Professional Cash Buyers Are Buying - Are You?

June 2, 2009

As we continue our series of blog posts about the change in real estate markets, we will now show a little known “secret”.   What the average Joe is doing, and what the professionals are doing, are 180 degrees apart.  Again, we will use Tampa as our example but what we show is happening in many places across the USA.

So What Is Joe Doing?

Referring to the typical home buyer as the “average Joe”, let’s see what is happening.  What everybody “knows” in the market is that times are tough and RETAIL prices are dropping.  Referring to the figure below, we see that this is true in every submarket in Tampa.

Chart Shows 12 Months Of Data For Various Tampa Submarkets

NOTE:  This is RETAIL pricing.  Prices paid by investors is RISING.

So, with this happening, Joe still believes now is not a good time to buy.  Let’s also look at the number of mortgages being written but let’s go all the way back to 2005 as we started coming off the boom in Tampa.  Here is what those charts look like for conventional, FHA, and VA financing.

Clearly, Joe is still on the sidelines.

What Is Sue The Professional Doing?

As mentioned in a previous blog post, there is now BIDDING WARS between professionals when a house goes on the market priced right.  Let’s see if we can really QUANTIFY that.  One very good measure of professional activity is CASH purchases.  Typically pro’s move in with very low (or zero) financing so if we look at the number of cash purchases, it  give us some indication as to the direction of pro’s and knowledgeable individuals.  We can also verify by being in the market that this is EXACTLY what is really happening.

Referring to the figure below, we see that Sue was not buying in 2005 when Joe was buying everything in sight.  We also see that now Sue, the Cash Buyer, is now buying while Joe is bailing.  The typical example of the pro’s doing EXACTLY OPPOSITE what most people do.

Just for comparison purposes, let’s now put conventional financing and cash on the same chart.

NOTICE THAT THERE IS NOW MORE CASH BUYS THAN FINANCED!!!  If that does not tell you something interesting about the way the pro’s think vs Joe.

The Cash Buying Pro Is Now A Huge Percentage

A natural question to then ask is what percentage of sales is cash now, and in the past.  This is shown in the chart below:

From this chart, we can see that cash buyers are now nearly 40% of the Tampa Bay market.  If you ever wanted an inside look at what the “pros” are doing in a market, this shows you.

Predictions For The Future

While we don’t have a crystal ball either, let’s see what predictions that we might be able to draw from this information.

1. Cash buyers & pro’s are buying everything in sight right now;
2. Conventional buyers still see “gloom & doom”;
3. Inventory will be absorbed by the professionals given rents versus prices;
4. At some point (we predict 6-12 months), Joe will wake up and then realize they are about to miss a golden buying opportunity;
5. Once a significant number of Joe’s start to “get it”, then prices begin to rise again as they scramble to buy homes before prices “rise too much”.

The joys of a real estate cycle……. it is just too predictable.

Go Zone Extension - Is There Still Time?

April 20, 2009

There is still a lot of confusion about when does GO Zone benefits end, especially for real estate investors.  Every time that  I send out an email about the Go Zone, I get several emails in return saying “didn’t that end after 2008?”.

The reason for the confusion is that MOST LOCATIONS DID END in 2008…… but not all.  There was an extension put into place for some of the hardest hit areas from hurricane Katrina.

Bottom line is that in certain locations in Mississippi and Louisiana, you can claim bonus depreciation benefits through 2010. In Mississippi, the eligible counties are:

* River;
* Stone;
* Hancock;
* Harrison; &
* Jackson.

For Louisiana, there is a much longer list of parishes including:

* Calcasieu;
* Cameron;
* Orleans;
* Plaquemines;
* St. Bernard; and
* St. Tammany.

In Alabama, no addition counties will remain open for bonus depreciation or GO Zone benefits after 2008.

The American Institute of Certified Public Accountants has published a handy guide that really summarizes all the rules, dates and locations. Click here to get their PDF report.

Go Zone Webinar - Tuesday, April 21

Buying New Homes For 77 Cents On TODAY’S Retail Amount?

April 15, 2009

In today’s market, everybody is looking for the next “great deal” which is obviously smart investing. However, many investors are also falling into the “you can buy at 50 cents on the dollar” trap. The trap that investors are falling into is that, unfortunately, these numbers are frequently referenced to yesterday’s market value and have little to do with what things are worth today.

