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Real Estate Investing Training Video - How To Wholesale Houses Part 2

2009-12-02T01:34:00.001-06:00

Real Estate Investing Training Video - How To Wholesale Houses Part 1

2009-12-02T01:25:00.002-06:00

Build a buyers list first before wholesaling!

Real Estate Investing Wholesaling Houses - Typical Junker

2009-12-02T01:22:00.001-06:00

Look at this junker!

Real Estate Investing Training Video - How to Flip a House part 2

2009-12-02T01:14:00.001-06:00

Real Estate Investing Training Video - How to Flip A House Part 1

2009-12-02T01:12:00.002-06:00

Sources To Temporarily Fund Your Deals!

2009-11-23T02:05:00.003-06:00

In this article I will list a few places that do transactional funding. I will also list a few places that do hard money lending, in the event you will need to hold on to the property longer.

When investing in real estate, there are times where you can do fantastic no money down deals. Other times you will need to use some cash. Many title companies are now refusing to do the old fashioned double closings where you use buyer funds to close (a dry closing). How do you remedy this situation? Why not try transactional funding (also known as wet funds). Before doing the deal, let your title company know that you will be doing two closings that day on the same property and that you have wet funds.

Transactional funding sources:

http://www.ivisionaryfinancial.com/

http://cashformyclosing.com/

http://www.tempofunding.com/

http://www.coastal-funding.com/

Hard money sources:

http://www.rehabfunding.com/

http://www.kennedyfunding.com/

http://www.brookviewfinancial.com/

Lenders with both hard money and transactional funding:

http://www.blazevicfunding.com/

Check out these sources above. Ask them questions and see if they are right for you.

How to Find Discounted Real Estate and Where to Get Funding

2009-11-23T01:27:00.001-06:00

Right now is a great time to invest in real estate. Investing in real estate is as simple as learning the process, building a buyers list, finding the deals and having access to money.

Learning about real estate investing can be done with courses, books or you can join a local real estate investment club and network with investors. Often times real estate investment clubs hold seminars or courses. You may even be able to find a local mentor, build your buyers list, locate deals or get access to funding.

While much information out there suggest you do not have to have money to invest in real estate, that is not exactly precisely correct. You do need money but it does not have to be your own money.

Funding came come from the following sources:
-Private lender
-Hard money lender
-Transactional funding

Buy building relationships and networking with other investors you will find yourself learning the ins and outs of investing and soon you will find yourself doing deals.

You can also find discounted deals and free real estate investing videos by going to www.wholesalerealestatechicago.com

Good Faith Deposit – Real Estate Transactions

2009-11-23T01:16:00.000-06:00

In a real estate transaction, a touchy issue is how much trust the seller has in a buyer. The existence of a good faith deposit helps put a seller at rest.

Good Faith Deposit

If you are selling your home, condominium or other real estate, you should always require a buyer to make a good faith deposit. The good faith deposit simply establishes that the buyer is serious and, to some extent, has the financial capacity to follow through on the purchase.

The amount of the good faith deposit is dependent upon the agreed sale price of the real estate. Although percentages vary from state to state, a cash deposit equal to three percent of the sales price is typical. For instance, the deposit would be $9,000 for home selling at a price of $300,000. As with most transactions, this percentage is negotiable. I don’t recommend that you accept anything less than two percent.

Once the buyer and seller agree to the amount of the good faith deposit, you have to figure out what to do with the deposit. Importantly, the seller should not hold the deposit as doing so could make the buyer very uncomfortable. Instead, the money should be deposited with a third party and held “in trust.” Potential third parties include escrow and title insurance companies as well as an attorney if your state requires their involvement.

A good faith deposit acts like an insurance option for a seller. Moving through escrow can take 30 to 60 days, during which the property is off the market. The good faith deposit essentially compensates the seller for this time in the event the buyer is unable to follow through on the purchase of the property.

Depending on the laws in your state, a buyer who can’t close will lose the deposit. Typically, the only exception to this is when the seller allows language indicating the deposit will be returned if the buyer can’t get a home loan. Of course, including such language can open the seller up to repeated frustration when bad credit buyers repeatedly fail to get funding.

Good faith deposits are a fundamental part of a real estate transaction. Buyers should expect to pay them and sellers should demand them.

Mobile Home Rentals - A Great Investment

2009-11-23T01:14:00.000-06:00

Why mobile home rentals? Get past the prejudice and look at the numbers. In our town, for example, a two bedroom house costs $130,000 and rents for $800/month. A $50,000 mobile home on real estate gets $500/month. Cash-on-cash return on investment is obviously higher with mobile homes.

