In business, wholesale is defined as the sale of merchandise to retailers rather than directly to the public (The New Dictionary of Cultural Literacy, Third Edition). In real estate investing, the term means to buy property below market value then use one of several possible exit strategies to make your profit.
“Wholesaling is one of the most powerful strategies in real estate investing, and it really is something you can do with no money and poor credit,” says Russ Whitney, founder and CEO of Whitney Information Network, Inc.
Whitney, the bestselling author of Building Wealth (Simon & Schuster), Real Estate Millionaire Mentor (Dearborn), and The Real Estate Millionaire Mindset (Doubleday), notes that wholesale investors have traditionally targeted distressed properties in less-than-desirable neighborhoods. “The problem with that approach is that new investors might not feel comfortable spending a lot of time in low- and moderate-income areas,” Whitney says. “It’s important to know that wholesaling works in nice neighborhoods every bit as well—and often even more profitably—as it works in not-so-nice neighborhoods.”
Typically wholesale properties are owned by strongly motivated sellers who are eager to get rid of what has become a problem for them. The property may be in poor condition and require repairs the owner can’t or won’t do before it would appeal to an average home buyer. You can buy these properties at a discount, do the necessary fix-up, and either hold the unit in your own portfolio as a rental or sell it.
Of course, that strategy usually takes access to some cash and financing. Whitney says another way to make money on a wholesale deal is not to buy it. Instead, he says, get the property under contract then assign that contract to another investor for a fee.
In addition to requiring virtually no cash beyond the nominal deposit (usually $100 or so) that you will put up with your contract, this technique makes everybody involved a winner: The property owner is getting rid of a problem; the investor you’re assigning the contract to is getting a good deal without having to do any work to find it; and you’re making some cash that you can use to further your investing business.
The key to successful wholesale investing is finding motivated sellers. “The question you need answered is, ‘Do they want to sell or do they have to sell?’ To find out, all you have to do is ask why they’re selling,” Whitney says. “Most people will tell you enough to let you know whether or not they’re motivated.”
An owner who simply wants to sell but is not under any pressure may not be willing to accept the discounted price you need to do a profitable wholesale deal. If that’s the case, move on to the next deal. Give the seller your name and contact information so he can call you if he changes his mind. You might also keep the details of the property in a database and check back every six months or so to see if circumstances have changed. But don’t spend a lot of time trying to do a deal with a seller who isn’t motivated.
Finding wholesale deals
So how do you find the motivated sellers with great wholesale deals? Some of the traditional ways include working with real estate agents, checking classified ads, and looking for properties that have been on the market a while. More effective ways include marketing, networking, and tracking vacant houses.
When you market effectively, you will find out about properties before other investors do because people will call you when they are ready to sell. Networking is closely related to marketing because it establishes you as the go-to person for anyone who has a piece of problem real estate.
One way to find vacant houses that might be good wholesale candidates is to regularly drive through neighborhoods where you want to invest and look for indications that a house is vacant. When you find a vacant house, track down the owner and ask if he’s interested in selling. In most cases, you can find the owner by a simple check of the public property records. Send a postcard or letter, or you might even want to make a phone call. If the owner isn’t interested, continue to monitor the property and follow up in a few months.
“Wholesaling is a great strategy for both new and established investors,” says Whitney. “It allows you to make quick cash when you don’t have any. When you’ve accumulated some cash, continue using this strategy to build your portfolio.”
Jordan Taylor is the editor of Millionaire Mentor™ Newsletter, which is published by Whitney Education Group, Inc.
Sunday, July 13, 2008
Monday, May 26, 2008
7 Steps To Avoid Foreclosure
Has it come to the point where you have asked yourself "How can I avoid foreclosure to save my home?" Don't feel alone. There are millions of Americans today facing the same problem.
If you are at this crisis in your life, I know you don't have much time to spend on reading. So we will get straight to the steps you need to save your home.
Step 1: Never avoid the situation. If you avoid making your full house payments, it will catch up with you within 3 months. If you put off the situation and hope it will get better you are only wasting valuable time. As you will see below, every day you are active in getting the situation resolved the easier it will be to avoid any foreclosure of your home.
Step 2: Contact your lender as soon as you know you have a problem.
You may not want to contact your lender because of embarrassment. It is natural to feel this way. It is not going to be on of those fun conversations to have, but avoiding the situation will only cause you more problems in very near future. Lenders don't want to start foreclosure proceedings on you home because of all the expenses involved (court fees, attorney fees, etc.). They would much rather discuss a modified repayment plan. If you don't feel comfortable talking with the lender then you should look into getting a foreclosure specialist to help with the process.
Step 3: Gather all your financial documents. You will need to have your loan number, a month's worth of your most recent paycheck stubs, a list of all your credit card debt, hospital bills etc. You should sit down and create a budget showing your income and expenses for a whole month. You should also prioritize your spending. Cut out the things you don't need, like cable, internet access, etc. The budget will show the lender you have already done some of your homework on how to work out a solution.
Step 4: Respond to any mail or phone calls you receive from your lender. This step is very important. You don't want the lender to think you are trying to avoid the situation. At this point you want to be very cooperative.
Step 5: Know your rights as a borrower. You should find your loan documents and read them. They will tell you what the lender can do if you are unable to make your payments.
Step 6: Determine how much you have in assets. Do you have some jewelry or a second car that you can sell? You may even have a life insurance policy you can cash in. Although these may not increase your cash flow, it will demonstrate to the lender that you are willing to make sacrifices.
Step 7: If you have gotten to this point and don't feel you are able to resolve the situation then you should seek the help of a professional foreclosure counselor. There are many companies that offer free consultations. You are not obligated to use their services, but you can definitely find the answer to your question of "How can I avoid foreclosure?" These professionals have many contacts in the banking market and can often times offer solutions you may not be able to find on your own.
Foreclose on your home is very serious. It can ruin your credit and more importantly ruin you way of life. Don't' become a victim. Find more solutions on how to stop or avoid foreclosure at http://www.foreclosure-free.com
Michelle Travis has over 20 years of experience in the credit and debt industry and works hard to provide solutions for you. If you would like to get more solutions on getting out of debt and credit repair goto http://www.your-credit-solution.com
Article Source: http://EzineArticles.com/?expert=Michelle_Travis
If you are at this crisis in your life, I know you don't have much time to spend on reading. So we will get straight to the steps you need to save your home.
Step 1: Never avoid the situation. If you avoid making your full house payments, it will catch up with you within 3 months. If you put off the situation and hope it will get better you are only wasting valuable time. As you will see below, every day you are active in getting the situation resolved the easier it will be to avoid any foreclosure of your home.
Step 2: Contact your lender as soon as you know you have a problem.
You may not want to contact your lender because of embarrassment. It is natural to feel this way. It is not going to be on of those fun conversations to have, but avoiding the situation will only cause you more problems in very near future. Lenders don't want to start foreclosure proceedings on you home because of all the expenses involved (court fees, attorney fees, etc.). They would much rather discuss a modified repayment plan. If you don't feel comfortable talking with the lender then you should look into getting a foreclosure specialist to help with the process.
Step 3: Gather all your financial documents. You will need to have your loan number, a month's worth of your most recent paycheck stubs, a list of all your credit card debt, hospital bills etc. You should sit down and create a budget showing your income and expenses for a whole month. You should also prioritize your spending. Cut out the things you don't need, like cable, internet access, etc. The budget will show the lender you have already done some of your homework on how to work out a solution.
Step 4: Respond to any mail or phone calls you receive from your lender. This step is very important. You don't want the lender to think you are trying to avoid the situation. At this point you want to be very cooperative.
Step 5: Know your rights as a borrower. You should find your loan documents and read them. They will tell you what the lender can do if you are unable to make your payments.
Step 6: Determine how much you have in assets. Do you have some jewelry or a second car that you can sell? You may even have a life insurance policy you can cash in. Although these may not increase your cash flow, it will demonstrate to the lender that you are willing to make sacrifices.
Step 7: If you have gotten to this point and don't feel you are able to resolve the situation then you should seek the help of a professional foreclosure counselor. There are many companies that offer free consultations. You are not obligated to use their services, but you can definitely find the answer to your question of "How can I avoid foreclosure?" These professionals have many contacts in the banking market and can often times offer solutions you may not be able to find on your own.
Foreclose on your home is very serious. It can ruin your credit and more importantly ruin you way of life. Don't' become a victim. Find more solutions on how to stop or avoid foreclosure at http://www.foreclosure-free.com
Michelle Travis has over 20 years of experience in the credit and debt industry and works hard to provide solutions for you. If you would like to get more solutions on getting out of debt and credit repair goto http://www.your-credit-solution.com
Article Source: http://EzineArticles.com/?expert=Michelle_Travis
Sunday, May 18, 2008
Real Estate Investing - Flip or buy and hold?
There are many ways to make money in real estate, but all the different methods boil down to two. The big decision in real estate is whether to flip a property for a fast profit or to hold on to the property for long term wealth.
The advantages of a flip are as follows:
You make a fast profit and can move on to the next deal. One of the downsides of holding a property is that you have to be a landlord. There is nothing more difficult to me than being a landlord. When I flip a property I don't have to worry about collecting rent or fixing the property over and over. I don't have to find someone to rent the property. There something to be said about a quick profit.
Finding a property to flip is fairly easy. Ugly properties are not hard to find, especially in the large cities. In Atlanta Georgia there are so many properties available for rehab and not enough investors.
Flipping a property is more interesting than find and hold. If you like excitement then flipping properties is your game. There are good times and bad times that come with flipping properties and it is never boring.
The disadvantages to a flip are as follows:
You will have to pay more taxes when you sell a flip. When you flip a property your profit will be taxed as ordinary income. This can be as much as forty percent of your profit.
Flipping a property means you must keep selling homes. The easy part of flipping is buying the property and then fixing it up. The hard part is selling the property.
The advantages of holding a property are as follows:
If you want long term appreciation then you need to buy and hold. There is no denying that if you buy a property at discount and then put a renter in the property for twenty years that you will have an investment that has appreciated tremendously.
Cash flow will come to the person who holds their properties for a long time. Positive cash flow usually takes time and if you are willing to wait a few years you will have a good monthly income.
The obvious problem with holding properties is being a landlord. If every renter stayed, paid on time, and never destroyed your home, then there would be no problems. Unfortunately you will have to find new tenants often. You will not collect all of the rent you are due. You will have to fix a property every once in a while.
The decision to flip or hold is a difficult one. I like to do both. If I find a home worth holding I hold it. If the property is too far away or needs too much work to be rental worthy then I will flip the property. Both have their good points and bad. The bottom line is that you need to be comfortable with your decision. Being a real estate investor should be fun first and an investment second. So do what you like most and feel best doing.
Article Source: http://EzineArticles.com/?expert=Max_Suther
The advantages of a flip are as follows:
You make a fast profit and can move on to the next deal. One of the downsides of holding a property is that you have to be a landlord. There is nothing more difficult to me than being a landlord. When I flip a property I don't have to worry about collecting rent or fixing the property over and over. I don't have to find someone to rent the property. There something to be said about a quick profit.
Finding a property to flip is fairly easy. Ugly properties are not hard to find, especially in the large cities. In Atlanta Georgia there are so many properties available for rehab and not enough investors.
Flipping a property is more interesting than find and hold. If you like excitement then flipping properties is your game. There are good times and bad times that come with flipping properties and it is never boring.
The disadvantages to a flip are as follows:
You will have to pay more taxes when you sell a flip. When you flip a property your profit will be taxed as ordinary income. This can be as much as forty percent of your profit.
Flipping a property means you must keep selling homes. The easy part of flipping is buying the property and then fixing it up. The hard part is selling the property.
The advantages of holding a property are as follows:
If you want long term appreciation then you need to buy and hold. There is no denying that if you buy a property at discount and then put a renter in the property for twenty years that you will have an investment that has appreciated tremendously.
Cash flow will come to the person who holds their properties for a long time. Positive cash flow usually takes time and if you are willing to wait a few years you will have a good monthly income.
The obvious problem with holding properties is being a landlord. If every renter stayed, paid on time, and never destroyed your home, then there would be no problems. Unfortunately you will have to find new tenants often. You will not collect all of the rent you are due. You will have to fix a property every once in a while.
The decision to flip or hold is a difficult one. I like to do both. If I find a home worth holding I hold it. If the property is too far away or needs too much work to be rental worthy then I will flip the property. Both have their good points and bad. The bottom line is that you need to be comfortable with your decision. Being a real estate investor should be fun first and an investment second. So do what you like most and feel best doing.
