Posted by: Vincenzo in Single Families, selling homes, Remodel, Rehab, Real Estate Investment, Real Estate, Property Ownership, Market Prediction, investing, Homes on the Market, Getting Started, Foreclosure, Flipping, Equity, Due Dilligence, Buying Homes on
May 18, 2010
There are a number of people in today’s market that are looking to put their money to work in more ways than one. Sure you can invest in the stock market like every other person out there or just buy an annuity that will give you a steady stream of income. Or you can invest in the real estate market that is just filled with more properties than anyone has ever seen. Because of the persistent presence of bank foreclosures, the real estate market has many amazing deals. This type of investment is not for the faint of heart, since your money may be tied up for months to years. There are a few ways you can invest in real estate that will make you money. The most recognizable way that people have made money was buying homes to flip in the short term. The other option is to hold them as rental properties for a few years while it is rented out for a steady stream of income. If you are looking into flipping homes you need to have expert knowledge of the area to make sure you are buying it at a price that will make you money. You also must consider the money needed to update the home so that it will sell quickly. As a general rule the nicer the home looks compared to others on the market the faster it will sell. However the investor must be careful not to put too much money into the home where he has no chance of recouping that upgrade. For example putting in a pool will cost more than you will get when you go to sell it. It might look great but items such as pools will not return the investment required to put it in. The goal in these types of investments is to buy and sell as many houses as you can. You need to find the right people who will help you achieve this goal such as local contractors and Realtors. They will be the key to helping you find the property, fixing it at the best price and then putting it back on the market.
The other type of real estate investing that is going on these days is to buy and hold as a rental property. There are many condos and smaller homes on the market that make great rentals. These can be so cheap that in a few years your entire investment has been paid off by your tenant. You still have to do your research and know the area before you buy. Making sure that your condo is in a safe part of town with stable employment is very important. If the tenant loses a job the faster he or she finds a new one the better off everyone is. Also knowing the area rents give you an idea of what your monthly income will be from your investment. With this monthly cash flow coming in you can even take part of it and trade the currency markets. With the help of forex trading charts you can take that monthly rent and double it. This is not to say that you might want to spend it on a vacation for you and your wife, but a forex position is a good way to hedge against your real estate holdings.
You can also buy real estate because you feel as if renting is giving your money away. This is very true. While renting you are not building wealth and only paying the owner of the property to go on vacation and play on his boat. Once you become a home owner you have that feeling of accomplishment knowing that you own a home. You don’t have to worry about a security deposit or wondering if your landlord will ask you to replace the carpets. The entire home is yours and you are free to do whatever you want to it. After all owning your own home is considered the American dream, and in today’s market you can buy that dream for a lot less than in the past.
Posted by: Alan Brown in Remodel, Rehab Money, Rehab, Real Estate, Property Ownership, Private Lender, Marketing, Investment, investing, Inspection, Homes on the Market, Getting Started, Foreclosure, Flipping, Equity, Due Dilligence, Comps, Buying Homes, Bank Owned, Appreciation, 1031 Exchange on
Mar 14, 2010
As a general rule our investing business focuses on buying distressed real estate properties, rehabing them and renting them to good long term tenants. Over the past year we've been able to generate on average a 20% annual return for each single family house we've purchased using this model.
From time to time we need to generate capital to finance new acquisitions. Flipping retail homes is one way to raise relatively quick capital albeit it can take up to 6 months to get cashed out. Flipping is generally frowned upon by sophisticated investors and I for one generally agree. But there are times when waiting 5 to 10 years before cashing out of a rental property is just too long to wait to unlock your equity in an investment.
We found a good deal on a 4 bedroom 2.5 bath 2800 sq ft home in a strategic area of Michigan for about $57,000. We intend on investing another $35,000 into repairs and improvements. Comparable homes in the area are selling between $130,000 to $150,000 in under 6 months. This would give a net profit of between $38,000 to $58,000 before closing costs are factored in.
