Offering a Life Insurance Policy. . .
. . . is another strategy the real estate investor can use to persuade the seller to play lender in a transaction.
Trust between Buyer and Seller is the key to all win-win Real Estate Deals.
As seen in the case of the blanket mortgage, the key is building trust. What if you say to the still somewhat incredulous seller,
You might say to the seller,
"Since you are permitting me to pay off your equity in cash over a period of time, how would it be if I took out an insurance policy in the amount of the note and made you the beneficiary?
That way you will feel secure that the note will be paid off no matter what."
This technique is not usually necessary. But it has proven to be the nudge needed in some deals.
Again, it is an inexpensive way to build trust especially when the seller just cannot quite see it your way and needs just a bit more persuasion to agree to your offer.
The cost of such policies are usually small and the costs can be redeemed at a later time if you flip or refinance. Thus the term, "Nothing Out of Pocket" Deal sometimes called 'Nothing Down' Deal.
We all know there is no such thing as 'Nothing Down' as there are always cost involved in Closing, Transfer of Title, etc etc.
Don't get me wrong I have done a Nothing Down deal with money take out at closing, so I can say I was paid to buy the property.
(This Advanced Technique to be covered at a later time).RT-RGA
Sunday, July 26, 2009
Wednesday, July 22, 2009
Buy Nothing Down using the Blanket Mortgage
Another Favorite Method I have used many times in the Bay Area of San Francisco.
If it works there it should work anywhere or at least most anywhere.
The key to using the seller as lender in a real estate transaction is trust.
The seller has to trust us to pay him his equity according to the terms of the agreement we work out with him.
The conventional way to "Buy" trust is to give the seller a large cash down payment that way he knows that we will not likely walk away from the real estate property.
We are going to stay around and take care of our obligations.
The seller will be able to take back the real estate property, and we will lose not only that big cash down payment but also any appreciated value above the seller's equity.
But how do we develop trust when there is little or no cash put down on the real estate property?
How does the real estate investor make the seller feel secure in such cases?
Often the real estate investor can develop personal trust with the seller simply on the basis of personal qualities and win-win attitudes.
In such cases, the equity of the subject real estate property itself is sufficient to close the deal.
In some instances, a little extra is needed to remove any suspicions on the part of the seller.
That is where the blanket mortgage comes into play.
In any Mortgage or Trust eed arrangement, there are two basic documents that are prepared.
One is a note given by the real estate investor to the seller setting forth the terms for converting the equity to cash, the other is a security agreement in which the real estate investor says to the seller . . .
"If I don't perform according to the terms of the note, then you can take back the real estate property."
In a cashless or a near cashless transaction, the security of the subject real estate property may not be enough to satisfy the seller.
The real estate investor may choose to secure the note with additional collateral - not only the subject real estate property but also additional real estate property (equity) he may have in his real estate portfolio.
The note itself stays the same, but the security agreement is changed to increase the collateral and build trust with the seller.
Naturally, the real estate investor will want to arrange to have the seller release the additional collateral as soon as the subject real estate property appreciates to a predetermined value or as soon as the real estate investor has proven himself to be dependable and prompt in making his payments.
The blanket mortgage technique is not among the most frequently used in creative finance.
The real estate investor hopes to build trust without having to tie up his other equities.
Still when a seller needs that extra bit of persuasion, the blanket mortgage technique can come in handy.
For example, one creative investor we know of recently acquired a nice four-bedroom, two and half-bath home for $85,000.
The investor put a new first on the real estate property (which was nearly free and clear) and had the sellers move their remaining equity ($45,000) to another real estate property owned by the investor.
To build trust will the sellers, the real estate investor granted them a blanket mortgage that also included his equity in another rental real estate property he owned.
Although the real estate investor did not put any of his own money into the deal (the bank provided all that was needed), he was able to persuade the sellers to agree on the basis of his neck being on the line with the blanket mortgage.
Remember there is not really any True Nothing Down but this is as close as you can get as we know there are always some expense involving Escrow, Closing and so on but that will be covered at a later time.
If it works there it should work anywhere or at least most anywhere.
The key to using the seller as lender in a real estate transaction is trust.
The seller has to trust us to pay him his equity according to the terms of the agreement we work out with him.
The conventional way to "Buy" trust is to give the seller a large cash down payment that way he knows that we will not likely walk away from the real estate property.
We are going to stay around and take care of our obligations.
The seller will be able to take back the real estate property, and we will lose not only that big cash down payment but also any appreciated value above the seller's equity.
But how do we develop trust when there is little or no cash put down on the real estate property?
How does the real estate investor make the seller feel secure in such cases?
Often the real estate investor can develop personal trust with the seller simply on the basis of personal qualities and win-win attitudes.
In such cases, the equity of the subject real estate property itself is sufficient to close the deal.
In some instances, a little extra is needed to remove any suspicions on the part of the seller.
That is where the blanket mortgage comes into play.
In any Mortgage or Trust eed arrangement, there are two basic documents that are prepared.
One is a note given by the real estate investor to the seller setting forth the terms for converting the equity to cash, the other is a security agreement in which the real estate investor says to the seller . . .
"If I don't perform according to the terms of the note, then you can take back the real estate property."
In a cashless or a near cashless transaction, the security of the subject real estate property may not be enough to satisfy the seller.