Article Source: http://EzineArticles.com/?expert=Max_Suther
Sunday, May 11, 2008
Real Estate Investing: Buying Property Out of State
Buying property out of your local area where you live is not something that is recommended for the new investor. That’s why we made purchasing our first real estate investment out of state our top priority! Why? Because a set of circumstances presented themselves that made sense for us to follow through on and purchase vacant land several states away. We paid cash for this property at a significantly lower price than market calls for in the area. Additionally, it matched our investment criteria and was a small enough deal for us that it made sense to buy it. Why have we italicized the term “us” thus far? Because this is a topic we believe does not belong on this site, however, we learned alot from the experience and want to share some simple lessons learned in this particular article as well as future articles. Bottom line, we are not recommending people new to real estate investing run out and buy property several hundred miles away!
Information is vital to good, sound real estate investing. No, good information is vital to sound real estate investing. No, actually, you, the buyer, gathering a ton of information about a property you plan to buy, is absolutely necessary in order to increase your odds for success at real estate investing! Phew! Okay, so we got that straight. So how do you get information and how do you get quality information? Do you call a few realtors and ask them about the area? That’s like asking a barber if you need a haircut. What about calling the local chamber of commerce? A local chamber of commerce is a good starting point, but it depends on who you speak with. For instance, you might speak to a person trying to market the area to bring business or improvement to the area. You may or may not get accurate information or the correct data given your investment goals.
Talk to multiple sources. Make several phone calls to different businesses. A reputable developer in the area can be an excellent resource for connecting you to other phone numbers to contact and possibly even some of their personal contacts.
Verify everything! Verify every statement a seller makes. If you can get someone to take pictures of the property you’re buying, that’s very important. If you’re buying vacant land, you’ll want to know if the lot is buildable, in a flood zone, zoning, utilities, sewer, and the surrounding neighborhood and subdivision.
When you contact municipalities, be sure to call back several times if you do not get a cooperative person on the phone. For some reason, people down south are nicer. They tend to spend more time on the phone with you and bear with you while you struggle to put two and two together. Don’t be afraid to let information sink into your head while you’re on the phone and ask the person on the line to wait while you write things down.
It pays to prepare for phone calls. Write down questions. It pays to have a questionnaire available. If you use ours feel free to make it your own. If you do not understand a terminology you can contact us or look it up online at any real estate investment website. Log all of your phone contacts and write down names and extensions of helpful people.
Another good source of information will be the local paper of that area. There you will find classifieds and legal notices which can give you an idea how business is growing and where and when foreclosure auctions are to take place. As you compile more places to follow up with from simply reading the paper, make sure you actually follow up! Many newspapers have websites, but you will not get the same information you will with the actual paper.
Additionally, you may also look into local real estate investor clubs and organizations. Here you will find possible online access to localized forums where you can chat and post questions, possibly make contacts and get further information. Local real estate investment clubs will help to get your foot in the door with other investors. This is important as you can learn what to do…and what not to do.
It cannot be stressed enough that is is very important to log everything you do. Make sure you write it down somewhere so that you may refer back to your notes on paper, rather than in your head. Hopefully, what you write, who you talk to and what you read will allow you to make wise decisions when considering your investment strategies for out of town real estate.
©2006 noobdogs.com
Noobdogs.com offers a place for fellow new investors in real estate to ask questions and get good, sound information they can understand. Noobdogs.com is owned and operated by AmeriCountry Realty Group LLC. Founded in 2006 by Tom McGiveron, a Behavior Specialist and entrepreneur, noobdogs.com is becoming the premier site for new investors to achieve success in personal development and real estate investment.
Article Source: http://EzineArticles.com/?expert=Thomas_McGiveron
Information is vital to good, sound real estate investing. No, good information is vital to sound real estate investing. No, actually, you, the buyer, gathering a ton of information about a property you plan to buy, is absolutely necessary in order to increase your odds for success at real estate investing! Phew! Okay, so we got that straight. So how do you get information and how do you get quality information? Do you call a few realtors and ask them about the area? That’s like asking a barber if you need a haircut. What about calling the local chamber of commerce? A local chamber of commerce is a good starting point, but it depends on who you speak with. For instance, you might speak to a person trying to market the area to bring business or improvement to the area. You may or may not get accurate information or the correct data given your investment goals.
Talk to multiple sources. Make several phone calls to different businesses. A reputable developer in the area can be an excellent resource for connecting you to other phone numbers to contact and possibly even some of their personal contacts.
Verify everything! Verify every statement a seller makes. If you can get someone to take pictures of the property you’re buying, that’s very important. If you’re buying vacant land, you’ll want to know if the lot is buildable, in a flood zone, zoning, utilities, sewer, and the surrounding neighborhood and subdivision.
When you contact municipalities, be sure to call back several times if you do not get a cooperative person on the phone. For some reason, people down south are nicer. They tend to spend more time on the phone with you and bear with you while you struggle to put two and two together. Don’t be afraid to let information sink into your head while you’re on the phone and ask the person on the line to wait while you write things down.
It pays to prepare for phone calls. Write down questions. It pays to have a questionnaire available. If you use ours feel free to make it your own. If you do not understand a terminology you can contact us or look it up online at any real estate investment website. Log all of your phone contacts and write down names and extensions of helpful people.
Another good source of information will be the local paper of that area. There you will find classifieds and legal notices which can give you an idea how business is growing and where and when foreclosure auctions are to take place. As you compile more places to follow up with from simply reading the paper, make sure you actually follow up! Many newspapers have websites, but you will not get the same information you will with the actual paper.
Additionally, you may also look into local real estate investor clubs and organizations. Here you will find possible online access to localized forums where you can chat and post questions, possibly make contacts and get further information. Local real estate investment clubs will help to get your foot in the door with other investors. This is important as you can learn what to do…and what not to do.
It cannot be stressed enough that is is very important to log everything you do. Make sure you write it down somewhere so that you may refer back to your notes on paper, rather than in your head. Hopefully, what you write, who you talk to and what you read will allow you to make wise decisions when considering your investment strategies for out of town real estate.
©2006 noobdogs.com
Noobdogs.com offers a place for fellow new investors in real estate to ask questions and get good, sound information they can understand. Noobdogs.com is owned and operated by AmeriCountry Realty Group LLC. Founded in 2006 by Tom McGiveron, a Behavior Specialist and entrepreneur, noobdogs.com is becoming the premier site for new investors to achieve success in personal development and real estate investment.
Article Source: http://EzineArticles.com/?expert=Thomas_McGiveron
Wednesday, April 09, 2008
Foreclosure Financing
Foreclosure refinancing is the process of helping the homeowner keeps his home when he or she became default on their loan payment. This will happen sometimes, especially when unforeseen financial problems occur or unemployment occurs. Happily, there are wonderful options to refinance your home. Foreclosing on your home can be expensive to the bank to pursue, so before you seek foreclosure refinancing anywhere you will want to check the bank so you can here about available option. Call your bank because they may be able to temporarily help you to suspend the process as long as you agree to a more regular mortgage payment, and pay extra to catch up.
Some people may not have additional funds to pay every month, especially if they are having trouble paying now, so they can opt for another program which is called a Loan Modification, which means that all of the default loans are added to the end of the loan, saving peoples home and making mortgage payments regular and on time again. You are usually only allowed this benefit once during the life of the loan.
People who are not able to work out a suitable situation with their current lender may wish to research other foreclosure refinancing options. They must decide if they will be able to make the required payments in the future, if not then it would probably be a good idea not to add a refinance loan at this time but if this is a consideration then they should investigate further options. The internet holds many different options for people looking for foreclosure refinancing, with many lenders looking for clients just like you.
Another option you may wish to consider may be using the equity already accrued in the home to take a second loan or line of credit. The money could bring the current first mortgage up to date. The only problem is that the person would then be responsible for not one, but two mortgage payments.
If you are a homeowner in fear of losing your home you should try one of these options, if none work for you then consider selling the home before you lose it, at the close of the loan, the new persons mortgage company pays off the existing loan, cleaning your credit enough to buy a new home at rates you can actually afford.
Over all, we can say that foreclosures may be good news for all those people who are interested in investing their money in the business of real estate and property. On the other hand, it is not at all good news for those whose home or business property is being foreclosed. Foreclosures can be a good source of making lots of profits for the others, but not for the people whose property is being foreclosed.
Robert Grazian is an accomplished niche website developer and author. To learn more about foreclosure refinancing visit Hot Foreclosure Market for current articles and discussions.
Article Source: http://EzineArticles.com/?expert=Robert_Grazian
Some people may not have additional funds to pay every month, especially if they are having trouble paying now, so they can opt for another program which is called a Loan Modification, which means that all of the default loans are added to the end of the loan, saving peoples home and making mortgage payments regular and on time again. You are usually only allowed this benefit once during the life of the loan.
People who are not able to work out a suitable situation with their current lender may wish to research other foreclosure refinancing options. They must decide if they will be able to make the required payments in the future, if not then it would probably be a good idea not to add a refinance loan at this time but if this is a consideration then they should investigate further options. The internet holds many different options for people looking for foreclosure refinancing, with many lenders looking for clients just like you.
Another option you may wish to consider may be using the equity already accrued in the home to take a second loan or line of credit. The money could bring the current first mortgage up to date. The only problem is that the person would then be responsible for not one, but two mortgage payments.
If you are a homeowner in fear of losing your home you should try one of these options, if none work for you then consider selling the home before you lose it, at the close of the loan, the new persons mortgage company pays off the existing loan, cleaning your credit enough to buy a new home at rates you can actually afford.
Over all, we can say that foreclosures may be good news for all those people who are interested in investing their money in the business of real estate and property. On the other hand, it is not at all good news for those whose home or business property is being foreclosed. Foreclosures can be a good source of making lots of profits for the others, but not for the people whose property is being foreclosed.
Robert Grazian is an accomplished niche website developer and author. To learn more about foreclosure refinancing visit Hot Foreclosure Market for current articles and discussions.
Article Source: http://EzineArticles.com/?expert=Robert_Grazian
Friday, April 04, 2008
Common Mistakes Investors Make
The question will always be which came first the chicken or the egg. In real estate it may be the deal or the plan. Many people make the mistake of finding a great property and then do not know what they are supposed to do. This is where the trouble begins. They have worked themselves backwards into a corner. The idea is to formulate a plan and then find the house which will work with this plan.
Failing to Plan: We are a planning people. We plan for the future, the college education for the kids, and retirement. When it comes to real estate it only makes sense to plan for that too. Sometimes the novice investor gets ahead of themselves and forgets to draw up a plan. Deciding what you want to do in the real estate market will determine what houses you buy and how you sell them. It is best to always have a plan.
Get Rich Quick: Planning to get rich quick is another common mistake. The big deals which will net you millions are usually only a dream. Investing in real estate is a slow and steady process. When you proceed at a steady pace, you will keep moving forward towards your goal. You can make money, but being a millionaire over night is stretching the limit.
On average a good investor can make $60 to $100 thousand a year with proper real estate investments. This strategy allows for a steady forward progress and takes into consideration that not everything will go as planned. You must keep real estate investing just what it is REAL.
Team Work: Don't think you can do it alone. There are many people who play a key role in making a real estate deal work. The smart investor has a team of specialists who assist him or her. They may not even know they are part of your team, but it's a team all the same.
You will need a good real estate agent or investment firm you can trust to help you analyze the properties. You will want an appraiser and a contractor or inspector to make sure the property is worth the investment. You probably even need a lender. The most important part of the team is the attorney or title/escrow company who is going to make sure there are no hidden surprises which may crop up at any point in the deal. This is not a loner business.
Due Diligence: One of the biggest mistakes investors make is not conducting their own thorough due diligence on the investment property. This is where well intentioned investors end up losing money, or worse yet, end up foreclosing and ruining their credit. Due diligence means taking the time to research and verify the benefits and risks related to the investment. Examining the local market for growth and stability, values of local comparable properties, rental rates and demand, condition of the property if buying used, and of course a cash flow analysis.
Exit Strategies: Real estate investing is not a business with a single strategy either. You should have a plan A, B, and C. On occasion it does not hurt to have a D in the mix. For example, you may want to buy a home and resell it within 6 months but then the housing market changes quickly. If you can't get it ready for market in time to sell for profit, you may need to consider renting it. There are times when the rental market stalls or becomes depressed. When this happens you could offer a land contract (also known as an all inclusive trust deed in some states), or a lease option to get rid of the property. There may come a time when the only thing you can do is to sell to another investor and cut your losses before you lose any more money. The wise investor also knows when to bail.
The common mistakes made by the inexperienced investor can be avoided with a little research and planning. When you decide to invest in real estate, be sure to keep learning the business. There are many books available which teach some of the strategies the pros use. There are seminars, many of them free, which teach you how to invest. Keep studying and make smart decisions when it comes to real estate investing. This way you can avoid the common mistakes investors make.
By: Marco Santarelli
Article Directory: http://www.articledashboard.com
Failing to Plan: We are a planning people. We plan for the future, the college education for the kids, and retirement. When it comes to real estate it only makes sense to plan for that too. Sometimes the novice investor gets ahead of themselves and forgets to draw up a plan. Deciding what you want to do in the real estate market will determine what houses you buy and how you sell them. It is best to always have a plan.
