Monthly Archives: December 2011

Dec 19

Finding Deals in Bank-Owned Home Foreclosures

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It is a fact of life; foreclosures happen. The upside to the foreclosure activity that is seen throughout the country today is that there are many bargains to find in both primary residences and investment properties. A bank-owned home foreclosure can be a great way for a first-time owner to break into the housing market, since the prices are generally low and the financing can be quite negotiable. These types of properties can be a lucrative investment for those with a little extra cash as well, since homes can be purchased for below market value and resold later for a decent profit margin. There are many bank-owned home foreclosures to choose from, and many are located in upscale neighborhoods and good school districts, making them attractive buys indeed.

What is a Bank-Owned Home Foreclosure?

When a homeowner becomes unable to make the monthly mortgage payments on their property, the lender who holds the mortgage can come in and take possession. These properties then become bank-owned home foreclosures and are often reintroduced on the market at a significant savings. While some of these properties will list as low as ten to twenty percent under market value, the most common savings on a bank-owned home foreclosure is around five percent. Still, when you are talking in the range of the price of a home, this can translate into a large amount of money. The extent of the savings will greatly depend on where the property is located and the overall condition. Some of these bank-owned home foreclosures can be in need of massive repair and cleanup, which will result in a lower price but a lot more work for the purchaser.

How to Find a Bank-Owned Home Foreclosure

There are a number of methods you can employ to find a bank-owned home foreclosure in your neighborhood. One way is through the Internet, if you are willing to put forth the time to search for properties on your own. There are many websites available to offer listings of current bank-owned home foreclosures and public auction information as well. Public auctions are often used to list foreclosed properties, and require a potential buyer to be on top of the market and ready to move quickly when the opportunity arises. You can also contact a real estate agent to help you locate bank-owned home foreclosures or check government listings for homes that are currently being sold by HUD. There are many ways to find bank-owned home foreclosures, and much potential to make a profit on the properties that are available.

Dec 18

Foreclosure Investing and Structuring Deals with Private Investors

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As a foreclosure investor, you’ll want to find private investors and structure deals with them. So you might ask yourself, “How much money do I offer my private investors?”  That’s easy: if it’s a new relationship, make sure it’s attractive enough that they are going to say yes! In this article, I explain how to successfully work with private investors.

There is no set amount that private investors expect to make on deals with real estate investors. Some private investors would like to lend you money at 10-12% interest per year. Others may want a percentage of the profits. They all have different expectations. Your job is to understand what they want in exchange for lending you their money.

The terms of private money can be anywhere from one month to whatever deal you need to strike. As long as the investor is getting paid the interest rate that you’ve promised them they’re probably not going to pressure you to give them back their money before the agreed-upon date–as long as it remains secured.

The more private investors you have at your disposal the less your money is going to cost you. And as you continue to have successful transactions with your private investors, their trust in you will go up and they’ll be more likely to lend you additional funds.

With our private investors we let our interest accumulate. For example, we borrow $100,000 at 12% per year, or $1000 per month in interest-only payments. Let’s say it takes 6 months to close the transaction; we will not pay them $1000 a month for six months. We will pay them $6,000 at the end of 6 months, plus their principal back. Most real estate investors will only do interest-only loans. They will not reduce the principal as the deal goes on like a bank would.

What you need to do when working with private investors is find someone who understands return-on-investment. If they don’t know a lot about the real estate business and return on investment it will be your job to educate them with statistics on the real estate industry that show them that investing in real estate through you is a good risk.

These days many investors are scared of the stock market and are looking for alternatives and most investors are looking for something solid. Explain to your potential investors that real estate is a solid investment that is secured by a Deed of Trust.

Here’s my secret for keeping my private investors happy: when I do a good deal with my investor’s money, I reward them with bonuses. If I make a substantial amount of money, let’s say $35,000, I might reward my investor with a $5,000 bonus check. Why? Because I like 12% money with no points. I want to keep my investors happy. It needs to be a win-win situation for everybody.

Continue to seek out private investors in your foreclosure investing business. It can be hard but very rewarding.

