Business Connections

Buying Investment Property – “A Foolproof Plan”?

You’ve done it!

Home prices in your local real estate market are their most affordable level in a decade and interest rates are their lowest ever.

It looks like the stars are finally in alignment and it’s the right time to buy that investment property you’ve been considering for months.

As you formulate your “foolproof plan”, research tells you that the combination of low prices and interest rates will give you a positive cash flow and a return on investment far greater than anything a bank might be offering. The demand for rental units in most markets is up because of the huge number of displaced homeowners.

But you’re wondering how you might make it even more lucrative.

You’ve checked every lender website on the internet and found that the interest rate for a mortgage on an investment property is higher than it would be if it was owner occupied.

The “foolproof plan” begins to take shape.

“If tell my lender that I’m going to live in the property that would give me a lower interest rate and I wouldn’t have to make that 20% down payment, which means I might be able to buy a second investment property with the money I saved”.

You discussed this “foolproof plan” with your neighbor and brother-in-law, who said “no problem” “We know lots of people who did that, and never got caught”

Foolproof plan?

A plan like this is not a “foolproof” plan, in fact it’s more like a scheme or scam.

The execution of this plan is a violation of federal law and that means a fine AND jail time, This is occupancy fraud, pure and simple. Any idea, who investigates mortgage fraud? It’s the FBI and I’ve heard they’re really good at what they do.

Despite everything that has happened and is happening in the real estate market, this is “foolproof plan” continues to play out daily, and lenders know that some people are still trying to buy a home this way. Lenders may have done some dumb things in the past, but we’re not dumb enough to continue doing them as the number of foreclosures continue to climb because we “turned a blind eye” to these schemes in the past.

In today’s market these “foolproof plans” will never withstand the scrutiny lenders are now giving every loan file. They will examine everything from the size of the new house as it compares to your current residence, the increase in commuting time, the motivation of the buyer etc.

If the buyer already owns rental property, chances have now dropped to ZERO this attempt will be successful.

Does that mean there aren’t legitimate reasons to buy another home as owner occupied and keep your current home as a rental? By no means, but that’s a discussion for another time and it won’t involve committing a felony.

by Greg E Cook for Ezine Articles

Donna Sanford

Phone: 888 381 8654
Email: donna@yoursolution4re.com

Real Estate Investor | Short Sale Professional
Real Estate Transaction Negotiator | Real Estate Investing Services

Your Solution 4 Real Estate, Inc.
Bauer Hill & Associates, LLC
Area Short Sale Pros, LLC
Tri-County Capital Partners, LLC

Twitter - Donna Sanford
Twitter - Short Sale Pro

Area Short Sale Pros, LLC negotiates short sales on behalf of homeowners, Realtors and buyers/investors and we act as a neutral third party in the transaction. We have partnered with the best short sale negotiators who have over 50 years of combined industry experience and focus specifically on Short Sales. What makes us unique is our extensive contacts with lenders who know we are working for both buyer and seller as a third party negotiator and this gives us the “edge” over others. We service customers in all 50 states and work with all lenders and mortgage servicers. We are professionals with a proven track record for achieving positive outcomes for our clients. Call us now at 888-381-8654.

Categories: Business Connections, Commerical Real Estate, Investing in Real Estate, Real Estate Investing, Real Estate Negotiating, Real Estate Sales

Tags: Business Connections, foreclosed homes, Real Estate Investing, Real Estate Investor, Real Estate Networking, Real Estate Transaction Negotiator

1 SEP 0

Wholesaling to Create Wealth Through Real Estate

Wholesaling allows you to create wealth through real estate with little to no initial investment. Tons of people think you must have a real estate agent and look at thousands of properties, so on and so on to be able to buy any property. That’s crazy to me and kind of played, while agents do come in handy we are not talking about that in this article. So lets come to the 21st century and new age thinking on investing or buying a property. When we say wholesaling we are talking about deep discounted properties that are not typically in view of the public. How I do this is by using the power of the web. By using the web we can market to motivated sellers and find hungry buyers looking for bargains.

One of the powers of wholesaling is it gives you an open door into the Real Estate Investing world that is only truly enjoyed by a few. If you choose to kick the door down you can give yourself a tool to create unlimited wealth and live a healthy lifestyle. Now imagine if you will that you “flipped” 15 contracts over the next 12 months. Lets see, well that could make you around $10,000 per deal. Soooo let’s do the math on 15 contracts at around $10,000 that would be an extra $150,000 per year right there.