Now let’s look at one way to buy new homes at a true 77 cents on the dollar relative to today’s retail value. To accomplish this, we are going to use a combination of a reasonable builder discount coupled with current, special IRS tax legislation. Using absolutely no “smoke or mirrors”, we are going to show you a real-life calculation, using IRS GO Zone tax law, to see how people are really creating equity for themselves.

Let’s look at the following REAL world example for a recent investor:

· True Retail Value: $141,128

· Net Purchase Value: $109,124 (Note 1)

· Net Cash In: $ 8,046 (Note 2)

· Realistic Profit In 3 Years: $51,664 (Note 3)

If you look at the above numbers, they are quite impressive numbers for purchasing and owning a BRAND NEW home and collecting some positive cash flow along the way (note that the positive cash flow has NOT been factored into the above for simplicity reasons). The difficulty is that many don’t recognize these “Net Numbers” when they see them offered on a home sales flier. In this article, we want to take you from actual purchase numbers and then show you how the above “Net Numbers” result. There has been 100’s of Millions of dollars in real estate done using these special tax results. Yet, most investors, and even most tax professionals, “just don’t get it!”

Referring to the above numbers, let’s now address the “Notes”:

NOTE 1: Realize that NO BUILDER in their right mind will sell you a home with that big of a discount to TRUE MARKET, especially when they are truly moving homes at retail prices. In this example, the builder has discounted their retail currently in this slow retail market. In addition, they have provided a reasonable discount to the GO Zone buyer.

The actual, discounted, purchase price on the home is $129,578. But, when you factor in GO Zone tax benefits, there is over $20,000 in real tax savings for an investor in a 35% tax bracket. When you take the actual purchase price and then subtract the tax savings, the NET purchase price becomes $109,124.

NOTE 2: Realize in this lending environment, most investor loans are pretty straight forward with 20% down plus closing costs. Obviously that is less than ideal but yesterday’s excesses impact you today.

In the above example, the total dollars required at closing is $28,416 which includes both the down payment and closing costs. But, when you realize that you get the tax savings back within a year or less, then your NET Cash In becomes that total amount to close minus your tax refund: or in this case, $8,046.

NOTE 3: In the GO Zone, while retail homes have seen a slow down they have not seen a “crash” like in other locations. Home pricing is very reasonable relative to income and the strong demand is expected to return with a small shift in the economy, home buyer incentives, relaxed credit, etc.

I know it seems strange to be discussing potential price escalation but at these locations, most professionals tend to agree that we have to go up in the area. Using a past, reasonable safe escalator of only 5%/year, you get to a retail value of over $163,000 in 3 years. Obviously nobody has a crystal ball and you can apply your own witchcraft here. However, when you look at the economic strength of the region, most agree that the area should do just fine over time.

Robert Kiyosaki once wrote that the wealthy “see” finances very differently than the average person by factoring in all aspects of a transaction including net tax considerations. As this example has shown, this is especially true for tax advantaged properties, such as found in the Katrina GO Zone.

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Do You Want $60K In Deductions From Uncle Sam?

April 13, 2009

‘Twas the week before tax day, and all through the country, not a sole was sleeping soundly, not even the wealthy.

I know, I know….. it’s terrible to take such liberties with a favorite Holiday story and ruin it with the tax season. But, it just seemed so appropriate!

As we all approach our favorite day of the year, April 15^th, we all make that vow that we do every year……., “I have got to do some better tax planning.” Unfortunately, it usually goes the same path as our vow to lose weight beginning January 1^st.

Fortunately, Uncle Sam has provided an easy way for real estate investors to substantially reduce their tax burden via buying properties in what is referred to as the “GO Zone”.

What Is The Go Zone?

The Gulf Opportunity (GO) Zone Act was passed in late 2005 as a mechanism to spur redevelopment in Hurricane Katrina impacted areas. In 2005, these areas included parts of Alabama, Mississippi, and Louisiana and are now referred to as “GO Zone” areas.

Modeled after the Liberty Zone legislation passed to spur growth in New York after 9/11, GO Zone legislation was enacted to entice the private sector to pour substantial dollars into hurricane Katrina impacted locations. The good news is that it has worked and we have seen it work first hand.

