real estate

DCFawcett asked:


I get asked all the time by new real estate investors if investing in hud homes is a good strategy. I will be recap in this article what I tell them….

The increased demand drives up the price and new investors tend to get any and will buy based on emotion instead of logic because they “just want to get their first deal”. If you pay too much for a property, you will lose your shirt on the deal. That’s why it important to not overpay for the property because you make your money on a property on the day you buy, not the day you sell.

This is why it’s important to have the right real estate investing training so you know how to spot the good deals from the bad and not overpay for a property. Your first deal can bankrupt if you don’t structure it the right way. I see this all the time in my real estate investment club. The guys that don’t take the time to invest in their education are soon out of business because they try and figure it out on their own and fail.

Short Sales are a great way to guarantee that you won’t overpay for properties. If you are wondering “what is a short sale “or are wondering what the “definition of a short sale is“here you go. A Short Sale is when the lender accepts less than what is owed on a mortgage on home foreclosures.

All of The deals are no money down.

We don’t give the sellers any money when we get the deed to their house.

The only thing you have to pay when you get a deal is the cost of the notary and recording fee when you record your deed. That’s a maximum of $100. Now my acquisitions manager is a notary so I don’t pay any notary fees. If you don’t put any money down on the house, you aren’t putting any money at risk.

You don’t need good credit to do short sale deals.

You don’t need to go get a mortgage when you do short sales deals. If you don’t need to use your credit, you aren’t putting your credit at risk. You fund the deal the way you structure the transaction. You fund the deal by either:

The ability to own houses without having to make monthly mortgage payments.

There are no monthly payments to make for short sale deals. The houses are either

in foreclosure or about to be in foreclosure. You don’t need to make any payments therefore you aren’t putting any money at risking making monthly payments.

Preforeclosures and Short Sales are extremely easy to find right now.

There aren’t enough investors out there to handle all of the deals in the market. That’s why I’m on a mission to equip you with all of the resources you need so you can go out there and help all of these struggling homeowners and make a lot of money while doing it.

You may here some real estate speakers say to stay away from foreclosures because there is too much competition. Well that was then and this is now. They are teaching old information because they are not currently practicing what they preach. I am actively buying and selling foreclosures in my own backyard and I know what works and what doesn’t work. And I have to tell you there is no competition for preforeclosure and short sales now because there are so many of them.

Short Sales are easy to get because it doesn’t require you to do a lot of negotiating with the seller because they know they don’t have any equity and they’re just looking for a way out. You are their solution! I love working with short sale sellers because they are the most motivated sellers out there.

Short Sales are the most profitable quick turn deals to do in residential real estate because you’re making all of your profit on the discount with the lender

One of the biggest benefits of the short sale business is that it works even better on Luxury Homes. The banks are more flexible and more negotiable on larger mortgages. Banks don’t want to take houses back and they definitely don’t want to take back Luxury homes.

It takes the same amount of work to do a deal on a luxury home than it does to do a starter home. The difference is A Luxury home pays 10 times as much profit. Its like doing 10 deals in one and when you combine the short sale strategy with luxury homes, you’ve got the golden ticket.

You See, Banks are in the money business. They’re not in the Real Estate business. They don’t want to own any properties. Their only interest is making interest on their money. Foreclosing on homes is a hassle they have to deal with because it’s a cost of doing business for them. The sooner you understand this the sooner you will realize how huge this opportunity is for you right now.

When banks lend out money – they have to keep a multiple of 5 times the amount of money they lend out in reserves. When a loan goes bad, it’s now considered a non-performing asset and that limits the amount of money they can lend out.

It costs a bank a minimum of $30,000 to foreclose on a home. They would rather take a discount on the mortgage and get that bad debt off their books so they can lend out more money.

You are the solution for them. Banks need you to help them liquidate their houses so they can get rid of their bad debt. You are doing them a great service.



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Gerald Mason asked:


If you are interested in the real estate industry you may want to consider foreclosures.

Even though this industry has fallen off a bit, it is still a great way to make money.

