Aug
24
Danger – Negative Cash Flow Real Estate
Posted By: Ramon Rivas on August 24, 2010 at 12:52 pmThe high Foreclosure rates changed all that. Now more people are seeking good homes to rent, so the supply of available rentals becomes slim. Demand for rental homes has also been stimulated by a reduction in the number of available apartments.
But it’s not all good news for landlords.
Some eager investors bought investment homes near the top of the real estate price cycle. They paid high prices for the homes they are now offering for rent. Many are learning that the cost of mortgage payments, taxes, insurance and other normal costs are leaving them with negative cash flow. That means it is costing them more each month to own the property than they can collect in rent.
The investor’s negative cash flow can amount to as much as $500 or more. Each month the owner must take those hundreds of dollars out of his/her pocket to make up the short fall between rents collected and money paid out in loan payments and so forth. That’s called an alligator property, because it can eat you alive.
Negative cash flow can be avoided by making a larger down payment on the property. You then have a smaller mortgage loan with smaller monthly payments. If you have planned correctly your rental income should then cover all your costs and expenses of owning. The down side is that you have a large amount of cash locked into one property.
The wise investor always buys at a price that will allow him to prosper no matter what happens to real estate values.
Aug
21Quick Update on Kenny Rushing’s Free House Giveaway
Posted By: Ramon Rivas on August 21, 2010 at 12:31 pmIt looks like Kenny is really serious about giving away a free house. Here are some updates about it:
Kenny wants you to feel what it’s like to have houses deeded over to you FREE & CLEAR, just like his students do, so he is Giving Away THREE FREE Houses, No obligation, no strings attached, and he’ll even pay the 1st years taxes and insurance for YOU!
And once YOU win your house, you can do WHATEVER you want with it!
• Imagine the profit you’ll make flipping a house you own for FREE! Or…
• Enjoy the cash flow from renting your FREE house with no mortgage payments!
Or…
• Feel the security building a nest egg by holding a free and clear house! Or…
• Be charitable and give it to your favorite non-profit! Or…
• Give it to a long lost cousin, who could use FREE a place to live!
What you do with your FREE HOUSE is up to you.
Enter to win right now. The winner will be announced on a special call Monday night, August 30th.
About these houses:
In case you’re wondering, these houses are NOT junkers. In fact, they are clean houses that only need minor cosmetic repairs. They are also NOT located in war zone areas – they are nice areas with good rental history.
As the lucky winner you get one of these THREE (3) houses FREE and CLEAR. Kenny will even pay the taxes and insurance for one full year!
You can do anything with your new house, sell it for 100% profit or hold it for rental income and equity. If you choose to rent it for cash flow Kenny will even put you in touch with a local property management company so you won’ t have to do ANY of the work, and you still cash flow from YOUR FREE HOUSE!
Why is Kenny doing this?
It’s simple; Kenny wants to prove to you his unique strategies work. No one else is teaching the stuff you’re about to discover when you enter the giveaway. You’ll learn how to get houses for free, by ethically “stealing” properties straight from banks in bulk – just like Kenny and his students do every day!
Honesty in Flipping – What to Disclose
By: David Reinholtz
This article is about flipping short sale properties, and the parameters associated with this are much different than other types of property sales and investment and should not be assumed to apply to other, more traditional forms of sales. Short sales, as most people are now aware, occur when a property owner is behind on his or her payments and makes an arrangement with their mortgage lender to sell the property for less than its assessed, or true, value in order to avoid foreclosure, the stigma that goes along with it, and the credit damage that can come from it.
If your client, or someone you know, is in the business of short sale investing, meaning they intend to purchase short sale homes and immediately turn around and resell them for a profit, there are legal questions that go along with the process, many of which have never been addressed, but will undoubtedly come to light in a court of law at some point in the foreseeable future.
While buying a short sale home at a bargain and turning around and selling it at its regular price, or slightly less than its assessed value is completely legal, the term ‘fraud’ is being tossed around lately and it may behoove the serious investor to make every effort to offer full disclosure, or at least a modest modicum of disclosure to all parties involved.