Posted by: Investors Lounge Online in Sub Prime Lending, Refinance, Recession, Real Estate Investment, Real Estate Agents, Pre Foreclosure, Mortgage, Market Prediction, Market Bubble, Loan To Value, Legislation, Investment, Foreclosure, Financing, Equity, Economy, Credit Report, Credit Cards, Commercial Real Estate, Bankruptcy, Bank Owned, ARMs, Appreciation on
Sep 28, 2008
This current talk of financial bailout suggests that as a result mortgage rates will fall allowing a surge in home buying especially for first time buyers. Still one must wonder how long this will last but also what are the long-term impacts for the housing market? Right now it feels like the lending industry is distressed but this may not be true for very long. The banks at risk of failing just need to time to recover and it will actually be consumer confidence that drive the economy back to being fruitful again.
There just seems to be a lot flux in the market, organizations don't know if they are coming or going. This is a period of acquisition and consolidation. Lehman Brother's is on the auction block, AIG's failure has brought the issue of bailout into the limelight and Bank of America, of course, will remain standing, buying up new pieces for their vast umbrella like Merrill Lynch. This week has been historic and shocking for the experts even to say, they don't know what should happen. That's tough. While so many people grasp this concept, many are putting their ducks in row and wonder if this is a right time to even think about buying a home or new car. I believe people are hesitant this week but this will change once there is direction and leadership toward resolution. This is what some experts have to say about the future of home buying:
How does the latest fallout from Wall Street influence mortgage lending rates? Well, let's take a look. We can only hope. In the interim rates will more than likely go down because there is a lot shuffling going as the dust settles and investors look for safety nets in this uncertain market. Upon many experts advise, this is a time to put our money in real estate investment or income property. As of last week the 10-year notes went down which means that the yield also decrease but this makes for new opportunities. Experts expect mortgage rates to follow this trend because historically they usually follow suit. Expect rates to drop further as more news brakes. Just within the last week Bankrate.com commented that the 30-year fixed rate was 5.78% down from 6.08% of the previous week. Just to compare, this rate was 6.5% in August.
Posted by: Investors Lounge Online in Sub Prime Lending, Seller Finance, Recession, Real Estate Investment, Over Leveraged, Over Financed, Market Prediction, Market Bubble, Investment, Getting Started, Flipping, Financing, Equity, Economy on
Aug 28, 2008
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 Many people do not understand the liquidity of real estate transactions and are often lead to believe that the transaction hinges on the accessibility of cash money. In this day and age of a troubled economy, few have such means. The reality is there are other benefits to explore when embarking upon a real estate transaction that has less to do with cash funds and more to do with the existing loan situation. Many homeowners do not see their existing loan as equity building over the years or that their home could work favorably on their behalf. So many people think with lack of cash, real estate transactions don't get done but there is flexibility in creative thinking.
This is where the know-how and knowledge of real estate professionals and investors must apply creative thinking to the every day challenges of doing business in such a slow market. While there is creativity thinking and finance involved, there is also the ability to have a tough skin that sets these professionals apart from others.
Many real estate investors and seasoned realtors will tell you that access to cash is not always the deciding factor in all real estate conveyances. In fact many layman do not see the notion of converting liquidity into part of the equation as being the talent for translating assets into working for the customer as an added benefit.
These professionals look at the positive aspects of the deal, which starts with ownership of property and these highlights remain beneficial to the success of the real estate transaction. |
Posted by: John Burrows in Sub Prime Lending, Refinance, Recession, Real Estate Investment, Pre Foreclosure, Over Leveraged, Over Financed, Mortgage, Market Prediction, Market Bubble, Loan To Value, Investment, Foreclosure, Financing, Equity, Economy, Bank Owned on
Aug 13, 2008
The so-called days of the mortgage boom are over causing a certain amount if disbelief among industry professionals. Like a bad hangover from Saturday night wild party, those who gained from historic low interest rates and flexible lending products that spawned the real estate boom at the turn of the millennium, are now slowly waking to reality. The once profitable sub-prime market is now close to extinction as many institutions known as great powerhouses are no longer in the business to originate loans. While Wall Street may have had a say in rating these companies poorly, the ones who catered to a specific clientele should have seen a shift coming especially when the funding is no longer available. 