While there is a ton of potential benefits to you, the one most often discussed in real estate investing circles is called “Bonus Depreciation”. In layman’s terms, this allows investors the opportunity to claim a 50% bonus depreciation during the first year that a GO Zone qualified property is put into the rental pool. As the example below shows, this can be a huge tax benefit.

A Very Simple Example

Suppose that you buy a new house for $140,000 in Biloxi, Mississippi and put it into rental service. Also, let’s suppose that the lot value for that home is $20,000. Here is how the transaction would look.

House Purchase Price: $140,000

Land Value: $20,000

Net Structure Value: $120,000

Allowed Bonus Depr: $60,000

So how would you like to deduct $60,000 from your income next year before computing bottom line tax values? What if you bought 10 of these like some of our clients have? In addition, you may be interested to know that this loss could be carried backwards or forwards, so it is quite possible to go back and recover already paid in taxes.

So Why Hasn’t Everyone Bought GO Zone Properties?

While the GO Zone is certainly news to many people and many tax professionals across the country, realize that it has been used…… a lot. In many hurricane impacted areas, it has already played a significant role in putting housing back on the ground.

One of the reasons that you don’t see it discussed everywhere is that this is NOT something that fits every single person. Without getting too technical, the GO Zone tax code is wrapped around existing IRS depreciation code, passive losses, etc. So, let me give you the cheat sheet. If ANY of these categories fit you, then you may want to look at the GO Zone more carefully:

1. Real Estate Professionals: Those who spend 51% or more of their time in “the business” of real estate have tremendous opportunity to use their depreciation losses to offset their actual income. Note – you do NOT need to be a licensed Real Estate Agent to qualify for this category!

1. High Wage Earners With Non-Working Spouse: Many people have structured their affairs so that the non-working spouse manages their properties and gets classified as a real estate professional: this also DOES NOT mean that they have to become a licensed real estate agent.

1. Adjusted Gross Income < $150,000: Depending on exact income, there are some specific paths for deducting up to $25,000 of bonus depreciation loss.

My Recommendation:

After having participated in all aspects of the GO Zone since 2005 and running the largest GO Zone website (GoZoneOnline.com), let me offer an observation. Because this topic involves tax code, many people (myself included when I first got involved) spend days and days trying to understand what is happening and frequently end up frustrated. Unless you are well versed in tax law, you will pull your hair out.

Instead, here is what you REALLY need to grasp:

• If you are in one of the 3 above classes of people, then you need to answer if this makes sense for your personal situation? Once you understand the layman’s basics, then there are tax pro’s that for a couple hundred dollars, can assess your specific situation rapidly and advise you on how to proceed. More than likely, your regular tax professional will be in the dark as much as you. But with some outside help, you can rapidly determine your personal situation.
• Assuming you want to participate in the GO Zone, then you need to understand:
  • What areas to are best to buy in;
  • What types of properties are best to buy and why;
  • How to find a good deal.

It really is that simple and definitely is not rocket science. To help readers come up to speed, we are going to hold an introductory webinar, April 21, to cover these topics.

Sign Up For April 21st Go Zone Training Webinar

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Investor Alert: Rental Guarantees

April 9, 2009

Another one bites the dust.  Another investor lead astray by what looks like a great thing to the uninitiated: the rental guarantee.

As I write this, I learned that an investor went from buying what I think is one of the best properties that I have seen in the Go Zone to what is in my opinion, junk.  Why?  Because they were lured in by the “security” of the marketers rental guarantee.

Now don’t get me wrong….. Sometimes a rental guarantee is a great thing on an investment property but the reality is that it is rare.   In fact, we are evaluating a deal right now with a rental guarantee but our Red Flags were immediately raised…. Time will tell if the project we are examining happens to be one of those rare cases that works with a rental guarantee.

WHAT IS A RENTAL GUARANTEE?

Quite simply, it is an agreement between the seller and the buyer that they, or a related company will lease the property for some period of time.  One example that can work really well is when a subdivision builder sells their model home to an investor and then leases it back as a sales center.  That can make a lot of sense for everyone involved.

These rental agreements tend to be as short as 3 months and can be as long as 2-3 years.  In addition, the seller might be leasing back a single unit, such as for the model home above, or they may be leasing back a ton of units and then they plan to sub-lease them to minimize their negative cash flow.

