Knowing What You Want and What You Don't Want in Bargain Properties

Home foreclosures and fixer-uppers have long been a focus of savvy real estate investors looking to quickly make big profits. Of course, if the target property doesn't meet certain criteria, an investor can lose their shirt almost as fast as a rock star on a tour bus.

A cautious and methodical approach is best for rewarding and risk-averse decision making. Keeping that mindset, here are some critical area's that must be considered when looking for real estate bargains for investing purposes.

They are not all equally important. But they must all be considered in their entirety. The property should firmly meet at least one of the criteria, and should have no unjustifiable issues in any one area.

Following these principles is essential for achieving a higher return on your investment and lessening your risk.

KNOW WHY ON PRICE

Most investors focus on price first and foremost.

They search for properties they think are selling for below apparent market value. It seems easy enough but there are several things to watch out for.

First off, never buy for less than market price until you know exactly why the seller was willing to cut the price. What was their motivation. Are they relocating or in financial duress?

If not, there may be problems with the property that require costly, time-consuming repairs. Structural problems such as a compromised foundation, or outdated plumbing and wiring could be deal killers.

CONSIDER HOLDING COSTS

A usually unforeseen profit drainer is underestimating the liquidation costs of holding and selling the property. This is not surprising when one considers all the cost components, including commission payments to real estate agents, closing costs, mortgage payments, taxes, plus repair and maintenance costs.

An faulty determination of true market value is another obstacle to the successful deal. Market value is essentially a subjective exercise where the true value is not known until someone buys the property.

It's essential to analyze similar properties in the area, keeping in mind that prices are set at the margins and may reflect the extremes of a particular housing market environment.

TAKE ADVANTAGE OF TERMS AND CONDITIONS

Investors often focus obsessively on price and location and discount other profit leveraging tools like the terms of the financing. This is especially advantageous if the property is intended an income producing rental.

In fact, used wisely, an investor can pay full price and use this positioning to negotiate lower interest rates or a smaller down payment. Over time, the rental cash flow will be in the black because of the generous terms given, combined with gradual rent increases and price appreciation.

KNOW THE LOCAL MARKET

Experienced real estate investors often rely on the fact they know more about the market than the seller does.

Rental market bargains come about because you know more about the market than the seller.

Consider the absentee owner of a rental property. They might be primarily concerned with vacancy rates, so they keep prices low instead of upgrading the property. In contrast, your research shows that particular upgrades like air-conditioning, second bathrooms, or enhanced security allow for both lower vacancies and higher rental rates.

LOCATION IS RELATIVE

Other than price, location is usually seen as the most critical component of finding a good deal. In reality, this matters much more in terms of finding a long-term residence than it does for a quick sale. It's more critical to focus on the potential profit margins than the area it's located in. If the ugly home by the dump is more profitable than the fashionable condo downtown, then it's a better deal, aesthetics aside.

FIXER UPPERS AND FORECLOSURES

A familiar area ripe for investment picking is distressed properties or fixer-uppers. Of course these are the houses that need repairs to some degree. And the investors job is to discount the costs of these repairs enough so that the profit is still suitable.

With small repairs such as painting, minor landscape, and basic flooring, profits may be available but not really worth the risk. More significant profits are found with extremely distressed properties. Those slipping down the hillside and selling for a quarter or less of normal area values. Or the plumbing is corroded, the roof needs replacing, and the interior needs to be gutted and remodeled, but the seller is asking 50% of the market value and you can repair it for much less.

GET IN A ZONE WITH ZONING

Zoning provides an opportunity to put the property to a higher or better use and is an area many investors ignore. Higher and better use means that the owner is getting the most out of the land. For example, if a lot is zoned for three units but contains a single lot, then it is not getting its highest and best use. Or if a lot is zoned commercial, yet there's a three unit residential building sitting on it, it is not getting its best and highest use, like a business or a store.

These are often bargains because the price is based on current utilization. So the single unit residential is priced low while the double unit duplex could be sold higher or rented out. Harder to find as developers stay more aware of zoning allowances these days.

Watch out for "midnight conversions" where owners, aware of the zoning ordinance, have made changes without the oversight of the local building authority. Garages being converted to second units on a duplex lot are common examples.

Zoning maps can be found at the local planning department. The biggest thing to watch out for with zoning bargains is properties with multiple zoning that is not reflected on the map.

Even if its not your core strategy, the zoning should be looked at just to avoid negative consequences. Something to beware of is a future zoning change from residential to commercial which might affect an income producing rental property.