The scenario
Imagine this scenario: You’re a homeowner who has fallen on hard times. You or your spouse may have lost his or her job and despite your best efforts, you can’t keep up with the mortgage payments. You are facing the barrel of foreclosure and work out an agreement with your lender to go ahead with a short sale. You know your home is in great shape, the lawn is meticulously maintained and you added a new kitchen and bathroom.
You have no choice but to let go of this home because you want to buy another one as soon as you recover from your financial setback, so the short sale seems fair. Several interested buyers flock to your house immediately and within a few days, maybe even that same day, you have an offer on it. The bank agrees and you sell the home, getting out from under your financial burden.
Two weeks later, you learn that your home suddenly sold for near full value. Perhaps forty thousand dollars more than you sold it. This is enough to feel as though you were taken advantage of. Maybe it’s enough to consult a lawyer. After all, if your home sold for its assessed value two weeks after the short sale, you could have made that sale directly.
Putting yourself in someone else’s shoes is the best way to determine what level of honesty should be used during the process.
Letting the homeowner know the truth
In most cases, homeowners who partake in short sales don’t have a choice, so whether you are going to turn around and sell their home at a profit or not, they don’t have the luxury of hanging onto any longer. Being upfront may sting for the homeowner, but you are protecting yourself legally.
The same holds true for the lender. Mortgage lenders make loans based on long-term earnings through interest rates. If they are aware of the intention to flip the house, there are some lenders that would not be willing to make the loan. Posting a statement of your intentions within the contract (which, as we all know, can be upwards of 100 pages or more), will cover you legally. Remember, loan officers don’t tend to read the contract thoroughly. You’re covered nonetheless from any legal action that uses the phrase ‘fraud’ in the future.
No legal obligation
While investors intending to flip short sale homes are under no legal obligation to disclose their intentions, most, if asked, wouldn’t want to become the guinea pigs in a legal dispute over a fraud allegation. Full disclosure is always a safe bet.
David
About the Author
David is the Founder and CEO of LoanOfficerSchool.com, an approved education provider for The Conference of State Bank Supervisors and The National Mortgage Licensing Systems’ (NMLS) required pre-licensing education and continuing education.
(ArticlesBase SC #3040471)
Article Source: http://www.articlesbase.com/ – Honesty in Flipping – What to Disclose
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Jul
24Real Estate Email Marketing Maximizes Your Exposure
Posted By: Ramon Rivas on July 24, 2010 at 5:29 pmThere’s little doubt that the U.S. real estate market is undergoing a profound transformation. After several years of freewheeling lending practices and unsurpassed increases in home valuations, the real estate market is undergoing a major correction. Home values are dropping in many areas around the country, and some homeowners are facing an impending uptick in their adjustable rate mortgage payments, placing them in an untenable position.
In short, it’s a volatile market. Lenders are tightening the criteria for mortgages, and subprime lending is gone. Most homeowners who are holding subprime mortgages are facing foreclosures, while others are trying to sell their homes before they find themselves in a negative equity situation. As a result, real estate professionals, investors, and home sellers are scrambling to gain an edge in a competitive marketplace.
Long gone are the days when traditional methods of real estate marketing are sufficient to move properties. A sign on the lawn, a Multiple Listing Service listing, and an open house still have their place, but they comprise only one facet of an effective real estate marketing campaign.
Just as in most other areas of business, the Internet is playing a crucial role in real estate. Online listings of homes for rent, homes for sale, and foreclosures draw an increasing number of buyers and investors. Photographs and video are increasingly being used to whet the appetites of potential buyers. Still, online listings and multimedia presentations are relatively passive forms of marketing in this competitive era. Those who are on the cutting edge are utilizing the Internet to their best advantage, and taking strategies from the playbooks of those in other fields.
Email Marketing as a “Push” Strategy
If drawing potential real estate buyers to an online listing is a “pull” strategy, then real estate email marketing is a “push” strategy – one that makes sense in today’s marketplace. After all, retailers and e-tailers use email marketing to their best advantage. Email inboxes are stuffed with large and small business emails alike. It makes sense that real estate email marketing can also be effective, in that it delivers information about agents, developers, sellers, and their respective properties directly into the hands of interested potential buyers.