The most important thing to remember about foreclosure investing is that there are many details to consider. Not only will you need to become familiar with your own situation, but you will also need to know a lot about the foreclosure industry in your area.

But with that being said, foreclosure investing is not a difficult thing to do. If you become familiar with all of the small details you can be a success in no time at all.

The first thing you need to know about foreclosure investing is how it works. Generally speaking, a foreclosure is a property that the bank owns due to the fact that the owner of the property neglected to pay his or her mortgage.

In turn, the bank owns these properties and is forced to sell them back to the public in order to recover the money that they lost. And to go along with this, the bank usually attempts to sell foreclosures quickly because they are not making any money by holding onto them. All of this works out to the advantage of a foreclosure investor.

Getting started with foreclosure investing is quite easy. Now that you know what foreclosure investing is you need to know where to find the properties.

There are several ways that you can do this, and you should look into each option so that you get the best selection possible. Search the newspaper and online and you should not have any problems finding foreclosures to invest in.

When you are finally ready to buy a foreclosure property you will need to become familiar with the steps necessary in your area. Buying foreclosures is different for each county. Some of them have foreclosure auctions once a week, whereas others only have them once a week. It really depends on where you live, and how your county operates.

Overall, foreclosure investing can be a great way to make money. You may have to learn a bit about the industry before starting, but after you are comfortable with what is going on you should be well on your way to success and when you finally begin to realize what foreclosure investing can do for you, you will then be able to make the most out of every transaction.



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Ajeet Khurana asked:


The concept of house flipping has become quite popular as of late and is seen by the average investor as a means of making money relatively quickly through the use of real estate flipping. What is house flipping? Generally speaking, house flipping is a term that is used when one purchases a house with no intent other than to make a profit off of it. The house flipper will buy a house that needs significant renovations or work, and then they will have the work done themselves and sell the house for more than they bought it in order to make their profit. House flipping has become so popular in fact, that many people have gone into this business full time and use the profits from house flipping as their sole income. If you are considering house flipping as a career, there are a few things you will want to know about the process that may make your life a little easier.

You do not need to be good at renovating to flip houses, but it is recommended that if you are not, you hire someone like a general contractor that can ensure that the work you need done is done properly. Hire someone with a good reputation and it is a good idea to use personal referrals for this when you are looking for someone. If someone you know has a good experience with a contractor, then you will likely have one as well. Your contractor is going to be your ‘go-to guy’ for all of your renovations and will meet you regularly at your property to ensure the repairs are met to your standards.

Before you choose a house that you want to flip, investigate the surrounding market in that area. Many house flippers fall into the trap of overestimating how much their house will finally sell for and often end up losing money on their homes. See what the houses in your area are going for and conduct your calculations accordingly. It is rare that you will be able to sell something that is priced out of the market in a certain area, so the term buy low and sell high is something that is appealing, however can backfire if you don’t do your calculations correctly.

Your contractor will be able to give you an estimate on how much your repairs and renovations will cost. Add an additional 3-5% on top of this estimate as many times projects run over budget as just a simple fact of life. Your contractor is not trying to scam you, but this happens more often than it does not. If you are prepared going into the flip with these budgetary guidelines, you will protect yourself in the long run. Take the cost of your house and add this to the contractors estimate, and when comparing with the market values in the area, you should have a healthy estimate of the profit you can expect from the house you wish to flip. No two experiences with house flipping are identical, so always be prepared for surprises. In the business of house flipping, the more prepared you are, the more profit you will make.



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Jason Loucks asked:


Is flipping houses legal or not? At seminars, I'm often confronted by people who insist "Flipping" is illegal.

What they don't understand is that the part that's "illegal" isn't the transaction, it's the mortgage fraud that some people commit in order to get the deal funded.

When you Option a house and sell it, the end buyer is responsible for their own financing, no "fudging" on your part, and no possibility of fraud.

The Buyer agrees to pay a certain amount, and has a down payment and credit to match, and knows the deal. The haven't been misled, and you haven't helped anyone commit fraud.