BEWARE OF SQUATTERS

A common instance of buying bargain properties at foreclosure is handling a former owner who still resides on the property. Not facing reality or citing mortgage fraud, they refuse to move out.

You can begin action to get the individual evicted, but if they battle it in court the judge may not dismiss the case and now you have a potentially lengthy court battle on your hands. Costs totaling in the many thousands and time measured in multiple months could be the end result of the purchase.

In any other type of purchase, always stipulate the conditions of occupancy, such as the house must be empty, before closing the deal.

In closing, these are some important areas you should use as a framework when searching for bargain properties. It serves to remind us that there's a bit more more to it than simply price and location.


Stephan Iscoe
Publisher,
MoneyMakersNews.com

---
Learn the Insider Secrets of Buying Bank Foreclosure Properties

What You Need to Know About the Foreclosure Crisis

by Shawn Buryska

For several years low interest rates and low down-payment percentages enabled home buyers to get into increasingly larger and more expensive homes. Then as home prices rose, home sellers took advantage of the “equity” in their existing homes to move up to even bigger, more expensive homes. Housing prices continued to rise, which brought talk of a housing bubble into the picture and speculation regarding what would happen when the bubble burst. And the consequences of a burst housing bubble add many challenges and obstacles to overcome in the housing market.

During the last year we’ve been experiencing the fallout from the bursting bubble as the high volume of homes for sale pushed prices down and homeowners found themselves unable to get out from under unaffordable mortgages.

Now the big news is the “foreclosure crisis” and what this means for the housing market.

One of the challenges in trying to completely understand the magnitude of this “crisis,” is identifying and interpreting the data correctly. The most commonly cited resource for foreclosure statistics, RealtyTrac, is a marketplace for foreclosure properties. The site’s data includes several types of foreclosure filings in determining their statistics, including default notices, auction sale notices and bank repossessions, making it possible for a property to be included more than once in certain statistics.

According to RealtyTrac (realtytrac.com), foreclosure filings increased 75% in 2007 from the previous year, with more than 1 percent of all U.S. households in some stage of foreclosure, up 79 percent from 2006. There were 1,285,873 properties in some stage of foreclosure during 2007. Nationally, there were 215,749 filings in December, nearly double that of December, 2006 (97%).

In 2007, Minnesota ranked 25th in country in terms of foreclosure filings with 11,557 properties having some level of foreclosure filing (default notices, auction sale notices and bank repossessions). Minnesota’s foreclosure rate (.513%) was half the national average (1.033%) in 2007.

The 1,232 Minnesota filings in December 2007 represented an increase of 1.82% from the previous month and 71.83% from December 2006. For the fourth quarter there were 4,092 filings in Minnesota, an increase of 2.2% from the previous quarter and 113.35% (3834 properties with filings).

The rise in foreclosures presents challenges to both buyers and sellers. Sellers will encounter additional competition, exerting further downward pressure on home sale prices. However, while foreclosure properties may be lower priced as the seller tries to recoup some of their losses, buyers need to use extra caution when considering a purchase. These properties typically have not been well-maintained and may require costly improvements or upgrades to be habitable. A professional home inspection is essential when considering a foreclosure property. Traditional sellers are more well-advised than ever to be sure their property is in pristine condition to outshine the competition.

While the rise in foreclosure activity shows no signs of slowing down anytime soon, the government is working to assist financially troubled homeowners. In late 2007 President Bush announced a deal with the mortgage industry that would freeze some mortgage interest rates for up to five years. For details on this program, contact the Hope Now Alliance, which is a private-sector group of lenders, loan servicers and mortgage counselors.


Real Estate in Rochester MN can be provided by Realtor Shawn Buryska, who specializes in southern Minnesota MLS database searches, finding Rochester MN homes for sale or rent, or selling your current home or condo.



Stephan Iscoe
Publisher,
MoneyMakersNews.com

---
Learn the Insider Secrets of Buying Bank Foreclosure Properties

How to Use Lease Options to Make Money

Really, if you think about it, buying a property and renting it out is nothing new in the world of real estate investing. The practice has been going around much longer than any of the real estate gurus that created these "get rich" real estate courses!

So why is everyone making such a big hoopla about doing lease options?

No Money Down Deals
=================

One of the many reasons that lease options are so popular, is the possibility of creating a No, or Low Down payment to purchase the home. This is done by working directly with the seller of the house, and hammering out a deal between you and the seller.

That means, no banks, no credit checks and no qualifying! Of course, not every seller is going to be open to the idea of flexible terms for you, so it would be a good idea to work with motivated sellers.