Don't let the half-truth that mobiles depreciate in value keep you from investing in them. They lose value in a park, on a rented lot, but not on real estate. My first home was a mobile, bought for $19,000 and sold for $45,000 fourteen years later.

House rentals here usually have negative cash flow, while mobile home rentals have some cash flow. Still, investors prefer houses, believing they'll build equity faster, but is that true? Only during times of fast appreciation.

Equity Building With Mobile Home Rentals

Buy a house for $120,00 with $20,000 down, and take out a $100,000, 6%, 30-year mortgage. You'll have a payment of $599.60. Of the first payment, $500 will go to interest, and $99.60 to principal. You only built equity of $99.60. This ignores appreciation, but only for the moment.

Second scenario: Find a mobile home for sale on land, and borrow $30,000, at 8%, amortised over 10 years. Higher interest and a shorter term is normal with mobiles, but being done with payments in 10 years instead of 30 sn't all bad. The payment will be $363.99. The first month, $200 will go to interest, and $163.99 to principal. You built more equity in this scenario.

Mobile home rentals on land might appreciate more slowly than the "regular" house, but faster loan pay-down usually covers this factor. Pay less per month, have positive instead of negative cash flow, and build more equity! Don't expect your real estate agent to tell you this.

Mobile Homes - Cash Flow

In the example, you'd lose about $150/month on the house, after the payment, taxes, insurance, repairs and other expenses. You'd have cash flow with the mobile home, and after ten years (when the loan is paid off), you'd have a lot of cash flow.

Mobiles are cheap to maintain. The furnace died in rental I owned, and I replaced it for $1,200, much less than a furnace for a larger home. For $200 you can have the roof tarred, instead of $5,000 to re-shingle a traditional roof. Windows, plumbing, doors - they're all cheaper. Property taxes and insurance are less too (be sure you can get insurance, since some old mobiles may be uninsurable).

The Bottom Line

$20,000 can buy two mobiles, with $10,000 down on each, or four with $5,000 down on each, instead of one negative-cash-flow house. The two investors in our town that own most of the mobile homes always have cash flow, and have built millions in equity. Others, following their prejudices, struggle to make money with their "nice" rental homes. So when you're looking for a good investment, don't forget those mobile home rentals.

Real Estate Terms – From Appraisals to Comps

2009-11-23T01:12:00.000-06:00

When you’re selling your home or other real property on your own, you don’t have to know everything about the process. It does help to have a practical knowledge of the terms that come up during the process.

Keep in mind, these aren’t intended as “be all, end all, penultimate” definitions. They’re working definitions for pragmatic folks. Let’s go…

1) Acceptance - A legal term referring to the acceptance of a buyer’s offer by the seller. Acceptance is often preceded by a number of counter offers between the parties.

2) Appraisal – a professional opinion of the value of real property. Most jurisdictions have careful rules defining who may call themselves an appraiser, and most lenders have a “stable” of approved appraisers whom they use regularly. Typically, the lender making the new mortgage loan will require that the property appraise for at least as much as the purchase price. Occasionally, a buyer will require the same thing in an all cash transaction.

3) Bridge Loan – Short term loans used to “bridge” any time gap between the sale of a home and purchase of the next one. These loans can be valuable when escrow is delayed on the sale of a home and the seller has committed to the purchase of another home. Bridge loans are also known as “panic loans”, but can be a life saver.

4) Coinciding Settlements – when a buyer needs the funds from the sale of his prior home (which is under contract to be sold) in order to purchase his next home, he may well make settlement under his sale a contingency for settling on the home he is purchasing. In reality, the sales don’t usually coincide. They usually take place back to back. Funds from the first are often wire transferred to the second.

5) Closing – Depending upon the state you live in, Closing can have different meanings. Generally, the closing of a real estate transaction refers to the exchange of necessary documents, execution of the same and transfer of money.

6) Comps – This term refers to the sales prices of similar properties in the area of a house in question. Comps are used to help determine the fair market value of a property.

7) Conditions – any conditions which must be met before the sale can be consummated. Some typical conditions include things like the property’s appraising for the purchase price or more, the property’s being in good condition when a home inspection is done, the buyer’s loan being approved.

As you can image, there are many real estate terms for which you have a general understanding. In our next article, we continue with the terms starting with “Condominium.”