RED FLAG #1

When done with multiple units for long periods of time, the lease back represents a substantial monetary liability to the seller.  So why would a seller offer this?  One possible (and common) explanation is that they are making a boatload of money on the sales of the units and the leaseback represents a small risk.   By offering a leaseback that hope to get a bunch of investors to start buying in which case the seller will do just fine.

Generally this occurs when the property is overpriced relative to market.  So the “game” is to mark up the property higher than market value, make a bunch of money, and then offer a rental guarantee to make this attractive to investors.  But of course, they can’t show that the property is overpriced so somehow they will also need to convince the investor that they are getting a good deal.

For this Red Flag, you should take any discussions on “appraised value” or “market value” with a degree of skepticism and really try to verify.  Every once in a while you will find a property that has a leaseback AND is actually priced right…… then you have found an interesting deal.  Just realize this is rare.

Red Flag #2

This leaseback can be a substantial financial undertaking for a builder/developer if many units are involved.  So, for example, suppose that they offer this for 50 units in a complex at $1,000 per unit, for 24 months.  So their total liability is:

50 Units *$1,000 * 24 = $1.2 Million

Obviously they probably PLAN on renting out these units, and they PLAN on selling enough units to be strong enough to cover this but will their PLAN work?  If not, good luck on getting all your PLANNED lease payments.   However, if what you are buying is till very rentable on the market, with or without them, then your are in a great position.

Red Flag #3

Is the leaseback consistent with market rents?  One other common “gimmick” is to offer a leaseback higher than market rents to make the numbers look good.  Based on Red Flag #2 and you always needing to plan on those leaseback payments stopping, then you really do need to know the market rent values.  If, however, the lease back amount does line up with market rents, then that is a good indication…… the question is how will you, as the investor, know what the market rents are for the area?

Conclusion

Again, don’t misunderstand my intent.  SOME RENTAL GUARANTEES are good and as mentioned earlier, we are evaluating a deal with one right now.  However, when you hear about an offered property with a rental guarantee, always go back and check your 3 Red Flags.

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Good News For Short Sale Investors

April 6, 2009

Its Monday morning so do you want the good news first or the bad news?

Since we mostly hear bad news these days, let’s start with the good news for a change.  If you are a short sale investor, or someone considering getting into short sale investing, then you may be in luck.   A new report from the Department of Treasury shows that banks approved almost 3 times more short sales in the 4th quarter of last year as compared to the first quarter.

Referring to the table and chart below, we can see that this is really a significant increase.

One of the biggest complaints of short sale investors has been that the banks are dragging their feet in getting their deals done.  In part, this may be due to non-ideal techniques used by many short sale investors: there are some short sale investors that are getting a lot of deals done on a consistent basis.  Even still, it sure would help to ride a wave of increasing short sales by the lending institutions.

If you are thinking about investing in short sales, you may want to visit this video that we put together.

So What Is The Bad News?

The bad news is that in all categories of loan defaults, foreclosures where just not getting any better by the end of last year…. Gee, isn’t that a surprise.  While we will cover this topic in much more detail later, the short story (no pun intended) is that when you look at the number of loans that are

• 30-59 days delinquent;
• 60-89 days delinquent;
• 90 or more days; or
• Foreclosure in process,

all were going up over the course of last year.  Looking at those stats, you know that we are not out of the woods yet.  Unfortunately, many of these type detail reports are a few months behind so it is just one piece of the puzzle that we all need to be watching.

Poof - An Instant Housing Fix?

April 3, 2009

Regardless if you are bullish or bearish on this market, what if something was planned that could radically change the real estate market…… almost overnight.

On April 1st, we offered a poll to determine the percentage of people that are bearish on this market and those that are bullish.  The chart below shows those results as of the time this article was written.

Click Here To Register Your Poll Vote

Out of the people that participated in the poll, 21 indicated that they were bearish, while the majority indicated that they were bullish.  Unfortunately, in my opinion, there is no right or wrong answer…… you simply have to interact with the market based on your beliefs.

One of the comments we received indicated that the person believed that the “real bottom” was 2012 - 2013.  Unfortunately, none of us will know until 2014 if that is true.  For that person, with their beliefs, probably the right strategy for them is waiting until that date….. it doesn’t mean that their approach is right (or wrong), but at least it lines up with their personal beliefs.

