real-estate

A Short Cut To A Short Sale In Foreclosure

2008-08-29T15:09:00.000-07:00

The best short cut to completing a short sale is actually having the lender sell the note to the property buyer. Yes, often the lender will consider selling the note at a discount when it won’t do a short sale. The difference to the lender is the cost and time saved in selling the note versus the drawn-out time required to complete a short sale.
The options to the lender are to:
1.) complete the foreclosure through the court system, which it will have to do if there are additional liens against the property that must be "extinguished",
2.) complete a short sale to an investor who may or may not close on the transaction, despite having given a deposit and showing proof of funds, or
3.) selling the mortgage note to a buyer in a few days at a discount they would have accepted on the short sale, and have no further headaches.
Generally this decision is an easy one in accepting the best offer that nets the lender the most money in the least time. However, some lenders have policies about what discounts they will take and often they have an internal policy of not selling their single mortgages at a discount to investors. This varies greatly from lender to lender and I am always surprised when I make an offer only to be told that the loss mitigation representative says "I’m not sure".
If we want to make an offer to the lender to buy a note, we preface the conversation with "We often buy the mortgage note (trust deed) at the same discount we would pay for a short sale and we continue the foreclosure". We go on to explain that the lender can be out of the mortgage in seven days or less instead of 30 - 60 days or more.

The benefit to us as investors is to get the transaction done and know we control the property. You do not have to have the deed to the property because you can continue the foreclosure and get the property at auction.
The auction offers another opportunity to make money on the foreclosed property if there are other bidders because your discounted note is good for the full face amount as an auction credit. For example, if you buy a $100,000 note for $80,000, at the auction you would bid $100 to start which means your first bid is $100,000 plus $100.

The next bidder bids $100 which is actually a bid of $100,200. If no other bids are made the bid for $100,200 is accepted and you will get $100,000 for your $80,000 note! The result is a clear profit of $20,000 or 25% without ever seeing the property.

We use this method when a homeowner will not take our offering price and says "I’ll let the bank have it first!" Well, in this case you become the bank and you get the property for less than the homeowner would have sold it for.
The homeowner can use this same technique by having a friend or family member buy the note from the lender, allow the homeowner to stay in the property and carry the mortgage on the property at the full face amount.
Many investors and homeowners called this an "advanced" strategy. The only advanced aspect of this technique is actually asking the lender, and making a case for why you are doing it. It is very important, to have your attorney do a complete title and lien search - even if you know the homeowner.
This technique of buying the mortgage loan at a discount is simple, straight forward and benefits the lender and the note buyer. Historically, lenders will gladly accept 78% - 80% of the balance due and will negotiate to as little as 50% if the property is in serious need of repair or has substantial code violations against the property.

Caution, if there are additional liens against the property, you may have to continue the foreclosure that the lender has already paid for in most cases.

Condo-Hotel Ownership

2008-08-29T14:20:00.000-07:00

The Teton Mountain Lodge has 145 guest rooms and suites and is located steps away from the gondola at the Jackson Hole Mountain Resort. Completed in 2002, the ski-in/ski-out hotel was built with lodgepole pine beams and board-and-batten siding for that true lodge feel. Equipped with a restaurant, bar, spa, fitness center, event room, a 22-person outdoor rooftop hot tub, indoor and outdoor pools, concierge services and more, the hotel can meet just about any need a guest may have.
With impeccable service, luxury amenities and elegant Western design, many hotel guests have no idea the units are actually individually owned and that they function as a condo-hotel.
What this means is that each unit is owned; however, they are typically rented nightly as a hotel room while the building functions as a full-service hotel. Each owner can choose to enter their unit into the rental pool, where is it run by the hotel management company, in this case Terra Resort Group.
An on-site property management company, Teton Mountain Lodge Property Management Company, oversees all of the owner concerns, including maintenance, quarterly owner statements, as well as acts as the liaison between the owners and the hotel management company.
With this type of product, buyers can purchase a condo in Teton Village while having the ability to offset the cost of owning by renting it nightly to hotel guests.
The business model works well because the goal of the owners and the goal of the hotel management company is the same, to earn as much revenue for the Teton Mountain Lodge as possible. Another unique feature of the property, which helps maximize the profit, is the lock-off capability which many of the units contain.
This allows the hotel management company to increase the rental configurations creating more revenue.
The units in Teton Mountain Lodge either have a valley view or a mountain view of the Jackson Hole Resort.
There are currently 10 condos on the market listed for sale. A studio unit with a valley view and 441 square feet lists for approximately $565,000 up to $604,500. A 3 bedroom penthouse unit with 2,394 square feet and a mountain view can cost as much as $2,895,000. The HOA fees vary according to square footage ranging from roughly $6,800 to $13,000 annually.
When considering your investment options, condo-hotels are a great property type to consider. It is truly a worry-free kind of ownership that allows your investment to make money or at least off-set your costs of owning.