The real estate investor may choose to secure the note with additional collateral - not only the subject real estate property but also additional real estate property (equity) he may have in his real estate portfolio.
The note itself stays the same, but the security agreement is changed to increase the collateral and build trust with the seller.
Naturally, the real estate investor will want to arrange to have the seller release the additional collateral as soon as the subject real estate property appreciates to a predetermined value or as soon as the real estate investor has proven himself to be dependable and prompt in making his payments.
The blanket mortgage technique is not among the most frequently used in creative finance.
The real estate investor hopes to build trust without having to tie up his other equities.
Still when a seller needs that extra bit of persuasion, the blanket mortgage technique can come in handy.
For example, one creative investor we know of recently acquired a nice four-bedroom, two and half-bath home for $85,000.
The investor put a new first on the real estate property (which was nearly free and clear) and had the sellers move their remaining equity ($45,000) to another real estate property owned by the investor.
To build trust will the sellers, the real estate investor granted them a blanket mortgage that also included his equity in another rental real estate property he owned.
Although the real estate investor did not put any of his own money into the deal (the bank provided all that was needed), he was able to persuade the sellers to agree on the basis of his neck being on the line with the blanket mortgage.
Remember there is not really any True Nothing Down but this is as close as you can get as we know there are always some expense involving Escrow, Closing and so on but that will be covered at a later time.
Sunday, July 19, 2009
My favorite “Nothing Down Real Estate” Investing Methods #1
Method # I Taking Paper Out (Seller's equity is converted to paper)
A real estate investor back East was able to acquire a $47,000 4plex from a banker who not only arranged for a new low-interest first mortgage, but also carried back virtually all the remaining equity in the form of second at below-market rates.
Another real estate investor, picked up a single family home for $67,000 by putting on a new first and having the anxious seller carry back all the rest of his equity ($37,000) for five years, no payments, no interest.
Both of these investors were using the technique known as - "Taking Paper Out".
Here is how it works.
When we are talking about buying or selling a piece of real estate, we are really talking about the problem of defining and dealing with the seller's equity.
Equity as a concept is straight forward enough.
Everyone knows that it represents that portion of the value of a real estate property that is not encumbered, that belongs lock, stock, and barrel to the owner.
Equity is a fluid concept.
It can be specified only in relation to that mysterious and shifting quantity called the "Fair Market Value."
The owner has dreams about an equity to be such and such - usually an optimistically high number. The truth of the matter is market forces determine his equity by determining how much his real estate property is really worth at any specific moment in time.
The members of the "Market Value Club" - gang up on the poor old seller and say collectively, "You have a nice little place, but we've taken a vote around town, and the best we could come up with is this price I have given you in the contract to buy which is such and such."
At that moment in time, the seller's equity is defined, and the problem now becomes how to transfer to him value equal to the equity involved.
The majority of sellers, of course, will want to hold out for a selling price at the high end of the scale. They want their equity to be lot higher because they think or heard it should be higher.
No one can blame them for that but among the army of sellers in the marketplace at any given time, there are always a few - perhaps 5 percent or less - who say to themselves . . .
"We like our equity and want to keep it and derive some benefit from it, but we are very anxious to sell, so we might give up some of that equity in order to get rid of the real estate property quickly."
These "Don't-Want" sellers might be thinking - I really don't feel like discounting my equity for a quick sale, but I would be willing to wait until later for a part or all of my equity to be converted to cash."
That is the issue when it comes to "Taking Paper Out" deal. After the seller and the real estate investor have determined what equity is involved, the next step is to decide how soon the equity is to be converted.
It all boils down to a matter of patience.
The seller with infinite patience (and infinite desperation) will say, "Here's my equity, take it all and just get me out of this place."
In a case like that the selling price is equal to the liens. Such cases are rare.
The next best situation is the case in which the seller says, "Here's my equity, pay me for it when you can. Let's work out the schedule."
That is the technique referred to as - Taking Paper Out". All of the seller's equity is converted to paper before it is converted to cash.
When the buyer takes over the real estate property, he gives the seller paper for his equity and obligates himself to redeem the paper according to mutually agreeable terms.
Not all sellers will agree to an "Taking Paper Out" but creative real estate investors should always ask. You never know exactly what the seller is thinking or how anxious he really is to sell.
Perhaps only one seller in twenty will be willing to enter into a nothing down deal and of these, perhaps only one in ten will agree to an "Taking Paper Out"
That means that Method # I will show up in only one out of every 100 creative deals. But which one the first or the last one, it is never known until you get in there and ask the questions and derive the reasons for the sale and the sellers point of desperation. Yet . . .
It does happen from time to time - much to the surprise and delight of many creative real estate investors.
Try it and see for yourself. I did and it worked for me in San Francisco and Hawaii and those are top end properties which were able to put into a break even and positive cash flow conditions due to the correct structuring of the sales agreement to meet my needs as well and the sellers.
Results. Win - Win Deal.
Always the best way to go.
There will be another Method called the " Blanket Mortgage". . . coming soon to this blog.
Keep an eye open, you never know, it might be exactly what you have been looking for in your investment strategies.
RT-RGA
A real estate investor back East was able to acquire a $47,000 4plex from a banker who not only arranged for a new low-interest first mortgage, but also carried back virtually all the remaining equity in the form of second at below-market rates.