But What If It Changed With The Stroke Of A Pen?

As a real estate investor, one of the difficulties that we face is that market conditions change much faster than we can react.  For example, many people were absolutely shocked at the rapidity that the real estate market stopped selling in mid 2005.

Now, let’s consider another potential event that could also have a major impact:  the Making Home Affordable (MFA) Initiative.  You can learn more here.  Under this initiative, some of the 3 to 4 million homeowners eligible for loan modifications could see interest rates as low as 2 percent.

I wonder what this could do to the current “conventional wisdom” prevalent right now with many professional real estate players.  Their view simplified is that:

• We are at the beginning of a wave of adjustable rate mortgage (ARM) Recasts;
• When these recast, especially option ARMs, tons more inventory will flood the market;
• This inventory will likely be in place for years to come.

But what if, with a pen stroke, that picture changes and now more people can stay in their home.  In turn, this means that we rapidly start to work through existing inventory, which then decreases supply.  Now, the building industry comes out of hiding, hires more people which then improves jobs, which increases demand, etc., etc.

PLEASE DON’T MISUNDERSTAND.  I am not predicting the above.  Most of the big money investors I know gave up on “predicting” years ago.  They make decisions based on the real data in front of them TODAY and when they see a deal that makes sense TODAY, and has a high probability of making sense TOMORROW, then they act.

Investor Alert: Bank Owned REOs Without Pictures?

April 2, 2009

Many people believe that now is a great time to buy a bank owned properties (see yesterday’s poll).   In some locations, you can literally buy for pennies on the dollar.

In addition, in some select areas, properties can be rented to generate 18-25% cash-on-cash returns while still picking up substantial equity.

That is the good news but what do you need to worry about??

The “No Bull” version is that these properties are being offered by everyone, with many of them junk.  Heck, it wouldn’t surprise me if Joe The Plumber was trying to get in on the action.

Over the last few months, we have sat in on about 1.2 million webinars (or at least if feels that way) of different groups “pitching” their homes.   There is a lot of things to consider to separate junk from good, but let me give you one insider’s tip:

If the offered property is supposedly rehabbed but the provider has been “too busy” to take pictures inside & out, it should raise a flag.

We have been actively looking for the best cash flow homes for ourselves and our clients and it is amazing how many providers don’t have inside pictures.  At least for me, I have a hard time believing in a property if I can’t at least see what the inside of the property looks like.

BE REALISTIC In Your Expectations

Please realize that this is a FAST MOVING industry.  So, it is not unreasonable for providers to have to sequence the process.  From the best providers, here is the process that we have seen:

1. You get exposed to the property immediately after their purchase (raw form):
2. You decide you like that location and then go to contract (with only exterior picture);
3. Their team hits the ground, gets pictures, finalizes their game plan to rehab, and gets info to you;
4. You then close AFTER seeing interior pictures

Now realize that these pictures can still be a little rough….. rehab is typically scheduled shortly after you close.  It is paid for by the property provider.  So when you look at the pictures, DON’T EXPECT pristine condition…. it won’t be.  However, you will be able to get a good idea of layout and current condition before they rehab it for you.

Are You Really Ready For What You Will See?

Having been in this business for quite some time now and having seen my share of preforeclosures, VA Repos, and bank REOs, I am over the “shock factor” when I first got in this business.

When someone goes into foreclosure and gets hounded by creditors and debt collection agencies, many go from being an upstanding citizen to being a wild cave dweller.  Believe me that most will not “tidy up” the property on exit.  Rather, they are much more likely to do cosmetic damage, steal light fixtures, trash carpet, bang holes in walls, etc. 

For the unprepared, this can be quiet shocking.  I know when I walked into my first VA Repo, I recoiled in horror.

Now let me tell you what the pro’s know that most people don’t.  Most of that stuff is cheap and fast to fix.  We have picked up homes that would disgust most people and with a couple thousands dollars and a “mow and go” clean up on the outside, place looked great. However, if you don’t know what you are doing, you can get in way over your head doing it yourself.

As long as the rehab/cleanup is being handled by the property provider, and they and their crew are experienced, then your job is to look past the cosmetic things and really quickly assess what this property will be like with a little TLC.