Finding Structural Problems During Escrow – Upscale Home Example

2009-11-23T01:08:00.001-06:00

When buying and selling homes, the property purchase is often subject to a satisfactory home inspection being done. Now and then, a home inspection uncovers severe structural problems. Here’s an example of a situation in an upscale neighborhood.

Severe Structural Problems

Does the buyer walk away when there are serious structural problems? Yes, but not always. A lot depends on the constraints facing the buyer (are they relocating to start a new job, or just “moving up” in the same general area?) and on how much the buyer likes the property. The attitude, maturity level, communication skills, and flexibility of both buyer and seller also make a huge difference.

It’s easy to see a deal blowing up in this situation. Let me tell you about a situation I saw that actually worked out.

Structural Problems – Upscale Neighborhood

The first involved two professional couples and a house one couple wanted to sell and the other wanted to buy in an established, up-scale neighborhood. The house was a colonial style, all brick, very traditional house built about 15 years ago using top of the line materials. The kitchen and bathrooms had been modernized and upgraded within the past 3 years. Top of the line materials (marble, ceramic tile, and granite) were again used.

The house was located on an acre lot that sloped gently down to the street in the front. About 10 feet from the right side of the house, the lot sloped steeply away to a pretty stream. The lot backed to a treed area of a beautifully maintained, historic estate owned by a university and open to the public on a fee-paying basis.

The home inspector noticed that the chimney on the right end of the house was pulling away from the house. It was about 2 inches away at the top, but the bottom was still attached. In the basement, there was some cracking along the wall the chimney was on. The home inspector would not certify the house as structurally sound, but recommended that an engineering firm take a look at it.

The buyer asked the seller to have an engineering study done. The seller was upset but didn’t go to pieces. Something was causing the chimney to pull away, so they called in an engineer. For legal reasons, the sellers also needed to understand what the problem was.

The engineer determined that shrink-swell soil was causing serious foundation problems. They recommended digging down a lot further than the original footers and constructing an elaborate new support system. The sellers agreed to do it and the buyers agreed to delay closing until the work was completed. Thirty thousand dollars later (out of the sellers’ pocket), the transaction closed.

In Closing

When considering the above example, what is the moral? If you keep a cool head and look for solutions, structural problems need not be a deal killer.

What is a Home Inspection?

2009-11-23T01:06:00.000-06:00

Any Sally and Sam Homebuyer can look at a home and decide whether it is attractive. They might notice it is freshly painted in pleasing colors, has the requisite number of rooms, a cook’s kitchen and is located in a location with top schools. But what about less obvious parts of the house?

It takes special expertise to determine if the functional parts of a home are in good shape. If you attend an open house, how do you determine if there are plumbing problems, electrical problems, structural problems, drainage problems, the condition of heating and air conditioning equipment and the condition of literally hundreds of other items that could cause concern?

Enter the home inspector.

A home inspector is trained to be a detective in regard to the construction and working parts of homes. It is not an exact science.

The home inspector cannot tear into things, so they can’t always see everything they’d like to. They do, however, come equipped with ladders, strong flashlights, and devices to measure various things related to plumbing, electrical and other necessary home items. Importantly, a home inspector will also typically bring a digital camera to photograph problems such as roof shingles not lying flat, signs of mildew from leaking pipes and construction that doesn’t comply with building codes. They don’t miss much.

It’s a good idea for the buyer to be present during the home inspection. If you ask them to, home inspectors will usually explain how things work to you. This is important as they can show you where cut off valves are, how to remove filters for cleaning or replacement and tell you how often various maintenance chores need to be done. This information can be very valuable if you ultimately purchase the property.

It’s also a good idea to ask the home inspector if there are any particular tests they would perform if they were buying the home. For example, radon gas (a colorless, odorless gas which is a carcinogen) can be a problem in some parts of the country. It can be detected, measured, and, if levels are above EPA standards, there are procedures to deal with it successfully. A home inspector can help identify such issues for you.

It’s easy to see that a home inspection can provide a wealth of valuable information. While it is easy to fall in love with a listed home, a home inspector can be the key to avoiding disastrous discoveries down the line.

Closing Costs When Buying A Home

2009-11-23T01:02:00.000-06:00

Closing costs are often the last thing a person thinks of when buying a home. While closing is the joyous moment the home becomes yours, the costs can be surprisingly aggravating.

When you purchase a home, condo or other property, you will go through a period known as escrow. During escrow, various issues related to the property transfer are worked out. The last day of escrow is known as the closing day and you are going to be paying closing costs.

