|Real Estate Information|
How I Became a Real Estate Investor
Recently I closed on the sale of two homes. They were located about a mile apart and had comparable market values. However, beyond these two similarities, the two deals were very different from each other. Let me discuss in more detail the similarities and differences of the two deals.
My business partner and I purchased both properties from families who were in preforeclosure. The leads for each property came from letters that I had mailed to families who had recently received Notices of Default. The one family responded to me within 24 hours of receiving my first letter. I met with them within two hours of receiving their phone call and signed a contract with them on the spot to purchase their home. The other family responded to me after receiving the fourth letter from me. After a couple of broken appointments and two meetings we signed a contract to buy their home. With each home we did a "kitchen table" type closing within a couple of days of signing the contract. Both homes were purchased "subject to" the existing financing remaining in place. The earnest money given for each home was one dollar.
We began marketing the first house by advertising it in the newspaper at market value and putting signs in the neighborhood and nearby intersections. We had a verbal agreement with the seller that they would clear all of their belonging out of the house within two weeks. The house was very messy and dirty. When the sellers failed to make any progress clearing the house we went ahead with the marketing and reduced the asking price. Within two weeks we had only received a few phone calls from mostly non-interested prospects.
At this point we reduced the asking price further and changed our signs to notify the public that owner financing was available. At that point we started to get a larger number of phone calls from truly interested prospects. Our owner financed terms and the lower than market value asking price separated us from the hundreds of realtor represented homes that needed bank financing.
With the second home, purchased a month later than the first, we immediately marketed it with owner financing. When we purchased the home we stipulated in the contract that the seller had to vacate the property in two weeks or be charged a fee for failure to do so. The seller was agreeable and cooperative and moved quickly to remove their belongings from the house. The seller of the first house was still dragging their feet and the house was still a mess.
Shortly after changing the marketing of the first house, we received an offer from a highly interested buyer. This house was truly ideal for this family and we wanted to help them get into it. They offered to buy it with bank financing and we agreed to sell it to them. There was still enough time before the foreclosure auction to close the sale with bank financing.
I cautioned the buyer that he should seek a loan other than an FHA loan since we had not held title to the property long enough for FHA to approve a new loan. In case you didn't know, FHA recently changed a rule that now requires a property to be on title at least 90 days before they will approve a new loan. So guess what the buyer did?
Right. His mortgage broker and his real estate agent steered him toward an FHA loan program. Luckily, the buyer qualified for a good FNMA program as well. So I stipulated in the contract that the buyer had to gain approval for the FHA program within 5 days or else drop the FHA program and proceed with the FNMA program. Both the broker and the agent needed education on this point, which I provided in writing, and four days later the broker notified me that the buyer would not be approved by FHA and that they were proceeding with the FNMA program.
The next obstacle we faced was the home inspection. The inspection resulted in asking for several hundred dollars worth of repairs that we agreed to do. The repairs took two weeks to complete. While repairs were ongoing we ordered a property appraisal. The appraisers in our area are backlogged eight weeks but we knew an appraiser who would perform an appraisal within a week for 150% of his normal fee. Of course we didn't have the luxury of being able to wait eight weeks so we bought the expensive appraisal.
The next obstacle was to order a preliminary title search, which showed a clear title luckily. The previous owner did not have an as-built survey so we had to order an expensive set of survey documents from the county.
Now that the obstacles to closing were nearly erased and we were close to a hard closing date, we still had a problem with the previous seller. They had only moved a few things out of the house and the house was still well cluttered. They were getting around to moving out eventually but not fast enough to be out of the house before closing the sale. Their lack of cooperation and their inability to follow through with their verbal promises made it clear why they had neglected their home and let it go into foreclosure.
Since the utilities were turned off and the seller was no longer living in the home I had the legal right to declare their belongings as abandoned property and I notified them that I would move the items out for them. My partner and I spent a day boxing and bagging up the seller's personal items, and grudgingly they picked the boxes and bags up the day before closing. Whew!
Now, on the other hand, events with the second property proceeded much more smoothly. We bought the home, found a buyer for it within eight days, and closed on the sale eight days later.
We decided to sell the second home on a land contract or wrap mortgage with the existing financing remaining in place. We also decided to stipulate that the home had to be refinanced within two years or it would be foreclosed back to us. We did this to protect the previous seller's interest in the underlying financing. They didn't want it hanging out there for a long period of time.
Our "owner finance" signage attracted several buyers quickly. We required a large enough down payment to "cure" the loan, that is, to pay off the existing arrearage and attorney fees. We found an eager buyer who had sufficient cash on hand and a good income, but without enough time in the area to have a high credit rating. He understood the concept of the wrap mortgage and the underlying financing and we negotiated a contract with him at Starbucks. He negotiated a lower sale price by offering a larger down payment. Basically we were able to immediately receive all of the "back end" profit that would have been paid to us in two year's time when he refinanced. We received this up front in exchange for a lower sales price. It was a fair exchange for both parties.
