Real Estate Investor – Commercial and Residential

In 2003 the Federal Housing Administration (FHA) feared that flipping homes was the cause of the skyrocketing home prices throughout individual neighborhoods. Because of this, the FHA no longer approved property loans that were resold within 90 days of the original purchase, with the exception of foreclosures owned by government sponsored enterprises (GSEs) such as FHA, Fannie Mae, and Freddie Mac. The anti-flipping rule is designed to help protect the FHA’s mortgage insurance program and federally chartered financial institutions from losses.

In February 2010, the FHA initiated a one-year suspension on the regulation that prevented “flippers” from purchasing single-family homes and releasing them into the market within 90 days. Since then, the FHA says it has insured 21,000 loans that had exchanged hands within the previous 90 days. The loans are worth more than $3.6 billion and would not have qualified for financing before suspension. An analysis of these loans suggest they do not present a greater credit risk than other loans, which lent support to the suspension’s extension.

The government sent a notice to banks in mid-January of 2011 in which it announced the extension of the waiver through the end of the year. According to FHA Commissioner David Stevens, the purpose of the extension was to accelerate the resale of REO properties in neighborhoods where there is a high rate of foreclosure. This will facilitate the purchase of homes that have recently been “flipped.” As a result, foreclosed properties will be moved off the market faster, reducing the amount of vacant homes in neighborhoods throughout the United States.

Limitations considered by the FHA consist of the following:

1.  20% Rule
If resale is higher than 20% of the original price, one must show proof of justified price. For example, if a $200,000 house is purchased and the resell price is $245,000, the house must undergo additional underwriting guidelines, which is considered a double appraisal.

2.  Title Hold
No simultaneous closings are allowed when the seller holds a property. In other words, back-to-back, same-day closings to an FHA end-buyer is prohibited.

3.  Short-term Funding
Investors must come up with short-term funding of the 30-to-60-day variety if their desire is to buy/fund and in order to sell to an FHA end-buyer.

4.  Previous Flips
A property cannot show signs of prior flipping activity. If so, the FHA has the right to object.

5.  Transactions at Arm’s Length
Transactions must show no identity of interest between the buyer and the seller or other parties that participate in the sale of a property.

Overall, this will help lower holding costs for investors/flippers allowing them to continue flipping more properties. In return, this will help bring more desirable homes to the market for first-time home buyers.

Looking for passive income?  Tired of tenants and toilets?  Need steady dependable income?  Check out these investments – payments guaranteed by national, stable corporations.

01 San Bernadino, CA 4 Tenant Retail
NNN lease summary of investment offering
Purchase Price: $2,381,600
Cap rate: 7.25%

02 Fresno, CA Retail Center
NNN lease summary of investment offering
Purchase Price: $13,290,000
Cap rate: 7.22%
03 Tuscon, AZ Pier 1 Imports
NNN lease summary of investment offering
Purchase Price: $3,445,000
Cap rate: 11.6%

04 North Carolina OfficeMax
NNN lease summary of investment offering
Purchase Price: $2,398,000
Cap rate: 11.25%

05 CA Sports Authority
NNN lease summary of investment offering
Purchase Price: $8,121,000
Cap rate: 8.25%

06 Colton, CA Wendys
NNN lease summary of investment offering
Purchase Price: $1,245,000
Cap rate: 5.4%

07 North Carolina Arbys
NNN lease summary of investment offering
Purchase Price: $10,210,650
Cap rate: 8.5%

08 Hesperia, CA Carls Jr
NNN lease summary of investment offering
Purchase Price: $2,105,000
Cap rate: 5.7%
09 El Monte, CA 7-Eleven
NNN lease summary of investment offering
Purchase Price: $845,000
Cap rate: 8%
10 Garden Grove Retail Center
NNN lease summary of investment offering
Purchase Price: $7,490,000
Cap rate: 7.15%

11 Pittsburgh, PA Retail Center
NNN lease summary of investment offering
Purchase Price: $6,840,000
Cap rate: 10.5%

12 Redlands, CA 2 Tenant Retail
NNN lease summary of investment offering
Purchase Price: $3,570,000
Cap rate: 6.81%
13 Hawthorne, CA jack in the Box
NNN lease summary of investment offering
Purchase Price: $2,165,000
Cap rate: 6%
14 La Mirada Industrial
NNN lease summary of investment offering
Purchase Price: $11,000,000
Cap rate: 7%

15 Marshall, TX Retail Center
NNN lease summary of investment offering
Purchase Price: $2,000,000

Cap rate: 9.27%The information contained herein has been obtained from sources we deem reliable.  We cannot assume responsibility for its accuracy.

