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How to Line Up Qualified Buyers So That You Can Flip Properties
In the last article, we talked about how you can still flip properties – literally overnight in some cases – in this economy. However, the key to this type of speed actually lies in your willingness and ability to network and set up buyer connections ahead of time so that when a good, qualifying deal arrives, all you have to do is make the call.
What If I Just Want to Flip?
We have spent a lot of time talking about short sales recently. This is because in many ways, flipping short sales has taken the place of flipping contracts and properties themselves.
Understanding the Difference Between Transactional Funding and Simultaneous Closings (Transactional Funding, Part 4)
Historically, simultaneous closings were a great way for real estate investors, buyers and sellers to all get their “piece of the pie” very quickly in a real estate flip. Simultaneous closings occur when a seller signs a contract selling the property to a real estate investor. This contract is put into the hands of a closing attorney. At the same time, the investor signs a contract selling the property to a third party buyer, contingent on that buyer’s ability to fund the transaction.
When Transactional Funding Alone Won’t Work (Transactional Funding, Part 3)
Now that you understand how transactional funding works, it probably has taken a pretty big load off your mind. Turns out, despite the new laws that require your name to be on the deed of a property that you sell, you can still get funding that is not a risk to you or the lender without having to have perfect credit and a huge down payment on the property.
A Basic Introduction to Transactional Funding (Transactional Funding, Part 2)
In today’s lending environment, most lenders will not lend money for a transaction unless the name of the owner of a property is on the deed to the property. Lenders say that this is because they are attempting to prevent lending and real estate fraud. They say that it helps them insure that the property is actually in a position to be sold. Many of my colleagues say that the real reason is far simpler: it is a way for the lenders to make some extra money.
New Developments in Short Sale Transactions (Transactional Funding, Part 1)
Whether you have done short sales in the past, or you have educated yourself about these transactions, you are probably fairly familiar with the basic function of the real estate deal. Essentially, the owner of the home gives a third party the right to the deed of the home and to negotiate with the bank for a discounted price on the home in exchange for avoiding a foreclosure.
Short Term Real Estate Investing in a Bad Economy
If you have been watching the news, then you likely are having some pretty serious concerns about your ability to perform as a professional real estate investor in this economy – particularly if your main focus is short term real estate investing rather than long term. However, in reality, the real estate investing reality is that your success literally depends on mindset – but it’s not just your own mindset that matters.
3 Things You Must Factor In If You Want to Flip Short Sale Properties
Short sale flipping is an extremely popular and effective way to invest in real estate in the short term in today’s market. However, there are some pitfalls in being involved in this type of real estate investing, and you must be aware of the legal issues and legislative regulations that are in place and are being put into place to deal with this relatively new real estate investing strategy.
Short Sales as Short Term Real Estate Investing
It used to be that there was nothing short about a short sale, other than that sometimes you could shortcut or circumvent a foreclosure. As you probably know, short sales are transactions between a real estate investor (or other third party) and a lender on behalf of a homeowner who is going to lose the home.
Timing Your Short Term Real Estate Investing
When it comes to short term real estate investing, timing really is everything. With longer-term investments, in many cases the fact that you are going to wait a decade or two to sell means that you can rest fairly safely in the knowledge that your property will appreciate over that time. (Of course, this is not always true, but generally the timing is slightly less of an issue in long-term investing).
Creative Short Term Real Estate Investing
So by now you have probably heard a lot about creative financing. Generally, creative financing involves finding unique and flexible ways to fund a real estate transaction. These methods may involve unusual ways of structuring the deal, or simply finding new sources of funding for the transaction. Either way, creativity and flexibility are crucial to creating financing.
How Your Credit Impacts Your Short Term Real Estate Investing Ability
As a real estate investor, having good credit can be a huge advantage. It can help you garner one or more loans in order to purchase properties or renovate them. It can even help you prequalify for mortgages so that you can go into a deal or an auction with proof of your ability to purchase a property. In short, it’s a great thing.
Working with Contractors on Short Term Investments
The other day, I was talking with a colleague who mentioned that he had a really fantastic deal on his hands. He was being offered hundreds of thousands of dollars just to find a buyer for several houses in a subdivision out west. I asked what was wrong with the subdivision, and learned that in fact, nothing at all was the matter. The finished homes were selling, and several under construction already had buyers lined up.
How to Spot a Good Short-Term Real Estate Investment
When it comes to short term investing, you need to look for properties with your end result – selling – in mind. However, just thinking of selling is not enough to help you spot a good short term investment in real estate. You need to think about several other factors before you start looking in order to insure that you spot the best short-term real estate investments in an area.
Turning for Profit in Any Economy
In many ways, you could view long-term real estate investing as an “easy” win. After all, you buy the property and then maintain it until it has a lot of equity. Then, you sell it. Since you held onto it for 10 or 20 years, the odds of it having appreciated are huge, so you probably will make a sizeable chunk of change when you sell it.