Get Rich Quick: Planning to get rich quick is another common mistake. The big deals which will net you millions are usually only a dream. Investing in real estate is a slow and steady process. When you proceed at a steady pace, you will keep moving forward towards your goal. You can make money, but being a millionaire over night is stretching the limit.
On average a good investor can make $60 to $100 thousand a year with proper real estate investments. This strategy allows for a steady forward progress and takes into consideration that not everything will go as planned. You must keep real estate investing just what it is REAL.
Team Work: Don't think you can do it alone. There are many people who play a key role in making a real estate deal work. The smart investor has a team of specialists who assist him or her. They may not even know they are part of your team, but it's a team all the same.
You will need a good real estate agent or investment firm you can trust to help you analyze the properties. You will want an appraiser and a contractor or inspector to make sure the property is worth the investment. You probably even need a lender. The most important part of the team is the attorney or title/escrow company who is going to make sure there are no hidden surprises which may crop up at any point in the deal. This is not a loner business.
Due Diligence: One of the biggest mistakes investors make is not conducting their own thorough due diligence on the investment property. This is where well intentioned investors end up losing money, or worse yet, end up foreclosing and ruining their credit. Due diligence means taking the time to research and verify the benefits and risks related to the investment. Examining the local market for growth and stability, values of local comparable properties, rental rates and demand, condition of the property if buying used, and of course a cash flow analysis.
Exit Strategies: Real estate investing is not a business with a single strategy either. You should have a plan A, B, and C. On occasion it does not hurt to have a D in the mix. For example, you may want to buy a home and resell it within 6 months but then the housing market changes quickly. If you can't get it ready for market in time to sell for profit, you may need to consider renting it. There are times when the rental market stalls or becomes depressed. When this happens you could offer a land contract (also known as an all inclusive trust deed in some states), or a lease option to get rid of the property. There may come a time when the only thing you can do is to sell to another investor and cut your losses before you lose any more money. The wise investor also knows when to bail.
The common mistakes made by the inexperienced investor can be avoided with a little research and planning. When you decide to invest in real estate, be sure to keep learning the business. There are many books available which teach some of the strategies the pros use. There are seminars, many of them free, which teach you how to invest. Keep studying and make smart decisions when it comes to real estate investing. This way you can avoid the common mistakes investors make.
By: Marco Santarelli
Article Directory: http://www.articledashboard.com
Saturday, March 22, 2008
Vacation Home Investing
Across the country, many people are buying second homes in America today. Although a sizable number of vacation home buyers plan to retire in those homes someday, another segment hopes their second home will do double duty--as a vacation getaway and an investment property. If you fit into the latter category, here are five areas of the country where you might want to begin your search.
* There are trade-offs to buying a second home in an area that's going to become one of THE hot places of the future, because you won't be the only one looking in that area, and it's going to grow quickly, bringing in more and more people. However, if those factors don't deter you, here are a few tips on how to look for a vacation property that will also prove to be a good investment over the long haul.
* Of course, a beautiful setting and decent weather are first and foremost, but the property must also meet a number of other criteria, as well. You'll want to begin your search in smaller towns that are still within a two or three-hour drive from a growing urban area with a large airport.
* There should be plenty of recreational opportunities. And that means things to do other than just shopping. Depending upon your personal taste, that typically means near a ski area, a beach, or in the mountains.
* It's also nice to have some cultural amenities nearby, since you won't always be in the mood to do strenuous physical activities. So make sure there are both stage and movie theatres, and it’s also advantageous to have art galleries and museums within easy reach.
* Take a look around and see if there’s commercial development going on in the area. Long-time residents may complain about how much the area is changing, but seeing new motels, malls, and other business investments moving into town is a good indicator that you're not the only one who thinks this section of the country is going to continue to grow.
With some diligent searching and a keen eye for what's going on in the area, you can find properties that will provide the best of both worlds. A wonderful getaway in a delightful vacation area AND a great investment that will continue to increase significantly in value while you make use of it.
Copyright © 2006 Jeanette J. Fisher
Jeanette Fisher offers free real estate investing information, free ebook, The Truth about Making Money Flipping Houses and teleseminars. http://doghousetodollhouse.com
Article Source: http://EzineArticles.com/?expert=Jeanette_Joy_Fisher
* There are trade-offs to buying a second home in an area that's going to become one of THE hot places of the future, because you won't be the only one looking in that area, and it's going to grow quickly, bringing in more and more people. However, if those factors don't deter you, here are a few tips on how to look for a vacation property that will also prove to be a good investment over the long haul.
* Of course, a beautiful setting and decent weather are first and foremost, but the property must also meet a number of other criteria, as well. You'll want to begin your search in smaller towns that are still within a two or three-hour drive from a growing urban area with a large airport.
* There should be plenty of recreational opportunities. And that means things to do other than just shopping. Depending upon your personal taste, that typically means near a ski area, a beach, or in the mountains.
* It's also nice to have some cultural amenities nearby, since you won't always be in the mood to do strenuous physical activities. So make sure there are both stage and movie theatres, and it’s also advantageous to have art galleries and museums within easy reach.
* Take a look around and see if there’s commercial development going on in the area. Long-time residents may complain about how much the area is changing, but seeing new motels, malls, and other business investments moving into town is a good indicator that you're not the only one who thinks this section of the country is going to continue to grow.
With some diligent searching and a keen eye for what's going on in the area, you can find properties that will provide the best of both worlds. A wonderful getaway in a delightful vacation area AND a great investment that will continue to increase significantly in value while you make use of it.
Copyright © 2006 Jeanette J. Fisher
Jeanette Fisher offers free real estate investing information, free ebook, The Truth about Making Money Flipping Houses and teleseminars. http://doghousetodollhouse.com
Article Source: http://EzineArticles.com/?expert=Jeanette_Joy_Fisher
Tuesday, March 18, 2008
The Benefits of Using A Realtor To Help You Buy Your Home
Is it possible to go out and buy a home on your own without the assistance of a professional realtor? Sure. But it’s not a good idea. Using a realtor to help in buying your home will make the entire process easier and will help to make sure that you get the best deal on your own and that all of the legal issues involved in home buying are taken care. Still not convinced? Just take a look at some of the basic benefits of using a realtor to help you buy your home:
· A realtor can significantly narrow down the home buying process by helping you to determine exactly what your needs and desires are for the new home.
· A realtor is more capable than you are of negotiating on the price of the home.
· Home buyers rarely pay out-of-pocket fees for the help of a realtor. Therefore you’re getting professional advice and a better deal on your new home without any costs.
· If you are going to be purchasing a new home in a city that you are unfamiliar with or in a neighborhood that you don’t know a lot about, a realtor can provide you with important information about neighborhood demographics and things like schools in the area.
· Realtors are able to access the right people for making a good value assessment of your home so that you know if you’re paying a fair price.
· Realtors have access to online listings of homes that you yourself may not have ready access to, making it possible for the realtor to find a home for you to buy that you wouldn’t have found on your own.
· There are a lot of details to buying a home and you probably aren’t familiar with them, especially if this is your first time as a home buyer. The realtor can help you through every step of the process so that you understand what is going on and don’t get cheated anywhere along the way.
· You’ll know that the I’s have been dotted and the T’s have been crossed so legal concerns about the home buying transaction won’t have to worry you.
· Your realtor will remain calm even when you aren’t. Many good home deals have gotten bungled because of the heat of emotions that can rise up during this important purchase. Realtors help make sure that these emotions stay in their office and don’t cause problems with your buying deal.
The benefits to using a realtor are obvious. And what it really boils down to is that buying a home is not something that you’re trained to do, so it makes sense to work with a professional who is trained. While there are certainly many areas of life that can be quickly learned and approached with the do-it-yourself mentality, home buying isn’t one of them. There are just too many legal details involved and too much (like your money and your home) at stake. When it comes down to it, the choice about using a realtor is up to you. But since there’s little to no cost and a whole lot of benefits, it is definitely the smart thing to do.
Eric Bramlett is the Broker and co-owner of One Source Realty in Austin Texas. He has seen considerable success in real estate, and looks forward to many more years in the business. Eric currently invests, renovates, and develops real estate in the Greater Austin Texas Market. He spends his time working with select clients, helps his new agents get started in their real estate careers, helps his experienced agents progress their careers to the next level, & when he has time…he takes his dogs to the lake. Visit Eric’s Austin Texas Real Estate Guide & visit his Austin Texas Real Estate company’s website. Downtown Austin Condos & Lofts
· A realtor can significantly narrow down the home buying process by helping you to determine exactly what your needs and desires are for the new home.
· A realtor is more capable than you are of negotiating on the price of the home.
· Home buyers rarely pay out-of-pocket fees for the help of a realtor. Therefore you’re getting professional advice and a better deal on your new home without any costs.
· If you are going to be purchasing a new home in a city that you are unfamiliar with or in a neighborhood that you don’t know a lot about, a realtor can provide you with important information about neighborhood demographics and things like schools in the area.
· Realtors are able to access the right people for making a good value assessment of your home so that you know if you’re paying a fair price.
· Realtors have access to online listings of homes that you yourself may not have ready access to, making it possible for the realtor to find a home for you to buy that you wouldn’t have found on your own.
· There are a lot of details to buying a home and you probably aren’t familiar with them, especially if this is your first time as a home buyer. The realtor can help you through every step of the process so that you understand what is going on and don’t get cheated anywhere along the way.
· You’ll know that the I’s have been dotted and the T’s have been crossed so legal concerns about the home buying transaction won’t have to worry you.
· Your realtor will remain calm even when you aren’t. Many good home deals have gotten bungled because of the heat of emotions that can rise up during this important purchase. Realtors help make sure that these emotions stay in their office and don’t cause problems with your buying deal.
The benefits to using a realtor are obvious. And what it really boils down to is that buying a home is not something that you’re trained to do, so it makes sense to work with a professional who is trained. While there are certainly many areas of life that can be quickly learned and approached with the do-it-yourself mentality, home buying isn’t one of them. There are just too many legal details involved and too much (like your money and your home) at stake. When it comes down to it, the choice about using a realtor is up to you. But since there’s little to no cost and a whole lot of benefits, it is definitely the smart thing to do.
Eric Bramlett is the Broker and co-owner of One Source Realty in Austin Texas. He has seen considerable success in real estate, and looks forward to many more years in the business. Eric currently invests, renovates, and develops real estate in the Greater Austin Texas Market. He spends his time working with select clients, helps his new agents get started in their real estate careers, helps his experienced agents progress their careers to the next level, & when he has time…he takes his dogs to the lake. Visit Eric’s Austin Texas Real Estate Guide & visit his Austin Texas Real Estate company’s website. Downtown Austin Condos & Lofts
Sunday, March 16, 2008
Short Sale 101 - The Ultimate Definition
This article will attempt to address the following:
1. Define a short sale
2. Talk about the different ways it can come about and be structured
3. Talk about how it’s different that foreclosure or bankruptcy
4. Talk about the implications for the seller
5. Talk about the implications for the buyer
6. Address investor related questions on capitalizing on short sales (which you will soon find based on the definition is not really what you investors are looking for)
7. If your question is not answered in the article, see the Short Sale FAQ.
Definition:
A short sale is an “arrangement” between the current owner of a home and the bank that lent them the money to buy their home to accept an offer for less than the total amount owed to pay off the home. The “deficiency” is the difference between the amount owed and what the bank collects at the short sale.
Although, the “arrangement” can take many different forms, there is no other definition of a short sale. I say this because many realtors and some investors simply throw the term around as if it meant “a sale under market value.” No. A bank owned (foreclosed) house is not a short sale. A seller deciding to lower their price and take less profit is not a short sale. An old lady that owns her home free and clear, selling a $150k home for $75k, IS NOT A SHORT SALE. For it to be a Short Sale, someone must be getting “shorted.” Either the seller, or the bank. I will explain how both of those happen in more detail presently.
Free Foreclosure List
Another important definition of a short sale is how it differs from foreclosure. In foreclosure, the homeowner falls way behind on their payments and the bank repossesses the house and sells it. In almost all cases, THE BANK PURSUES THE HOMEOWNER FOR THE DEFICIENCY!!! No one seems to know or believe this, but just ask someone who has gone through foreclosure, they will tell you the only way out of this was to file bankruptcy.
How It Can Happen - The Arrangement
Most short sales arise when a seller owes more on their house than they can sell it for (upside down). The owner of the home then attempts to make an arrangement with their lender to sell the house for less than is owed.
The term “arrangement” was used in the definition and is intentionally broad because the arrangement depends on the bank that holds the loan. Though there are general practices, every bank does it differently. This article will give you the most common arrangements, but if you take part in a short sale, it’s crucial you assume nothing until you have the bank’s policies in writing.
