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: Alan Brown in Single Families, secure notes, Retirement, Real Estate Investment, Real Estate, Private Lender, Land Trust, investors, Investment, investing, Hard Money Lender, Getting Started on
Jul 03, 2009
Investing in fixed secured real estate notes can yield fruitful returns often higher than mutual funds while providing security of investment only found with bonds and CD's. Conservative investors looking for stable long-term investments such as bonds, CD's or money-markets currently only receive APR rates between 2% and 4%. The inflationary period looming due to government spending, budget deficits and money printing will continue to drive these investments into the ground. A high price to pay for security of investment.
What Is A Fixed Secured Note Backed By Real Estate?
A first position high yield collateralized note much like a lean held by a mortgage lender on a piece of real estate that can be called due if the terms of the agreement are not met between lender and borrower. In this case, the note holder (i.e. private lender) would simply take control of the real estate if the terms of the loan are not met. The borrower (i.e. real estate investor) will buy a piece of real estate with the money provided by the note holder. The two parties agree on a set of terms of the note. The property is purchased and the term starts. A fixed secured note can also provide investors such as retirees tax free income by using a self-directed IRA for the source of the note. For more information on self-directed IRA's visit: http://www.trustetc.com
Terms
The terms of a fixed secured note are generally 3 to 5 years, 6% to 10% APR interest only with monthly payments. There is typically a balloon payment of the original principle payed to the note holder at the end of the term just like a CD.
Posted by: Nick Johnson in Single Families, Remodel, Rehab, Recession, Real Estate Investment, Real Estate Agents, Private Lender, Preforeclosure, Offer, Motivated Sellers, Mortgage, Market Prediction, Investment, HUD, Hard Money Lender, Getting Started, FSBO, Foreclosure, Financing, Economy, Due Dilligence, Bank Owned on
Feb 18, 2009
Over the past 12 months my partners and I have been buying single family home foreclosures. Homes are selling for deep discounts and providing high cash-flow rates once rented. Our strategy is not to buy and flip, but to buy, rehab then rent to provide cash-flow and capital appreciation. On the surface this may seem as easy as drinking coffee because of the high number of foreclosures available. But don't be fooled with high quantity and low prices. Buying foreclosure properties is not as easy as it may seem. Buying houses for cash has been our strategy which is one way to up your chances of success. Refer to my previous article "Buying Real Estate With All-Cash" In todays article I'll outline another strategy that when paired with all-cash works for us.
Relieving Some of the Burden
Buying homes at deep discounts for cash relieves vacancy pressure as there is no unerlying mortgage. You may still have a lean on the property held by a private lender but hopefully you have worked out the terms so that you have 60-90 days until your first interest payment. Racing out to find a tenant before your first payment is no longer a pressing issue. You can be more choosy when screening tenants. You can hold closer to your asking rent price and not decrease it just to get the property occupied. You can save money by performing more of the rehab yourself. These are just a few of the benefits.
The Problem With Real Estate Agents
As easy as it might seem to buy real estate at low prices, a problem has arrisen that must be addressed if we are to successfully close deals with banks. I have found, as with many of my collegues that seller real estate agents have all the control when it comes to you submitting your offer, deciphering which offers to submit, how much information they tell you ahead of time, and lets face it some blatently do nothing. As a buyer in the past I have typically used a buying real estate agent to help me track down candidate properties, perform showings and leg work. As a result I did not close many deals dispite offering near or above asking price. The reason...
Posted by: brad miller in Sub Prime Lending, Refinance, Recession, Private Lender, Mortgage, Loan To Value, Financing, Economy, Credit Report, Credit Cards, ARMs on
Jun 13, 2008
Time is of the essence for those of you that have adjustable-rate mortgages (ARM)! The housing has taken a big hit in the aftermath of the mortgage crisis, for both home sellers and buyers. Lenders are being much more astringent in their lending practices, and some are even going out of business. All of this leads to a tight credit market.
For those that negotiated an ARM, the mortgage knife cuts in two ways: home values are plummeting while mortgage payments are jumping up. This could result in default when payments exceed the owner's ability to pay, but then the resale price is not sufficient to cover the original mortgage to begin with. So, that's how we got to where we are now.
Is there a way out of this mess? The easy answer is, maybe.
The current credit market is by no means as favorable as it was just a few years ago. Lenders were much more prone to making high-risk loans, which endangered not only their business but the borrowers as well. In those boom times, teaser rates were the hook used to entice borrowers into mortgages that appeared to be good in the short term. This was all put in the positive light of home values, which were believed to keep rising. Borrowers were betting on an uncertain future that seemed to be bright. Now that future is here, and it is proving to be more difficult than the borrowers or lenders could have ever imagined. So now those same borrowers are seeking ways to alleviate the mortgage crunch, but are finding few options. What they need to understand is that through some patience, determination, and the ability to reach out to those that can help.