In this business if you are willing to put in some time and really get it in; you would be surprised at what you can do.

Article Source: EzineArticles expert Kesha Day

Categories: Business Connections, Real Estate Investing, Real Estate Negotiating, Real Estate Sales, Residential Real Estate

Tags: housing market, Real Estate Investing, Real Estate Investor, Real Estate Networking, Real Estate Sales, Real Estate Transaction Negotiator, Residential Real Estate, short sale, short sales

1 SEP 0

Investing in Apartments – 3 Reasons Why Now Is a Great Time

Everywhere one looks today there are growing signs that investing in apartments is a smart idea now and will be for the next several years.

The part of the American Dream that includes a white picket fence and your very own home is fading for many. In the second quarter of 2010, only 66.7% of households owned their own home. That’s the lowest number recorded since the last quarter of 1999. Many of those former homeowners are now renting their homes, and some have gone back to apartments.

In fact, when a Trulia survey recently asked, “Is home ownership a part of your American Dream?”, only 72% responded, “Yes”, compared to 77% just six months earlier.

In a May 2010 survey of over 2,000 U.S. adults, the National Apartment Association found that 76% of the respondents now believe that renting is a better option than owning. This is up from 71% in 2008. Half of the people cited financial reasons, while a full 64% enjoy having no maintenance responsibilities.

In addition to the positive signs from these surveys of American’s attitudes, current apartment owners are reporting improving conditions. The National Multi Housing Council performs a quarterly Survey of Apartment Market Conditions. One section measures “market tightness.” A Market Tightness Index reading above 50 indicates that, on balance, apartment markets around the country are getting tighter; a reading below 50 indicates that market conditions are getting looser; and a reading of 50 indicates that market conditions are unchanged. The July 2010 index stood at 83, up from 38 in January and 11 recorded in January 2009. This is a clear trend showing fewer vacancies in existing apartments.

Greg Willett, VP of MPF Research claims that, “Demand is stunningly high in the first half of 2010.” The number of occupied units increased by 215,000 in the 64 largest U.S. markets through June. That’s almost twice as many as in all of 2009. The overall vacancy rate in the same markets declined to 6.6% from 8.2% in December. Closer to home, the Colorado Springs vacancy rate dropped to 5.8% in the second quarter, the lowest rate recorded since the 5.4% reported for the third quarter of 2001.

The third main reason smart money is moving into apartment investing is the tsunami of new renters coming of age in the next few years. These “echo boomers”, children of the original baby boomers, are now in their 20s and 30s, typically prime renting years.

The Baron’s cover story of July 26, 2010, entitled Renter Nation, claims that, “Roughly 10 million extra folks could be moving into rentals in the next five years.” In addition, the National Association of Home Builders chief economist believes the 83 million echo boomers entering the market over the next decade is a positive demographic trend for the apartment market.

Since improving apartment market conditions usually follow job growth, experts are speculating as to why this improvement is happening without it. Maybe the economy has stabilized to the point that young workers have enough confidence in their current job to move out of home or split up from their roommate, but not enough to put a down payment on a home (if that’s even a goal).

So, because of changing American attitudes about home ownership, decreasing vacancy rates, and the demographic bubble approaching, it’s looking like a great time to be investing in apartments.

Les Goss is a real estate investor and syndicator in Colorado Springs, Colorado. You can get more reports like this one by visiting his blog at http://www.ColoradoSpringsApartmentInvestor.com

Article Source: Les Goss

Categories: Business Connections, Commerical Real Estate, Investing in Real Estate, Real Estate Investing, Real Estate Negotiating, Real Estate Sales, Short Sale Pro

Tags: Real Estate Investing, Real Estate Investor, Real Estate Transaction Negotiator, Residential Real Estate

26 AUG 0

Tips on How to Bid at a Foreclosed Property Auction

Although, making profit at the cost of someone else’s misfortune may seem callous, one of the best ways of making money is by bidding at a foreclosed property auction.

The format of an auction and possession of a property therein is very different from the usual practice of purchasing it from a bank or directly from the owner. In the case of an auction, there is the risk of overbidding by getting carried away.