Here's what some people consider "flipping":

They'll buy a house, or even just contract it, and then turn around and sell it to an unsuspecting homebuyer or Investor, often from out of town or with no Real estate experience, and usually with no money down or for very little down.

Next, they'll bribe an appraiser to give a fictitious appraisal, much higher than the true Comparable sales. They'll work with a mortgage broker who will show the borrower how to submit false documents to the mortgage lender to qualify for a loan they often can't afford.

Then last but not least, they'll forge the closing statements from the Title Company to show a down payment and/or closing costs coming from the borrower, in order to get the bank to fund the deal.

Is this what you consider "Flipping"? Bribing appraisers and falsifying loan documents and paperwork? If so, then you're right, it is illegal.

But when you "Flip" a house by selling it for retail price to a retail buyer, who works with a legitimate appraisaer and Mortgage Broker and gets their own financing, with no "funny stuff," there's nothing even slightly illegal or grey about it. It's simple and easy, with no B.S.

Some people are just simply SOOO lazy that can't be bothered to buy houses at a discount- instead, they falsely jack up the price, bribe an appraiser to confirm it, and try to pass them off onto an investor or homebuyer who commits mortgage fraud to get them funded. THAT is illegal.

Don't get me wrong, I don't have a whole lot of pity for the Buyers in those fraudulent transactions. They are the ones buying houses without enough common sense to even check the value first!

Here's something else you should learn from this: These supposed "victims" (who all volunteer to commit mortgage fraud and know what they are doing, by the way) buy these properties at grossly inflated values based on appraisals someone else ordered for them. (I know, it's hard to imagine they were taken advantage of, huh?)

NEVER believe what someone tells you about a property without verifying it for yourself. That means you have to do your Due Diligence- check every assumption- about the property BEFORE you buy it, not after.

While house flipping has gotten a bad reputation in the last few years due to a few bad apples, it is still a great way to get into Real Estate Investing if you know what to watch out for. Done properly, house flipping is legal, moral and ethical, and is a great way to invest in real estate wiothout tenants, rehabs, or risk.



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Hunter Craig asked:


With the housing market in a downturn and hundreds, if not thousands, of homes going into foreclosure, people are beginning to talk more about and pursue foreclosure investing. But, what is it and how does it work? Well, for answers to your questions on foreclosure investing, keep reading.

What is foreclosure?

Foreclosure is a process that is initiated when a homeowner is not able to pay the mortgage on their property or sell the home quickly or efficiently enough. The financial burden is no longer manageable and the house then becomes the property of the lender or bank. Typically, the property is later sold at a below-market prices in order to settle the outstanding debt.

So, what is foreclosure investing?

The term "foreclosure investing" refers to the practice of buying houses that have gone into or are about to go into foreclosure and then selling them on the traditional real estate market. Typically, these homes are sold at auction or at a reduced price, meaning investors can purchase homes for less than their normal value and then - after doing some repairs and sprucing up - resell the homes for a profit.

What is pre-foreclosure investing?

Pre-foreclosure investing is the practice of buying a property before it's actually foreclosed on, but after the homeowner has gone delinquent on their payments. In this case, the home is purchased from the owner who can at least make enough on the sale to cover a lot of the owed mortgage debt.

The appeal of pre-foreclosure investing is that the homeowner does not have to go through the process of foreclosure, and the buyer or investor is typically able to obtain the property for less than market value since the seller is highly motivated.

Is foreclosure investing legal?

Yes, foreclosure investing is legal and done by many reputable investors and real estate professionals. Unfortunately, there are some unethical individuals and businesses who prey on homeowners in trouble, claiming they can save them from foreclosure while simultaneously stealing their homes. This practice, however, is considered fraud and is illegal.

Does foreclosure investing work?

That depends on what kind of profitable returns you're looking for and how fast you want to turn your property around to sell it. Typically, the longer a property appreciates, the greater your return will be. On the other hand, the longer a property appreciates, the greater your carrying costs will be. By carrying costs, we mean the expenses associated with ongoing mortgage payments, taxes, and maintenance.

Also, depending on the location you're purchasing in and the current real estate market in the area, you may have a hard time selling or making the kind of profit you might otherwise anticipate.