Working With Motivated Sellers
=======================

Although these deals are more difficult to find, they are out there and they exist. You just have to know where to find these deals. Many of these deals can result in no down deals if you offer the seller something that they desire. One such item is the sales price. Offer to pay maximum dollar before repairs to entice the seller to offer you good terms for buying the property.

While other investors come by and offer them low-ball insulting offers, you might get the nod for coming out and offering a better deal.

Remember, these people are in distress some how, and if you put together a fair offer for both parties, you may get the property at a really good price.

Giving To Get What You Want
======================

Nobody likes to be sold. Don't make your seller feel like they've been ripped off! Creative negotiating is the key to securing a great deal. There's no need to strip the seller of their dignity by insulting them with a totally one-sided offer. Make the seller feel like they are getting something out of the deal and you'll close more profitable deals faster with less problems.

While you are negotiating with the seller, find out just what they need to get rid of the property and go from there. Most sellers in distress don't have a lot of time or options and may offer you a very good deal.

Also take in consideration the condition of their property. You cannot pay full price if the house is in need of repairs. A good suggestion would be to only look at houses that are cosmetically damaged, and not structurally damaged.

Needing a new roof or new plumbing installed is different than just cleaning up the yard and putting a fresh coat of paint on. Actually, the more cosmetically unpleasing the property is, the better your negotiating leverage is. You'd be surprise the amount of discount you can get from an unpleasant looking property!

To ensure the property has no major problems, bring along a handyman and have them hand you estimate for getting everything done. Once he does, simply hand that to the seller and show them how much it's going to cost to get this property back into a livable place. If the seller can't or won't fix the problem areas, ask them to add the cost into the final sales price to make it fair for both parties.

Important Tips When Buying With Lease Options
====================================

When purchasing property via "For Sale By Owners" (in other words, no real estate agents), always buy the property on a Land contract or a Contract for Deed. Both of these contracts are used when selling property between two parties without a real estate agent. Sit down with a real estate attorney and have them go over the details with you for a land contract.

If the seller offers a lease option to you, turn the offer down. Here's why. A lease is another word for renting their property, which means you don't own it.

If you are simply a renter of the property, the seller only needs to get a court order of eviction and your out of the property. If however you are the owner of the property, the seller will most certainly have to induce what is called a judicial foreclosure. The difference is probably $10,000 dollars or more in attorney fees, court fees and between 8-12 months time for processing.

A judicial foreclosure is very costly and time consuming for the seller, and would probably force him to negotiate more favorably towards you. All the while, the property is in a period of Stay, of course you are still required to pay the seller and follow through with your end of the contract. However nothing can be put into action until after the foreclosure is completed. Wow, that's a very important point.

Know that this has happen and the people ended up staying in the home mortgage free! They didn't fulfill their end of the contract by paying the seller their monthly mortgage payment like they should have, yet the seller couldn't do anything until the pending foreclosure had been resolved. Not even get the buyer to pay their monthly mortgage payment to them!

These are the extreme's. But it would be in your best interest to see that you are considered an owner then a renter.

Important Tips When You Lease Your Property
==================================

For the very same reasons listed above, when you look to sell your property, you first do it as a lease. If the buyer/renter insist on having an option contained within the lease contract, you write the option on a separate contract. If there was ever a dispute, you may gain an advantage in court since the original lease is basically a renter's agreement.

The option that you have your attorney write up, simply will include that the option is not an option unless terms of the lease agreement is met. Always make the option contain wording that has the renter fully complete the lease agreement first. A good term for a lease agreement is 24- 36 months. The option would be null and void if the renter moves out before the lease agreement is up or is late on any rental payment within that time.

By doing so, if your renter violates any portion of the lease, you simply file for an eviction and your tenant will need to evacuate the property within the time stated by the eviction notice given by a judge. No judicial foreclosures, no lengthy waiting periods and the defaulted tenant is removed in less than 45 days!

Also ensure that your contract has some type of clarification as to the sales price. Specifically the property should be priced at the market during the time of the sale, not fixed at the time of the lease agreement started. You also want to make sure that you stipulate that as a renter, the renter cannot sub-lease out the property and by doing so would violate their lease agreement. You don't want another investor in there trying to profit off of your deal.

If there is any violation of the lease agreement you can let the renter/buyer know that you may take them to eviction court if the violations aren't corrected.

Time To Cash Out Your Option
=======================

If the lease agreement is fulfilled as stated in your contract, then go ahead and offer your leaser the chance to own the property outright. Of course, they will have to qualify with a bank and get the whole sales price paid off. By doing this, you would have the funds to pay off your contract with the original seller, and pocketing the difference from your buyer.