Flipping Houses for Gold

2008-08-29T13:55:00.000-07:00

Many real estate investors enjoy "flipping houses," or buying and selling houses quickly for profit. Not all flips are fixers. However, rehabbers make millions turning ugly houses into dollhouses. On the other hand, some inexperienced investors lose money buying houses that just don't turn a profit.
If you're looking to get started investing in real estate by fixing and flipping houses, you'll want to know what type of property to buy.
HOW TO FIND THE PERFECT FIXER
1. Know Your Market
Your first task, exploring your market, helps you know a bargain house when you spot one. Look at many houses for sale in your area. Keep track of sales and how long the houses take to sell. Ask selling real estate agents about the terms of these sales because this helps you understand how sellers market their property (some of this information is public record). For instance, if a seller paid closing costs for the buyer, did the price rise from the listed price accordingly? Or, did the seller come down on the price and also pay the buyer's costs?
Examine the sales that sell quickly.

What home features and financing options prompted the fast sale?
Also, look at model homes. Buyers often buy resale homes because they can't wait for a new home to be finished. However, these buyers like the distinctive features new homes offer. Visit model homes and take notes on how details like a water fountain or a new state-of-the-art appliance makes a house sell itself. When you remodel your fixer, you'll know what attracts buyers and you'll make smart redesign choices.
2. Know When "Ugly" Means "Gold"
When you first start out in your real estate "flipping fixers" business, you'll want to look for houses needing only cosmetic work. Look for houses that just need cleaning up, painting, and new flooring. Use your imagination when viewing these homes.

Try to visualize the finished dollhouse as you look at structural features and the surrounding homes. Make offers on the ugliest houses in decent neighborhoods.
Don't be afraid of stinky houses that show horribly. Search for fixers with peeling paint, holes in the wall, stained carpeting, and trash in the yard. Remember, these houses won't look good to most buyers, but other real estate investors see them as gold mines.
3. Know When "Ugly" Means "No Thanks"
When you're new to real estate investing, always remember your limitations.

Use caution when considering houses that need structural repairs. Some rehabbers replace walls, plumbing, structural beams, sub-flooring, and electrical systems. These experienced real estate investors acquired those skills after years of experience or they have the money to pay for professional help.
If you find a house with structural problems, get estimates from reliable contractors to do the work. If the walls have too many cracks and bumps, you may need to hang new sheet rock or hire a professional plaster refinisher.

Check for signs of plumbing problems such as water stains under sinks and loose flooring, and get estimates for professional repair. Take professional estimates into account before deciding whether or not to purchase an investment property. Any big expense decreases your eventual profit.
Turn Yucks into Bucks
Why would anyone want to do this hard work? How much does the average rehabber make? In Ohio, real estate investors buy houses expecting a profit of about $30,000. In Southern California, many investors make $50,000 to $100,000 on each house.
When you find a garbage-filled, flea-infested house in a family neighborhood, take your bug spray, hold your nose, and get ready to make a difference, in the neighborhood and in your bank account.
You can make a fortune fixing nasty houses. Know your market. Know when "ugly" means profit in your pocket, and when to keep looking for the house with the hidden gold mine. by: Jeanette Joy Fisher

