorating your house, you should envision exactly what you want family to experience once they walk into the room. Most home decorating design is assorted in style, with a variety of traditional and contemporary furnishings, blending new with the old. You should choose furniture that accommodate your family and arranging it in a way that works gracefully with the home decorating theme. Home decorating can involve a variety of different hues, fabrics, furniture, flooring and accessories. Once you find out about such things as color and how it can be applied, room sizes and planning, you’ll find yourself designing new creations for your home decorating.
Style comes from the heart and is a reflection of your character and preferences. Before you begin to decorate, remember that most likely never is a living space decorated in one style. Most home decorating design is varied in style, with a mix of traditional and contemporary furnishings.
Accessories, are not usually something that is simply copied exactly, thus, more than anything else, accessories personal style to a living space. Accessories add character to your home. whether those accessories are candles or knick knacks, try accessories that show a funky and unique decor. By purchasing the most ideal accessories, you will be able to make your living area design to look like it was decorated by a interior design minus the high price that comes along with it. To enhance your decor scheme display a variety of home accents like wooden sculptures, artwork and photos in frames.
Home decorating is often seen as a desire however, it should be an exciting experience. It is for the interest to anyone who has a desire to make their living space to look luxurious. Decorating your home should be a memorable experience and one that will last with you for many years to come.
Looking for Wealth? Dean Graziosi’s Approach can Help You
April 9, 2008 Real Estate No CommentsVery few people can go home every night with the knowledge that they’ve changed lives for the better that day. Dean Graziosi is one of these people. Raised by a single mother, and working two jobs for $90 per week, Dean isn’t coming from a “trickle down” information approach. He’s lived it from the bottom up…from second hand clothes in school to a multi-millionaire.
There are “gurus” out there that tell similar stories of taking themselves from poverty to riches, and they sell motivational books and seminars to tell their followers that they too can be rich. The difference lies in what is being taught. Dean isn’t teaching you just that “you can do it.” He’s teaching you “how to do it.” He isn’t putting forth real estate investment schemes that have only worked for a tiny percentage of those who have tried them. What you learn from Dean’s website and the materials available there are tools for real estate investment success in the real world…..for real investors like you.
The “Think a Little Different Real Estate Course” by Dean Graziosi offers more than a few success stories. You’ll find that you actually get teleseminars, education with mentors, and even alerts on foreclosures as they happen in your. So, there is no way that you cannot succeed. You’ll get a proven course that will help you along the path to your financial goals.
Whether you read Dean’s book Totally Fulfilled, gather materials and use tools from his website at DeanGraziosi.com, watch Dean’s video Be a Real Estate Millionaire, or subscribe to his highly successful real estate investment training materials, you’ll be following in the footsteps of thousands of highly successful real estate investors. They got there using these tools and the extensive knowledge gained from Dean’s real-life and repeatable strategies for wealth.
Stimulating hope with hype is effective…for the seminar provider. Providing help, through real tools with recurring success over time, is what will actually get you to the result you seek.
STEPS TO SELLING YOUR HOME
April 9, 2008 Real Estate No CommentsSelling your private property is something private as well. It requires courage and confidence. Here are some steps that will help you to sell your home:
1. Look at your home condition. This is the first step that will make you easier to get a buyer. Buyer or consumers always need a first impression. The physics of your home, inside or outside, is very important to make them contact you for the price. So, make sure you have a property that is clean, neat, and well-cared. Who want to buy a home with filthy condition? Repair the leakages and re-paint the walls will make your home even nicer and attractive.
2. Price your home. How much do you want to worth your home? Of course it depends on your home physics and external supports. External supports mean the neighborhood and public access. The more accessible and nicer neighborhood will definitely in demand and can be considered plus points for your home. Also in pricing your home, it is important to look at the market. How does the market say? Market can be a good step point to set your home price. As an additional tip, always open for negotiation! People like to bargain.
3. Advertise your home. Advertisement is always effective in getting consumers. Many ways to advertise your home:
a. Advertise your home on the newspaper. It requires extra budget, but it is worth lots of people to read your advertisement.
b. Put an announcement board or banner in front of your home. This will make everybody who crosses the street to know your sale and perhaps tell it to their relatives. The bigger the banner is the better.
c. Print lots of brochures or leaflets and disseminate it in public places. And do not make the information narrative; just a few pointers that has your home picture and contact number on it.
d. Tell your friends and relatives. This could be the easiest way to advertise your home. I personally do not prefer friend/relative-related consumers, but as long as they can give you a good price, why not? And also, friends and relatives are usually kind enough to help us to look for buyers. That’s what friends are for, right?
4. Use a broker service. Broker service will help you to market your home even better since they have lists of potential buyers. They are definitely the expert to help you in negotiating with buyers and basically arranging your home sale (from the first step). You can call them as the middleman. If you do not want to waste your time, you could just contact few brokers and ask for their services. The consequence is you have to share a certain percentage of your home selling price with them. So, if you do need to sell your home very soon, I would recommend this strategy.
Good luck in selling your home!