So what is the big deal anyway? All this hoopla has many asking, what is a subprime loan anyway? How does this influence the mortgage industry? So okay, a subprime mortgage is a real estate loan given to a consumer with less than perfect credit and little or no down payment available. One must keep in mind the majority of loans in a financial institution's portfolio does not consist of these types of loans but during the mortgage boom, many consumers took out these types of loans as a means of affording the American Dream of homeownership. These loans broke down the barriers to home ownership because of their flexible lending parameters. What this has now lead to be a marketplace upside down in loans not considered "A" paper but B, C, D and F translating into a high-risk venture? As home values have risen so has the risky nature of these loans still being unpaid or falling behind.
So how did the bubble burst so badly, one is also wondering? As subprime became a more popular loan product, so did the practice of selling it to the consumer become more flexible. More and more lenders approved borrowers with not only less than perfect credit (small blemishes) but also those with poor track records including larger debit issues like previous foreclosure and automobile repossessions. What further compounded the issue is the lenders sales device of enticing the poor credit customer by offering homeownership programs with minimum documentation needed known as "stated-income" or "no doc" loans.
Understanding the fundamentals of finance known as the time value of money is key in real estate investment. Such causes as inflation make the real value of a dollar less in the future than it is worth now. Because of this principle, buying property outright in cash does have its drawbacks, financially speaking, because another use of that cash may actually benefit the investor in the future more than it would if it was expended in an immediate purchase.
When an investment is made using funds that have been borrowed, we call this activity leveraging. It is the expressed intent of the investor to make a return on the investment. If a $100,000 property were to appreciate 10% over a 12-month period, its value would be $110,000. The return on investment (ROI) would correspond to its appreciation of 10%, not including the costs of selling the property.
For those investments made with borrowed money, the resulting ROI is actually a much higher percentage of the out-of-pocket investment. Should the investor contribute $10,000 in the purchase of a $100,000 property, and capitalize the remaining $90,000 in financed funds, a 10% increase in the value would still yield an increased equity of $10,000. However, the ROI is 100%, because of its basis on the actual out-of-pocket investment of $10,000 made by the investor. Essentially, the investor doubled his investment! Of course, in financing the remaining $90,000, costs associated with financing interest would diminish the actual yield. As a way of allaying these financing costs, a good strategy would be to rent the property to generate revenue.
All investors including ones new to the playground know that the "golden grail" to succeeding in the real estate business is location. Location is the alpha and the omega of the real estate world. The common mistake is many assume that high-end prime location property is the be-all to end-all but that is simply not the case. Although those locations are often sought after they are not always the most favorable for an investor. When evaluating a property, the investor needs factor in the property's cabability of producing a high return, regardless of the forecast prediction.
It seems like yesterday that Britney Spears was the hottest thing to hit the music scene & no one could have imagined that her stock a.k.a. her career could have dropped so quickly after riding so high and her oops so far has not been done again. The same falls true for property and the location you purchase it in as well as the potential of what you can do with it. An area can be highly desirable for five years running and just as you decide to zero in on it you notice it is like that slow leak in your tire that took a couple of weeks before it had you parked on the side of the road. It must be determined if the tire is just flat or totally shot as in what is the potential for a property in a location to rebound or will it remain in a lull for a long time to come.
It is very important to understand how critical location is in terms of how it can increase your ability to sell during what seems like an elevator that has a broken "up" button and keeps heading down floor after floor but you know eventually it is going to stop. The great news is that just like that battery that you assumed was dead but starts working like a charm after charging, the value of majority of locations will go up in time.
You don't want to end up like Evander Holyfield with the threat of losing his 54,000 square foot home expressing "I have money but I am not liquid" Whew, that is quite a statement because we know one of the bottom lines is liquidity so when you purchase that property please consider how soon you might see a return on investment, and what you can pull as profit if any when you decide to sell seeing as that your profits for a time will be held in equity. When your profits are tied up in equity, do your best to select property that can meet its forecast, produce ample returns, and provide easy liquidation, regardless of the market condition