Remind the buyer/renter that the sales price is based on what the price is at the present time, and not when they had initially started their lease. A tactic of negotiating for the buyer/renter is that the price should be set back to the price when the house was originally rented to them. You can let the buyer/renter know that you will offer them a 5% to 10% discount on the current sales price for being a good tenant.

With any of the strategies listed here, it is always wise to consult a real estate attorney to find out your legal options of any part of the deal.

Happy Property Investing!

Stephan Iscoe
Publisher,
MoneyMakersNews.com

---
Learn the Insider Secrets of Buying Bank Foreclosure Properties

Real Estate Investing in Bank Foreclosures

Loan foreclosures on real estate property provide a multitude of opportunities and challenges to a real estate investor. When a homeowner faces default on their loan and the possibility of a foreclosure by the loan holder, an investor has an opportunity to help the homeowner out of their problem and to make a profit at the same time.

No foreclosure situations proceed identically, but let's talk about some of the typical problems, steps, and resolutions. Large books have been written that cover the wide range of problems and solutions, but for the sake of this short article everything will be kept simple.

Homeowners miss loan payments for a variety of reasons, and when a homeowner has been delinquent on their payment for a number of months the loan holder, most commonly a bank, will issue a Notice of Default. The Notice tells the homeowner how much they owe in missed payments plus how much they owe in attorney fees and other penalties. The Notice also gives the homeowner a time period to be able to pay all that is owed and bring the loan back to good standing. If the homeowner can't pay all that is owed, then the bank has the right to insist that the homeowner vacate the property and the bank can then put the property up for sale or auction.

During this period of time between the Notice and the foreclosure sale, often called the pre-foreclosure period, the homeowner has the option to sell the property and to use the proceeds to pay off the arrearage that is owed. This pre-foreclosure period is also a time when a resourceful real estate investor has the best opportunity to help the homeowner with their problem. However, the homeowner who is in default and the investor have to find each other.

Since the Notice of Default is a recorded document and is made public, the investor can often view the Notice shortly after it is recorded. In most states and counties the Recorder's office makes the Notice public by posting it at the local courthouse or by posting it on their internet website.

The investor will generally find the Notice on the Internet and then contact the homeowner. Through a combination of letters, post cards, phone calls, and home visits the investor introduces himself or herself to the homeowner and suggests some courses of action.

Often the investor can take over the property and the responsibility for the loan by offering a reduced sales price or by taking over the loan altogether. This allows the homeowner to leave the property and the problems behind while the investor deals with them. The advantage to the homeowner is that they can avoid having a property foreclosure on their record, which would damage their credit score and their chances to purchase property in the future. In exchange the homeowner will generally willingly give up a large part, even all, of the equity that they had in the property.

Now the investor has an opportunity to make a profit if sufficient equity has been left in the property for him to make arrangements. For example, the investor may be able to pay off the arrearage, fix up the property, and sell it for a profit. That takes a fair amount of time and resources. The investor could also pass the deal along to an investor who specializes in fixing up properties and take a small but quick profit. Or the investor could sell the property at an attractive discount before the property goes to the foreclosure sale and make a profit without putting much of his own money into the transaction.

If there is not sufficient equity in the property for the above solutions to work, then the investor could negotiate with the bank to reduce the outstanding loan balance in exchange for a quick sale. That would save the bank from having to foreclose on the property and having the property become part of the bank's non-producing inventory for an uncomfortable period of time. This solution gives the investor the necessary equity to be able to make a profit.

There are numerous other scenarios, complications, and solutions, but this article has highlighted several of the more typical and common situations. In the transactions discussed here the homeowner benefits by being able to escape a damaging foreclosure and the real estate investor benefits by being able to make a profit on their investment of time and resources.

Stephan Iscoe
Publisher,
MoneyMakersNews.com

---
Learn the Insider Secrets of Buying Bank Foreclosure Properties

How to Effectively Profit With Lease Options

Really, if you think about it, buying a property and renting it out is nothing new in the world of real estate investing. The practice has been going around much longer than any of the real estate gurus that created these "get rich" real estate courses!

So why is everyone making such a big hoopla about doing lease options?

No Money Down Deals
=================

One of the many reasons that lease options are so popular, is the possibility of creating a No, or Low Down payment to purchase the home. This is done by working directly with the seller of the house, and hammering out a deal between you and the seller.

That means, no banks, no credit checks and no qualifying! Of course, not every seller is going to be open to the idea of flexible terms for you, so it would be a good idea to work with motivated sellers.