About the Author

Paul Wells has been investing in foreclosures full-time for more than 5 years. For more foreclosure investing secrets like the one in this article, subscribe to Paul’s Free Foreclosure Investing course here : http://www.FreeForeclosureInvesting.com

Dec 17

Looking To Invest In Property? Try Foreclosure Lists To Discover A Fabulous Deal

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Both buying and selling real estate can not only be interesting and challenging but it can be a highly profitable business venture – as long as you play your cards right.  You do not even need to make it a full time job if you don’t want to.  However, selling brand new properties is less profitable than selling seized or foreclosed properties instead.  If you want to start looking at investing in property then why not start by looking at a foreclosure list to see what is available?The profits you can make from reselling foreclosed properties is much larger than you would get from selling a new home.  You can often purchase foreclosures for much less than their actual market value and then resell them for a higher price.

You can obtain foreclosure lists from real estate agents who get provided with listings of foreclosed properties from banks.  You can also check out government agencies and there are some web based source providers of such lists.  Often these lists contain detailed information on the various properties such as location, status of the property, the actual address of the property and its foreclosure value.  Such foreclosure listings where provided by banks and government agencies are free because they prefer to dispose of non performing assets as soon as possible so that they can have the cash and invest it elsewhere.  It also means that they will not have to worry about paying real estate taxes or other fees for selling the property.

Web based foreclosure list sources will require you to pay a membership fee before they provide you with access to their database and this is the way that they earn money from the service that they provide to you as the customer.  When you consider how much time you save and how much money you can make with just one foreclosure house deal, these fees really are minimal.

However if you really want to get a bargain when looking to invest in foreclosure properties then ask instead for the pre-foreclosure listing.  Properties on these lists can often be purchased at a much lower price than those that you will find on a foreclosure list. Expect to do more work to get that profit though!

So using a foreclosure list in order to look for a property to invest in for your future financial security is a good way to start on the investment portfolio ladder.

Dec 16

Foreclosed Homes – Capitalize on the Advantages of Foreclosed Homes Investing

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Foreclosed homes can be a great way to enjoy a great home or terrific investment for many people.  While it is a myth that you can always buy foreclosed homes for pennies on the dollar, you can still find very good bargains, with some foreclosed homes selling for as much as 10-40% off the market value of the foreclosed home.

Where Do Foreclosed Homes for Sale Come From?

Foreclosed homes are usually the result of unemployment, divorce, or death.

When these things occur to the average homeowner, if he is not prepared, he may get so behind in mortgage payments that the lender decides to foreclose the property in order to get their money back.  Then the lender takes over legal possession of the foreclosed home, has it appraised and puts it up for sale.

The problem is that there are so many foreclosed homes on the market, appraisals are hasty and under-appraisal is common.  The professionals in charge of appraisals may have to appraise dozens of foreclosed homes in a day, so mistakes occur frequently.  In order to ensure that you get the best deals on foreclosed homes for sale, therefore, it is very important that you do your research well.  You will likely find some foreclosed homes that have been over-appraised.  However, if you keep looking, you will likely find foreclosed homes that are under-appraised and are being sold for far less than the market value.  These under-appraised foreclosed homes can be a great investment.

What Are the Benefits of Foreclosed Homes?

For investors and homebuyers, foreclosed homes:

Are a great way to buy homes.  Foreclosed homes often allow you to buy a more costly or valuable home than you could otherwise afford.

Are great way to build equity.  Since foreclosed homes may be sold under market value and in some cases and require some minor repairs, you can build equity very quickly on them.

They are fast and inexpensive to buy.  Government agencies generally pay the real estate agent’s commission on government foreclosed homes, saving you on closing costs.  In addition, the occupants of foreclosed homes are almost always already gone, allowing you to move in right away.

Whether you want to buy a foreclosed home to live in or to invest through reselling, foreclosed homes are simply an untapped gold mine.  If you want to see all that foreclosed homes can do for you, ForeclosureDeals.com has the largest database of the freshest foreclosed homes for sale listings across the nation.  With experts standing by to answer questions and a free full access seven-day membership trial, you can find the home of your dreams.