Building Wealth

2008-08-29T13:02:00.001-07:00

You've seen the real estate guru advertisements for books, DVDs, programs, seminars, and mentoring coaches promoting no-money-down deals. Perhaps you've watched the infomercial on TV with the people telling their stories of how they made millions investing in real estate with no-money-down and cash back to the buyers.
Maybe you, like me and many others, have purchased books or expensive systems based on these no-money-down and lease-option investing schemes. Here's the rest of the story.
Perhaps you've seen an ad in your local newspaper offering a home with 100% financing from the seller or a lease option.
You should know that the investor offering these types of deals makes money by purchasing the property at a discount and selling the property for an inflated price.
Lease-option real estate investors play the odds. They bet that most people won't be in a position to purchase the lease-option home in a year. So the investor seeks a hopeful tenant to make higher than average rental payments, pay more move-in cash, and make the investor's mortgage payment.
Those tenants who do eventually purchase the home paid much more for the home than the investor. Many tenants never come up with a new mortgage loan to purchase the property when the time runs out. Either way, the real estate investor makes money.
First-Time Home Buyers
If you need to buy your first home to live in, these home-purchase methods may help you if you have terrible credit and can clean it up in time to finalize the purchase in a year.
Just understand that you're paying too much for the property and may not make any money on appreciation. On the other hand, if you have strong credit, you can purchase a bargain house with no money down legitimately.
Tips for Beginning Real Estate Investors
Don't buy overpriced property! Avoid 100% investor-financed "deals." You will have to wait too long to make any money. Plus, the rental income most likely won't come close to making the mortgage payment for you.
Don't waste your money buying real estate guru books, DVDs, programs, seminars and mentor-coach promoting no-money-down deals. Would you buy a book on how to make a fortune on the Internet that was written in 1995?
These out-of-date, no-money down schemes, tell you to look for home sellers in distress who will let you buy their home for no-money down with the seller financing the property for you. This system worked last century. Today's home sellers know that they can get a buyer who can get their own financing.
Plus, today's home sellers know that other sellers have lost money selling with no-money down. They've heard the stories where home sellers didn't get paid and had to foreclose on a property. They've heard the stories where the investor-buyer rented the house to tenants who trashed the property. They've heard the stories where the investor-buyer collected the rent and didn't pay the home seller.
To get started building wealth in real estate today:
1. Get your credit ready for mortgage financing. (Mortgage credit differs from consumer credit.)
2. Buy right. Don't overpay for deals that sound too good to be true. These schemes are too good to be true!
3. Guard your money. Don't get yourself in over your head with high mortgages on rental properties that cause you negative cash flow and jeopardize your financial well-being.
The best way to do this is to make sure you get the best mortgage rates on a bargain-priced property.
You can buy investment property for little -- or even no-money down. Get started by buying your home or a second home. Real estate investing offers you the most tried and true way to build wealth when you avoid investing schemes.
by: Jeanette Joy Fisher