I've heard about foreclosure investing clubs - are they a good idea?

Think long and hard before you hand over your money to a stranger, or even a club of strangers. Foreclosure investment clubs can work, but there are also a number of scams out there that prey on potential investors. If you find one that is of interest, investigate them and their practices thoroughly before committing any money.



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Greg Chan asked:


With the current chaos in the real estate market, it seems that there are foreclosures everywhere.  If you’re interested in buying a new home or an investment property, foreclosures offer a great way to get a rock bottom price on a property.  Buying a foreclosure property, however, can also have some inherent risk.  The risks associated with buying a foreclosure stem from the lack of normal protections you would get from buying a conventional house. 

Property Listings

You don’t always have to pay a fee to find listings of foreclosed properties.  Find a local real estate agent with foreclosure experience.  An agent can often give you free information on foreclosures in your area.  You can also find listings by going to the local courthouse.  The tax office will often having postings of foreclosed properties.  For more information on finding local foreclosure listings, visit GreatForeclosureListings.com.

Home Inspection

Be sure to invest in a home inspection.  Foreclosed homes are often poorly maintained and in disarray.  The property may be vandalized or appliances may be missing.  Also, do not be surprised if the utilities have been discontinued.  This can particularly be in colder climates when the heat has been shut off.  Try to have the utilities turned on before your inspection.  An inspection can cost anywhere from $250 to $400 but will save you money in the long run.

Title Insurance

Be sure to purchase title insurance.  Title insurance will protect you from any unforeseen liens against the property.  It will also protect you in case a previous owner makes a claim against the house after you purchase it.

Get a Lawyer

A good real estate lawyer is essential in any foreclosure deal.  You will need a lawyer to draw up a contract with escape clauses in case something goes wrong at the last minute.  You can find a real estate lawyer at BestPropertyLawyer.com

Final Sale?

Don’t assume that the sale is final.  In some states, the homeowner has up to six months after the foreclosure to pay any outstanding debts and reclaim the house. 

Location, Location, Location

Be careful of where you buy a foreclosed property.  In cities like Las Vegas and Tampa, widespread foreclosures are plummeting an already weak real estate market.  Thus, although there may be more foreclosures available, it may be harder to turn a profit.  It may be wiser to buy a foreclosed home in markets that are already showing signs of stabilization.  According to Forbes Magazine, the top ten markets for buying a foreclosed home are:

Charlotte, NC

 

Raleigh, NC

 

Nashville, TN

 

Oklahoma City, OK

 

San Antonio, TX

 

Albuquerque, NM

 

Knoxville, TN

 

Seattle, WA

 

Indianapolis, IN

 

Washington-Arlington-Alexandria



Buying a foreclosed property can be risky.  But with the proper protection, it can also be very rewarding.  To learn more about buying foreclosed homes, visit GreatForeclosureListings.com



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Hunter Craig asked:


There are an incredible number of scams that promise you can make huge returns on foreclosure and pre-foreclosure investing without using a cent of your own money. They take the form of supposed "investment clubs," expensive how-to courses, books and e-books.

Unfortunately, the majority of these programs are about making someone else rich, not you. Though it would be great to have confidence that most advertisements involved legitimate, helpful products and services, the reality of human nature forces us to exert caution and weigh any business or investment opportunity before jumping in headlong.

Despite the risks, there are ways to make money on foreclosure investing without risking a large chunk of your own nest-egg, and here's how.

1. Buy a Property with Tenants

A foreclosure or pre-foreclosure property that already has tenants allows you to claim that rental income on your mortgage application. So, if you're applying to a lender for a mortgage loan, that rent will be seen as income and property, both reducing your borrowing rate and increasing your eligibility for a higher mortgage.

You will have to pay closing costs and a down payment, but the rental income will allow you to pay the mortgage until you're able to sell the property for a profit.

2. Find Tenants for the Property

If you have the cash to put a down payment on a foreclosure property and carry it for a few months while you locate good tenants, the potential rental income could pay the mortgage on the property while you wait for the property to appreciate in value. At that time, you can sell it for a profit, all without having to carry the lending costs associated with it.