Working With Motivated Sellers
=======================

Although these deals are more difficult to find, they are out there and they exist. You just have to know where to find these deals. Many of these deals can result in no down deals if you offer the seller something that they desire. One such item is the sales price. Offer to pay maximum dollar before repairs to entice the seller to offer you good terms for buying the property.

While other investors come by and offer them low-ball insulting offers, you might get the nod for coming out and offering a better deal.

Remember, these people are in distress some how, and if you put together a fair offer for both parties, you may get the property at a really good price.

Giving To Get What You Want
======================

Nobody likes to be sold. Don't make your seller feel like they've been ripped off! Creative negotiating is the key to securing a great deal. There's no need to strip the seller of their dignity by insulting them with a totally one-sided offer. Make the seller feel like they are getting something out of the deal and you'll close more profitable deals faster with less problems.

While you are negotiating with the seller, find out just what they need to get rid of the property and go from there. Most sellers in distress don't have a lot of time or options and may offer you a very good deal.

Also take in consideration the condition of their property. You cannot pay full price if the house is in need of repairs. A good suggestion would be to only look at houses that are cosmetically damaged, and not structurally damaged.

Needing a new roof or new plumbing installed is different than just cleaning up the yard and putting a fresh coat of paint on. Actually, the more cosmetically unpleasing the property is, the better your negotiating leverage is. You'd be surprise the amount of discount you can get from an unpleasant looking property!

To ensure the property has no major problems, bring along a handyman and have them hand you estimate for getting everything done. Once he does, simply hand that to the seller and show them how much it's going to cost to get this property back into a livable place. If the seller can't or won't fix the problem areas, ask them to add the cost into the final sales price to make it fair for both parties.

Important Tips When Buying With Lease Options
====================================

When purchasing property via "For Sale By Owners" (in other words, no real estate agents), always buy the property on a Land contract or a Contract for Deed. Both of these contracts are used when selling property between two parties without a real estate agent. Sit down with a real estate attorney and have them go over the details with you for a land contract.

If the seller offers a lease option to you, turn the offer down. Here's why. A lease is another word for renting their property, which means you don't own it.

If you are simply a renter of the property, the seller only needs to get a court order of eviction and your out of the property. If however you are the owner of the property, the seller will most certainly have to induce what is called a judicial foreclosure. The difference is probably $10,000 dollars or more in attorney fees, court fees and between 8-12 months time for processing.

A judicial foreclosure is very costly and time consuming for the seller, and would probably force him to negotiate more favorably towards you. All the while, the property is in a period of Stay, of course you are still required to pay the seller and follow through with your end of the contract. However nothing can be put into action until after the foreclosure is completed. Wow, that's a very important point.

Know that this has happen and the people ended up staying in the home mortgage free! They didn't fulfill their end of the contract by paying the seller their monthly mortgage payment like they should have, yet the seller couldn't do anything until the pending foreclosure had been resolved. Not even get the buyer to pay their monthly mortgage payment to them!

These are the extreme's. But it would be in your best interest to see that you are considered an owner then a renter.

Important Tips When You Lease Your Property
==================================

For the very same reasons listed above, when you look to sell your property, you first do it as a lease. If the buyer/renter insist on having an option contained within the lease contract, you write the option on a separate contract. If there was ever a dispute, you may gain an advantage in court since the original lease is basically a renter's agreement.

The option that you have your attorney write up, simply will include that the option is not an option unless terms of the lease agreement is met. Always make the option contain wording that has the renter fully complete the lease agreement first. A good term for a lease agreement is 24- 36 months. The option would be null and void if the renter moves out before the lease agreement is up or is late on any rental payment within that time.

By doing so, if your renter violates any portion of the lease, you simply file for an eviction and your tenant will need to evacuate the property within the time stated by the eviction notice given by a judge. No judicial foreclosures, no lengthy waiting periods and the defaulted tenant is removed in less than 45 days!

Also ensure that your contract has some type of clarification as to the sales price. Specifically the property should be priced at the market during the time of the sale, not fixed at the time of the lease agreement started. You also want to make sure that you stipulate that as a renter, the renter cannot sub-lease out the property and by doing so would violate their lease agreement. You don't want another investor in there trying to profit off of your deal.

If there is any violation of the lease agreement you can let the renter/buyer know that you may take them to eviction court if the violations aren't corrected.

Time To Cash Out Your Option
=======================

If the lease agreement is fulfilled as stated in your contract, then go ahead and offer your leaser the chance to own the property outright. Of course, they will have to qualify with a bank and get the whole sales price paid off. By doing this, you would have the funds to pay off your contract with the original seller, and pocketing the difference from your buyer.