San Francisco Area Sells 5,000 To Investors & Home Buyers

March 31, 2009

The market is totally dead, right?

Wrong!  Would you believe that about 5,000 homes are selling MONTHLY in the bay area right now.  Does not sound like the market is totally dead to me.

One of the interesting stats is that most of these homes sales are going to one of two categories of people:

• Investors; or
• First Time Home Buyers.

Let’s look at the first time home buyers first.  One of the things that has happened in the Bay area is the ability to use FHA financing for first time buyers.  Previously, the price points made this impossible but today, the FHA limit goes all the way to $729,250.  Personally I believe that is a bit ridiculous but that is besides the point.  So, with FHA financing, the buyer can put little money down and get into a fantastic deal.

The price points have changed dramatically as well in the area.  A couple of years ago, less than 10% of the homes in the area sold for under $300K…… Today, it is over 51%.

Investors are also finding good deals.  A recent article in the San Francisco Chronicle described how a real estate agent turned a quick $77,600 profit by buying a house with cash and the reselling.  While most investors are buying, then renting, then planning to sell in a few years, there is still a few flip type opportunities that exist.

This Is A Link To The Chronicle Article

291,000 Foreclosures in Feb. Creates Window Of Opportunity

March 25, 2009

Realty Trac has reported that there where another 291 thousand foreclosures reported in February alone.  And this is despite the government actions to date.

While this is not great news for homeowners, it does present some interesting opportunities for investors.

NBC put together a well written piece that is worth visiting.

SYNOPSIS

The growing inventory of distressed homes on the market may be sending shock waves through the economy, but it’s also giving investors a wider window of opportunity.

Despite federal initiatives to stem the rising tide of foreclosures, some 291,000 foreclosure filings were reported in February, the third highest monthly total since RealtyTrac began following the data in 2005. Such filings include default notices, auction sale notices and bank repossessions.

Over the last three years, more than 4 million U.S. homes have been sent into foreclosure.

Whether you’re an investor looking to purchase a rental property, or a homeowner who’s ready to retire and move someplace more affordable, the price of foreclosed properties right now is right,” says Debra March, executive director of the Lied Institute for Real Estate Studies at the University of Nevada Las Vegas, the nation’s leading state for foreclosures.

Read Entire Story

The Risks and Rewards of Investing in Foreclosures

March 15, 2009

There are many different things to invest in these days. One investment route which individuals take is with regard to foreclosures. Foreclosures occur when the current homeowner of a property fails to pay their monthly mortgage and the property is repossessed by the lender. There are various risks and rewards which go along with investments of this type and some of these will be discussed below.

Advantages and Disadvantages to Buying Pre-Foreclosure Properties

One type of property sale which relates to foreclosures is the pre-foreclosure sale. A pre-foreclosure sale occurs when the lender allows the homeowner with past due mortgage payments to sell the home on their own and pay back the lender what they can from the sale of the home. The lender often agrees to this so that they do not have to get involved with possessing then reselling the home and the homeowner likes this option because it prevents foreclosure. The investor also benefits from this type of sale as well.

Some advantages to purchasing an investment property via pre-foreclosure sale include discounted price, speedy purchase and wonderful profit opportunities. As for the disadvantages, the investor who buys property by way of a pre-foreclosure sale may find that the homeowner is hard to contact and/or unwilling to sell, the research is cumbersome and there are other potential buyers who wish to purchase the property.

For those who wish to purchase property via a pre-foreclosure sale, they should do their independent research, approach the homeowner in a courteous manner and ensure that they make an offer that will not cause them to lose money in the end. By doing so, the investor may find that buying a house by pre-foreclosure sale will work to their advantage.

Advantages and Disadvantages to Buying at a Foreclosure Auction

Another way to purchase foreclosure property is through a foreclosure auction. Auctions of this type are usually held at the local courthouse of the county where the property is located within. This is a common way for foreclosed properties to be sold and this too has its pros and cons.

Read Entire Article

Foreclosure Investing - The Fastest Way To Get Started

March 7, 2009

Foreclosure investing is actually quite another world when people have finally taken that risk and go for it. This really applies to anything else in life. Remember all those late nights where you’d stay up and watch those “how to make millions in your sleep” commercials. Or perhaps you remember all those times you went to the book store and purchased tons of real estate investment study guides.