There are some overriding principles:
1. There is no such thing as a free lunch. This is not some dream come true alternative to foreclosure where the money you owe magically disappears. The deficiency will be accounted for. The deficiency can be 100% loaned to the seller in the form of a promissory note, which they then must repay. If any portion of the deficiency is “written off” meaning that the bank eats it, you can be sure that they will report it as 1099 income to the seller or even as a judgment which will show on your credit for 10 years (not 7 years, 10 years).
2. It is a cumbersome process. If you are entering into a short sale as a buyer or seller, don’t expect it to go as quickly as any other sale. There’s a lot of “back and forth”.
3. The employees of the lender that are negotiating the sale ARE NOT there for the benefit of the seller. Their only goal is to collect as much money possible for the lender and they will use whatever means necessary. You can be sure they will misrepresent their own policies and flat out LIE to the seller in order to intimidate and scare them into paying more money. If you think I’m exaggerating, the joke will be on you.
For instance, I was once told by a lender negotiating a short sale that, as a policy, they don’t “write off” any of the deficiency and that the seller would have to have a promissory note for $40,000. This lender also told the seller that their hands were tied and this decision came directly from the investor who provides the money for the lender. The lender also said there is absolutely no negotiation on the amount owed, either pay the deficiency, or they will foreclose. The lender made the promissory note very manageable (20 years 0%) so that the seller would be more enticed to just roll over.
But the seller called the lenders bluff. The seller then provided a letter from an attorney stating they would qualify for a bankruptcy, thus rendering the lender incapable of collecting anything. That same day, the lender called the seller saying they would reduce the promissory note and write off $30,000 of the debt! It would have to be reported as 1099 income, but it would not have to be paid. Amazing change of policy! Then the seller saw what was happening and just said, “no thanks, we don’t want to owe you anything, we’ll just go ahead with the bankruptcy.” Two days later the seller received a written offer that the lender would completely forgive the debt and simply report it as 1099 income! Wow!
The moral of the story is that the lenders will LIE to obtain their money. Many of the managers of the collections departments are paid on COMMISSION on how much they collect. Just imagine if that seller had rolled over on the first offer! That employee would have been responsible for keeping $40,000 of his company’s money with one five minute phone call!
One other important thing to remember is that if the lender gets the property back (i.e. short sale doesn’t go through), they have to put it up for auction. This creates the risk that additional money will be lost if the house doesn’t sell for what it’s worth. In the case of the example, the short sale offer was for $550,000, and the amount owed was $590,000. The seller faxed in evidence to the lender that most similar houses in the area were now selling for $480,000. So this enabled the seller to make the argument that it was a much more prudent risk to write off $40,000 instead of running the risk of losing $110,000. This enabled the seller’s representative to intimidate the employee of the lender asking him “did he really want to be responsible for losing his company $110k, when he had the option, right now, to settle for 40k?”
If it seems like I know a lot about “this example” it would be because I was the mortgage broker for the people making the offer and seller of the property happened to be my wife.
The Details of the Arrangement
Different banks have different policies. The best case scenario is to get a bank that actually “writes off” the deficiency. All that happens here is that the seller has some minor derogatory credit reporting, but doesn’t actually owe the bank any more money. This credit reporting can consist of anything from “creditor settled for less than the amount due” all the way to “foreclosed.”
As the example noted, many banks will do a promissory note for the deficiency.
Some banks are stupid enough to require that the deficiency be paid at closing. Think about it. This does no good because it’s the same thing as the seller selling their house without doing a short sale and simply bringing cash to the table. If a bank tells as seller they need to bring cash to the table in a short sale, they are either idiotic, or more likely LYING.
In cases where the money is “written off” it’s important to understand that the lenders will never actually “write something off.” In most states (I don’t know the law in every state), the lender has the ability to show any deficiency as 1099 income for the seller. All this really means is that the seller has to pay taxes on that income. Depending on one’s situation, it could mean that people that are dependent on some form of aid because of “low income” will have some explaining to do come tax time.
Another way that the deficiency can be written off is in the form of a judgment. This will often occur in conjunction with the 1099 reporting. It might say something on the seller’s credit report such as “judgment filed against John Doe in the amount of $xx,xxx by ABC lender.” This will appear in the “public record” section of the seller’s credit report for 10 years (7 years is only for late payments, 10 years for public record info, don’t argue, trust me). It can either show up as satisfied or unsatisfied. Satisfied is obviously better because it means that the worst thing that can happen is that the lender will report 1099 income.
Unsatisfied could be a problem, because it means that a court has found in favor of the lender to collect the deficiency from you. Now they still might simply do the 1099 thing, or they might try to collect it from you. They can keep trying to collect it from you until they get it. They can garnish your wages. Your only hope then is that you qualify for a chapter 7 bankruptcy.
This brings up an important note. NEVER EVER ASSUME THAT A DEBT THAT YOU OWE A LENDER IS GONE UNLESS YOU HAVE THE DETAILS OF THE RELEASE OF THAT DEBT IN WRITING. For instance, someone who had done a short sale had a first and a second loan. The bank agreed to the short sale, which ended up being enough to pay off the first loan, but not the second. The seller had assumed that because the bank agreed to the short sale that they wouldn’t have to worry about the deficiency from the second mortgage. Now they are surprised that they are being pursued for the deficiency. REMEMBER, the lender(s) will always want ALL their money accounted for somehow. NEVER assume something is written off unless you have a formal, signed, written, unconditional release of lien and/or judgment from the lender specifically stating that no further action to collect this debt will be taken.
How did we get to this place in the first point?
A short sale can come about for many different reasons. In my wife’s case, she was the owner of the house and had been making payments. We bought an investment property and put it solely in her name to protect our family in the event that the market took a turn for the worse. It did. We owed 590k, but the best offer we had after 6 months was 550k. The short sale prevented her from having to file bankruptcy, and there was no derogatory credit reporting because there were no late payments made.
Despite popular belief, YOU DO NOT HAVE TO BE BEHIND ON YOUR MORTGAGE TO REQUEST A SHORT SALE. You just have to demonstrate that your house can’t be sold for what you owe.
In other cases, short sales happen when a seller can’t afford to make their payments and is nearing foreclosure or bankruptcy. It makes life much more complicated if you are living in the house in question. The bank’s ability to scare you is much greater in that case. In this case, a short sale is only slightly better than the alternatives. You will still lose your house, and your credit is still destroyed just because you’ve made 4-5 late payments on your mortgage.
Despite popular belief, A BANKTUPCY, FORECLOSURE, OR REPOSSESSION DO NOT HURT YOUR CREDIT AS MUCH AS THE MULTITUDE OF LATE PAYMENTS THAT OFTEN LEAD UP TO THEM!!!!! I just cannot stress this enough. People think that a bankruptcy damages their credit beyond repair in and of its own accord. I’ve had many clients file bankruptcy with 750 scores and no late payments only to have their score drop to 680. It’s the clients with 20+ late payments that are having their credit hurt.
A final note on how the short sale can come about… Most banks will not agree to a short sale in writing until you have a formal offer. You can simply call your bank and ask them if you could do a short sale at a certain price and they might say “sure, no problem, we’d be happy to facilitate that offer.” BEWARE. That doesn’t mean a thing. Before your short sale is APPROVED, you’ll have to submit an application, hardship letter, financial statements, tax returns, pay stubs, the purchase agreement from the buyer, a HUD statement from the pending transaction, payoff letters from all lenders involved, and several other things depending on the lender.
Once this huge packet of information is submitted to the lender, you will most likely hear back in 1-4 weeks on the TERMS of their “approval.” Be warned their approval will most likely be thinly disguised attempt to collect their debt and will almost never be the “write off” you were hoping for.
Investors
If you’re an investor, by now, I hope I’ve scared you off. Short sales are not some magic way for you to find properties under market value. They are a tool for sellers that owe too much on their homes to sell them at market value.
What you are looking for (or should be if you’re not) are sellers that owe far far less on their homes than what they’re worth. Sellers who don’t care how much they earn because they’re either desperate or have so many houses they don’t care.
Still if you see a house you want, there is one way that a short sale could come into play. Say there’s a distressed property that you’d pay 100k for that you know would be worth 180k if it was fixed up a bit. The seller doesn’t have the money to do it and the house is either vacant or they want out of their situation. In this case, if the seller happens to owe 130k (around there), and you will only pay 100k, AND the seller hasn’t had any viable offers because of the level of distress on the property, then a short might be just what the doctor ordered.
Don’t be unethical and take advantage of people. You’re only going for short sales if the person WANTS to sell their house and no one else but you will buy it because you’re not afraid to rehab a house that’s smells bad and is falling apart.
Conclusion
Again, a short sale is not a magic cure. It’s also not some mystical solution that only an elite few know about. If you’re curious about selling your house as a short sale, you should contact your lender and get information in writing. It’s usually not easy, and hardly ever will truly “win.” But in some cases, it can leave you much better off than the alternative of foreclosure and bankruptcy. If you’re an investor, there are much better ways to obtain undervalued homes.
Visit www.RealEstateInvestorsLife.comfor more valuable investor resources
By: Real Estate Investor
Article Directory: http://www.articledashboard.com
Rick Sarouk is an 18 year veteran real estate investor and certified Appraiser He specializes in foreclosure and Preforclosure real estate investing.Visit www.RealEstateInvestorsLife.com
1. Define a short sale
2. Talk about the different ways it can come about and be structured
3. Talk about how it’s different that foreclosure or bankruptcy
4. Talk about the implications for the seller
5. Talk about the implications for the buyer
6. Address investor related questions on capitalizing on short sales (which you will soon find based on the definition is not really what you investors are looking for)
7. If your question is not answered in the article, see the Short Sale FAQ.
Definition:
A short sale is an “arrangement” between the current owner of a home and the bank that lent them the money to buy their home to accept an offer for less than the total amount owed to pay off the home. The “deficiency” is the difference between the amount owed and what the bank collects at the short sale.
Although, the “arrangement” can take many different forms, there is no other definition of a short sale. I say this because many realtors and some investors simply throw the term around as if it meant “a sale under market value.” No. A bank owned (foreclosed) house is not a short sale. A seller deciding to lower their price and take less profit is not a short sale. An old lady that owns her home free and clear, selling a $150k home for $75k, IS NOT A SHORT SALE. For it to be a Short Sale, someone must be getting “shorted.” Either the seller, or the bank. I will explain how both of those happen in more detail presently.
Free Foreclosure List
Another important definition of a short sale is how it differs from foreclosure. In foreclosure, the homeowner falls way behind on their payments and the bank repossesses the house and sells it. In almost all cases, THE BANK PURSUES THE HOMEOWNER FOR THE DEFICIENCY!!! No one seems to know or believe this, but just ask someone who has gone through foreclosure, they will tell you the only way out of this was to file bankruptcy.
How It Can Happen - The Arrangement
Most short sales arise when a seller owes more on their house than they can sell it for (upside down). The owner of the home then attempts to make an arrangement with their lender to sell the house for less than is owed.
The term “arrangement” was used in the definition and is intentionally broad because the arrangement depends on the bank that holds the loan. Though there are general practices, every bank does it differently. This article will give you the most common arrangements, but if you take part in a short sale, it’s crucial you assume nothing until you have the bank’s policies in writing.
There are some overriding principles:
1. There is no such thing as a free lunch. This is not some dream come true alternative to foreclosure where the money you owe magically disappears. The deficiency will be accounted for. The deficiency can be 100% loaned to the seller in the form of a promissory note, which they then must repay. If any portion of the deficiency is “written off” meaning that the bank eats it, you can be sure that they will report it as 1099 income to the seller or even as a judgment which will show on your credit for 10 years (not 7 years, 10 years).
2. It is a cumbersome process. If you are entering into a short sale as a buyer or seller, don’t expect it to go as quickly as any other sale. There’s a lot of “back and forth”.
3. The employees of the lender that are negotiating the sale ARE NOT there for the benefit of the seller. Their only goal is to collect as much money possible for the lender and they will use whatever means necessary. You can be sure they will misrepresent their own policies and flat out LIE to the seller in order to intimidate and scare them into paying more money. If you think I’m exaggerating, the joke will be on you.
For instance, I was once told by a lender negotiating a short sale that, as a policy, they don’t “write off” any of the deficiency and that the seller would have to have a promissory note for $40,000. This lender also told the seller that their hands were tied and this decision came directly from the investor who provides the money for the lender. The lender also said there is absolutely no negotiation on the amount owed, either pay the deficiency, or they will foreclose. The lender made the promissory note very manageable (20 years 0%) so that the seller would be more enticed to just roll over.