One should start the process by keeping a ceiling amount of the bid in mind. This helps one stay rooted to reality and not get carried away by emotions. One must learn to discipline oneself in attending an auction; knowing what one wants and at what price, simultaneously being prepared that one may not be able to get it. This price should be set keeping in mind the average price of similar properties in the neighborhood and the added cost which would be incurred to make the property in a habitable condition. A reasonable ceiling amount would be 20% below the market value

The starting point of any bidding procedure will be to have a sound understanding of the procedure and thereafter, get listed prior to the auction date. It is important to keep up to date about properties which meet ones requirements either by the online medium or through newspapers etc. It is also advisable to go for one or two auctions as an observer so as to test the waters and get used to the situation.

Bidding requires a lot of preparation and planning by doing a thorough research on the plot and the entire bidding procedure. Try to get information about what led to foreclosure of the property, what debts are owned against it, if there are any liens on the house, the estimated value of the opening bid, the approximate market value etc. It is always advisable to bring along a contractor who will help in estimating the refurbishing costs thus giving one an inflated figure which will help in making an informed decision.

Bidding at an auction may become intimidating, especially if one is doing it for the first time. Thus it is important to observe and learn by taking as many cues as possible from other participants while keeping in mind that they should not be able to dictate the amount which one is bidding.

Timing is an important factor to be considered. One shouldn’t start bidding with the first property but wait for the first few properties bidding process to get over so as to get a hang of the pricing patterns. Similarly, it is wise to wait until the bids start to die down before making one’s own bid. Another important factor is the legal issues. One should make sure that they have enough knowledge on the various issues surrounding law suits and transfer/ownership documents. One should also be well versed with all of the local laws.

Foreclosed house auctions are completely trouble free and provide for a true money making opportunity. Auctions help in the sense that they allow one to purchase the property at a much lower amount than the present market price and serve as a replacement for negotiating with the realtor. All in all throughout the procedure, one has to be confident and sure, maintain his calm and composure and weigh each option logically and practically before jumping in on any decision.

By Luis Pezzini

Categories: Business Connections, Commerical Real Estate, Foreclosure, Real Estate Investing, Real Estate Negotiating, Real Estate Sales, Residential Real Estate, Short Sale Pro

Tags: Buying Forclosures, foreclosed homes, Foreclosure, Real Estate Investing, Real Estate Networking, Real Estate Transaction Negotiator, residential foreclosure, short sale, Short Sale Pro, short sales

18 AUG 1

Short Sale Flips and Seasoning

Recently many of the financial institutions are expressing concern about flips by investors in general and specifically short sale flips.

A flip is when an investor gets control of a piece of property as the buyer and they find a third party who purchases the real estate shortly after closing. Let’s take a look at how this relates to the real estate investor who is doing a short sale flip. The investor takes control of a property from a distressed property owner. The investor negotiates a sales price which is submitted to the lending institution. The lending institution agrees on a fair market price for the property. Once the fair market price is established, the investor finds a buyer to purchase the property at a fair market value. The distressed property owner has reduced his liability by the investor taking control of the property. The lender has reduced their liability by removing the distressed property from their inventory and the ultimate buyer has received a property which is the fair market value as they see it. This seems like a very workable and smart business decision on all participants.

The banking institutions find something sinister about these transactions so they have decided to add a clause in their documentation requiring “seasoning”. This seasoning can result in the investor being required to hold the property in inventory for between 30 to 90 days before you can sell the property to the third party. In addition, they are requesting that the investor notify the lender, seller and buyer how much the investor initially paid for the property as well as how much they sold the property to the end buyer. This spread is the investor’s profit in the transaction.

Many of the business books I have studied indicate the free market system is “Where buyers and sellers can make the deals they wish to make without any interference, except by the forces of demand and supply. A stock market comes closest to this ideal.” (BusinessDictionary.com)

Now let me try to understand what the “Law of Supply and Demand” looks like. BusinessDictionary.com’s definition for “Law of Supply and Demand” is as follows: “Common sense principle which defines the generally observed relationship between demand, supply, and prices: as demand increases the price goes up which attracts new suppliers who increase the supply bringing the price back to normal. However, in the marketing, of high price (prestige) goods, such as perfumes, jewelry, watches, cars, liquor, a low price may be associated with low quality, and may reduce demand.”

