Real Estate Investing Strategies

Make more money with more than one strategy!

Consider other Creative Real Estate Investing Strategies:

Are you an investor with plenty of cash to spare?

If so, you may be able to save a bundle by getting a considerable discount for purchasing a property outright and without the current owner having to wait for bank financing to be approved.

In most cases, sellers are willing to negotiate a much lower selling price if you have means to complete the purchase instantly.

Owner financing is another popular creative real estate investing strategy for investors who may have past credit problems or have sporadic income. The interest rates vary depending on the seller and loan terms are generally less than 10 years, which means a quicker payoff and less interest than would otherwise be paid over a 15 or 30-year loan.

Owner financing typically requires no credit check and anyone who has the required down payment is approved.

A lease purchase option or rent to own agreement is ideal for the investor who wants the option of purchasing a property in the future, but is not required to do so.

If you need time to rebuild your credit, save for the down payment or simply want to lower the purchase price by paying toward it during your time as a tenant, this option may be the key to a successful and creative way to invest in real estate.

Investing in real estate can be both fun and profitable. If you cannot qualify for a conventional loan or simply want to purchase properties in another state, you may need to find alternative financing and/or payment options in order to accomplish your investment goals.

With a little thought and some creativity thrown into the mix, you are sure to stir up some hot deals in real estate.

Real Estate Lease Option Deals

Real Estate Lease option deals are popular among sellers who may be struggling with the sale of their property for whatever reason or who happen to be experiencing a cold real estate market.

This term simply means that the seller is leasing, or renting, the property with the tenant retaining the option to purchase it at a later date. In this case, the cost of the property should be fixed and agreed upon at the time the lease option is signed.

Typical lease option deals require that the tenant pay a specific amount of money in order to assume the lease. This is similar to a down payment and will be applied toward the actual purchase price of the home.

The option money is, however, much less than a typical down payment and allows for individuals without a bulging bank account or whose credit is less than perfect to be able to move into a home without the hassles of bank qualifying.

Real estate lease option deals also give tenants additional time to rebuild their credit until they may be able to obtain a conventional loan in order to purchase the home in the future.

Although sellers do not receive the large lump sum cash payment as they would with a typical sale, they will benefit from the fact that lease options typically call for rent prices that are somewhat above the current market.

The reason is because a portion of the money will be going toward rent and the rest will be credited toward the purchase price of the home. Because the renter has a lot invested in the property, they are more likely to take care of it as they would their own house because, quite simply, they may choose to purchase it under the lease option.

It’s important to note that there is a big difference between a lease option and a lease purchase agreement. A lease option gives the tenant the option to purchase, but does not require them to do so. A lease purchase, on the other hand, requires that the tenant purchase the house at the conclusion of the agreement, which is typically 1-3 years after moving in and assuming the lease.

Find bargain foreclosure properties and profit from it.

There are several ways to locate opportunities for bargain foreclosure properties during these stages.

In some areas, the lender will actually post a notice on the property that will be sold at a public auction, while in others the condition of the property will indicate foreclosure is in process. In either case, you would want to approach the owner if possible not the lender.

You can locate the owner through public records, by sending a letter to the address,through the telephone directory, knocking on the door or talking with neighbors.

There are definite benefits of buying bargain foreclosure properties. Assume you are buying the foreclosure during the initial stages of the foreclosure property (Pre-foreclosure Short Sale Strategy), first thing you have to get is the unrestricted permission from the owner of the property. Be sure that the lender will allow you to assume the mortgage if you bring it current.

The seller should be willing to agree to your terms including bringing the mortgage current and deeding the property to you with a hardship letter to allow you to negotiate with the bank. Get your inspections and tile report done, then have a deed prepared, signed and notarized. File the deed in public records, and get your insurance.

You can also wait for the foreclosure property to go to auction, here you could get the opportunity to get the property for 50 – 60 cents on the dollar. You could get the money for the purchase form a private lender or partner, or even go to a bank and get a 90 day loan. Once the property is repaired, you can put a new mortgage on it and take out whatever cash you had invested or even more than you invested.

The majority of the home buying market does not know or use auctions to buy properties and especially not foreclosed properties, so the amount of competition you will face is far less than if you were to rely totally on the open market. There is less competition and the cost of buying bargain foreclosure properties is far less than it is to buy a similar property from a Realtor.

This does not mean you will not get bargain foreclosure properties from a Realtor, they can be a good source of deals on foreclosure properties. You are being offered the opportunity to purchase a property well below market value and it may only need some minor repairs. So when all is said and done, you have the potential for a huge profit margin.

Buying foreclosure properties from the sellers or as REO’s (Bank Real Estate Owned), you will find that they are both highly motivated to close the sale. A seller will be motivated by the opportunity to sell their house without completely ruining their credit, by selling to you before the finalization of the foreclosure.