Remind the buyer/renter that the sales price is based on what the price is at the present time, and not when they had initially started their lease. A tactic of negotiating for the buyer/renter is that the price should be set back to the price when the house was originally rented to them. You can let the buyer/renter know that you will offer them a 5% to 10% discount on the current sales price for being a good tenant.

With any of the strategies listed here, it is always wise to consult a real estate attorney to find out your legal options of any part of the deal.

Happy Property Investing!

Stephan Iscoe
Publisher,
http://MoneyMakersNews.com

---
Learn the Insider Secrets of Buying Bank Foreclosure Properties

Real Estate Investing: Bank Foreclosures

Loan foreclosures on real estate property provide a multitude of opportunities and challenges to a real estate investor. When a homeowner faces default on their loan and the possibility of a foreclosure by the loan holder, an investor has an opportunity to help the homeowner out of their problem and to make a profit at the same time.

No foreclosure situations proceed identically, but let's talk about some of the typical problems, steps, and resolutions. Large books have been written that cover the wide range of problems and solutions, but for the sake of this short article everything will be kept simple.

Homeowners miss loan payments for a variety of reasons, and when a homeowner has been delinquent on their payment for a number of months the loan holder, most commonly a bank, will issue a Notice of Default. The Notice tells the homeowner how much they owe in missed payments plus how much they owe in attorney fees and other penalties. The Notice also gives the homeowner a time period to be able to pay all that is owed and bring the loan back to good standing. If the homeowner can't pay all that is owed, then the bank has the right to insist that the homeowner vacate the property and the bank can then put the property up for sale or auction.

During this period of time between the Notice and the foreclosure sale, often called the pre-foreclosure period, the homeowner has the option to sell the property and to use the proceeds to pay off the arrearage that is owed. This pre-foreclosure period is also a time when a resourceful real estate investor has the best opportunity to help the homeowner with their problem. However, the homeowner who is in default and the investor have to find each other.

Since the Notice of Default is a recorded document and is made public, the investor can often view the Notice shortly after it is recorded. In most states and counties the Recorder's office makes the Notice public by posting it at the local courthouse or by posting it on their internet website.

The investor will generally find the Notice on the Internet and then contact the homeowner. Through a combination of letters, post cards, phone calls, and home visits the investor introduces himself or herself to the homeowner and suggests some courses of action.

Often the investor can take over the property and the responsibility for the loan by offering a reduced sales price or by taking over the loan altogether. This allows the homeowner to leave the property and the problems behind while the investor deals with them. The advantage to the homeowner is that they can avoid having a property foreclosure on their record, which would damage their credit score and their chances to purchase property in the future. In exchange the homeowner will generally willingly give up a large part, even all, of the equity that they had in the property.

Now the investor has an opportunity to make a profit if sufficient equity has been left in the property for him to make arrangements. For example, the investor may be able to pay off the arrearage, fix up the property, and sell it for a profit. That takes a fair amount of time and resources. The investor could also pass the deal along to an investor who specializes in fixing up properties and take a small but quick profit. Or the investor could sell the property at an attractive discount before the property goes to the foreclosure sale and make a profit without putting much of his own money into the transaction.

If there is not sufficient equity in the property for the above solutions to work, then the investor could negotiate with the bank to reduce the outstanding loan balance in exchange for a quick sale. That would save the bank from having to foreclose on the property and having the property become part of the bank's non-producing inventory for an uncomfortable period of time. This solution gives the investor the necessary equity to be able to make a profit.

There are numerous other scenarios, complications, and solutions, but this article has highlighted several of the more typical and common situations. In the transactions discussed here the homeowner benefits by being able to escape a damaging foreclosure and the real estate investor benefits by being able to make a profit on their investment of time and resources.

Stephan Iscoe
Publisher,
http://MoneyMakersNews.com

---
Learn the Insider Secrets of Buying Bank Foreclosure Properties

"Subject To" Real Estate Deals Explained

"Subject To" real estate financing is fairly new on the real estate investing scene, mainly because many investors don't know what it is.

"Subject To" financing actually can be a win-win situation for both the seller and the buyer/investor if both parties understand their obligations to one another. The seller usually gets to sell his/her property at the asking price which was originally sought, and the buyer/investor usually gets the property with very little money down, if any, while not having to qualify for any bank loans.

We know, that traditional real estate investing is mainly about buying low and selling high, and making a profit from that difference, usually over time. There's absolutely no secret to that. While doing it this way, of course, you would incur all the paperwork and everything else that goes along with buying and selling a home like paying all the transaction fees that are involved like commissions, closing costs, title, recording fees and of course your time. On an average, the whole process usually takes a month and a half up to six months depending on the situation.