Another real estate investor, picked up a single family home for $67,000 by putting on a new first and having the anxious seller carry back all the rest of his equity ($37,000) for five years, no payments, no interest.
Both of these investors were using the technique known as - "Taking Paper Out".
Here is how it works.
When we are talking about buying or selling a piece of real estate, we are really talking about the problem of defining and dealing with the seller's equity.
Equity as a concept is straight forward enough.
Everyone knows that it represents that portion of the value of a real estate property that is not encumbered, that belongs lock, stock, and barrel to the owner.
Equity is a fluid concept.
It can be specified only in relation to that mysterious and shifting quantity called the "Fair Market Value."
The owner has dreams about an equity to be such and such - usually an optimistically high number. The truth of the matter is market forces determine his equity by determining how much his real estate property is really worth at any specific moment in time.
The members of the "Market Value Club" - gang up on the poor old seller and say collectively, "You have a nice little place, but we've taken a vote around town, and the best we could come up with is this price I have given you in the contract to buy which is such and such."
At that moment in time, the seller's equity is defined, and the problem now becomes how to transfer to him value equal to the equity involved.
The majority of sellers, of course, will want to hold out for a selling price at the high end of the scale. They want their equity to be lot higher because they think or heard it should be higher.
No one can blame them for that but among the army of sellers in the marketplace at any given time, there are always a few - perhaps 5 percent or less - who say to themselves . . .
"We like our equity and want to keep it and derive some benefit from it, but we are very anxious to sell, so we might give up some of that equity in order to get rid of the real estate property quickly."
These "Don't-Want" sellers might be thinking - I really don't feel like discounting my equity for a quick sale, but I would be willing to wait until later for a part or all of my equity to be converted to cash."
That is the issue when it comes to "Taking Paper Out" deal. After the seller and the real estate investor have determined what equity is involved, the next step is to decide how soon the equity is to be converted.
It all boils down to a matter of patience.
The seller with infinite patience (and infinite desperation) will say, "Here's my equity, take it all and just get me out of this place."
In a case like that the selling price is equal to the liens. Such cases are rare.
The next best situation is the case in which the seller says, "Here's my equity, pay me for it when you can. Let's work out the schedule."
That is the technique referred to as - Taking Paper Out". All of the seller's equity is converted to paper before it is converted to cash.
When the buyer takes over the real estate property, he gives the seller paper for his equity and obligates himself to redeem the paper according to mutually agreeable terms.
Not all sellers will agree to an "Taking Paper Out" but creative real estate investors should always ask. You never know exactly what the seller is thinking or how anxious he really is to sell.
Perhaps only one seller in twenty will be willing to enter into a nothing down deal and of these, perhaps only one in ten will agree to an "Taking Paper Out"
That means that Method # I will show up in only one out of every 100 creative deals. But which one the first or the last one, it is never known until you get in there and ask the questions and derive the reasons for the sale and the sellers point of desperation. Yet . . .
It does happen from time to time - much to the surprise and delight of many creative real estate investors.
Try it and see for yourself. I did and it worked for me in San Francisco and Hawaii and those are top end properties which were able to put into a break even and positive cash flow conditions due to the correct structuring of the sales agreement to meet my needs as well and the sellers.
Results. Win - Win Deal.
Always the best way to go.
There will be another Method called the " Blanket Mortgage". . . coming soon to this blog.
Keep an eye open, you never know, it might be exactly what you have been looking for in your investment strategies.
RT-RGA
Monday, July 13, 2009
Finding Good Deals in this Market - RT-RGA
I think the Key to Successful Real Estate is finding motivated sellers.
When I look for Real Estate, I look for DON'T WANTER CONDITIONS.
These are conditions that create motivated sellers...(RT RGA)
D - Divorce
O - Obsolescence of property - needs major fix up
N - Negative cash flow
T - Transfer from job
W - Wrong management approach
A - Arrears in payments
N - Negative location
T - Taxes
E - Estate situations (death)
R - Retirement
C - Competition with neighboring properties
O - Out-of-area owners
N - Neurotic fears
D - Debts
I - Ignorance of investment principals and market conditions
T - Time constraints
I - Investment capital - needs capital for another investment
O - Ornery partner(s)
N - Need for status symbols
S - Sickness
These are the majority of the reasons for motivation and your goal is to find properties with sellers in these unfortunate situations. Using Win-Win Philosphy
You now become a problem solver as you attempt to solve these personal problems. Keeping in mind you are trying to offer a solution that will require little to no money down. The challenge is finding them.
There are several ways of finding good deals.
Here is some idea’s when it comes to finding deals, especially in markets like this one. Getting Good Deals In Any Market It is getting harder to find fixer properties.
Secondly, some markets are still hot . . . and some are cooling down. But fixers are still hard to find.
We are still at a point that many cash buyers have to settle for less than perfect properties. This puts upward price pressure on fixers and takes minor fix-up houses off the market. The home buyer will take on paint and paper level problems.
So secret number one in this market is . . .
Be willing to go beyond filthy houses. You will need to be willing to tackle some construction problems if you are going to find the profits you want. (Yes, deals will get better over the winter, but this is still good advice.)
To do this, you need two things:
Either you need to really know construction, or have a good property inspector you can count on. (I have been a general contractor, but I still hire an inspector now and then, and I always get a second opinion of someone in the trades.)