Now let’s ask several questions – Why would a firm (banking institution) who sold their distressed product want to retain liability on the product for 30 – 90 days? Why would an individual, who has been distressed while owning a product, want to know what happened to the product after they no longer have responsibility for that product.

Let’s close with this: The free market system is where buyers and sellers make deals they wish to make without any interference except by the common sense principle defined as the generally observed relationship between demand, supply and prices.

Are these recent moves prolonging the recession in general and the housing crisis in particular?

Article Source: Tom Fitzgerald with Ezine Articles

Categories: Business Connections, Real Estate Investing, Real Estate Negotiating, Real Estate Sales, Residential Real Estate

Tags: Real Estate Investing, Real Estate Investor, Real Estate Networking, Real Estate Transaction Negotiator, short sale, Short Sale Pro, short sales

16 AUG 2

Joint Venture in Real Estate

Joint Venture is termed for a venture or a project achieved jointly or combined, a project which has been achieved by the collaboration of two or more parties. In real estate, joint venture means that a project is developed by two parties jointly. This generally happens where one party would have his land and the other party would be interested to develop a project on that land.

Some time the owner of the land could not develop it because of many reasons such as he doesn’t have the expertise or he doesn’t have the fund and likewise for the other party who want to develop might not have a land in the prime location where he can build up a nice project.

So, if these two parties join together on a mutual understanding they sign an agreement which is termed as joint venture agreement. This agreement comprises legal understand like will there be any advance or good-will money be paid by developer to land owner? Advance is the amount which a developer needs to pay to land owner which would be refunded by the land owner after completion of the project. If any problem arises while constructing, because of which they couldn’t complete the project, then that advance Amount will not be paid back.

Good-will money is the amount which a developer need to pay to land owner for developing the project and this is not refundable. This would remain with the land owner even after completion of project.

Now when the project is completed, the property will be divided between the land owner and builder, the ratio is worked out between 60-40 or 50-50 which mean that builder will keep 60% and owner will keep 40% or both will keep 50%. This division done is basis of the built up area. Built up area dependents on the site area and the road width where the site is situated, for a 30ft road width one can maximum have build up area as 1.6 times the site area, following are the regularities for different roads

30ft road 1.6

40ft road 2.0

40ft-60ft road 2.5

60ft to 100ft 3

above 100ft more than 3 and generally more than 100ft won’t be there for residential purpose

So now lets take this example to even simplify of what we have said above:-

Let take a site which is 20000 sqft and the road width is 40ft road so maximum built-up area should be 40000 sqft. Lets assume the joint venture agreement between owner and builder is fixed as 50-50 ratio and also the owner of the land get 1cr as advance. Generally the property building cost would be Rs. 1000 per sqft, so to build 40000sqft it is 40000*1000 = Rs 40000000. After completely building the apartment, the builder would get to sell his 50% share of the total 40000 sqft which is 20000 sqft. Lets assume the apartment selling rate is worked out to be Rs. 2200 per sqft, then he will earn 20000*2200= Rs. 44000000, so builder’s total earnings for this apartment will come to Rs 4000000 minus the interest rates for the 1cr advance. Let say construction take 2 yrs to complete, so builder would lose the interest for 1cr for 2 yrs, which would come around 2400000, if he takes an interest rate of 12%. So finally builder’s total earning for this property would be 40l-24l=16l which is not good for his 2 years of work.

Likewise, lets take the land owner’s point of view, Let say that the land rate is Rs 2500 per sqft so by selling land owner will get 5cr and by doing joint venture he will earn 4.4cr + the interest on 1cr which would be 4.66cr which is 34l less than what he would have got without doing Joint Venture so its not feasible. So, eventually this deal wont work out for both the land owner and builder.

All the above calculation goes into paper to decide whether to go into joint venture or not. A sample copy of joint venture agreement can be drafted with a help of lawyer.

Article Source: Jeni Relo

Categories: Business Connections, Commerical Real Estate, Real Estate Investing, Real Estate Negotiating, Real Estate Sales, Residential Real Estate

Tags: Business Connections, housing market, Real Estate Investing, Real Estate Investor, Real Estate Transaction Negotiator

1 2 3 4 5 6 7 8 9

Recent Posts

Categories

Archives

Tags