Creative financing, or "other than" traditional and/or conventional real estate investing, is basically working out an agreement that is fair both the seller and the buyer, without using banks or mortgage brokers. By incorporating this type of financing, the sellers can sell their property for the price they want, and in a timely fashion. The buyer/investor can create an environment for him/her to profit in some manner over a period of time.

By leaving out the usual suspects like title companies, real estate agents and loan officers, both parties stand to make the transaction more profitable for the buyer/investor and more cost effective for the sellers. Specifically this can be real profitable for the real estate investor because in any type of investing, and especially in real estate, it's about leverage. The leverage is what makes creative financing a powerful, profit-making tool for those looking to start a real estate investing business. The leverage is usually represented by how much money you put into a certain investment, and how much you make from that amount over time. "Subject To" deals make your leverage extremely high, since most of the time you place a small amount of cash, for usually a much lager return.

Let's go over a sample situation which would create an ideal environment for a "Subject To" agreement.

Debbie and Joe Blume bought their house five years ago for a $100,000 dollars. After 5 years, they now owe about $95,000 dollars, while their house is appraised for $160,000 dollars. Both Debbie and Joe have accumulated a credit card debt of about $20,000 dollars since that time, and of course, the interest on that debt is much larger than they really care to have.

Joe and Debbie take out a second mortgage to pay off their credit card debt, take a vacation and buy a new car. With their second mortgage, they do all those things and have about $10,000 leftover, after everything is done. After 7 short months, most of that $10,000 is gone also.

Shortly after this, Joe receives an offer within his company for a higher paying position, but in a different State. Joe and Debbie talk it over, and decide to take the offer and move out of State. Of course, deciding to do that, they must now sell their beautiful home.

Like so many of us, when we look to sell our house, we think logically and talk to a real estate agent. The agent informs them that there is little to no equity left in the house, and tells the Blume's that they will have to pay the agent's commissions out of pocket. Of course, Joe and Debbie can't do that, because they ran out of money and are basically living paycheck to paycheck until the new job starts.

Joe starts to worry a bit, because he needs to get to his new job out of State, within 14 days, and Joe and Debbie would like to spend a few days off together before going to his new job.

Joe starts to think and remembers a "We Buy Houses" sign down the street from their home and runs down and calls the number on his cell phone. After talking with the investor, Joe finds out that the investor isn't will to pay more than $120,000 for the house. Hearing that, Joe is mad and upset that such a person can come in with such a low and insulting offer. Besides Joe couldn't do that deal anyway because the second mortgage they took out last year, places their debt just about what the house is worth.

Getting worried and running out of time, Joe places an ad in the local newspaper advertising the house as a "For Sale By Owner".

Mostly everyone is trying to low ball him except for one guy who said "he will offer the asking price, so long as he can see the place first". Feeling excited and curious at the same time, Joe invites the man over.

A couple of hours later, Brad comes over and tells Joe that he is the one who called about the house. Brad tells Joe to explain to him a little about the house and his situation.

Joe spills his guts and describes his dilemma to Brad. After Joe finishes his story about his situation, Brad tells Joe that he thinks he can still offer the asking price and if Joe was still interested in selling?

But before they start agreeing any further, Brad says, that as an investor, that his primary motivation to make a profit on the house. Joe and Debbie understand that, so long as their asking price is met and the house is sold quickly.

Brad continues and tells both Joe and Debbie that because of his need to make a profit, he needs to offer an agreement which will satisfy both their needs. Brad continues and says "That offer is what's called a Subject To" offer. Of course bewildered and confused, Debbie and Joe ask what kind of program is that. Brad simply states, that it's a program that suspends both their money for the house and his profit on the house for 2 years, while Brad takes over the payments. Not fully understanding, Joe continues to listen to Brad's offer.

Here's what it entails:

>keep the current mortgage in place for 2 years, at which time the house will be sold, and Joe's originally asking price will be met, plus 5% of whatever profit is made by Brad

>escrow account is setup and paid by Brad to ensure full integrity of his contractual agreement with Joe
and Debbie

>property is claimed over to Brad which obligates Brad to continue making the existing payments to the escrow account. The deed will stay in the attorney's presence until the deal is fully obligated by Brad in 2 years

>relieves Joe and Debbie of the monthly debt for the mortgage payment so they can move on with their life

>Brad offers to pay closing cost and 2 months of mortgage payments to the escrow account to solidify his offer and his intentions to make good on the contract

After discussing the deal with each other and realizing that their options and time are running low, both Joe and Debbie agree with Brad over the details and sign over the deed to Brad via the attorney.