3 Risks that You Must Factor in as a Short Term Real Estate Investor
Recently, I got a great deal on some property. It was literally pennies on the dollar. And it was not because I have great connections (although I do), or because I had a note on the property, or because I bought some tax liens, or even because the owner was in dire financial distress and had to take a huge cut on the property in order to stay afloat. It was not any of those things, even though they are all quite common in today’s market.
A Brief Review of Short Term Real Estate Investing
I have been investing in real estate for more than two decades, and I have seen some pretty amazing changes in the market during that time. One of the most interesting shifts that I have seen in real estate investing is the notion of short-term investing. Generally, the term “short term investing” refers to flipping or turning houses quickly – sometimes even before you have them under contract. This is an exciting and fast-paced business that tends to yield big rewards fast.
Fact or Fiction: Long Term Investing with Someone Else’s Money?
I have heard the “no money down” and “invest with someone else’s money” spiel so many times that I almost did not write this article. So often, it seems like these are just great, attractive tag lines designed to sell a real estate investing course or get you pay for someone’s “connections” so that you can make money without spending it. So let’s get one thing straight right now: You can make money without spending money, but you cannot make money for free.
Spotting a Good Long-Term Investment Property
One of the things that my clients most often ask me is very simple: “How do I spot a good long-term real estate investment?”
While my answer often varies depending on the individual client’s personal situation, there are some things that nearly always indicate a good investment property.
Long-Term Real Estate Investing Green Flags
I’ve done a lot of teaching up to this point about how to avoid making mistakes when you are involved in long-term real estate investing. However, I think it is important to also make sure and focus on the positives, including how to know when you have spotted a great deal that could make you some serious money in the long run. As we all know, probably the most attractive feature of a long-term real estate investing deal is usually the ability to buy low and eventually sell high.
Long-Term Real Estate Investing Red Lights
Today’s real estate market is ideal for the long-term real estate investor. After all, in just about any market in any geographic location, you can purchase valuable real estate for mere pennies on the dollar.
When Market Matters in Long-Term Real Estate Investing
I have always thought that one of the best things about long-term real estate investing was that for all intents and purposes, you can do it in any market. After all, if you track the value of real estate investments over time in just about any locale, you will find that in the long term, the value of the vast majority of real estate investments will increase. Period. It’s a known fact.
Planning for the Worst in Long-Term Real Estate Investing
No one likes to plan for the worst. In fact, I know a lot of people who think that planning for the worst is just being pessimistic, and that the best way to avoid having bad things happen is to avoid thinking about them. While on some level this does make sense, as a real estate investor I have found that not planning for the worst is one of the most fiscally irresponsible things you can do when you are involved in real estate investing.
Long-Term Real Estate Investing for Retirement
Traditionally, owning real estate was a retirement plan. Period. In fact, it is only in the past 2 or 3 decades that the world at large has started to view real estate investing as a way to “get rich quick.” But long-term real estate investing for retirement purposes is an age-old concept that has worked for literal centuries, and despite the current, uncertain real estate market, today is no different.
Long-Term Real Estate Investing in a Bad Economy
As you are watching the real estate market “crumble” and the deals multiply exponentially, you may be thinking to yourself (and any economist would agree with you) “A bad economy is a great time to spend money.” All political issues and platforms aside, for real estate investors this is nothing short of the bare, honest truth. When the market sinks, the deals come out and a buyer with cash has his or her choice of the lot.
Long-Term Investing Using Subject-To Transactions
A subject-to transaction is a real estate deal in which the buyer purchases the property subject to the existing mortgage. This means that they assume the current payments at the current interest rates and their payments, present and future, are subject to the terms of the loan. This is an extremely useful and valuable tool to have in your real estate investing arsenal, particularly in the current market when traditional lender-financing is hard to come by.
Short-Term Investing for Long-Term Results
In the last lesson, we talked about how important it is to not let yourself get caught in the trap of thinking that your long-term real estate investments will be nothing but a drain on you in the short term. Of course, you do need to plan ahead for the possibility that they could be a drain.
Planning for the Future of Long-Term Real Estate Investments
Jane Investor buys a property when she is in her late forties. She wants to use it as a long-term investment, so she gets a conventional loan on the property and makes the payments as well as maintaining the property for the next 30 years.
3 Fast Exit Strategies for Long-Term Real Estate Investments
As we’ve already discussed, part of successful long-term real estate investing is having an effective way to get out of the investment – preferably while generating wealth at the same time. Sometimes, however, you need to get out of a long-term real estate investment fast, which can create trouble for a real estate investor who only planned for a calm, prolonged exit that could happen at their leisure.
The Number One Mistake Real Estate Investors Make In Long-Term Real Estate Investing
Long-term real estate investing has been around since the beginning of recorded history. Thousands of years ago, the ancient Egyptians invested in extended areas of attractive burial grounds and built amazing tombs that could be either used by a family or sold for a profit in an emergency, and even that was probably not the beginning of real estate investing.