Mortgage industry heavyweights slow pace of properties entering REO pipeline

In response to the recent “robo-signing scandal,” JP Morgan Chase and Co., put 56,000 foreclosure filings on hold last week, following similar actions by Ally Bank (formerly GMAC Mortgage) in 23 states, including Illinois, Florida, New York and Ohio.

This temporary crackdown on the part of various states attorney generals is due to allegations that tens of thousands of foreclosure documents were essentially “rubber stamped” or signed without adequate review or scrutiny. Among the state officials who have initiated investigations, IllinoisAttorney General Lisa Madigan has demanded a meeting with JPMorgan Chase to address her concerns that the company violated the state’s Consumer Fraud Act.

Vowing to hold banks accountable, Madigan said in a recent statement: “With JP Morgan now acknowledging possible abuses in preparing court documents, the impact on homeowners in our state and across the country could be great.”

Despite recent findings “that in some cases employees in our mortgage foreclosure operations may have signed affidavits about loan documents on the basis of file reviews done by other personnel – without the signer personally having reviewed those loan files,” Chase spokesman Tom Kelley, contends, “We believe the accuracy of the factual loan information contained in the affidavits was not affected by whether or not the signer had personal knowledge of the precise details.” He added that Chase has “begun to systematically re-examine documents we have filed in current foreclosure proceedings to verify that the affidavits and other documents meet the standard of personal knowledge or review where that is required.”

Chase has requested that the courts hold off on entering judgments in pending matters for a few weeks until their review process is completed.

Looking for places with appreciation potential?

CNN Money has listed the 10 most undervalued cites

Metro area           Median $$        %  2010        % 2006

Las Vegas, Nev.       $129,700      -41.4%           38%
Vero Beach, Fla.      $123,300      -39.8%          54%
Merced, Calif.          $102,300      -37.7%           77%
Cape Coral, Fla.      $118,700      -36.8%           52%
Houma, La.              $116,200      -34.6%          -1%
Port St. Lucie, FL   $115,600      -33.3%           72%
Warren, Mich.         $117,500      -32.3%          15%
Vallejo, Calif.          $196,900      -31.9%            53%
Modesto, Calif.      $138,700      -31.8%            67%
Stockton, Calif.      $145,100      -31.8%            72%

Myth – You will get rich overnight

If you listen to the late night gurus on tv, read their books, go to their seminars, you might believe that one form of real estate investing or another will make you a millionaire over night – or at least by the end of the week.  Reality is, real estate investing is no different in terms of effort and energy than any other means of producing real wealth.

It takes time to find the right investments of any kind.  It takes time to learn the ropes.  It takes time for assets to appreciate (either by waiting, fixing up, getting a deal someone else will pay more for, etc).  It takes time for real estate transactions to close.  It takes time to build a network of people to facilitate your own endeavors.

Myth – That late-night TV stuff doesn’t work

It is a fact that very few people who purchase guru products make money.  This does not mean that the methods taught by the gurus don’t work – most do.  The key word is work, and the potential investor must do the work.  You can convince yourself that anything won’t work and you will be right.  If you take to heart what is taught and adapt it to your own situation (remember, no one thing works for everyone) and put forth the effort, you can succeed.  Probably not as fast as advertised and don’t expect checks as big as shown in the testimonials; but that does not mean the system does not work.

Myth – Real estate investing is easy

Let’s face it; if it were easy everyone would be a real estate millionaire!  There have been many people who have lost everything because they went in blindly thinking anyone can do it without effort.  The reality is it takes effort to acquire the know-how to succeed.  Real estate investing is definitely something almost everyone can learn, but it is like anything else new, there is a learning period.  Once a method is learned well, the real estate investor can make a very good living with it, but can be quite an uphill road full of potholes in the beginning.

Myth – Money is not needed to invest in real estate

Another often touted “benefit” of real estate investing is “No money needed!”  Let’s be real here.  Nobody is going to give you his or her home just because you make a phone call.  It takes money for education. It takes money to drive out to look at properties.  It takes money to print fliers.  It takes money to acquire real estate, even if it is only $10.  it takes money to mail out fliers.  I once signed up for a no money needed tutorial and one of the first questions we were asked was could we commit $300 a month to advertising!  So much for no money.

Myth – You need money to make money

Though it was just said you do need money, you do not need a lot of money.  The reality is, in the real estate world, if you have taken the time and effort to find a truly good real estate deal, the money will appear.  Remember, in the first myth, it takes time to find others.  Money is where those “others” can be a tremendous asset to you.

Myth – With a full time job, a spouse, and children, there is no time.