They will have their mortgage brought up to date and depending on the deal maybe a little money to move or settle any other debts they may have. The lender on the other hand is not in the business to of owning property, so they are motivated by the chance to get rid of a property and recoup their money form the property including foreclosure costs.

Investing in Real Estate Foreclosures

Many investors have found success in purchasing foreclosures, but knowing where to find them may be one of the most challenging aspects.

Because lenders are eager to sell a foreclosed property, potential buyers are often able to get a very good deal under the right circumstances.

If real estate foreclosures are listed on the market for a considerable amount of time, the price is much more likely to be negotiable. For the buyer, this means instant equity in purchasing a home for far less than its actual value and, for investment purposes, this equals a big profit potential.

When it comes to locating real estate foreclosures, there are a number of resources known to offer these types of properties.

Among them:

• the U.S. Department of Housing and Urban Development (HUD)
• Department of Veterans Affairs (VA)
• Online and public auctions
• Realtors
• Banks
• Mortgage companies.

The best way to inquire about foreclosures is to contact these companies directly and ask about their current offerings. Public auctions are often advertised in the local newspaper and online auctions, such as eBay and Bid4Assets, are accessible via the internet.

Although it is often necessary to place a down payment on loans obtained for purchasing the property, there are ways to purchase without breaking your budget.

For instance, everyone is familiar with VA loans, but not everyone knows that you do not have to be a veteran in order to request a VA foreclosure loan with little or no money down. This opportunity, which is available to the general public, may require that the purchaser pay a $500.00 fee or, in some cases, no down payment at all.

Know the pitfalls and disadvantages with Foreclosure Properties

A. One of the disadvantages with foreclosure properties -> You are responsible for any unpaid mortgage and punitive fees. You will have to settle any liens against the property and any back taxes owed.

You will have to have your title company look for liens on the property. In some cases, the creditor will have legal claim against the foreclosure property, but not actually hold it in possession, while in other cases the creditor will actually hold on to the asset until the debt is paid off.

The former is a more common arrangement when the asset is productive, since the creditor would prefer that the asset be used to produce a stream of income to pay off debt rather than just held in possession and not used. A claim can hold against an asset until all the obligations to the creditor are cleared (a general lien), or just until the obligations against that particular assets are cleared (a particular lien).

There may also be a junior lien on your property, this is a legal claim placed on all of the real and personal property of a judgment debtor(party who has been issued a judgment by the court to pay the money owed) which enables a judgment creditor (party who has received from the court a decree or judgment against a debtor to have him or her pay all money due)to have the property of the debtor sold for payment of the amount of the judgment.

You will also have to lookout for Judgment liens. These are legal claims placed on all of the real and personal property of a judgment debtor which enables a judgment creditor to have the property of the debtor sold for payment of the amount of the judgment. There may also be an involuntary liens, which is a lien imposed against property without consent of an owner which typically are property taxes, special assessments and federal income taxes.

B. Here are more disadvantages with foreclosure properties -> While you are having the title company look up all these issues with your foreclosure property, you may want them to look into cloud on title. You may not know that these exist, they are any outstanding claim, lien, encumbrance, document or condition usually revealed by a title search which impairs the title and the marketability of a property until it is removed by a quit claim deed or quiet title court action. So it is vital to make sure that a thorough search is done.

When attempting to clear judgments and lien debt, you will generally find the best success in approaching the judgment or lien holder directly. Explain that the property is approaching foreclosure, and that should this happen, the debt will be dissolved. Let them know you want to buy the property and settle the debts, but will be unable to do so if you have to pay the full amounts. They are very likely going to deal with you, and lower the debt.

You will also be responsible for any unpaid taxes on this property both back taxes and current taxes due. You do not want to put this off or not find out what the amount owed is before you make an offer to purchase. Not knowing that back taxes are owed could cost you dearly.

There are also mechanics liens which are liens created by statute in favor of contractors, laborers, and material men for the purpose of securing priority of payment for the price or value of work performed and materials furnished in construction or repair of improvements to land, and which attaches to the land as well as the improvements and which is enforceable by legal proceedings. This is one of the most common disadvantages with foreclosure properties that is often overlooked.

Be sure you have checked all these debts out and found a way to clear them up prior to purchase and factor these costs into your purchase price.

C. Last set of disadvantages with foreclosure properties -> Aside from the debts, there are natural and human disasters that could sabotage, delay or outright kill your purchase of a foreclosure property.

Death of the owner of the property will definitely complicate if not substantially delay your efforts to purchase a foreclosure property. As will divorce, since the property may have to be held for sale to settle divorce decrees. You may still be able to purchase the property during or after proceedings depending on the level of acrimony of these proceedings.