You will either have to hire a permanent construction person, which I have done, or develop a special relationship with one.
The third problem is here. Since real estate is hot, contractors and their subs are very busy. If you think you can get someone to show up THIS MONTH to do a small fix up job, forget it.
If they know how to use a hammer, they are working twelve hours a day now if they want.
The only other alternative is to know how to do it yourself. But that is about ten percent or less of the investors I know.
If you cannot solve those problems, you might consider just flipping (buy sell without holding) the fixers you find, and stay out of doing the repairs in the fixer market until you do. Cash is not really a problem now.
There are lots of investors to partner with. They will loan you money at high rates, or take a piece of the deal, or both.
The problem is finding the deals and getting the work done. Here are two examples to prove there are good deals still out there:
The first was a "For Sale By Owner". The owner is a contractor. It would seem a contractor would not be selling a fixer, but he lives 50 minutes away, and he has many houses under construction.
His subs figured $18,000 to fix the house. I figured $10,000 or less. He figured the value when completed at $173,000. I figured it at least $182,000. He said he would sell at $152,000 and he was firm. I got him to close at $149,000 plus some "give-me's".
Give-me's included six months of no-questions-asked financing at a very low interest rate, etc. Now that is what most people would say was the story. That is not the story. The story was that his sister had been living there for 16+ years.
He had been fighting with her over rent the entire time. She was behind. She would not pay. He would not fix. On and on. That was his motivation.
Unless and until you find the real motivation, you will be lacking the key tool to get the deal. We finished it, and the house down the street--which looks identical--is on the market for $95,000! It house recently been appraised for nearly $200,000.
The second deal was a cat infested house. You could smell the cat urine OUTSIDE the house!
That was the quickest inspection I ever did! The second time in the house I filled my nose with Vaseline or something before I went in!
It was listed for $170,000. The neighborhood was at $195,000. It was a pigpen. It would have to be gutted, dry walled, bleached etc.
My kind of deal, but I waited and made no offer at that time. It was listed, and the listing agent was a match with the owner. The owner offered for me to go around the agent at $99,000. My kind of people! I refused. But...
A month later the listing had a few days to expire, and I prepared a contract. I had $1,000. Ten brand new $100 bills. The contract called for a closing in 7 days. The proper day to present came and slam, we signed.
To be safe the contract was signed at an attorney's office. Later, someone might say she was off her rocker and did not understand what she was doing.
She was more than a little strange; the 15+ cats would be proof of that. But, she did know what she was doing. She had to quit work because of nerves.
The purchase price was $85,000. I liked that. But the real story was not the cats or the smell. That is why no one else would buy the place. That is not what is important. The reason she wanted to sell the place is because her money ran out.
Spending $20,000 for fixing the property, but sold it for $204,000. Not bad. The good deals are still out there, but if you want the big equities and big profits, you may need to roll up your sleeves.
As for myself, I have begun to start buying with the intent of holding two or three years. I may buy them in need of repairs, but in any case, I want to be positioned to wait out the economy for maximum profits.
If someone comes along and offers me too much, I just might take the cash.
Another method is a Short Sale. This is a situation where the homeowners have no equity.
The market has been softening, lenders have been very lenient on loaning to practically anyone and now we have properties going into foreclosure at an astounding rate as the market crashes.
A short sale is where you can negotiate the purchase price of the home for a fraction of the loan amount. It's a fantastic strategy especially in this market.
I will discuss more about this kind of market and foreclosures in a future article.
RT-RGA
When I look for Real Estate, I look for DON'T WANTER CONDITIONS.
These are conditions that create motivated sellers...(RT RGA)
D - Divorce
O - Obsolescence of property - needs major fix up
N - Negative cash flow
T - Transfer from job
W - Wrong management approach
A - Arrears in payments
N - Negative location
T - Taxes
E - Estate situations (death)
R - Retirement
C - Competition with neighboring properties
O - Out-of-area owners
N - Neurotic fears
D - Debts
I - Ignorance of investment principals and market conditions
T - Time constraints
I - Investment capital - needs capital for another investment
O - Ornery partner(s)
N - Need for status symbols
S - Sickness
These are the majority of the reasons for motivation and your goal is to find properties with sellers in these unfortunate situations. Using Win-Win Philosphy
You now become a problem solver as you attempt to solve these personal problems. Keeping in mind you are trying to offer a solution that will require little to no money down. The challenge is finding them.
There are several ways of finding good deals.
Here is some idea’s when it comes to finding deals, especially in markets like this one. Getting Good Deals In Any Market It is getting harder to find fixer properties.
Secondly, some markets are still hot . . . and some are cooling down. But fixers are still hard to find.
We are still at a point that many cash buyers have to settle for less than perfect properties. This puts upward price pressure on fixers and takes minor fix-up houses off the market. The home buyer will take on paint and paper level problems.
So secret number one in this market is . . .
Be willing to go beyond filthy houses. You will need to be willing to tackle some construction problems if you are going to find the profits you want. (Yes, deals will get better over the winter, but this is still good advice.)
To do this, you need two things:
Either you need to really know construction, or have a good property inspector you can count on. (I have been a general contractor, but I still hire an inspector now and then, and I always get a second opinion of someone in the trades.)
You will either have to hire a permanent construction person, which I have done, or develop a special relationship with one.