3. Buying Direct from the Owner

Buying direct from an owner is an option that allows you to take over the deed and the mortgage of the property while retaining the existing owners as tenants. In turn, the owners may engage in a buy-back or rent-to-own program or simply continue as tenants until you decide to sell the home. If your credit is good, you can renegotiate the financing to obtain a lower rate.

Buy-direct and rent-to-own programs are legally tricky, meaning you'll have to invest in quality legal advice, contract preparation and real estate consulting, but you can save big on down payments, purchasing costs and interest.

4. Don't Get Involved in Investment Clubs

Unless you're dealing with trusted family members and very close friends, don't involve yourself in a foreclosure investment club. These supposed money-making ventures seek to pull together small investments to buy foreclosure and pre-foreclosure properties, sell them at a profit and then send the returns to the original investors.

Unfortunately, properties are often never bought, returns are frequently deflated and profits can be heavily skimmed.

If you're considering an investment club strategy, try taking it on with a group of close and well-known friends, and do so with a transparent structure and well-written legal contracts.

Foreclosure investing can be a lucrative business opportunity for the savvy investor who is will to take sufficient time to learn the details and "practice" them before placing huge sums of money at risk and simply hoping for the best.



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Hunter Craig asked:


Foreclosure investing involves a lot more than picking up a house for a below market price at an auction and then turning around to sell it for an amazing profit. Foreclosure is a long process, as is real estate, and both are bound by laws and tax regulations that you need to follow. Before you invest in an expensive how-to program or ebook, keep reading to learn the basics of what you need to know for investing in foreclosure properties.

Why Foreclosure Investing is a Good Buy

Because most banks are only looking to regain the value of the home's unpaid mortgage, foreclosure investors can often obtain a property for about 70 to 90 percent of its true market value.

And, thanks to today's still low interest rates, the cost of carrying that property is low. This means if you can hang on to a property for five to fifteen years you can actually double your money, depending on the market. And if you have tenants residing in the property, you can earn even more.

It Takes Capital

Typically, real estate isn't considered a quickie investment, and your capital can be tied up for a long time. A down payment on a home can't always be taken out and withdrawn in the case of a financial emergency or the need for quick cash.

That capital could also be used for other investments. For example, let's say you invest $20,000 into a home that winds up not appreciating at the 8 percent annual rate you hoped it would. Instead, it depreciates and then eventually appreciates at a low 4 percent rate. That $20,000 could have made more by investing it wisely in a diversified investment portfolio.

Ask For a Warranty Deed

Do your homework about potential tax liens or outstanding building code violations on the property. A warranty deed will ensure you're buying a property with a clear title.

Understand Redemption Period Laws

Many states have what's called a "redemption period" that allows the previous owner to clear his or her debt and then take back the home for a period of time that continues even after the foreclosure is completed.

Buy a Vacant Home

Typically, the bank or lender will evict the previous tenants before the house is sold at foreclosure auction. If, however, you buy a home where the previous owners are still living in the property, you will need to take on the long, arduous, expensive and emotionally-taxing eviction process. It's hard and unpleasant, so unless the opportunity is especially appealing, look for a home that's already vacant.

Hire Professionals, Not Late Night TV Gurus

Don't spend your money on useless "how to" audio books and videos that are little more than sales tools for another product that claims to teach you how to do foreclosure investing.

Instead, commit your resources to a good real estate agent, a quality real estate attorney and a recommended and thorough home inspector. Most foreclosure investment homes are sold in what's called "as is" condition, meaning the seller makes no guarantees about the condition of the property. This is why you need a fantastic home inspector to let you know if you're walking into any major potential problems or expenses.



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Ron Victor asked:


When a person buys a home, he has to take a loan regularly. The lenders, generally banks, keep the title to home collateral in this case. When the person is unable to pay the dues and payments in time, the ownership of the home is moved to the lender. Transferring of ownership to lender is called Foreclosure. Buying foreclosure has been compared to playing poker. Considering as an investment, it has its own risks. First the lenders will check out if there are any junior liens. When they find any pending loans, they pay off everything so that they themselves have clear title to the property. Once this is done, the lender adds up all costs to the loan amount to be recovered, and again resells the property so that they can convalesce the expenses together with the loan amount. This is an ideal time for investors to buy such property. Buying a property that has been foreclosed already has many gains.