There is also the chance that the owner of the property files for bankruptcy, and this will delay the process of a foreclosure by several months at least.

Lets say all is resolved, you then have to go through the process of evicting the owners too.

Maximizing your cashflow with Real Estate Wholesaling

One of the most controversial topics surrounding real estate wholesaling is that of disclosure. In order for any sell to be a legal and ethical one, the seller must disclose any shortcomings that the house may have so that the buyer is fully aware of what they are purchasing. One of the best ways to do this is through hiring a licensed housing inspector to investigate the property.

Today, real estate wholesaling is a very popular industry and makes up a large part of all real estate transactions. In order to wholesale anything, the seller must have first obtained the item or, in this case, real estate, below fair market value.

Despite what many promise, finding distressed properties is not as easy as it may look on a weekend infomercial. In order to successfully locate these types of real estate, you will need to be familiar with the area of interest and be willing to perform the necessary footwork to find low cost properties that have a valuable resell potential.

As mentioned earlier, a motivated seller is one of the best possible sources for purchasing real estate at a price below the current market value. Possible reasons that someone may want to sell a property without delay include their need to relocate, the fact that they are falling or have fallen behind in house payments and wish to avoid foreclosure or simply the fact that the house has been on the market for awhile. Of course, one of the most common reasons that a seller may be motivated to sell a house is because it is distressed and is in need of repair.

If you are considering a venture into the real estate wholesaling market, it’s important to note that not every investor gets rich overnight or even at all.

Although there are profits to be made, not every piece of property, regardless of its cost, will be able to produce a profit. Most sellers are well aware of what their property is worth and, although they are eager to sell, they may not be willing to practically give it away. The seasoned real estate investor will know how to recognize the potential signs of a good deal and will act on them quickly. Rather than hoping to make a big profit on one sale, it’s more feasible to earn smaller profits on multiple properties.

Subject To Real Estate Basics

Buying real estate in any fashion can be a challenge, but shopping for a conditional purchase may be a slippery slope unless you know what you are getting into and exactly what certain real estate terms mean.

Have you ever heard of purchasing subject to real estate? If not, this article will guide you through its definition and how approach a seller who is offering this type of property.

If you are purchasing real estate using subject to, this means that the value of the property is subject to specific things being done, such as improvements that may increase the appraisal value.

When used to describe a new construction, it typically means that the home will be worth a certain amount of money ‘subject to’ being completed as planned.

As is the case with any investment, there are both pros and cons to the situation. The benefits of purchasing subject to real estate is that you can often get a much better deal because the property is in need of upgrades or finishing. The downside, however, is similar to the upside.

Buying a home that needs work or is ‘subject to’ additional improvements may prove to be a tough venture if you are searching for financing. A lender will typically want to lend no more than what a home is worth and may be especially concerned if there is a lot of work needed.

With that being said, lenders will expect an appraisal on any property before granting a loan. In order for an accurate appraisal to be completed, all improvements or construction must be completed. If it seems like a vicious circle, it is. But, for those with a little patience and a lot of know-how, buying ‘subject to’ real estate can be a wise investment.

Why real estate foreclosures occur and how to prevent it from happening to you

A foreclosure, is the legal process in which a person loses his/her right to the mortgaged property.

Real estate foreclosures occur when someone either fails to make timely payments as agreed or does not meet other specific obligations as outlined in the loan contract.

There are a number of reasons why real estate foreclosures occur, including job loss, illness, divorce, bankruptcy, injury, etc.

When the primary wage earner loses his/her job due to an illness or layoff, the finances often become impossible to handle.

The same is true during a divorce or death when what was formerly a two-income household suddenly become one and the debts are often too great for one person to repay.

If an injury occurs, either at work or home, and the individual is unable to continue working in the same capacity as before or at all, it is often difficult to continue meeting all financial obligations, including the mortgage payment.

When financial situations change, it is important to notify the lender immediately and inquire about possible options for lowering the monthly mortgage payment. This may include refinancing the property or even being granted some type of temporary hardship assistance that allows for lower payments or interest until you are able to get back on your feet again.

In some cases, individuals may be faced with a tax foreclosure. This process occurs when an individual is unable, for whatever reason, to pay their taxes and their home is seized, or foreclosed upon, to be sold for repayment of the tax debt. The best way to avoid a tax foreclosure to is to speak with an attorney or work out a repayment plan before your home becomes the subject of this action.

Finding Investment Properties

A thorough knowledge of your market area helps with finding investment properties. Keeping up with changes in the job market, incoming new businesses and zoning changes will enable you to find purchase opportunities in neighborhoods that are at the front end of an improvement cycle. Once you have determined what opportunities you will be looking for, it will be a lot easier to find properties that you will want to invest in.