In fact you probably have a impressive home library and collection of real estate, investment, and how to get rich quick type books by now. Some people may get a feeling of being overwhelmed after wading through those thick books and studying all the complex terminology.

The truth is, if you are a naturally goal-oriented and self-disciplined person than you can probably achieve a full-time income in real estate within a year with the right system. So how do you choose the “right” system when everyone and his uncle says they are an expert or guru within the real estate domain?

One thing you might want to consider doing is to align yourself with a acquaintance or relative who is already successful in real estate investment or at least in the branch of real estate that you are interested in doing. Don’t be shy, definitely get in touch with them.

It may be a friend from high school or university, or perhaps even a former room mate that you knew when you were just getting started with your own life and needed someone to share the rent costs with in order to have your own place, etc. I am sure that if you brainstorm for a bit, you may even surprise yourself at how much opportunity there is in your own circle.

That is actually a very good idea- the number one way to get into real estate successfully is to have a mentor or at minimum someone that can really show you the ropes and provide feedback in real-time. No matter how well written the courses you’re looking at is, nothing really compares to a trusted friend or adviser that can actually walk you through this process step-by-step.

Read Entire Article

Understanding The 3 Stages Of Foreclosure

March 2, 2009

If you are like many people, you recognize that there is tremendous opportunity available in this real estate market.  Let’s face it, we have not seen bargains like this since the 1970’s.

However, what many people also learn is that finding, buying, servicing, and reselling foreclosures is a lot of work.

If you are like many people, you recognize that there is tremendous opportunity available in this real estate market.  Let’s face it, we have not seen bargains like this since the 1970’s.

Considering the home pictured to the left, you can try to acquire this home at 3 different stages:

• Preforeclosure - The bank has not yet foreclosed on the current owner;
• Foreclosure Sale - Typically auction style at the court house steps; and
• Bank REO - After the bank acquires the property.

PREFORCLOSURE:

In this stage, you are typically negotiating with the current owner to reach some sort of advantageous agreement.  Unfortunately, many owners at this stage are very unrealistic in their expectations and as a consequence, many times you cannot get a good deal.

Also during this stage, you will have to have a stratedgy to deal with the underlying mortgage holder…. the bank.  While there are many possibilities of how to accomplish this task, rest assured that unless you are trying to acquire $5M of property, you will not be high on the priority list of banks.

In short, this can be a very time consuming process where you need to look at many deals to get one.

FORECLOSURE SALE

The next option is to buy the property at the court house steps during a bidding process.  In this case, you are bidding against many other professionals in the hopes that you can get a great deal.  Of course, you have lots of issues like:

• You don’t know the minimum that the bank will take in advance;
• You cannot inspect the property (inside) before the sale;
• You will typically need to cash buy the property with 24-72 hours after the sale.

While some people make a living doing this, it can also be a very time consuming process.

BANK REO

This is our favorite stage to purchase….. after the bank has been forced to take the property back.   In this case, there is two methods to buy:

Method 1: Bank REO’s go out to brokers at somewhat reduced rates.  Generally, this is not your most advantegeous time to buy because the bank is still trying to maximize returned capital.

Method 2:  Banks bundle 100’s if not 1000’s of homes together and sell them to private equity groups at pennies on the dollar because of the large volume that they buy.  What BankREOSpecialists.com does is then bring those properties to you at incredible prices.

• Who Is "REALLY" Making $ In Today's Real Estate Market? Our 29,689 Members Tend To Agree... It's Usually Not The GURUs Have you ever noticed that every "Guru" real estate pitch sounds the same........ They once were poor, but now are rich working only 5 hours per week, and you can be rich too if you just buy their "can't fail system". Or have you noticed that every property promote has a can't miss proposition, if you just buy TONIGHT.  At the NoBullRE club, we are huge believers in real estate investing...... but we also know that every approach has two sides: Nothing is perfect.  If you want unbiased ("No Bull") facts of who is making money, how are they doing it, and where do they get their knowledge, then you don't want to miss joining the NoBullRE Club  IT'S FREE (FOR NOW) Name Email See What Others Are Saying SECURE & CONFIDENTIAL Your info will never be shared CONFIDENTIALITY GUARANTEED

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