In this day and age with sports and school and all the other things that claim out time, finding time for one more thing may seem daunting.  For most of us, however, if we really want something, somehow the time materializes.  Spend a week or two and keep an accurate record of how you have spent every minute of each day.  Things like watching TV or reading entertainment magazines might take more time than you realize.  What about having the children take over some of the day to day chores.  There is nothing wrong with teaching a 10 year old how to do laundry, load a dishwasher, and vacuum a room.  Might even help them break the TV habit.  Use the time saved to learn about real estate investing, research, etc.  If you are looking to flip or wholesale, have the family go on ugly house drives.  Let the kids know what you are looking for and you might get leads from their friends who live next door to an ugly house.

Myth – There is too much competition.

What sounds like competition is often wishful thinking.  Two investors in the same neighborhood, investor #1 finds deals and the investor #2 feels there are no deals because investor #1 is getting them all.  Now investor #3 comes along and sees 2 others working the territory and leaves due to competition.  Reality is, he who makes the first BEST offer gets the deal.  If investor #2 and #3 were to act instead of just look, they would have deals too.  Investor #1 cannot be on top of all deal at the same time.  Deal density varies from location to location, but reality is there are more deals than people who know what to do with them.

Myth – Real estate agents will not cooperate with investor

Like anything else, some will, some won’t.  There are a lot of agents out there who rely on investors for their commissions.  It can be a really sweet deal for agents that understand investing.  They are in the position of helping you find a property and helping you find a buyer.  Sure, they need to be paid, but that is what having a team is about.  What’s it worth to you to have properties and buyers brought to you?

The internet is a great place to find information, AND misinformation.  There is a lot of stir about HR 2454 – the American Clean Energy and Security Act of 2009 (Cap and Trade Bill)– and the impact it will have on real estate investors.  The claim being made is that for every home sale, there will need to be an inspections and the house cannot sell until it meets certain energy criteria. We are still doing our own research at this time, but have not found anything in the bill to support these claims.  The full text of the bill, a summary, and myths and facts can be downloaded here

Don’t foreclose on our home until you look at selling your house on eBay!  This is not for everyone and does take effort to do it right.

“There are now over 4,364 real estate properties sold on eBay Real Estate every month and thousands more are listed using our ad format! eBay is particularly popular for those selling unique homes, vacation homes, or homes for investors. Let yours be next!” – Ebay web site

With the exposure eBay has, you drastically expand your audience.  As with any other internet method, home buyers have 24/7 access to the listings and can respond immediately.  You do not need to be an agent or broker to sell a house on eBay.

Home sellers have the choice of selling through the auction or the classified sections.  eBay has the templates and suggestions.  I have looked through real estate listings and find it amazing how poorly done some are.  To stand out, you want your “for sale” post to stand out and shout buy me.

Use pictures and videos.  As in using real estate marketing sites, spend time creating a description that will make the potential home buyer feel at home in your house.  Just because eBay it used like classifieds doesn’t mean you need to keep it short.  Just be professional.

eBay real estate auctions are not binding.  Essentially, buyer and seller get together after the close of the auction and work out the details, which vary from state to state.  Click here for a short article in the Wall Street Journal you should read if you are thinking about selling or buying real estate on eBay. There is some very good advice here.

Would it be better to know how to use eBay real estate from someone who has figured it out, or would you prefer to stumble through and hope for success?

“Sell Your House On EBay In Less Than 17 Days!” gives step-by-step instructions to optimize your eBay real estate experience.

Real Estate agents in particular and home sellers in general, often don’t think about the fact that many buyers use the internet to find their new home. It is amazing how many real estate agents have not updated their thinking and don’t market properties on the Internet.   It is vital to you, whether you’re selling your house yourself or using an agent that you know and use your internet options.

You do not need your own website to advertise your house for sale.  You do not even need to be particularly internet savvy.  Sellers are guided through a simple fill in the blank template for all the information on the property.  Then there are instructions for uploading photos.  It is easy and fast.

The advantage of using one or more of these sites is exposure.  They already come up on top in Google and other search engines, so you do not need to worry about optimization and all the other search stuff.

Make you title specific for your location and type of property.  Putting “House for Sale” will not draw the same response and putting “3 Bed, 2 Bath in City, State”  Include as many good pictures as the site allows.  Include in the description area as much information as you can think of to make a prospective buyer get a good feel for your house. If you read the previous post, you will remember to call your house a home when communicating with a prospect.

I have included a few sites where you may want to post your house.  Check them out.  They often have information to help you market your property.

http://www.forsalebyowner.com/

http://www.fsbo.com/

http://www.owners.com/

http://www.homesbyowner.com/

http://byowner.com/index.html

http://www.salebyowner.com/

http://www.virtualfsbo.com/

Also Google  “for sale by owner” or some similar keywords to find more sites.  Explore them to see which may be most beneficial.  Of course, you are not limited to the number of sites you use.  The more exposure, the better your chances of selling.

Good luck.