The third problem is here. Since real estate is hot, contractors and their subs are very busy. If you think you can get someone to show up THIS MONTH to do a small fix up job, forget it.
If they know how to use a hammer, they are working twelve hours a day now if they want.
The only other alternative is to know how to do it yourself. But that is about ten percent or less of the investors I know.
If you cannot solve those problems, you might consider just flipping (buy sell without holding) the fixers you find, and stay out of doing the repairs in the fixer market until you do. Cash is not really a problem now.
There are lots of investors to partner with. They will loan you money at high rates, or take a piece of the deal, or both.
The problem is finding the deals and getting the work done. Here are two examples to prove there are good deals still out there:
The first was a "For Sale By Owner". The owner is a contractor. It would seem a contractor would not be selling a fixer, but he lives 50 minutes away, and he has many houses under construction.
His subs figured $18,000 to fix the house. I figured $10,000 or less. He figured the value when completed at $173,000. I figured it at least $182,000. He said he would sell at $152,000 and he was firm. I got him to close at $149,000 plus some "give-me's".
Give-me's included six months of no-questions-asked financing at a very low interest rate, etc. Now that is what most people would say was the story. That is not the story. The story was that his sister had been living there for 16+ years.
He had been fighting with her over rent the entire time. She was behind. She would not pay. He would not fix. On and on. That was his motivation.
Unless and until you find the real motivation, you will be lacking the key tool to get the deal. We finished it, and the house down the street--which looks identical--is on the market for $95,000! It house recently been appraised for nearly $200,000.
The second deal was a cat infested house. You could smell the cat urine OUTSIDE the house!
That was the quickest inspection I ever did! The second time in the house I filled my nose with Vaseline or something before I went in!
It was listed for $170,000. The neighborhood was at $195,000. It was a pigpen. It would have to be gutted, dry walled, bleached etc.
My kind of deal, but I waited and made no offer at that time. It was listed, and the listing agent was a match with the owner. The owner offered for me to go around the agent at $99,000. My kind of people! I refused. But...
A month later the listing had a few days to expire, and I prepared a contract. I had $1,000. Ten brand new $100 bills. The contract called for a closing in 7 days. The proper day to present came and slam, we signed.
To be safe the contract was signed at an attorney's office. Later, someone might say she was off her rocker and did not understand what she was doing.
She was more than a little strange; the 15+ cats would be proof of that. But, she did know what she was doing. She had to quit work because of nerves.
The purchase price was $85,000. I liked that. But the real story was not the cats or the smell. That is why no one else would buy the place. That is not what is important. The reason she wanted to sell the place is because her money ran out.
Spending $20,000 for fixing the property, but sold it for $204,000. Not bad. The good deals are still out there, but if you want the big equities and big profits, you may need to roll up your sleeves.
As for myself, I have begun to start buying with the intent of holding two or three years. I may buy them in need of repairs, but in any case, I want to be positioned to wait out the economy for maximum profits.
If someone comes along and offers me too much, I just might take the cash.
Another method is a Short Sale. This is a situation where the homeowners have no equity.
The market has been softening, lenders have been very lenient on loaning to practically anyone and now we have properties going into foreclosure at an astounding rate as the market crashes.
A short sale is where you can negotiate the purchase price of the home for a fraction of the loan amount. It's a fantastic strategy especially in this market.
I will discuss more about this kind of market and foreclosures in a future article.
RT-RGA
Wednesday, July 8, 2009
First-Time Home Buyer Tax Credit: Q's & A's
1. What exactly does “monetizing” the tax credit mean?
The term “monetization” is defined as the act of converting something into money. In the context of the first time-home buyer tax credit, monetization means to treat the payment of the credit as if it was cash and allow its use as a payment for certain closing and down payment expenses.
2. What is a “bridge” loan?
A 'Bridge loan' is a type of loan that is intended to be outstanding for a very short time period, often only a few days or weeks. Bridge loans are use to provide funds in situations where the borrower is expected to receive funds, such as the payment of this tax credit, within a very short time.
3. What is a state housing finance agency?
A state housing finance agency, often referred to as an “HFA,” is an organization that provides funding for a variety of loan and grant activities related to for-sale and rental housing. HFAs are also typically responsible to distribute grant funds from federal agencies, such as the U.S. Department of Housing and Urban Development (HUD).
4. How do I find out if my state housing finance agency is providing this service?
The best way to locate information about your state’s HFA is via the Internet. The National Council of State Housing Agencies (NCSHA) maintains a directory of state HFAs at: http://www.ncsha.org/section.cfm/4/39/187
5. What kinds of lenders are doing this? How can I find a list of lenders who are providing these short-term loans?
Many state housing finance agencies are either running or sponsoring programs that will use a tax credit for a downpayment. These programs often place a second lien on the home as collateral to secure the eventual repayment of the tax credit funds. Some state HFAs lend directly to home buyers while other HFAs work through networks of state-approved lenders.
In addition to state agencies, FHA-approved lenders may be offering to purchase a first time home buyer’s tax credit in conjunction with an FHA-insured mortgage loan. Interested buyers should check with area lenders, home builders, or real estate agents for the names of participating lenders.
The Federal Housing Administration (FHA) also has an online tool to find FHA-approved lenders: http://www.fhaoutreach.gov/FHALookup/
6. What types of loans qualify?
Any lender could offer a program that would permit a first-time home buyer to apply the tax credit to funds needed for a loan that is obtained in conjunction with a home purchase. At this time, however, only the Federal Housing Administration (FHA) has issued guidance regarding the monetization of the first-time home buyer tax credit in conjunction with FHA-insured mortgage loans.