The foremost and well-known benefit is the fact that all properties bought from lenders will have clear titles and ownership rights, thereby saving you the difficulty of doing any research. Next fact is that the foreclosure is not for profit booking. When the lenders sell foreclosed property they need their money back, so they are ready to sell the property cheaper than what it could have obtained in open market under normal conditions. The first step of buying foreclosure is to gather information. The best idea is to make a database in a specific manner so that you will have separate data on all the properties and markets in clear sets. The next step is to directly get in touch with the foreclosure owners and start negotiating with them. If you have the address of property but not the name, online directories may help you to find the pertinent names. Buying foreclosure property as a beginner on your own can be risky and if you are trying to buy such properties get help from agents.

One of the risks occurring is that when buying foreclosed property at auction, give just a week to deposit all the cash, and if you fail to do so, you may lose all your deposit at certain times. But as you keep on investing and making money, you can gain experience about bad construction, poor soils, problems with septic systems etc. Background reading and relevant information is extremely important before you get into foreclosure investing. Foreclosure laws in your state, priority of liens, bidding at auctions, title insurance, and bankruptcy are some key areas where you should obtain complete knowledge. You will be able to make better and safer investments in this way particularly. Property investment is not an easy game, and must be played only with caution and care. Little concerns for the person whose property is up for foreclosure are necessary for this process. But you can easily cut down the process of foreclosures into three primary stages. The first stage is pre-foreclosure, second stage is foreclosure auction and the third and final stage is bank owned foreclosures.

In general as you move along the timeline of the foreclosure process your potential for profit will diminish the latter you get to the foreclosure a property. If you're planning on making a full-time living eventually from real estate investment then you'll want to learn in baby steps how to get the most out of your time and efforts without any doubt. With that saying for those who are ambitious enough to do this full time work you have to learn how to find pre-foreclosures because they normally offer you the utmost leverage and profitability relevant to the most deep discounted properties available via bank owned properties.



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DCFawcett asked:


In the first half of 2007, sub prime loans made up 54 percent of the loans starting foreclosure. In the last half, sub prime loans will make up 60 percent of the foreclosure starts. According to the Mortgage Bankers Association, sub prime loans only represent 14 percent of all loans outstanding.

Most of the sub prime loans are on the east and west coast, particularly south Florida and southern California, but also New England and Texas. Most of the delinquencies are happening in the Midwest. So what does this tell us?

Foreclosures are everywhere and are easy to find and profit from.

Historically the reason for default has not been loan type or because mortgage companies have made bad loans over the past few years.

The number one reason for default is from Job Loss or Loss on Income. This accounts for 36% of defaults.

The number 2 reason which accounts for 21% is due to illness in the family.

The number 3 reason is because people have taken on too much debt and is the one that all of the newspapers are talking about.

The 1st and 2nd reasons have always been there and will not go away. The additional of the mortgage problem is what has created the increase in the foreclosures we are seeing.

These top 3 reasons account for 70% of the mortgage defaults.

Another precursor to foreclosure is divorce and quite often someone that is going through foreclosure is filing bankruptcy to stop their foreclosure actions.

Lesson to learn from this.

If you want to get ahead of your competition, you should be targeting not only the the foreclosure list for your marketing efforts but also:

1. A list of homeowners in your farm area that are 60 days behind on their mortgage.

2. A Divorce List

3. A list of people that have filed bankruptcy and are failing out of their Chapter 13 plan.

By targeting these three targeted lists as well as the foreclosure list, you will crush your competition by getting the deals before they even know about them. You will be the only person contacting these homeowners and you will be the only game in town for their problem with their house payments. Go Get Em!

To get a Free 52 Week Foreclosure Investing eCourse, go to www.dcfawcett.com



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