Brad then quickly rents out the house to cover the mortgage payments and manages the house as a rental.

Two years later, Brad sells the house for $210,000 and pays $160,000 dollars to Joe and Debbie's mortgage company, plus sends Joe and Debbie a check for %5 of the $50,000 dollar profits, which is $2,500. Everybody wins!

Best of Success,
Stephan Iscoe

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Learn the Insider Secrets of Buying Bank Foreclosure Properties

Flipping Homes - How to Find Your Next Money-Making Property

by Eric Rogers

The first thing to remember is that: you’re in this business for investment—I.E. to make money—not loose it. The quickest way to disaster is to let emotion get involved. Buying a property because “it looks exactly like the home you grew up in” or any other similar emotional reason is an easy but big mistake. When it comes to choosing a property, let your wallet choose. If you only have a modest budget to work with, don’t try to rehab a $400,000 property with foundation issues—you’ll eat through your budget too quickly. Choose your first project carefully—it should be easy enough to get your feet wet and relatively low risk. You might not make as much as a high-risk project yields but you’ll be learning as you go and in this business, knowledge and experience mean money.

The first step is getting your finances in order. This usually starts by contacting a loan officer or other mortgage professional and talking about what type of financing you have available. If you have a pool of savings to tap or can liquidate some assets to be able to pay cash for a home, that’s the best financing situation you can be in. Otherwise, talk with a mortgage professional about how much you can afford and get a letter of pre-qualification or pre-approval for that amount.

At the same time, you will need a budget for your rehab project. This should include projected expenses for selling the home once it’s rehabbed. Once you work out your budget, subtract 10% and that’s the amount you should use as your realistic budget with a 10% cushion.

The next question is how do you go about finding your first property to rehab? Well, your top resource is your local real estate expert. Being a local REALTOR, I see many properties come up every week that would make great rehab projects for first-time rehabbers. Just remember: as a buyer, you won’t have to pay your REALTOR for their assistance. When I work with buyers, my fees are paid by the sellers of the home you will eventually purchase with my help.

Once you have your budget and financing in place, contact your local real estate professional and give them the numbers—the more information you can give them about what your budget is and what types of homes you are looking for, the better they will be able to aid you. It won’t be long before your REALTOR starts sending you information about homes that meet your requirements.

You should always seek to establish trust with your REALTOR—your bottom line depends on them finding you a great project. Always be upfront and forthcoming about what you’re looking for and what you’re not. Once you find a few properties that meet your price range and budget constraints, have your REALTOR set up private showings for those homes. That’s where the real business of finding a good rehab project happens.

When preparing to go see a potential project, you should bring a few important things. These include a pen and notebook for taking notes, a measuring tape, trundle wheel or sonic tape measure, a small tool kit with basic tools and a flashlight. Remember, many of the homes you might be looking at are going to be in poor condition and likely be without power, water and gas service. Always dress for the occasion—in long pants/sleeves and work boots if you have them. A good pair of work gloves is also vital.

When you set foot on the property, you have to act like a detective. Look for hints of past and recent leaks, foundation issues, structural issues and other major defects that can kill your project. At the same time, you should be adding up the estimate costs of the rehab work that is needed. If you did your homework and have an idea of what things cost, you should be able to estimate some values. Make sure you take room measurements so you can better estimate expenses for carpet, tile and similar items.

After you’re done, it’s time to crunch the numbers. Go over your notes and start adding up estimated costs. Your goal should be to do this quickly. Often, good rehab projects sell quickly, so you may not have a day or two to think it over. Pay attention to big-ticket items that add up fast like a roof tear-off or foundation repair. These are the expenses that can quickly put a rehab project in the red.

At the end of the day, you should have an estimate of what the rehab work should cost. That will give you a good idea of what your bottom line is for purchasing the property. If the investment seems sound and you decide to go forward with the purchase, the next step is to make an offer.


Eric Rogers - Century 21 Pro-Team - Oswego Real Estate and Naperville Real Estate Expert
Article Source: The FREE Article Distribution Center


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Learn the Insider Secrets of Buying Bank Foreclosure Properties

Investment Properties – Is It Best To Buy And Hold?

by Alex Anderson

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.


Alex Anderson Has Sites For Minneapolis Real Estate Agents, St. Cloud Investment Property and Investment Properties.

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Learn the Insider Secrets of Buying Bank Foreclosure Properties