7. Can this short-term loan be applied to the minimum 3.5% downpayment required by my FHA loan or is it only available above and beyond the initial downpayment required?
If an FHA-approved lender or state housing finance agency is purchasing a tax credit and therefore making a short-term loan that is secured only by the repayment of the first-time home buyer tax credit, these funds cannot be applied to a downpayment in lieu of the home buyer’s funds. A home buyer still has to provide the 3.5 percent downpayment from his or her own funds.
The money from the short-term loan can be used to pay closing costs and prepaid expenses, such as escrows for taxes, insurance, and community association assessments. These funds could also be used to make a larger downpayment or to “buy down” the interest rate on the mortgage loan.
However, many HFAs are offering tax credit loan programs that offer home buyers a short-term loan backed by the anticipated tax credit and secured by a second lien, which in general will be paid off after the homebuyer receives their income tax credit from the IRS.
The proceeds of these loans may be used to satisfy the 3.5 percent downpayment requirement for FHA-insured loans. The National Council of State Housing Agencies (NCSHA) maintains a list of such tax credit loans programs at: http://www.ncsha.org/section.cfm/3/34/2920.
8. Who should I contact at my state housing finance agency to urge them to participate in this program if they don’t already do so? What should I say?
The best way to locate information about your state’s HFA is via the Internet. The National Council of State Housing Agencies (NCSHA) maintains a directory of state HFAs at: http://www.ncsha.org/section.cfm/4/39/187
Most state HFA web sites include phone numbers and email addresses by which they can be contacted.
9. Is this an interest-free loan or are there fees associated with this type of short-term loan?
If a governmental agency, such as a state housing finance agency, or an FHA-approved lender purchases a first-time home buyer tax credit, they are allowed to charge no more than 2.5 percent of amount of the credit.
10. How can I tell if the short-term loan on the tax credit is being offered by a reputable company?
If the organization is a unit of state government, it is safe to say that it is reputable. Otherwise, a home buyer may want to check with their local Better Business Bureau or through a state or local government’s department of consumer affairs.
The term “monetization” is defined as the act of converting something into money. In the context of the first time-home buyer tax credit, monetization means to treat the payment of the credit as if it was cash and allow its use as a payment for certain closing and down payment expenses.
2. What is a “bridge” loan?
A 'Bridge loan' is a type of loan that is intended to be outstanding for a very short time period, often only a few days or weeks. Bridge loans are use to provide funds in situations where the borrower is expected to receive funds, such as the payment of this tax credit, within a very short time.
3. What is a state housing finance agency?
A state housing finance agency, often referred to as an “HFA,” is an organization that provides funding for a variety of loan and grant activities related to for-sale and rental housing. HFAs are also typically responsible to distribute grant funds from federal agencies, such as the U.S. Department of Housing and Urban Development (HUD).
4. How do I find out if my state housing finance agency is providing this service?
The best way to locate information about your state’s HFA is via the Internet. The National Council of State Housing Agencies (NCSHA) maintains a directory of state HFAs at: http://www.ncsha.org/section.cfm/4/39/187
5. What kinds of lenders are doing this? How can I find a list of lenders who are providing these short-term loans?
Many state housing finance agencies are either running or sponsoring programs that will use a tax credit for a downpayment. These programs often place a second lien on the home as collateral to secure the eventual repayment of the tax credit funds. Some state HFAs lend directly to home buyers while other HFAs work through networks of state-approved lenders.
In addition to state agencies, FHA-approved lenders may be offering to purchase a first time home buyer’s tax credit in conjunction with an FHA-insured mortgage loan. Interested buyers should check with area lenders, home builders, or real estate agents for the names of participating lenders.
The Federal Housing Administration (FHA) also has an online tool to find FHA-approved lenders: http://www.fhaoutreach.gov/FHALookup/
6. What types of loans qualify?
Any lender could offer a program that would permit a first-time home buyer to apply the tax credit to funds needed for a loan that is obtained in conjunction with a home purchase. At this time, however, only the Federal Housing Administration (FHA) has issued guidance regarding the monetization of the first-time home buyer tax credit in conjunction with FHA-insured mortgage loans.
7. Can this short-term loan be applied to the minimum 3.5% downpayment required by my FHA loan or is it only available above and beyond the initial downpayment required?
If an FHA-approved lender or state housing finance agency is purchasing a tax credit and therefore making a short-term loan that is secured only by the repayment of the first-time home buyer tax credit, these funds cannot be applied to a downpayment in lieu of the home buyer’s funds. A home buyer still has to provide the 3.5 percent downpayment from his or her own funds.
The money from the short-term loan can be used to pay closing costs and prepaid expenses, such as escrows for taxes, insurance, and community association assessments. These funds could also be used to make a larger downpayment or to “buy down” the interest rate on the mortgage loan.
However, many HFAs are offering tax credit loan programs that offer home buyers a short-term loan backed by the anticipated tax credit and secured by a second lien, which in general will be paid off after the homebuyer receives their income tax credit from the IRS.