Ernani Uchoa is the Author of http://www.foreclosuredeals.com, leading source of foreclosed homes on the web. Keep informed with up to date foreclosures information visting our foreclosed homes blog.

Dec 12

Foreclosure Investing Money Can Come From Anywhere

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As a foreclosure investor, you never know where your money to do the next deal might come from. In this article I’ll tell you a story about how networking with people might turn up your next private investor.

When I first began investing, I figured I would have to go through the traditional lending channels. But I also knew that was very cumbersome. So I wanted to find a source of private funds. One person said if you don’t have your private funding in place, you can miss out on many good deals. Well, I knew I wanted private funding, but I didn’t know where to look.

In August 2002, I was doing a foreclosure deal with a double closing. Everyone at the closing table was dressed very sharply–except for me.  For those of you who know me, you know that I can dress pretty dang casual in any given circumstance, and when I first started this business I did it all the time.  Now, I will dress up somewhat for closings, but a tie is still out of the question.

So I did this deal with all these well-dressed guys there. When we finished the closing, the mortgage lender for the buyers came up and introduced himself to me. I will call him “TB”.

TB said that he had seen the numbers, and that I had made more money then anyone at that table.  My response was my usual: “Well, you win some, and then you win some that are bigger.” And I left it at that.

Well, funny how things happen. I did another deal, and at the closing table sitting across from me was TB. This was a stinky deal.  But TB’s professionalism and his ability to work under pressure and get the deal done impressed me. I told him so after the closing. Again, he said that he saw the numbers and he still was pretty impressed. This time, I had a business card and gave it to him.

The next morning, TB called. “I may have a business opportunity for you,” he said. And we scheduled a time to get together.

At lunch, TB asked if I ever needed money.  He saw how much creativity and enthusiasm I had for the deals I was doing.  He also was impressed by the fact that I always seemed prepared. He offered to fund deals, up to 90% LTV.   That was the difference between him and “hard money” lenders.

I thought to myself, BINGO!!  I had been looking for money, but didn’t know where to get it. Now, I had an investor. TB’s money was expensive–12% interest and 50% of profits–a very, very steep price! However, at that time I needed the money to do my real estate deals, and TB became a source of my funds.

These days I use 12% money on a regular basis and this works just fine for me now.

The lesson of this article: never be surprised where your funds can come from!

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Paul Wells has been investing in foreclosures full-time for more than 5 years. For more foreclosure investing secrets like the one in this article, subscribe to Paul’s Free Foreclosure Investing course here: http://www.FreeForeclosureInvesting.com.

Dec 06

Can You Make Money Investing In Foreclosures Today?

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Today both home buyers and real estate investors have become more aggressive in their hunt for bargain homes and the competition for the best priced and most attractive homes is on the increase.  Because of this foreclosure houses are now becoming the prime interest of both home buyers and real estate investors.

Whilst a foreclosure house can offer you some financial benefits there are also some risks involved as you might expect with any house purchase.  Unfortunately not every foreclosure is the same and whilst interest in them is growing you should be aware of what to look for when deciding whether the purchase of a foreclosure house is for you or not.  Below are a number of things that you should be looking for if you want to invest in a foreclosure house.

1.  Pre-Foreclosures

This type of property can offer you an attractive investment or home purchase opportunity if you are willing to work for it.  There is a period of time when a homeowner will be notified that their loan is in default and before the bank will actually seize the home so that they can put it back on the market in order to recoup their monies.  It is during this period that it will be possible to purchase the property and satisfy any financing requirements that are outstanding on it.

Unfortunately there are two disadvantages when deciding to purchase a property using the pre-foreclosure route which discourages a lot of potential investors from choosing this route.

Firstly and probably most importantly is that you will only have an extremely brief period of time available to you in which to complete the deal.  The period of time available is normally regulated by the individual States in the US and is generally a couple of months.

Secondly is the necessity that you deal with the homeowner directly.  The homeowner is probably not only embarrassed that their home is in pre-foreclosure but also they were likely to be unaware that such information is available to the public.