But the seller called the lenders bluff. The seller then provided a letter from an attorney stating they would qualify for a bankruptcy, thus rendering the lender incapable of collecting anything. That same day, the lender called the seller saying they would reduce the promissory note and write off $30,000 of the debt! It would have to be reported as 1099 income, but it would not have to be paid. Amazing change of policy! Then the seller saw what was happening and just said, “no thanks, we don’t want to owe you anything, we’ll just go ahead with the bankruptcy.” Two days later the seller received a written offer that the lender would completely forgive the debt and simply report it as 1099 income! Wow!
The moral of the story is that the lenders will LIE to obtain their money. Many of the managers of the collections departments are paid on COMMISSION on how much they collect. Just imagine if that seller had rolled over on the first offer! That employee would have been responsible for keeping $40,000 of his company’s money with one five minute phone call!
One other important thing to remember is that if the lender gets the property back (i.e. short sale doesn’t go through), they have to put it up for auction. This creates the risk that additional money will be lost if the house doesn’t sell for what it’s worth. In the case of the example, the short sale offer was for $550,000, and the amount owed was $590,000. The seller faxed in evidence to the lender that most similar houses in the area were now selling for $480,000. So this enabled the seller to make the argument that it was a much more prudent risk to write off $40,000 instead of running the risk of losing $110,000. This enabled the seller’s representative to intimidate the employee of the lender asking him “did he really want to be responsible for losing his company $110k, when he had the option, right now, to settle for 40k?”
If it seems like I know a lot about “this example” it would be because I was the mortgage broker for the people making the offer and seller of the property happened to be my wife.
The Details of the Arrangement
Different banks have different policies. The best case scenario is to get a bank that actually “writes off” the deficiency. All that happens here is that the seller has some minor derogatory credit reporting, but doesn’t actually owe the bank any more money. This credit reporting can consist of anything from “creditor settled for less than the amount due” all the way to “foreclosed.”
As the example noted, many banks will do a promissory note for the deficiency.
Some banks are stupid enough to require that the deficiency be paid at closing. Think about it. This does no good because it’s the same thing as the seller selling their house without doing a short sale and simply bringing cash to the table. If a bank tells as seller they need to bring cash to the table in a short sale, they are either idiotic, or more likely LYING.
In cases where the money is “written off” it’s important to understand that the lenders will never actually “write something off.” In most states (I don’t know the law in every state), the lender has the ability to show any deficiency as 1099 income for the seller. All this really means is that the seller has to pay taxes on that income. Depending on one’s situation, it could mean that people that are dependent on some form of aid because of “low income” will have some explaining to do come tax time.
Another way that the deficiency can be written off is in the form of a judgment. This will often occur in conjunction with the 1099 reporting. It might say something on the seller’s credit report such as “judgment filed against John Doe in the amount of $xx,xxx by ABC lender.” This will appear in the “public record” section of the seller’s credit report for 10 years (7 years is only for late payments, 10 years for public record info, don’t argue, trust me). It can either show up as satisfied or unsatisfied. Satisfied is obviously better because it means that the worst thing that can happen is that the lender will report 1099 income.
Unsatisfied could be a problem, because it means that a court has found in favor of the lender to collect the deficiency from you. Now they still might simply do the 1099 thing, or they might try to collect it from you. They can keep trying to collect it from you until they get it. They can garnish your wages. Your only hope then is that you qualify for a chapter 7 bankruptcy.
This brings up an important note. NEVER EVER ASSUME THAT A DEBT THAT YOU OWE A LENDER IS GONE UNLESS YOU HAVE THE DETAILS OF THE RELEASE OF THAT DEBT IN WRITING. For instance, someone who had done a short sale had a first and a second loan. The bank agreed to the short sale, which ended up being enough to pay off the first loan, but not the second. The seller had assumed that because the bank agreed to the short sale that they wouldn’t have to worry about the deficiency from the second mortgage. Now they are surprised that they are being pursued for the deficiency. REMEMBER, the lender(s) will always want ALL their money accounted for somehow. NEVER assume something is written off unless you have a formal, signed, written, unconditional release of lien and/or judgment from the lender specifically stating that no further action to collect this debt will be taken.
How did we get to this place in the first point?
A short sale can come about for many different reasons. In my wife’s case, she was the owner of the house and had been making payments. We bought an investment property and put it solely in her name to protect our family in the event that the market took a turn for the worse. It did. We owed 590k, but the best offer we had after 6 months was 550k. The short sale prevented her from having to file bankruptcy, and there was no derogatory credit reporting because there were no late payments made.
Despite popular belief, YOU DO NOT HAVE TO BE BEHIND ON YOUR MORTGAGE TO REQUEST A SHORT SALE. You just have to demonstrate that your house can’t be sold for what you owe.
In other cases, short sales happen when a seller can’t afford to make their payments and is nearing foreclosure or bankruptcy. It makes life much more complicated if you are living in the house in question. The bank’s ability to scare you is much greater in that case. In this case, a short sale is only slightly better than the alternatives. You will still lose your house, and your credit is still destroyed just because you’ve made 4-5 late payments on your mortgage.
Despite popular belief, A BANKTUPCY, FORECLOSURE, OR REPOSSESSION DO NOT HURT YOUR CREDIT AS MUCH AS THE MULTITUDE OF LATE PAYMENTS THAT OFTEN LEAD UP TO THEM!!!!! I just cannot stress this enough. People think that a bankruptcy damages their credit beyond repair in and of its own accord. I’ve had many clients file bankruptcy with 750 scores and no late payments only to have their score drop to 680. It’s the clients with 20+ late payments that are having their credit hurt.
A final note on how the short sale can come about… Most banks will not agree to a short sale in writing until you have a formal offer. You can simply call your bank and ask them if you could do a short sale at a certain price and they might say “sure, no problem, we’d be happy to facilitate that offer.” BEWARE. That doesn’t mean a thing. Before your short sale is APPROVED, you’ll have to submit an application, hardship letter, financial statements, tax returns, pay stubs, the purchase agreement from the buyer, a HUD statement from the pending transaction, payoff letters from all lenders involved, and several other things depending on the lender.
Once this huge packet of information is submitted to the lender, you will most likely hear back in 1-4 weeks on the TERMS of their “approval.” Be warned their approval will most likely be thinly disguised attempt to collect their debt and will almost never be the “write off” you were hoping for.
Investors
If you’re an investor, by now, I hope I’ve scared you off. Short sales are not some magic way for you to find properties under market value. They are a tool for sellers that owe too much on their homes to sell them at market value.
What you are looking for (or should be if you’re not) are sellers that owe far far less on their homes than what they’re worth. Sellers who don’t care how much they earn because they’re either desperate or have so many houses they don’t care.
Still if you see a house you want, there is one way that a short sale could come into play. Say there’s a distressed property that you’d pay 100k for that you know would be worth 180k if it was fixed up a bit. The seller doesn’t have the money to do it and the house is either vacant or they want out of their situation. In this case, if the seller happens to owe 130k (around there), and you will only pay 100k, AND the seller hasn’t had any viable offers because of the level of distress on the property, then a short might be just what the doctor ordered.
Don’t be unethical and take advantage of people. You’re only going for short sales if the person WANTS to sell their house and no one else but you will buy it because you’re not afraid to rehab a house that’s smells bad and is falling apart.
Conclusion
Again, a short sale is not a magic cure. It’s also not some mystical solution that only an elite few know about. If you’re curious about selling your house as a short sale, you should contact your lender and get information in writing. It’s usually not easy, and hardly ever will truly “win.” But in some cases, it can leave you much better off than the alternative of foreclosure and bankruptcy. If you’re an investor, there are much better ways to obtain undervalued homes.
Visit www.RealEstateInvestorsLife.comfor more valuable investor resources
By: Real Estate Investor
Article Directory: http://www.articledashboard.com
Rick Sarouk is an 18 year veteran real estate investor and certified Appraiser He specializes in foreclosure and Preforclosure real estate investing.Visit www.RealEstateInvestorsLife.com
Friday, March 14, 2008
Time To Buy And Hold?
Real estate investing can be seen as a complex issue, but that is only because there are so many choices. When you invest, you have a virtually unlimited array of ways to make money. But that entails being able to make choices. You have to decide how much you will learn about each aspect of real estate, whom to add to your team, where to seek properties, whether a particular property is a good one for you—and on and on.
One question you will find yourself faced with is what to do with a property once you have purchased it. You may not be the type of investor who wants to buy a property and hold on to it for a long time. You may not want to deal with property managers and tenants or to see to the upkeep of a piece of real estate. If these things don't appeal to you in the slightest, your other option is flipping.
Flipping a property is simply the practice of selling it as soon as you buy it, often at the same closing. At the very latest, flippers tend to begin the selling process the day of the sale. Some even begin before they own the property, which is very risky business. However one goes about doing it, flipping always entails a mad rush to the auction block because an empty property is always a liability.
However, when you hold a property, you have the opportunity to raise that property's value. If you get a really good deal, the amount you have paid for it will probably be a drop in the bucket compared to what you stand to make from it. And when you do decide to sell it, you will be able to do so at your leisure and get more than you would have by flipping.
This holds true especially if you property is a multi-family dwelling such as an apartment high rise. If it is a good property in a good location, and you take care of it, chances are that occupancy is going to stay up. With a property like that, your earnings tend to increase exponentially. With good management, that is almost guaranteed.
Speaking of management, you will need to decide whether you will do that yourself or hire a management company to do that for you. If you own a particularly large piece, or if you own many pieces, you will have to hire a manager. Ken McElroy, author of “The ABCs of Real Estate Investing,” strongly suggests that you hire a real estate management company so that your talents and your time will be put to better use elsewhere.
Those are the sorts of things you will have to consider if you hold a property.
Ultimately, however, whether you flip a property or hold it depends on what you would rather spend your time doing. Perhaps you thrive on the fast-pace workday that flipping entails. Maybe the adrenaline rush feels like an adventure to you. In that case, you should learn the proper way to flip properties (i.e., wait until you actually own a property to sell it and don't approach buyers at the very closing where you acquired a property).
However, if the idea of nurturing a property appeals to you, then buying and holding is the way to go. Depending on your talents, you personally may be able to make more money working one way as opposed to another. It's totally up to you.
About The Author: Alex Anderson Has a Website for Minnesota Real Estate and Assists Buyers To Purchase Investment Property in Minnesota As Well As National Investors Looking to Buy Investment Property.
One question you will find yourself faced with is what to do with a property once you have purchased it. You may not be the type of investor who wants to buy a property and hold on to it for a long time. You may not want to deal with property managers and tenants or to see to the upkeep of a piece of real estate. If these things don't appeal to you in the slightest, your other option is flipping.
Flipping a property is simply the practice of selling it as soon as you buy it, often at the same closing. At the very latest, flippers tend to begin the selling process the day of the sale. Some even begin before they own the property, which is very risky business. However one goes about doing it, flipping always entails a mad rush to the auction block because an empty property is always a liability.
However, when you hold a property, you have the opportunity to raise that property's value. If you get a really good deal, the amount you have paid for it will probably be a drop in the bucket compared to what you stand to make from it. And when you do decide to sell it, you will be able to do so at your leisure and get more than you would have by flipping.
This holds true especially if you property is a multi-family dwelling such as an apartment high rise. If it is a good property in a good location, and you take care of it, chances are that occupancy is going to stay up. With a property like that, your earnings tend to increase exponentially. With good management, that is almost guaranteed.
Speaking of management, you will need to decide whether you will do that yourself or hire a management company to do that for you. If you own a particularly large piece, or if you own many pieces, you will have to hire a manager. Ken McElroy, author of “The ABCs of Real Estate Investing,” strongly suggests that you hire a real estate management company so that your talents and your time will be put to better use elsewhere.
Those are the sorts of things you will have to consider if you hold a property.
Ultimately, however, whether you flip a property or hold it depends on what you would rather spend your time doing. Perhaps you thrive on the fast-pace workday that flipping entails. Maybe the adrenaline rush feels like an adventure to you. In that case, you should learn the proper way to flip properties (i.e., wait until you actually own a property to sell it and don't approach buyers at the very closing where you acquired a property).
However, if the idea of nurturing a property appeals to you, then buying and holding is the way to go. Depending on your talents, you personally may be able to make more money working one way as opposed to another. It's totally up to you.
About The Author: Alex Anderson Has a Website for Minnesota Real Estate and Assists Buyers To Purchase Investment Property in Minnesota As Well As National Investors Looking to Buy Investment Property.
Thursday, March 13, 2008
Using Short Sales To Buy Property With Little Or No Equity
You know that it’s possible to buy a house that has little or no equity in it for less than is owed on the mortgage! Yes, it’s possible. Let’s say that you, as a property investor come across this homeowner who is behind in their mortgage with the bank. On the current real estate market the defaulted property is worth $100,000, but the homeowner is actually in debt for $115,000. It is possible for you to get that homeowner’s house for just $70,000.