Finding investment properties is not hard, you just have to make sure that the one you do decide to invest in is right for you and fits your investing strategy. lso, make sure you take advantage of all the professionals you have hired to assist you in making the right choices, they will not be as emotionally invested and will be able to give you an impartial opinion.

“For Sale Buy Owner” is a great investor’s resource for finding property. For starters since they are not paying a commission, they are most likely to be in a position to negotiate many terms including the down payment. When you plan to make the offer you want a great deal and so does the seller, so keep that in mind when you go to negotiate, you want to be sure the seller feels like they are getting a good deal.

These deals can be a little more emotionally charged, but can also be closed faster, be mindful of the seller’s state of mind, it will serve you well if they feel you are sensitive to their needs. Put the seller in the driver’s seat while maintaining control of the offer.

Leasing with the option to buy is a great technique of finding investment properties with no cash down. The main advantage is that you are not actually buying the property now, but at a future date , and for today’s prices. So if the property is to go up in value, you will receive the appreciation in the property even though you have not owned the property during the time of the lease. In the meantime, you can rent out the property for the duration of your lease getting rents higher than your lease rate. When the house has appreciated in value say in about three or so years, you can get financing for it and purchase it form the seller with money to spare. You could also have in your contract that you can sell the property at any time to a new buyer.

A home that is vacant has an owner maybe paying two mortgages and could be very desperate to sell. They’ve usually moved to a new town, state or country. However do not assume that they will be giving the house away, negotiate with them to alleviate their burden.

They could also be open to no money down deal since their primary motivation is to get rid of the payment. You could even get them to carry the mortgage and you would pay them enough to cover their mortgage plus a little extra each month. Get creative and you could get a great deal and possibly one with no out of pocket expense to close.

Realtors and their MLS listings, are a great way of finding investment properties. Realtors have access to a list of every property up for sale through all the real estate firms. They will be your first line of defense in finding these properties and letting you know as soon as the ones that meet your criteria come on the market. They are a great asset for tapping this market and getting their fellow realtors to look out for properties that would interest you, this is why knowing what you are looking for is important.

Lenders like banks have property for sale a.k.a REO’s. these are their repossessed homes from people who have defaulted on their mortgages. These properties are going to be on discount since banks want to make their money back, not own property. Get to know your local banker and they will be happy to give you a heads up when they have REO’s up for sale or auction. This is an overlooked source of finding investment properties.

Attorney’s that represent estates, trusts and divorces can be a good source. Get your real estate attorney to tap some of these sources for you. You can also find some good deals by locating properties that look empty, abandoned or in disrepair and going to the county registry office and locating the deed and the owner. Your local county or town also hold periodic auctions, good deals are also available this way, and you could get great bargains.

Real Estate Fix and Flip Basics

In this article, we will take a look at some real estate fix and flip basics and let you know what to look for in a good investment property.

Flipping a house or house flipping, is simply a term that describes the process of purchasing a home at below market value and remodeling it in such a way that increases the value and, in turn, selling it for a profit.

Many real estate investors embark on this process and, in order to be successful, it takes a lot more that simply the financial means to make the purchase. If you are to be successful at house flipping, you need to have a basic understanding of what it is to be a general contractor or you have to be ready to roll up your sleeves and do the work yourself.

A typical real estate fix and flip will involve pulling up carpet and replacing it with hardwood floors to increase the value. An outdated kitchen could be modernized with stainless steel appliance and new cabinetry to further increase the home’s worth. After all, many real estate experts believe that the kitchen is the main selling point of any home. Adding fresh coats of wall paint, updating lighting fixtures, landscaping and possibly even some new construction can all help to add to a home’s value.

When it comes to budgeting, it’s important to research local property values and get a very good idea as to what you can expect from the sell of your newly flipped home. It is possible to invest more than you could actually recover in the sell of the home, which is why research is the key.

What is the median selling price of a home in the area? What type of upgrades do similar homes have and how much will it cost you to remodel the home?

When factoring in all of these, you must also consider the purchase price of the home itself. Your profit will depend on your selling price minus upgrades, renovations and the actual price that you paid to purchase the home. If you will be hiring laborers to help with the upgrades, which many investors do, you will also need to factor in their fees.

When you are completely finished with the actual flip and are ready to begin showing the home to realtors and potential buyers, it’s important to ‘stage’ the home using furniture and other accents, such as candles, place settings and decor, to help shoppers be able to envision themselves living in the home. It is said that an unfurnished home takes twice as long to sell, which is why giving your newly remodeled house a great ‘stage’ presence may just help it to move off of the market and into the hands of a new owner.