2.  Foreclosed Homes

This is the final step of a bank or lending institutions foreclosure proceedings and this is when the home is put up for sale on the real estate market.  Unfortunately with this method because the bank is in no hurry to lose money on any loan against a property the savings you will make on a foreclosure house may be quite small.

But there are positives to this method as well.  Banks and lending institutions will offer these kinds of properties at a discount (although it may only be small) and also deals on foreclosure houses are much easier to put together as often these transactions will follow the format that is used for common real estate transactions and will offer you similar protections as well.

Dec 03

7 Big Reasons To Invest In Pre-Foreclosures

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Looking for an in to real estate investing?

Working a nine to five job swapping time for money can be incredibly dispiriting. After the futility of it all hits home, its all you can do to limit the number of home business opportunities you investigate to twenty per week.

One of the more compelling home business opportunities is real estate investing. Real estate investing is the perennial wealth builder, and the transition from working a job to achieving wealth through real estate investing is becoming increasingly well documented.

You’ve probably thought about investing in real estate yourself but you’ve not gone for it because you thought you needed tens of thousands in savings for a down payment, and perfect credit along with strong banking relationships.

Well, you can get all that together if you want. It doesn’t hurt to have those resources. But it’s not necessary to have a huge pile of cash and perfect credit to buy a house cheap and resell it for a profit.

It’s especially not necessary in the preforeclosure market. Preforeclosures are houses in the default phase of foreclosure; where the bank has filed initial foreclosure papers but the Sheriff Sale or Trustee Sale where the bank auctions off the property, or repossesses it if no-one buys at the auction, hasn’t occurred yet.

Buying during the preforeclosure period is one of the best ways for anyone to get involved in real estate investing. With little more than a few hundred dollars and some specialized knowledge you can buy a house at a substantial discount and resell it retail picking up a five figure profit check in the process.

Don’t believe it?

Well, let me give you seven reasons why its true:

1) When people are in default on their mortgage they have stopped making payments to the bank. So when you are negotiating with the seller, and the bank, right up until the point where you buy, no-one is making the payments. For novice investors worried about holding costs this is a huge advantage.

2) Preforeclosures are a very well defined niche market. One of the most deadly mistakes rookie investors make is trying to be a jack-of-all-trades, going after any and everything they can lay their eyes on. The result of this lack of focus is they are soon back at their jobs. By being a very defined market, preforeclosures allow you to develop focused marketing campaigns and standardized processes to get deals completed and closed.

3) One of the fundamentals of real estate investing is contacting and talking only to motivated sellers, and avoiding all the rest. Sellers in preforeclosure are some of the most motivated sellers you will find. Their world has been turned upside-down, they are about to lose their house, and their motivation is such that they just want out of the house and the bank off their back. By buying houses from people in preforeclosure, creating 30%+ equity spreads on houses often in good condition is not a difficult thing to do.

4) Buying houses in preforeclosure enables you to create unusually large equity spreads. Recent economic uncertainty has caused a lot of foreclosures, and rising rates will cause more in coming years. If banks had to take back all of the properties that went into foreclosure the FDIC would shut them down. They know this, so they try not to take properties back they dont have to. By requesting the Lender discount what is owed on their payoff, large spreads of equity can be created on houses that are totally maxed out with loans. This cant be done on loans not in default.

5) Because Lenders are under pressure to liquidate bad loans rather than take the property back, large discounts can be negotiated. After becoming familiar with the issues that cause Lenders to discount, larger and larger discounts can be achieved as you hone your negotiating skills.

6) If your plan is to buy and hold the property, having good enough credit and financials to get bank financing excludes a great many people from getting into real estate. On top of that, if you do get a bank loan, your financial exposure is at its maximum when everything is in your own name and personally guaranteed. Buying houses in preforeclosure allows you to simply take over the existing financing already in place. No qualifying needed. You can take title to the property in a Land Trust, begin making payments on the existing mortgage(s), and still get all the tax advantages, appreciation, depreciation without any of the risk of being personally liable for the mortgage and the property.