He agreed to buy the home "as is" and to do some repairs himself. No home inspection was needed; no appraisal was needed; no repairs had to be made; no real estate agent needed to be paid; and no survey had to be ordered. The buyer paid all of the closing costs which were far less than he would have paid if he had used a real estate agent and a mortgage broker.We used a closing agent who is very familiar with transactions of this type, which she calls "unacknowledged wrap sales." Our closing agent has become a friend and has spoken at our local Real Estate Investment Club.
In summary, each of the two deals netted about the same profit, but it is obvious which deal one would prefer to do if given a choice. If I were Robert Kiyosaki I might call one deal my rich dad's deal and the other my poor dad's deal. We learned enough to make deals of the first type go more smoothly in the future but I'll take deals of the second type every day of the week.
I hope all of your real estate investing deals proceed smoothly and quickly.
This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news
Rutgers Real Estate School releases landmark study on school-aged children in multifamily properties - ROI-NJ.com
A Coast real estate agent cried when a judge told her how long she could spend in prison - The Sun Herald
How dirty is Miami real estate? Secret home deals dried up when feds started watching - Miami Herald
Real estate briefs: New coworking brand, California industrial investor, Engel & Völkers ink new deals - Chron.com
What to Look for in a Real Estate Agent
Real Estate Agents play an essential, critical role in the process of buying and selling a home. You just simply cannot afford to work with an agent that does not exhibit top-scale professional values.
Real Estate Investing in Rentals - the $10 Million Real Estate Investing Mistake
Renting to tenants is no longer "where the money is" for real estate investing. I became a multi-millionaire landlord in the 1980s by buying $10 million in rental houses.
Can I Sell My Private Mortgage Notes?
In this country millions of homes are sold every year. In most cases buyers go to a bank or finance company to seek mortgage financing.
Investment Property Part 2 of 2: What You Need to Know Before You Buy
Welcome to the second portion of a two-part series on investment property. In the first installment, "How Not to Become a Slumlord", we discussed a little of what it takes to own and operate a property as well as some of the do's and don'ts of the property management trade.
Prepare Your Rental Property for Occupancy
Among your many responsibilities as a landlord, the law provides for a warranty of implied habitability. This means that the dwelling must be considered habitable and any known problems must be fixed before you allow a tenant to take occupancy.
Buying Beach Houses in New Zealand: Real Estate and Investment Opportunities
Buying a beach house in New Zealand offers many possibilities.New Zealand is made up of two main islands, North Island and South Island, giving it miles of coastal lands and perfect beaches to live by.
How to Choose Your Real Estate Lender
Because you need quick action when applying for a real estate purchase loan, find a lender you can access easily. A lender's quick response signifies good service to follow.
Real Estate Bankruptcy
Although real estate bankruptcy cases no longer dominate the bankruptcy courts' dockets as they did in the early nineties, but they continue to be filed with great frequency in UK. At its essence, the real estate bankruptcy is a two party dispute between mortgagee and mortgagor.
Property Investing Secrets 1
When property investing, pay the seller their asking price but negotiate the terms under which you can buy property. You'd be absolutely surprised when property investing at how many sellers will help fund you into their property.
The Ultimate Short Sale Secret
Buying foreclosures can be extremely profitable for real estate investors. However, most of these homeowners are mortgaged to the hilt.
Landlording And Other Aggravations
Here's the gripping story..
Making it affordable: Nine tips for first time home buyers
It seems that everyone loves a good real estate story. The media is filled with reports about soaring property values and home owners of modest means becoming instant millionaires when they sell.
Building Your Dream Home - Part 1
For most of my adult life I had thought about someday building my Dream Home. Several years ago I finally got the chance.
Make Money As A Slumlord
Be a slumlord? Okay, I got your attention, now the truth. I really don't recommend that anyone endanger their renters with unsafe housing.
Real Estate Investing In Belize
Any trip to Belize starts fantasies of owning a beach villa, or a jungle resort. There are a lot of North Americans in this English speaking, former English colony.
An Ideal Way to Purchase Your New Home without Strict Banking Regulations
You've searched high and low around town looking for that special home for you and your family. Everyone agrees that "this is the one"! Your down payment for the home is large enough, but you know your credit is terrible, or worse, practically non-existent.
Create a Sizzling Home Sales Flyer
Did you know that the sales flyer is the most important tool in selling a house?Even if your home is listed with an agent, check the flyer that your agent has created, to see if you can jazz it up. Examine it closely, to make sure that all your amenities are listed.
Talk to a Lender Before You Sell Your Home
If you're looking to sell your home quickly, and for top dollar, the best thing you can do is to be able to offer your buyers some sound financing options. That's why developing a relationship with a lender can be the key to a quick sale, and to more money at closing.
10 Frequently Asked Short Sale Questions
1. What happens to the seller's credit rating when they allow an investor to short sell their property?What typically happens is the loan will show up as "paid" on their credit report; however there will be a notation that says "settled for less than originally owed" or something along these lines.
What We Do To Sell Your Property!
Once you have contracted us to sell your property we go to work for you to bring you the most money and best price for your property as quickly as possible. Some properties are faster selling than others based on the location, condition, size, price, of course, and type of the property.
|home | site map|