This seems impossible, but a little known practice called, “Short Sales” in defaulted note buying allows you to purchase property that is over financed and has little or no equity in it! This is basically when you work with the bank to renegotiate the selling price of the house and the bank writes off the remainder of the mortgage.
Getting Started with the Short Sale When you work with this homeowner, you will become the homeowner’s advocate or intermediary with the bank. So the first thing you’ll need to do is get an “Authorization to Release Information”, and fax it to the bank so that you can negotiate with the bank. This basically means that the homeowner is giving the bank permission to speak with you concerning their mortgage.
When you contact the bank you’ll want to explain to the bank the reasons why they should be willing to let go of the house for less than it is valued and for less than is owed on the mortgage. This involves putting together a little package with information that the bank may request from you and extra information that you include on the condition of the house.
For example; the house may need a new roof. There could be all kinds of deferred maintenance and it needs all kinds of repairs. You could even point out that the housing market is declining in the area or point out that there are loads of other houses on the same street that haven’t sold. Basically, you present your case to the bank explaining the reasons that they should let the property go cheap. Be sure to include digital photos of the damage to the property or the decline.
Using the Short Sales technique it is possible for you to work with the bank to reduce the selling price of that defaulted property. You are able to purchase it from the homeowner for a reduced price and the homeowner can get out from under this mortgage without it being on their credit.
All you need to do is approach the banks professionally, put together a good case for reducing the price (such as needed repairs to the property) and for good measure include some digital photos of damage or neglect on and around the property.
This seems impossible, but a little known practice called, “Short Sales” in defaulted note buying allows you to purchase property that is over financed and has little or no equity in it! This is basically when you work with the bank to renegotiate the selling price of the house and the bank writes off the remainder of the mortgage.
Getting Started with the Short Sale When you work with this homeowner, you will become the homeowner’s advocate or intermediary with the bank. So the first thing you’ll need to do is get an “Authorization to Release Information”, and fax it to the bank so that you can negotiate with the bank. This basically means that the homeowner is giving the bank permission to speak with you concerning their mortgage.
When you contact the bank you’ll want to explain to the bank the reasons why they should be willing to let go of the house for less than it is valued and for less than is owed on the mortgage. This involves putting together a little package with information that the bank may request from you and extra information that you include on the condition of the house.
For example; the house may need a new roof. There could be all kinds of deferred maintenance and it needs all kinds of repairs. You could even point out that the housing market is declining in the area or point out that there are loads of other houses on the same street that haven’t sold. Basically, you present your case to the bank explaining the reasons that they should let the property go cheap. Be sure to include digital photos of the damage to the property or the decline.
Using the Short Sales technique it is possible for you to work with the bank to reduce the selling price of that defaulted property. You are able to purchase it from the homeowner for a reduced price and the homeowner can get out from under this mortgage without it being on their credit.
All you need to do is approach the banks professionally, put together a good case for reducing the price (such as needed repairs to the property) and for good measure include some digital photos of damage or neglect on and around the property.
Article Directory: http://www.articledashboard.com
Monday, March 10, 2008
5 Top Foreclosure Techniques
Financing options for foreclosure investors are not in short supply. On the contrary, there are a variety of options - both traditional and more creative - for foreclosure investors to choose from. There are many people who would like to try their hand at foreclosure real estate investing, but feel held back by their lack of financing. They wrongly assume that having the cash outright or taking out a large mortgage are their only options available to them. In this article, we will explore the top 5 foreclosure financing options - that touch both creative and traditional approaches.
1. Make payments on the sellers mortgage in order to get it current and out of the pre-foreclosure phase. You can then have the loan transferred into your name and take over future payments. To go this route, you have to contact the home owner before the property goes into foreclosure and is sold at auction.
2. If you have an investment that you can borrow against, such as a life insurance policy or a retirement fund, it is a great way to get a large sum of money without taking out a traditional bank loan, dipping into your savings, or risking a high-value asset such as your home.
3. If a large loan is out of your reach due to credit problems, you may still be able to get approved for several smaller loans. If you take them all out within days of each other, you can secure them all before they start to hit your credit report and affect your eligibility for other loans. Plus, paying all of these loans off will help your overall credit situation immensely.
4. If you own a home, you can use the equity you have in it to secure funds through a home equity loan. Since you are using your home to guarantee the loan, you will have an easier time with the approval process, than you might if you tried to take out an unsecured personal loan.
5. Lastly, if you can't secure financing on your own, then it may be a good idea to find a partner who has the assets, credit, or cash to help you finance your properties. You will have to split your profits, but you will still be making your share of money off of each deal.
Although these are great options to choose from, they are not the only ones available to you. There are many other financing options out there to explore and the more time you take to explore each of these options, the easier it will be to discover which financing options are best for your investment strategy. Choose the right financing options and you could make a killing in the foreclosure real estate market.
About the Author:
John Krajewski is a 33-year old real estate investor who has spent several years building a successful REI portfolio. After facing and conquering the common REI trials and tribulations that most new investors deal with, John has poured his wealth of valuable information into one amazing e-book: Secrets to Foreclosure Profits. This powerful e-book teaches real estate investors of any level how to profitably invest in foreclosure properties using the insider secrets and little-known tips discovered by John during his direct experience with foreclosure REI. Besides real estate investing, John also enjoys snowboarding, mountain biking, networking with other investors, and spending time with his family. Learn more about John's e-book Secrets to Foreclosure Profits at http://www.4closuresecrets.com
Article Source: http://EzineArticles.com/?expert=John_Krajewski
1. Make payments on the sellers mortgage in order to get it current and out of the pre-foreclosure phase. You can then have the loan transferred into your name and take over future payments. To go this route, you have to contact the home owner before the property goes into foreclosure and is sold at auction.
2. If you have an investment that you can borrow against, such as a life insurance policy or a retirement fund, it is a great way to get a large sum of money without taking out a traditional bank loan, dipping into your savings, or risking a high-value asset such as your home.
3. If a large loan is out of your reach due to credit problems, you may still be able to get approved for several smaller loans. If you take them all out within days of each other, you can secure them all before they start to hit your credit report and affect your eligibility for other loans. Plus, paying all of these loans off will help your overall credit situation immensely.
4. If you own a home, you can use the equity you have in it to secure funds through a home equity loan. Since you are using your home to guarantee the loan, you will have an easier time with the approval process, than you might if you tried to take out an unsecured personal loan.
5. Lastly, if you can't secure financing on your own, then it may be a good idea to find a partner who has the assets, credit, or cash to help you finance your properties. You will have to split your profits, but you will still be making your share of money off of each deal.
Although these are great options to choose from, they are not the only ones available to you. There are many other financing options out there to explore and the more time you take to explore each of these options, the easier it will be to discover which financing options are best for your investment strategy. Choose the right financing options and you could make a killing in the foreclosure real estate market.
About the Author:
John Krajewski is a 33-year old real estate investor who has spent several years building a successful REI portfolio. After facing and conquering the common REI trials and tribulations that most new investors deal with, John has poured his wealth of valuable information into one amazing e-book: Secrets to Foreclosure Profits. This powerful e-book teaches real estate investors of any level how to profitably invest in foreclosure properties using the insider secrets and little-known tips discovered by John during his direct experience with foreclosure REI. Besides real estate investing, John also enjoys snowboarding, mountain biking, networking with other investors, and spending time with his family. Learn more about John's e-book Secrets to Foreclosure Profits at http://www.4closuresecrets.com
Article Source: http://EzineArticles.com/?expert=John_Krajewski
Sunday, February 24, 2008
Better To Rent or Buy?
A lot of renters dream of the day that they can make a monthly payment for their living quarters and know that that money will serve them well in the future. In other words, they are excited about being able to make mortgage payments and invest in something that they own instead of constantly paying money just to be able to live in their home for one more month. This is the reason that the majority of renters wish to change their current situation and picture how great it would be to buy a home. But before any decisions are made, there are things to consider before deciding to buy if you are currently renting.
The first thing to consider is the cost of buying a home. First, there is the down payment, which can be as little as five percent or as large as twenty percent. But it doesn't stop there. Once the down payment is made and the home is purchased, there are many other costs that need to be weighed. These include the monthly mortgage payments, property taxes, home insurance, and any repairs or upgrades that need to be done within the home.
But these costs don't mean that it is a bad idea to buy a home. Buying a home is a great option for many people. The home serves as an investment for the future as it builds equity for the homeowner. And of course, it's always good to know that the money you are paying every month in those mortgage payments is going towards something that you own, instead of just into someone else's pocket.
Owning a home also means that one has the freedom to do whatever they wish to it, whether it be adding on another bathroom, tearing down a wall, or painting the kitchen a vibrant red. And just because one buys a home doesn't mean that they are stuck living there forever even if their situation changes. Home selling and buying can be an exciting experience and with resale value, another way to make money off of the home.
There are many pros and cons to buying a home when individuals are renting. These need to be carefully weighed to determine what will be right for the individual. Owning a home is a great dream to have but one has to be able to see the reality of it to make a good decision.
A lot of renters dream of the day that they can make a monthly payment for their living quarters and know that that money will serve them well in the future. In other words, they are excited about being able to make mortgage payments and invest in something that they own instead of constantly paying money just to be able to live in their home for one more month. This is the reason that the majority of renters wish to change their current situation and picture how great it would be to buy a home. But before any decisions are made, there are things to consider before deciding to buy if you are currently renting.
The first thing to consider is the cost of buying a home. First, there is the down payment, which can be as little as five percent or as large as twenty percent. But it doesn't stop there. Once the down payment is made and the home is purchased, there are many other costs that need to be weighed. These include the monthly mortgage payments, property taxes, home insurance, and any repairs or upgrades that need to be done within the home.
But these costs don't mean that it is a bad idea to buy a home. Buying a home is a great option for many people. The home serves as an investment for the future as it builds equity for the homeowner. And of course, it's always good to know that the money you are paying every month in those mortgage payments is going towards something that you own, instead of just into someone else's pocket.
Owning a home also means that one has the freedom to do whatever they wish to it, whether it be adding on another bathroom, tearing down a wall, or painting the kitchen a vibrant red. And just because one buys a home doesn't mean that they are stuck living there forever even if their situation changes. Home selling and buying can be an exciting experience and with resale value, another way to make money off of the home.
There are many pros and cons to buying a home when individuals are renting. These need to be carefully weighed to determine what will be right for the individual. Owning a home is a great dream to have but one has to be able to see the reality of it to make a good decision.
Search all Houston Texas homes for rent for free at http://www.houstonproperties.com/lease-houston.html.
Paige Martin is a member of the prestigious Martha Turner Properties Circle of Excellence, an award given to honor the company's top producers. Paige is a member of the Houston Association of Realtors, Texas Association of Realtors, and the National Association of Realtors. She specializes in selling Houston's Inner Loop real estate including River Oaks homes for sale as well. Paige Martin, Realtor, Martha Turner Properties.
Article Source: http://EzineArticles.com/?expert=Paige_Martin
Wednesday, February 20, 2008
Investment Properties - End Of The Year Tax Strategies
"First thing Monday morning I'm going to march into my boss's office and demand a pay cut so that I'll be in a lower tax bracket next year."
Of course that's ridiculous, but isn't it about the same as the financial community's "Conventional Wisdom" (CW) for year-end tax planning? What about the long-term nature of investing, or the merits of that investment they felt so strongly about in July? What are their motivations, and what discipline thought up these strategies in the first place?
Clearly there are many questions that require answers, but as investors, it should be crystal clear that the object of the investment exercise is to make money... just as much as possible, quickly, legally, and within a low risk environment. The faster it comes in, the more effectively it can be compounded. Otherwise, wouldn't the "CW" be to find as many downers as uppers so that there are no tax consequences? Wouldn't Zero Taxable Gain Investing be the only "smart" investment strategy? A December, 2004 New York Times Money Section article actually suggested that Investment Professionals had an obligation to lose money for clients in order to reduce the tax burden.
Your Financial Professional's perspective may produce smart tax advice but only professional investors (not accountants, attorneys, stockbrokers, financial planners, advisors in general) should be called upon for acceptable investment advice. CPAs may look smarter if you have a lower tax liability, but many of them go too far with a calendar year focus that ignores the realities of an emotional and cyclical investment environment. Take last year's Merck for example. It has nearly doubled in Market Value since you were told to sell it last November... who'da thunk it! Why didn't you buy more (of this and many high quality losers) instead of selling? Fortunately, not all professionals are into losing money. In fact, in nearly thirty years of dealing with hundreds of Accountants and other advisors, not even a handful have suggested that clients should take losses on fundamentally sound securities, Equity or Fixed Income. Just think if you had taken your dot.com profits in '99, purchased the downtrodden profit making companies of the time, and paid the ugly taxes. The value companies didn't crash. They've rallied for nearly seven years!