Canada Plays China Card

2008-08-29T12:56:00.000-07:00

Trade friction and energy leverage has led to an unprecedented Canadian policy of “speak loudly and carry a big piece of lumber” policy towards the United States.
The long running dispute over American tariffs on Canadian lumber escalated to the point last week that Canadian Prime Minister Paul Martin indirectly linked settlement with continued U.S. access to Canadian energy supplies. Meanwhile, Canadian Natural Resources Minister John McCallum was off to China to meet with Chinese oil, mining and forestry officials.
This is serious business.
Part of the 1994 NAFTA Free Trade Agreement guaranteed that Canada would remain the favored supplier to the U.S. It might surprise you to learn that Canada supplies 17% of U.S. oil imports, 16% of our natural gas and nearly all of our hydroelectric power. The Canadian government owns the vast majority of the country’s energy resources and Canada exports more than 1.5 million barrels a day to America representing 8% of U.S. consumption.
China’s Lengthening Reach
Meanwhile, China’s aggressive moves in Canada’s energy sector are raising eyebrows in Washington. Chinese government has earmarked $100 billion for overseas acquisitions of oil and gas.
The Chinese are going on a buying spree investing in Canadian energy companies and recently plunked down $2 billion to build a thousand mile pipeline from Alberta tar sands to port on the west coast and onward to Beijing and Shanghai. While the oil reserve numbers for Saudi Arabia are under scrutiny, Canada has recoverable reserves of roughly 175 million barrels. Much of it is in oil sand that is processed profitably at oil prices of $20 or higher and T.
Boone Pickens thinks that Canada’s oil sand production could reach 6 million barrels a day
There are now about 1 million ethnic Chinese residing in Canada and China is now Canada’s second largest trading partner. Last month, Chinese President Hu Jintao visited Canada and declared that the two countries had upgraded their relations to a “strategic partnership”.
The US’s Waning Grasp
This Chinese-Canadian power play puts America in real jam. You could write a book about the long simmering lumber dispute but a Nafta panel recently ordered the U.S. to return $5 billion of collected tariffs to Canadian lumber companies.
Relations with Canada were also weakened earlier this year when Canada announced that it would not contribute to the American-led missile defense program even though 90% of Canadian citizens live within 100 mile of the border between the two countries and Americans purchase 85% of total Canadian exports.
What’s going on? Part of the answer is that the vast majority of Canadians oppose the policies of the Bush Administration. The issue is sensitive in many areas across Canada that are highly dependent on the lumber industry and Mr. Martin and his party are preparing for national elections expected early next year. It is always a vote getter to poke a stick in the eye of the elephant to the south.
How to Play
While Canadian-American relations have seen better days, the energy boom has certainly been beneficial to investors in Canadian markets. The Canada iShare (EWC) tracks the MSCI Canada Index that has 40% exposure to Canada’s energy and materials sector. While the S&P index is up only 3%, the Canada iShare is up 16.6% year to date and 28.8% over the past twelve months.
Speaking of timber, it is smart to have some timber exposure in your portfolio and I have had timber REIT Plum Creek Timber (PCL) in our core portfolio for over two years. Here is why I like it. First, timber is a great inflation hedge and over the past 100 years has risen 3% above the average annual inflation rate.
Secondly, timber is not correlated to stocks or bonds and thus is a great “shock absorber” to cushion your portfolio when shares are declining. During the 1970s bear market, timber rose in value while stocks went down.
Thirdly, from 1973-2000 timber yielded an average annual return of 15%. Last but not least, timber valuations are attractive after some declines during 2000-2002 especially relative to real estate prices.
During 2004 Plum Creek was up 23% and this year it has traded between $34 and $39 finishing last week just over $35 with an attractive dividend yield of 4.3%.
It behooves the U.S. to negotiate a settlement to the lumber dispute as soon as possible and lock up Canadian energy sources before the Chinese get the jump on us. Investors can’t do much about improving Canadian-American relations but they can improve their portfolios by adding exposure to timber as well as to Canada as both an energy and China play. by: Carl Delfeldby: Carl Delfeld

Make Money With No Investment

2008-08-29T12:25:00.000-07:00

In the begining it's a tentative situation. Your first few deals are small potatoes. To make money with no investment is not entirley accurate. Everyone has access to something. Some small amount that will be allocated for wealth building.

I think back to when I was starting from scratch and at the time my cynical attitude made it painful, but looking back I remember the experience fondly.
It's challenging to make money with no investment capital but when you are starting from scratch you have nothing to lose.

With your back to the wall, you can go forward confidently in the knowledge that you literally have little to lose.
Curiously, all great wealth once began from scratch. To make money with no investment capital is exactly the situation you need to be in if you want to succeed and get that first million under your belt.
You see, it's not how much you started with that counts.

It's not how much you have made that counts. What matters is the system. HOW you do it.

If that is based on sound principles then you will never fear poverty again.
I could make money with no investment capital if you dropped me in any free City on the planet. I guarantee you within a few months I'd be living well (providing I spoke the language).
Starting from scratch, the first thing I would do is find a market. No money, but I have my self. I can offer a service. As soon as I make a few hundred dollars saved, I would begin applying the principles of opportunity investment.

I would trade up and up until I had borrowing capacity.
I would use the leverage that borrowing allows me to manufacture obscene compounding returns in real estate and large ticket items like used trucks and yachts. I would work until I was comfortable, then start spending on myself.
You are in a better situation than my scenario. You have friends, contacts, and knowledge of your town.

You have experiences and intimate perceptions of the existing markets in your home town. All you need is the knowledge to make it happen.
To make money from scratch with no investment capital is easy. Don't be fooled into thinking your situation is hopeless. You need knowledge, tools, and skills.

It's time you took a real shot at your first million, believe me the second and third will be easy.
"The pain of discipline is less then the pain of regret" -- Martin Thomasby: Jack Reynolds