The proceeds of these loans may be used to satisfy the 3.5 percent downpayment requirement for FHA-insured loans. The National Council of State Housing Agencies (NCSHA) maintains a list of such tax credit loans programs at: http://www.ncsha.org/section.cfm/3/34/2920.
8. Who should I contact at my state housing finance agency to urge them to participate in this program if they don’t already do so? What should I say?
The best way to locate information about your state’s HFA is via the Internet. The National Council of State Housing Agencies (NCSHA) maintains a directory of state HFAs at: http://www.ncsha.org/section.cfm/4/39/187
Most state HFA web sites include phone numbers and email addresses by which they can be contacted.
9. Is this an interest-free loan or are there fees associated with this type of short-term loan?
If a governmental agency, such as a state housing finance agency, or an FHA-approved lender purchases a first-time home buyer tax credit, they are allowed to charge no more than 2.5 percent of amount of the credit.
10. How can I tell if the short-term loan on the tax credit is being offered by a reputable company?
If the organization is a unit of state government, it is safe to say that it is reputable. Otherwise, a home buyer may want to check with their local Better Business Bureau or through a state or local government’s department of consumer affairs.
Saturday, July 4, 2009
Foreclosures Boom or Bust ?
I'm sure you are aware that foreclosures right now are exploding with interest because people are finding out it is a better, safer,and more secure way to make a living. It's no secret that foreclosures are at a 30-year high.
Why? Some may feel the economy is to blame. Still others say it could be due to unemployment. Yet others speculate that it could be the leniency in the lending business.
Whatever you choose to believe, the fact still remains that foreclosures are at record highs. This is wonderful news to the investor. This just means there are plenty to go around and several to search through so you can find that "diamond in the rough".
Most people have heard that foreclosures are or can become a great investment. So why doesn't everyone do it? Is it because it's hard? Too time consuming? Takes a lot of money?
These are all good answers, however none are correct. Through our research, we have discovered that most people just lack the motivation, desire, and knowledge.
They are stuck in what some call a "comfort zone,"satisfied with their surroundings, living from paycheck to paycheck.Foreclosures are not new by any means. During the depression, savvy real estate investors were making all the money investing in Real Estate.
They would buy houses dirt cheap, then sell them for a little more than what they paid for them. So why do the rich keep getting richer?
They know where to find the money. Foreclosure is just one of those areas. It was Robert Allen who said "More bargains are available in the area of foreclosures than in any other area of real estate."
Foreclosures to most people automatically imply the word"discount," which is great.
This is exactly what you are after. You are after properties with discounts, which means you are looking for homeowners in distress. You are looking for people in desperatecircumstances, who are motivated, who want peace rather than money.
Are there people out there like that? Absolutely...Without question! Now more than ever.
There are several reasons homeowners become delinquent on their mortgages. It could be because of a job loss, divorce, death of a spouse, illness, job transfer, economic conditions and so on.
These are all unfortunate situations, but the truth of the matter is these situations happen all the time. It's now your goal to help this homeowner get out ofthis situation. You are trying for a "Win-Win". You want to make money; they want out of their unfortunate situation. Most people have a lot of pride in their home; therefore, the biggest challenge they face is embarrassment.
They don't want their friends, family and neighbors to know they are about to lose their home. So they would rather take a loss -- "sell the home" and start over from scratch. So how do you find these homeowners in distress?
Next time I will share with you a few secrets that will help you find homeowners before all your competition.
Why? Some may feel the economy is to blame. Still others say it could be due to unemployment. Yet others speculate that it could be the leniency in the lending business.
Whatever you choose to believe, the fact still remains that foreclosures are at record highs. This is wonderful news to the investor. This just means there are plenty to go around and several to search through so you can find that "diamond in the rough".
Most people have heard that foreclosures are or can become a great investment. So why doesn't everyone do it? Is it because it's hard? Too time consuming? Takes a lot of money?
These are all good answers, however none are correct. Through our research, we have discovered that most people just lack the motivation, desire, and knowledge.
They are stuck in what some call a "comfort zone,"satisfied with their surroundings, living from paycheck to paycheck.Foreclosures are not new by any means. During the depression, savvy real estate investors were making all the money investing in Real Estate.
They would buy houses dirt cheap, then sell them for a little more than what they paid for them. So why do the rich keep getting richer?
They know where to find the money. Foreclosure is just one of those areas. It was Robert Allen who said "More bargains are available in the area of foreclosures than in any other area of real estate."
Foreclosures to most people automatically imply the word"discount," which is great.
This is exactly what you are after. You are after properties with discounts, which means you are looking for homeowners in distress. You are looking for people in desperatecircumstances, who are motivated, who want peace rather than money.
Are there people out there like that? Absolutely...Without question! Now more than ever.
There are several reasons homeowners become delinquent on their mortgages. It could be because of a job loss, divorce, death of a spouse, illness, job transfer, economic conditions and so on.
These are all unfortunate situations, but the truth of the matter is these situations happen all the time. It's now your goal to help this homeowner get out ofthis situation. You are trying for a "Win-Win". You want to make money; they want out of their unfortunate situation. Most people have a lot of pride in their home; therefore, the biggest challenge they face is embarrassment.
They don't want their friends, family and neighbors to know they are about to lose their home. So they would rather take a loss -- "sell the home" and start over from scratch. So how do you find these homeowners in distress?
Next time I will share with you a few secrets that will help you find homeowners before all your competition.