The key issue in considering a capital loss is the economic viability of the investment... not your tax situation! A key element of The Working Capital Model (for investment portfolio management) is to eliminate the weakest security in a portfolio every time the Market Value of the portfolio establishes a significantly new "All Time High" profit level (an ATH). My definitions may be different than those you are used to: (1) Profit = Total Market Value - Net Portfolio Investment, (2) A "weak" security is a stock that is no longer rated Investment Grade by S & P, or no longer traded on the NYSE, or no longer dividend paying, or no longer profitable. Income securities whose payout has fallen to way below average (or risen to an unsustainable level) could also be culled at an ATH. Securities that have fallen considerably in Market Value for no apparent reason (other than recent news or changing interest rate expectations) are referred to lovingly as "Investment Opportunities". This is what you look for while trying to reinvest your profits... like last year's MRK. By the way, switching from the strong asset class to the weaker one as a "hedging strategy" or vice versa (as a greed motivated speculation) is simply an attempt at "market timing", not a "sophisticated" or "savvy" adjustment to your asset allocation. Asset Allocation is always a function of personal factors and never a function of asset class (Equities and Income Generators) directional speculation.
So what happens if a new portfolio ATH is achieved in February or August instead of in November or December? (Note that the financial community only preaches tax loss strategies during the last calendar quarter.) Should you unload all the weak issues at the same time, even those purchased just a few months ago? Management of your portfolio requires the disciplined application of consistent rules and guidelines, and every manager will develop his or her own style. But in a high quality, properly diversified, income generating portfolio, (1) the number of weak issues will generally be small and (2) the probability of escaping with only a minimal loss very real. Keep in mind two basic investment axioms: There is no such thing as a bad profit, regardless of the tax implications; and no matter how you may rationalize, there's no such thing as a good loss. So, sure, if a loss should be taken due to an ATH in February, bite the bullet on the one security (only one) with the declining fundamentals (A Merrill Lynch/CNN/CFP opinion is not a fundamental.) If there are none, good job!
Profits are the holy grail of investing. Few people will admit just how infrequently they have experienced them or, conversely, just how frequently they have watched them disappear beneath the waves of a correction. (Like gamblers retuning from Vegas... no one ever seems to lose!) Similarly, most financial professionals will counsel their charges to let their profits run, particularly around year-end. Surely, speaketh the CW prophets, these profits will hang around until next year, thus deferring those terrible taxes! (Worked real well at year-end '99, you'll recall.) Don't think for a moment that anyone knows what will happen this time around the rally pole, particularly in those ridiculously priced ETFs, which are put together with the same kind of spit and duct tape used for the dot.coms. Always take your profits too soon, because you can't get poor that way!
First thing Monday morning I'm going to: (1) Call my accountant to tell him that I'm going to help him reduce his tax burden by not paying him, (2) continue to view the Investment process in cyclical rather than calendar terms, (3) limit my tax liability by how I invest, not by taking unnecessary losses, (4) continue to make as much money as possible, as quickly and safely as possible, and (5) contact the media, my political representatives, and anyone else I can think of that will help in the fight to abolish the taxation of all investment and retirement income.
Steve Selengut
http://www.sancoservices.com
http://www.valuestockbuylistprogram.com
Author of: "The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"
Article Source: http://EzineArticles.com/?expert=Steve_Selengut
Monday, February 18, 2008
Investment Techniques For Creating Passive Income
There are many wealth creation strategies and investment techniques available to those who are looking to create a passive income. These fall into three main categories. Running a business, investing in property and investing in the share market. Although there are many options in each of these areas, finding the right wealth creation strategy for you is not that hard.
The formula for Wealth Creation is relatively simple. In order to increase your wealth, you need to increase your wealth generating activities. Most of us start out trading our time, for money. We get paid an hourly rate for doing a certain job. The problem with this is that in order to increase your income, you usually need to increase the amount of hours you sell to your employer or clients. Which in turn reduces the amount of time you have to spend on yourself, your family and doing the things you enjoy.
In order to increase your quality of life, the only realistic strategy is to increase your income, and reduce the amount of hours you work. How do you do this you might ask? By using time tested wealth creation strategies and investment techniques to create and then increase your passive income.
Creating a Passive Income gives you more time and money to spend on living your life.
Passive income is generated when you are making an income without having to work for it. For example if you own a business, that you have setup to run completely on its own, or if you own shares in a company that pays you annual dividends, or perhaps a piece of real estate that generates capital or rental returns.
All these investment techniques earn you passive income. because you are not limited by the amount of hours you can spend per day working on them. Instead of working for money, you now have money working for you. This is the true essence of any effective wealth creation strategy. Maximum return for minimum effort.
Another great way to leverage your investment capital is to use stock options. There are literally thousands of ways to use options, both as a speculation tool and but as a way to hedge your other investments. But options can also be used to create passive income through becoming an option 'writer' instead of a 'taker'.
Writing options is a lot more like holding stock and making yearly dividends but instead by writing options you can actually make a passive monthly income and still be protected against any large market moves.
There are also hundreds of ways to setup these option strategies, and of course these is always some risk involved in any investment. But with a proper understanding of the strategies you are using and with vigilant risk management, the end results can be nothing less than spectacular.
To learn more about the new wave of option investing available to personal investors visit http://www.optiontradersjournal.com where you will find a range of free videos, e-books and reports on option trading to help you get started in this exciting investment field.
Investment webmasters or publishers, please feel free to use this article provided this reference is included and all links remain active.
Article Source: http://EzineArticles.com/?expert=Mika_Hamilton
Sunday, February 17, 2008
Investing In Fixer Uppers
It does not take long for most investors and home owners to realize that there are incredible benefits to investments in metro Denver real estate. Just a few of them are a nice return on the investment, many tax deductions and a very safe form of investing. What makes a good real estate investment are the type, condition and location of the property. To get the good returns you need to recognize the properties which have potential to be good investments.
When selecting a property you need to make sure it is comparable to the others in the same neighborhood and it does not have structural damages which will require expensive repairs. As an example of comparable homes if a newer two story home with a more modern look is located in an area that is typically know for its brick ranch style homes built in the 1960's the more modern home may be one to avoid.
While you may be able to acquire an out of place home like this at a reduced cost it would probably not turn into a profitable investment. When selecting a property you need to take into account the market in that area and the market demands there. When you understand this concept picking out properties that make good and profitable investments gets easier.
A common mistake is not recognizing that an older deteriorating home which can give you larger capital gains. If the home is in a good location older homes can command good prices and be profitable after being renovated. Look for those properties which have no structural issues and just require a quality cosmetic makeover.
The problem with structural issues is they typically involve expensive repairs that reduce potential profits or erase them completely from any deal. They also might mean the need for additional permits or inspections from community agencies. Things like this increase you potential holding period and holding costs for the property in addition to increased risks in a market that might fluctuate.
Investment properties which can be purchased and renovated to be quickly sold or rented have the most potential for generating profits. Fix-ups such as landscaping, painting, flooring, accessories or curtains can be quickly completed and give your home a look which will be attractive to potential buyers or renters.
There are some limitations to a quick cosmetic fix-up. They typically cannot cover a floor plan that is not functional or outdated. Your buyers will shy away from non functional floor plans even if they have more space and a good price. In some cases minor changes to a floor plan can increase the value and potential to sell the property.
Make sure that once you select a fixer upper that you have it inspected by professionals for any significant issues. Some problems with a property can be difficult to spot and professional inspectors know what to look for. There is nothing worse than finding structural repairs are needed on a property after you have completed the purchase which turns a profitable investment into a major loss that a $250 inspection could have prevented.
Get your home listed on the most trafficked Denver Real Estate website. When you want to sell your home, you want it seen. Read up on the Key Steps to Renting out Your House at the Authority Real Estate Directory.
Article Source: http://EzineArticles.com/?expert=Bruce_Swedal
Saturday, February 16, 2008
Make $$$ Being A Real Estate Bird Dog
Both financial experts and investors unanimously agree on the remarkable benefits investors reap if they invest in real estate. Asset appreciation, higher profits, and interesting tax benefits are some of the main advantages of being a real estate investor. There are countless instances of people who make it BIG in the real estate business.
With the right business strategy and thoughtful research of the market, anybody can make huge profits from their real estate investment. People invest in real estate for a number of reasons. For many, it is a profitable alternative to the volatile stock market. Besides, the risks associated with real estate investing are relatively less. To invest in real estate with practically zero risk, you can recruit real estate bird-dogs.
Real estate bird-dogs ensure minimal risk thereby saving a good deal of your money. Typically, real estate bird-dogs are the ones that help prospective investors to invest in real estate by helping them find profitable deals.
The best part of recruiting real estate bird-dogs is that you are required to pay them (generally in cash) only if you purchase the fixer-upper. In other words, you recruit them to do all the legwork involved to successfully invest in real estate market, and pay them for providing prospective leads.
Good and experienced real estate bird-dogs are well acquainted with the trends of the market and often know the area like the back of their hand. They know the prevailing rates of fixer-uppers in the neighborhood and are usually the first to know of any prospective deals being offered in the market. They are your best choice if you have the money to sustain the rehabbing costs but lack the time to look around.
You pay a bounty (fee) to bird-dog for locating profitable deals and helping you establish a contact with the seller. The fees they receive are based on the quality of information provided and the value of the project.
Bird Dogs may earn anywhere in the range of $50 to $1,000 per lead and at times, much more. Due to their key role in cracking the real estate game, this community is highly sought after by prospective investors.
When recruiting bird-dogs, give them your card and description of the kind of properties you are interested in. You can strike a lucrative deal with him, wherein you pay him a handsome price for providing solid leads. However, it is imperative to hire good bird-dogs, as the market is flooded with them.
Look out for referrals from friends and relatives. By being in the right circuit of real estate professionals, you will be able to get the most lucrative deals available in the market.
Discover exactly how Sal Vannutini combined two of the easiest (yet brutally powerful) real estate investing strategies and made an insane $31,510 Profit In Just 49 Days... And How You Can Do The Same!". Visit http://www.FixerUpperFortunes.com
Article Source: http://EzineArticles.com/?expert=Salvatore_Vannutini
Thursday, February 14, 2008
Investing In Emerging US Markets
Most new investors, and plenty of more experienced ones too, like to stick to what - and where - they know when it comes to investing their hard-earned cash in equities. This is a natural enough reaction from people who are asked to take a risk with their investments on a daily, almost, basis.
Emerging markets are markets which are in the grip of a sudden growth spurt (like, for instance, Austin, in Texas) or are in receipt of government incentives which help spur growth. The savvy real estate investor is able to understand what makes an emerging market attractive by studying the signs right from the start. He then gets in early, identifies the opportunities in multi-family real estate properties he should be investing in and makes the maximum amount of money in the shortest time possible. It really is that simple.
Within this perceived simplicity lies a world of complexity in just how do you correctly identify an emerging market, how you go about finding the right real estate investment opportunities in it for you and how you then go about taking advantage of these while minimizing the risks, as much as possible, for yourself.
As a real estate investor who started out the hard way I know from experience that some of the barriers which keep you from being successful are perceived ones. I also know that once I show you what you should be doing you will be fully equipped to simply "get out there and make money".
While there are many real estate investment courses which purport to show you how to invest in real estate few actually tackle emerging markets in our country precisely because there is a lot of skill required to correctly identify them and then take advantage of them.
The first thing to tackle of course is your own motivation. If you are not yet ready to leave the rat race behind and embrace a future where your hard work allows you to enjoy anything you really want then maybe you are not ready to take advantage of any kind of real estate investing, never mind investing in the tough environment of an emerging market.
But if you feel that the time has come and you are ready to put in all that hard work, energy and drive in a course of action that will free you from the daily wage-slavery you find yourself in then any of my courses on the subject will be suitable for you.
In order to be successful in any kind of real estate investment in an emerging market you need to do some careful analysis, you need a lot of drive and the vision to see what few others can see clearly at that stage.If you think you've got all this and are prepared to learn, then reading this article should be the first step in a journey that will take you to the rest of your life.
David Lindahl, also known as the "Apartment King" has been successfully investing in single family homes and apartments for the last 10 years. David regularly shares his secrets and experience on the same stage as Tony Robbins, Robert Kiyosaki, and Donald Trump!
If you would like a free copy of the Special Report: 27 Ways to Buy a Multi-Family Property with No Money Down, please go to http://www.davespecialoffer.com/
Article Source: http://EzineArticles.com/?expert=Dave_Lindahl
Emerging markets are markets which are in the grip of a sudden growth spurt (like, for instance, Austin, in Texas) or are in receipt of government incentives which help spur growth. The savvy real estate investor is able to understand what makes an emerging market attractive by studying the signs right from the start. He then gets in early, identifies the opportunities in multi-family real estate properties he should be investing in and makes the maximum amount of money in the shortest time possible. It really is that simple.