7) If you have ever bid at auction for property at the courthouse steps, you are only too aware of the competition breathing down your neck. Lots of mind games. The 40 thieves are talking trash to you trying to get you not to bid. If you are Larry Bird, no problem. Make sure you have $500K on your credit line though. However if you are not the Bird and you dont pack half a mil of credit, you can sneak in and avoid this NBA showdown by buying the house during the preforeclosure period… before the auction.

Make no mistake about it, there are many ways to make healthy profits in real estate investing. But when you look at how easy preforeclosure makes it to buy houses cheap and resell for five figure profit checks, all the while helping people out of agonizing life circumstances, it makes little sense to pursue real estate investing any other way.

About The Author

Ben Innes-Ker is a full-time real estate entrepreneur, best-selling author, and real estate investing warrior. He has developed the “Motivated Seller Magnet – automatic lead generating system” to help real estate entrepreneurs and investors attract more motivated sellers with less effort and increase profits. To learn more about this powerful step-by-step program and receive your free special report, go to http://www.motivatedsellermagnet.net.

Dec 03

Foreclosure Investing: Telephone Magic

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Are you afraid of the telephone?

You would be surprised to find out that many people do not even attempt foreclosure real estate investing because they are afraid of making a telephone call.  If that is you, I have some great news for you.

I am going to take away the phone fear for you at absolutely no charge.

Welcome to the next installment of Matthew Griffin’s 7 Foreclosure Secrets where I am giving away information that is currently being sold on other websites.  Why am I doing this?  It’s very simple; once you see how easy it is to make money in foreclosure real estate investing, I believe you will come to me for your educational needs.  Simply visit my website at http://www.foreclosureprofitsnow.com/.

Would you like to know how to pick up the phone and call a homeowner to discuss purchasing their property without being afraid?  I’m going to tell you.  In fact, what I am about to do is unprecedented.

I am going to tell you exactly what to say.  It’s called a telephone script and some people would charge you hundreds of dollars for it.  I’m not only going to give a script to you for free, I’m going to give you two of them.

All you have to do to work some Telephone Magic is obtain the telephone number of a prospective homeowner and, after practicing a few times, repeat the words contained in one of the following two scripts:

  • Script one.  Hello, my name is NAME and I would like to speak with HOMEOWNER NAME, please.  [After the homeowner gets on the phone with you, say] I am calling you today because we work with people who are facing challenges with their mortgage.  The company that holds your mortgage has filed legal documents with the county to begin proceedings to take your home away from you.  These documents are public record, and that’s how we found out about your situation.  We have worked with people facing this exact same issue for many years, and would like to discuss some possible solutions with you.  We may be able to help you obtain a forbearance, sell your home, find a cash buyer for your home, or take other creative steps to stop the legal proceedings and keep any foreclosure off of your credit report.  We would like to schedule a free, no obligation consultation to discuss possible solutions to this situation.  May I set up a time for us to come meet with you?
  • Script two.  Hello, my name is NAME.  I have been looking to purchase a home in this area and heard that your house might be for sale.  When I drove by to look at it, however, there was no sign in the yard.  Is your home on the market?

As you can see, you don’t have to be afraid of talking on the phone.  Simply go over these scripts until you are able to say them smoothly and confidently.  Feel free to put things in your own words.  You don’t want the homeowner to realize you’re reading something, so do your best to sound natural.  You may want to print out the script and use a highlighter to highlight certain words and phrases as sort of an outline.  That way you can say things in your own words, but if you need help, you can refer back to the script.  After you have made a few phone calls, you will find that you don’t need to use scripts anymore.  You will have overcome your fear completely.

Was fear of talking on the telephone standing between you and financial security?  Are you not living the lifestyle you desire because you thought it was too hard to successfully invest in real estate?  If so, your worries are over.

I encourage you to investigate for yourself the many advantages of successful real estate investing.  If you would like additional information, including the other installments of Matthew Griffin’s 7 Foreclosure Secrets, please go to http://www.foreclosureprofitsnow.com/.

Matthew Griffin