Friday, July 3, 2009
Some Ways To Make Social Media Work For Your Business
Owning your own business is difficult enough without having to worry about finding the perfect balance of marketing strategies.
Stick solely to traditional marketing strategies and you will find yourself potentially missing an enormous demographic.
Try to milk the internet for all It is worth and you will find yourself completely overwhelmed by the number of tools and application available for internet marketing.
But what if you used social networking sites as a happy medium between traditional and hard-core internet marketing strategies?
Using this one tool could make a huge difference in your business without overwhelming you altogether. Here are 5 ways to get started using social media in your marketing strategy.
1. Create a Strategy. Your competitors have already created a strategy for using social media, so chances are you are already behind. This means thinking intentionally about how to use social media instead of randomly opening an account here and joining a group there.
Spend some time determining the kinds of sites available and evaluating what role they might have in your marketing strategy. Then make a plan to use them consistently and effectively. If you just go with the flow you will be wasting your time and effort.
2. Brand Building. Social media marketing is like having one enormous billboard advertising your company. Everything you post, every tweet you write, and every comment you make should be treated as a chance to show your audience what your business is all about, what you value, and what you stand for.
The first step to consider is creating a business blog.
Chances are you have employees who are already involved in social media in one way or another, so ask them to post some articles to the blog.
Be sure your blog includes your logo, a picture of yourself, and any other tools that will help you promote your brand.
Use your company’s colors as background on your blog and as wallpaper on your Twitter profile.
3. Choose Wisely. Do not feel like you need to use every single social media site available. Stick with a few and spend time using them to your advantage.
Choose sites that help you connect with your target demographic, that help you show off the components of your business that interest potential customers, and that will be most helpful in connecting potential customers to your business.
4. Find the Right Balance. Social media is so popular that it might initially be difficult to find the right balance between it and traditional marketing strategies. In the end, they should all work together to serve your business effectively.
Start with LinkedIn and create a business profile where you can post testimonials and make connections with your customers.
Then create a Facebook group tied to your industry or product.
Finally, use Twitter to create a village of those with interest in your industry.
Connect traditional strategies with online strategies by printing your Twitter ID on business card and make a place on your website that shows visitors where they can connect with you using social media.
5. Mobility. Many platforms allow you to communicate in real time by downloading applications to your phone.
Imagine what you could do as a business owner attending a conference. Sharing with your readers what you are learning, as you learn it, is a great way to build rapport with and interest in your customers.
Overwhelming or not, young people are exchanging information and making decisions based on social media sites.
If you are interested in connecting with them as they age, procure more discretionary income, and spend money on things that interest them, then you need to find a way to connect with them now.
And you need to make sure you are defining your business online rather than waiting for others to define you in your stead.
Get connected online and let the world know who you are.
Stick solely to traditional marketing strategies and you will find yourself potentially missing an enormous demographic.
Try to milk the internet for all It is worth and you will find yourself completely overwhelmed by the number of tools and application available for internet marketing.
But what if you used social networking sites as a happy medium between traditional and hard-core internet marketing strategies?
Using this one tool could make a huge difference in your business without overwhelming you altogether. Here are 5 ways to get started using social media in your marketing strategy.
1. Create a Strategy. Your competitors have already created a strategy for using social media, so chances are you are already behind. This means thinking intentionally about how to use social media instead of randomly opening an account here and joining a group there.
Spend some time determining the kinds of sites available and evaluating what role they might have in your marketing strategy. Then make a plan to use them consistently and effectively. If you just go with the flow you will be wasting your time and effort.
2. Brand Building. Social media marketing is like having one enormous billboard advertising your company. Everything you post, every tweet you write, and every comment you make should be treated as a chance to show your audience what your business is all about, what you value, and what you stand for.
The first step to consider is creating a business blog.
Chances are you have employees who are already involved in social media in one way or another, so ask them to post some articles to the blog.
Be sure your blog includes your logo, a picture of yourself, and any other tools that will help you promote your brand.
Use your company’s colors as background on your blog and as wallpaper on your Twitter profile.
3. Choose Wisely. Do not feel like you need to use every single social media site available. Stick with a few and spend time using them to your advantage.
Choose sites that help you connect with your target demographic, that help you show off the components of your business that interest potential customers, and that will be most helpful in connecting potential customers to your business.
4. Find the Right Balance. Social media is so popular that it might initially be difficult to find the right balance between it and traditional marketing strategies. In the end, they should all work together to serve your business effectively.
Start with LinkedIn and create a business profile where you can post testimonials and make connections with your customers.
Then create a Facebook group tied to your industry or product.
Finally, use Twitter to create a village of those with interest in your industry.
Connect traditional strategies with online strategies by printing your Twitter ID on business card and make a place on your website that shows visitors where they can connect with you using social media.
5. Mobility. Many platforms allow you to communicate in real time by downloading applications to your phone.
Imagine what you could do as a business owner attending a conference. Sharing with your readers what you are learning, as you learn it, is a great way to build rapport with and interest in your customers.
Overwhelming or not, young people are exchanging information and making decisions based on social media sites.
If you are interested in connecting with them as they age, procure more discretionary income, and spend money on things that interest them, then you need to find a way to connect with them now.
And you need to make sure you are defining your business online rather than waiting for others to define you in your stead.
Get connected online and let the world know who you are.
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