Closing costs come in many forms. Some involve significant dollars while others are relatively painless. Here’s a list of typical costs:

Escrow Fees

An escrow agent is essentially a third party that works with the seller and buyer to finalize the transaction. For this assistance, the escrow agent will charge a fee. Depending on your area and the agent, you can expect fees from a few hundred dollars to around a thousand or so. Make sure you find out the fees before picking an escrow agent.

Home Loan

Obtaining a home loan in the current market is a highly subjective event. “Points” can be a major cost associated with home loans. Points are essentially a fee you pay or have build into the loan for the privilege of being allowed to borrow money. A point usually equates to 1% of the loan. On a loan of $300,000, one point would equal $3,000. If you have excellent credit, you can shop for a loan that doesn’t require you to pay points.

Home and Title Insurance

Insurance for your home and title are a must. If you are borrowing money to purchase the home, each is mandatory. If you are using your own funds, you should still get both forms of insurance. As each name implies, they provide insurance against issues involving your home and problems with the title transferred to you. You want to have clear title.

PMI

Private Mortgage Insurance, “PMI”, is mandatory if your down payment is less than 20% of the purchase price. You can expect to pay a few hundred dollars a year in PMI. Inspections, Appraisals and Miscellaneous Fees

In the home purchase process, you are going to use a variety of services to validate the property is your dream home. These services come with fees and you can expect to pay for home inspectors, appraisers and the like. Depending upon the state you live in, many of these fees may be built into your mortgage. Nonetheless, you need to know exactly what you must pay for on closing day so you can budget accordingly.

Closing escrow should be one of the happier days in your life, particularly if it is for your first home. Make sure you know the costs associated with it so you don’t have to spend the day running around borrowing money.

Selling a Home – What Personal Property Stays?

2009-11-23T01:00:00.000-06:00

The home selling and buying process can be confusing, particularly when it comes to figuring out what items stay with the home. This is especially true when it is a FSBO (for sale by owner) operation. It’s even tougher when neither the seller nor the buyer is in the real estate business. This article sorts out what personal property stays with the home when it is sold.

Personal Property

Although every state has slightly different rules, there are general guidelines to what goes and stays when a house is sold. Typically, any items attached to the home stay with it while non-attached items are considered personal property and go with the seller. For instance, the seller typically takes personal property such as tools and potted plants.

Certain personal property items, however, don’t always go with the seller. In Virginia, items such as stoves, washers and dryers, refrigerators and built-in microwaves usually stay with the home when the buyer moves in.

If you’re a seller and you don’t offer the items generally expected to convey, you make your property less attractive than the competition. With the red-hot real estate market, it may not matter. You may still sell your property quickly and easily.

Conversely, if you’re a buyer, you can gain an edge with a seller who wants to keep an item of personal property. Allowing them to haul off a particular item is a good way of building good will. When deciding how you want to approach your options here, consider how competitive the situation is and the monetary value of the item. You always want to keep the big picture in mind.

As with most things related to the real estate buying and selling process, keep in mind the relationship between the parties. The buyer and seller are not enemies and all items on the table don’t carry equal importance for both parties. If you are willing to be reasonable, there is almost always a win-win solution.

Selling and buying a home can be an emotional rollercoaster. If the parties work together, it doesn’t have to become a scary one.

Home Staging Strategies for Selling Your Home

2009-11-23T00:57:00.001-06:00

Who are you preparing your home to sell to?

You, as a home seller, have two initial choices.

1. Sell your home as a bargain to investors or bargain shoppers with limited income, or

2. Sell your home for top dollar to your target market.

To prepare your home to sell to investors and bargain shoppers, all you need to do is look for a real estate agent who advertises bargain houses. This agent will list your home under market value. Then sit back, watch TV, and sell your home for a rock-bottom price. Don't be surprised when you get many offers for lower than your asking price right away.

If you want to work a little, or perhaps a lot, you can sell your home for top dollar. Explore ways to create a buyers' dream home. Because buyers let their emotions rule their decisions, stage your home for your specific buyer profile.

To sell your home for market value quickly, remove all your personality from the home. Besides getting rid of clutter, pack your family photos, children's artwork, trophies, and personal effects. Buyers want to envision their belongings in their new home.

Design Psychology home staging strategies include setting up spaces with suggested activities that buyers perceive as a lifestyle change. You want home shoppers to think that if they choose your home, they will enjoy a new life.

Get busy removing clutter, packing memorabilia, home staging, and prepare your home for a top-dollar sale. Don't be surprised when you get many offers for more than your asking price right away.

Copyright © 2005 Jeanette J. Fisher. All rights reserved.