Email Marketing is Easier than it Seems
At first blush, real estate email marketing may seem out of reach for many people. After all, their expertise is in real estate and they may not be very tech savvy. On the contrary, there are online real estate services that make email marketing a cakewalk for virtually anyone.
When looking for an online email marketing service, choose one that can help you create emails, manage your contact lists, and obtain tracking reports. Essentially, you should be able to send your first email marketing piece in less than an hour. The best services have “wizards” that allow you to, for example, put together email newsletters using a Web interface and on a single screen. Templates and click-and-drag functionality allow you to easily arrange text, upload photos, and instantly see what your recipients will see when they receive your email.
Once you’ve sent your emails or newsletters, the service should enable you to track the results, telling you how many emails you sent, how many bounced back, how many people opened the email, how many clicked on the links, and how many forwarded it on to others.
There’s little doubt that real estate email marketing is a cutting edge tool that helps push your message into the inboxes of potential buyers. And in today’s competitive environment, it’s an advantage you can’t afford to be without.
Jun
09Why Lenders Agree to Short Sale Foreclosures
Posted By: Ramon Rivas on June 9, 2010 at 5:11 amAre you looking to profit from the current real estate market? Ask any expert and they will tell you that the real estate market is suffering. Yes, this is true. What they will also tell you is that there is the potential to make money. If you have the needed financial resources or the ability to secure financing, you can profit from the buying of short sale foreclosure homes.
What are short sale foreclosures? They are homes listed for sale before foreclosure begins. In these instances, there is no way that the current homeowners can make their mortgage payments. foreclosure will occur; it is just a matter of when. Instead of just waiting for the home to foreclose, the homeowner and lender work together to decide on a short sale. The home is listed for sale through either the homeowner, mortgage holder, or a third party real estate agent. The sale price is less than the outstanding mortgage.
foreclosure short sales should result in great buys. It is a relatively easy way to make a profit. Are you looking to buy your first home? Do you want to buy a multi-family home to rent for a profit? Do you want to buy, make improvements, and resell a home? You can easily do so with foreclosure short sales. Unfortunately, many first-time buyers assume that they are getting a bad deal. After all, why would a financial lender sell a home for less than it is worth or even less than what the current occupants owe? There are many reasons why.
Time. Each state has their own rules and regulations on foreclosed properties. The process can take as little as a week, but can take many months. Some states also prohibit lenders from automatically evicting occupants. This isn’t a problem with a short sale foreclosure. In most cases, the homeowner and mortgage lender decide on a short sale together. This means that the homeowner will be out as soon as the home is sold and the new owners can move in. Why does a home occupant do this? To protect their credit and avoid bankruptcy.
Ease. As previously stated, foreclosing on a home or another piece of property isn’t an easy process. It takes time, a lot of paperwork, and so forth. Mortgage lenders do not want to deal with this. They want money. Honestly, that is really all they care about. Not only do they want their money, but they want it quickly and with as little hassle as possible. Agreeing to a foreclosure short sale allows this to happen.
Money. As previously stated, mortgage lenders want their money. If it will be two months before they can evict a homeowner, they lose money for those two months. Not to mention the previous months the mortgage went unpaid. When both agree to a short sale, the process starts right away. Typically, a real estate agent is contacted immediately. Yes, it can take time to sell a home, but since the selling price is less than the home’s value, it will sell and likely quickly. This means mortgage lenders get their money. Although not all of it, they get most and without having to wait.
As you can see, there are many reasons why a mortgage lender will agree to a short sale. So, if you see a low priced home available for sale through a real estate agent, a for sale home listed by the lender, or a cheap for sale by owner home, don’t assume you are getting a bad deal. Instead, ask. You may hear that the home is a short sale.
In short, if you are looking to profit from the troubling real estate market, look beyond foreclosed homes. Don’t wait until a foreclosure auction where you may find hundreds of other investors looking to turn a profit. Instead, look in the right places and find foreclosure short sales. You should walk away with a better deal.