Within this perceived simplicity lies a world of complexity in just how do you correctly identify an emerging market, how you go about finding the right real estate investment opportunities in it for you and how you then go about taking advantage of these while minimizing the risks, as much as possible, for yourself.
As a real estate investor who started out the hard way I know from experience that some of the barriers which keep you from being successful are perceived ones. I also know that once I show you what you should be doing you will be fully equipped to simply "get out there and make money".
While there are many real estate investment courses which purport to show you how to invest in real estate few actually tackle emerging markets in our country precisely because there is a lot of skill required to correctly identify them and then take advantage of them.
The first thing to tackle of course is your own motivation. If you are not yet ready to leave the rat race behind and embrace a future where your hard work allows you to enjoy anything you really want then maybe you are not ready to take advantage of any kind of real estate investing, never mind investing in the tough environment of an emerging market.
But if you feel that the time has come and you are ready to put in all that hard work, energy and drive in a course of action that will free you from the daily wage-slavery you find yourself in then any of my courses on the subject will be suitable for you.
In order to be successful in any kind of real estate investment in an emerging market you need to do some careful analysis, you need a lot of drive and the vision to see what few others can see clearly at that stage.If you think you've got all this and are prepared to learn, then reading this article should be the first step in a journey that will take you to the rest of your life.
David Lindahl, also known as the "Apartment King" has been successfully investing in single family homes and apartments for the last 10 years. David regularly shares his secrets and experience on the same stage as Tony Robbins, Robert Kiyosaki, and Donald Trump!
If you would like a free copy of the Special Report: 27 Ways to Buy a Multi-Family Property with No Money Down, please go to http://www.davespecialoffer.com/
Article Source: http://EzineArticles.com/?expert=Dave_Lindahl
Tuesday, February 12, 2008
Starting Your Real Estate Investing Career!
Real estate is a formidable investment, as it can be difficult to acquire. The initial investment that it takes to purchase a house anywhere in the country is enough that many people never purchase a house in their lifetimes. If you are fortunate enough to have a bit of money for a down payment and a good credit score, then it would be a wise idea to start with your investing now.
There are several ways to invest in real estate depending on your preferences. One way to invest in real estate is to buy a home to live in yourself. People are always making babies, and those babies are growing up. With people living longer than ever, room is not being made for the new generations fast enough. There may be market slumps now and then, but as long as we continue to have babies, there will always be a market demand for homes.
If you buy a home to live in, a great investment is to buy a fixer-upper (a home that needs repairs). Fixing these minor problems over the duration of your stay, especially if you can do the repairs yourself, will help you to gain a great deal of value in the home before you sell it again for a different home.
Some people buy houses just to fix them and sell them again, never actually living in any of these homes. Indeed, in some parts of the country, the market is so "hot" that people can buy a house, hold onto it for three months and resell it at a profit without repairing a single leaky faucet. In time, these people will be able to purchase several homes at once and continue to sell them as they wish, or even let them out to renters.
This leads us to the third type of real estate investment. Buying properties to rent is a great way to make a steady income as long as you are willing to be liable for the premises and willing to be on call for the residents should a problem with the facilities arise. The landlord is responsible for all repairs to the rental building whereas the renters are responsible for not destroying your property. There is a tight legal line to walk, and some people find this means of making money to be too much trouble. For many, though, owning properties and renting them out is a great way to make a second income in addition to their regular jobs, and the properties can pay their own mortgages in many areas.
All of these methods of real estate investment require significant initial investments on your part to start them off, and for the most part they will also require a significant investment of time as well. This can be time dealing with tenants, time repairing buildings, and even time that is spent on acquiring the houses in the first place.
Real estate is a game that is played by men and women all across the United States, and with the right investments it is a game that you can play as well. Buying and selling homes a-la Monopoly(R) certainly feels like a game, after all and it is a great way to make an income. You just have to be willing to take that first, scary step.
Get Your Real Estate Investment Guide for Your Success Now. Learn More About Real Estate Fundamentals, Financial Real Estate Investment Model and Real Estate Investment Tips. Find Out Which Real Estate Investment Strategy Gives You Good Return.
Article Source: http://EzineArticles.com/?expert=Casey_Yew
Monday, February 11, 2008
Multi Unit Investing - Accelerate Your Profits!
Having rehabbed over 700 properties in the last seven years and collected over 3200 apartment units I’m often asked, how can I become wealthier faster investing in real estate?
While most investors concentrate on some aspect of single family houses, I was always interested in multi-units (apartments) first, and then single family homes as a means of getting more multi-units.
From the very beginning of my investing in real estate, I liked the idea that a group of people (the tenants in a building) would get together and pool their money to pay down the mortgage on a property, and I liked the idea that they would also pool their money together to pay for all of the maintenance work for a building.
I especially liked the idea that they would give an owner so much money that the owner would have a bunch of money left over at the end of every month that could be used to either re-invest, save or to go out and have a good time with.
Essentially, I like the idea that other people were willing to help make me wealthy. I liked it even more when I started using management companies to manage my properties and no longer had to have contact with my tenants.
I soon came to realize that I could also wholesale, retail, pre-foreclosure, rehab, subject to and lease option apartment houses as well.
I also realized that there were certain advantages that investing in multi-units buildings had over single families.
1) The first was cash flow. Cash flow on a multi-family is always greater than that of a single family. Simply because you have more rents coming in.
The more units you have under one roof, the less risk you have. If you have a single family house and you lose your tenant, you’ve lost 100% of your income. In some instances, this could be your entire profit for the year. If you had a three family and lost a tenant, you still have two rent coming in to pay your expenses.
2) Economies of scale are in mulit-unit buildings. If you have six single family houses opposed to one six family, you have six roofs to be replaced or repaired, six lawns to be maintain, six tenants spread out through out your city or town.
In your six family you have one roof, one lawn and your tenants are centrally located. Economies of scale are in your favor.
3) There’s a lot less competition than there are in single family houses. Why? Because no one is out there teaching how to do it and all the single family guru’s make flipping single family houses sound as easy as chewing gum in the dark. The smart investors put multi-units in their portfolios along with single family houses.
4) Because of the bigger cash flows, you can afford to hire management companies to manage your tenants, thus eliminating that hassle while you go out and do what you do best (or should do best), find and finance them.
5) Your pay days are a lot bigger when you finally sell your property. This is because an apartment complex cost more than single family homes, because of this they obtain a greater dollar amount of appreciation. For example, a $100,000 single family house will in a market that appreciates 10% will be worth $110,000 while a three family house worth $300,000 in the same market (10% appreciation) will increase to $330,000. That’s $20,000 more money in your pocket!
You’ve know a few people who have made a lot of money flipping single family houses, but if you think of the all the people you know who have become extremely wealthy through real estate, you’ll realize that they did it through owning multi-units (apartments).
These are the five biggest advantages to investing in multi-units, there are many, many more. If you are interested in creating more wealth at a faster rate, adding multi-unit to your portfolio is the way to do it!
David Lindahl, also known as the “Apartment King” has been successfully investing in single family homes and apartments for the last 10 years. David regularly shares his secrets and experience on the same stage as Tony Robbins, Robert Kiyosaki, and Donald Trump! If you would like a free copy of the Special Report: 27 Ways to Buy a Multi-Family Property with No Money Down, please go to http://www.davespecialoffer.com/
Friday, February 08, 2008
Lease Options - Is It For You?
Bring up the subject of using Lease Options for real estate transactions and you normally get one of three reactions. "I hate 'em! I have never seen one work out right yet!" - from some real estate agents. "I think they're great!" - from investors who actually use them. Or maybe you get a "What's a lease option?" from someone just getting into the business.
Whatever your position, I probably wont change your mind. I will say however that lease options are one way to control and benefit from real estate without taking on the risks of ownership. And they provide a service that cannot really be done in any other way, except with rent to own and the two concepts are so close together that they are almost the same thing.
Lease option real estate solves a problem that has always been with us and one that is going to get much bigger, very rapidly with the tightening up of sub-prime mortgage lending. That problem is credit.
Credit problems plague people all over the country and around the globe. These problems make it difficult to purchase vehicles, find employment, open a bank account, and purchase or rent a home. For those who are going through this experience, hope seems a thing of the past when it comes to the very American dream of owning a home of one's own.
But there is some good news. That is that there are some savvy investors that are willing to take the risk with those people who have had credit problems but are attempting to get their lives back in order. Getting out of credit trouble is not an immediate thing. It takes a while and for many the process is long and filled with pitfalls and missteps along the way. For those that are living the nightmare of poor credit there are times in which seem hopeless.
For this reason, investors that offer lease to own real estate to those with credit blemishes are often viewed as saviors on the one hand and villains on the other. However, they are taking a risk that others are unwilling to take with a person that has not proven to be a good credit risk. Most investors charge more than the current market price for the home and require a substantial deposit up front. This was, they have some protection if the lessee decides to default on the contract. It is also their money that will be required to make any repairs that will be needed if eviction becomes a necessary conclusion.
Some investors who are interested in holding rather than selling a property also find that lease option real estate works for them. Why? Well, many times the 'buyers' will find another property after a couple of years and will have essentially rented the property for a specified amount of time. At other times they will seek alternative financing once they have been able to straighten out their credit situations.
Either way there are many occasions when the property is returned to the investor who has earned a fair profit. The lessees also take some degree of 'pride of ownership' in the property during the time they occupy the home compared to ordinary renters who often have little or no regard for the condition of the landlord's property.
Lease to own real estate can be set up several ways. The most common however, is that there is a specified amount of time, typically 2-5 years, in which those that are leasing the property can live in the property prior to finalizing a purchase. During this time, a portion of the monthly lease payment is commonly applied towards a down payment for the property once they are able to get traditional financing.
If a twenty percent down payment is accumulated during that time the chances of them being approved for a traditional loan are greatly improved. If they (being the lessees) combine this opportunity with serious efforts to improve their credit scores then there should be no problem achieving this.
Lease options are much more attractive than renters to an investor for several reasons. First, in most cases the minor maintenance and the attendant headaches of being a landlord becomes the problem of the lessees rather than of the investor. Second, the 'renters' are hoping to have ownership of the property in time and will take care of it and often add improvements. And third, the investor can charge a little more each month for rent in order to cover the money being applied toward a down payment.
Article Directory: http://www.articledashboard.com
Wednesday, February 06, 2008
Real Estate Investing - No Money Down
Real estate investing with no money down, yes its possible and widely practiced by several creative investors, as they say where there is a will there is a way. This is creative real estate investing at its best. There are so many ways that these enterprising investors use, it just boggles the mind!
Some investors use notes to invest in real estate with no money down. Let's say the investor gets hold of a note whose face value is $100,000 and purchases it for $80,000. He uses the note as collateral for its full value to get a property worth $100,000. He can sell the house for $100,000 and can pocket $ 20,000 or more if he sells the property at a profit! He not only got back the $80,000 but also made quite a profit. Some investors with no money for down payments offer to take over the seller’s loan or mortgage payments in return for the title deeds of the property.
Flipping Properties; Flipping properties is another way to invest in real estate with no money down though it just earns them a modest cash assignment fee. Investors can borrow money from hard money lenders, use a home equity loan or get a line of credit, get the loan from a private lender and secure it with a mortgage, find partners who supply the money needed, etc.
Lease Options; Using lease options or lease purchase options is another way to invest in real estate with no money down. The lessee agrees to buy the property from the seller at a fixed rate at some fixed time in the future, where a portion or at times all of the rent paid will be credited towards the purchase price of the property. The lessee has to pay monthly installments until the end of the lease.
Seller Financing; Using seller financing is another way to invest in real estate with no money down. The seller may agree to get higher monthly installments rather than a lump down payment or may offer to finance the buyer to close the deal quickly.
Tax Certificates; Tax certificates such as tax lien and tax deeds are also another form of investing without money down. People just pay a nominal amount to purchase the certificates and if the owner defaults, the investors could foreclose on the property!
The investor may combine mortgages of your home as well as the property you want to purchase and give cash to the seller without using your own money! The possibility of investing in real estate with no money down is endless for people who use creative investing techniques. once investors learn the knack of investing without money down, they rely on using those techniques again to make a better profit. There are firms that offer help and products to run a small business successfully.
Alexander Gordon is a writer for http://www.smallbusinessconsulting.com - The Small Business Consulting Community. Sign-up for the free success steps newsletter and get our booklet valued at $24.95 for free as a special bonus. The newsletter provides daily strategies on starting and significantly growing a business.
Business Owners all across the country are joining "The Community of Small Business Owners” to receive and provide strategies, insight, tips, support and more on starting, managing, growing, and selling their businesses. As a member, you will have access to true Millionaire Business Owners who will provide strategies and tips from their real-life experiences.
Article Source: http://EzineArticles.com/?expert=Alexander_Gordon
Subscribe to:
Posts (Atom)