Planning for Long-Term Real Estate Investing
When it comes to investing in real estate for long-term purposes rather than short term, you may think that there may not be a lot of planning involved. After all, how complicated can it be? You just pay for the thing one way or the other for the next 20 or 30 years, then sell it.
Long-Term Real Estate Investing Advantages
In the past few decades, I’ve noticed that there has been a major – and somewhat disconcerting – shift in the way that the majority of investors view real estate investing. As little as 20 years ago, real estate was something that was purchased by-and-large for the long term.
Spotting Good Long-Term Real Estate Investments
As the economy continues to be unpredictable and many experts aggressively disagree on how the state of the real estate market will trend in 2010 and beyond, there is one thing that everyone can agree on:
Long-term real estate investing is the only guarantee.
A Major Subject-to Pitfall that Can Cost You Your Deal
There is a simple question that you must ask every owner of a property who is considering selling it subject-to. It should be the first question out of your mouth, because the answer to this question will determine whether or not the deal can ultimately be closed.
Selling the Seller on Subject-to Transactions
If you are familiar with subject-to transactions, then you know that the original owner of the property is taking a pretty big risk. After all, they are trusting you with their mortgage payments for a minimum of the next few years (and in my experience based on the current “credit crunch” you need the option of never refinancing at all if you do not wish to do so). If you fail to make those payments, their credit – not yours – will suffer.
Subject-to Investing for the Future
If you wanted to buy 10 properties via subject-to transaction in a great neighborhood today (in Atlanta, at least) you probably could with little trouble and very low expense. However, once you had those properties, what would you do with them? Many people look at real estate investing as a short-term operation.
Selling Subject-to Properties
If you are like a lot of real estate investors, then you do not actually want to own subject-to properties forever. In an ideal situation, you would take over the loan for a few months, and then sell the property at a profit by selling the house at value rather than simply allowing someone else to take over the loan.
Subject-to Timing
A lot of my colleagues have been saying recently that the time for subject-to investing is over. As an investor who has done countless subject-to deals in all sorts of markets and economies, I find that viewpoint disconcerting to say the least.
Could Subject-To Transactions Become the Next “Conventional” Real Estate Deal?
In the past, subject-to transactions were the height of “creative” real estate investing and innovative real estate financing. After all, most of the people who were interested in buying properties did so in more conventional ways, by applying for a loan and then buying based on what the loan and their savings for a down payment indicated that they could afford.
How to Talk to Your Lawyer when You Are Closing on a Subject-to Transaction
If you have done one or more subject-to transactions, then the hard facts of the matter are that you have likely done one or more more subject-to transactions than your real estate attorney. Of course, there are exceptions and some real estate attorneys specialize in subject-to deals, but the majority of them have never actually closed this type of creative financing deal.
Subject-To Transactions: 100 Percent “Safe”?
We might as well deal with the hard facts up front: mortgage companies do not necessarily like subject-to transactions, and if they don’t like yours, then they can demand the loan be paid in full. Period. End of story.
Protecting Yourself in a Subject-to Transaction
In real estate investing, you always have to watch your back. It is just a simple fact of life. Even if everyone involved in a deal loves, trusts and has “history” with each other, you still much make sure that you are all legally protected not just for the security of the immediate deal, but for your security in the future.
Dealing with "Toxic-Homeowner" Syndrome in Subject-To Investing
Once you work with a homeowner to show them just how good a subject-to investing deal can actually be for them as well as for you, you may find that the homeowner becomes a little more demanding.
Mortgage
As you can probably imagine, when you are doing a subject-to deal you need to examine the terms of the mortgage agreement very closely. After all, there are a lot of advantages to doing subject-to deals, but all of these can go right out the window if you end up with a mortgage that does not meet your needs.
How to Flip a Subject-To Property
Flipping and flippers are getting a bad name lately because many economists and a large portion of the general public blame the process of flipping real estate for driving prices up so high before the housing market gave out. However, you should not believe all the bad press you hear.
Subject-To Investing for Your Real Estate Portfolio
When it comes to building your real estate portfolios, subject-to transactions are a great way to start building without major financial outlay. In fact, many people who are afraid of mutual funds and the market in general at this time are putting their money into real estate instead because they can actually acquire one or more valuable properties at very low prices, sometimes for less per month than they were putting into their other retirement plans.
Finding Buyers for Subject-to Properties
At this point in time, you can definitely get some great deals on subject-to properties. After all, there are frankly just more out there that are decent values than any one real estate investor could ever handle.
Dealing with Potential Sellers in Subject-To Deals
Just as every real estate investing strategy is different, every motivated seller is different too. Of course, in one way each seller is different because each is experiencing a slightly different situation that is making them want to sell their house in short order.
Getting Started with Subject-To Investing: Finding the “Right” Motivated Sellers
While many people understand the basics of subject-to investing, they may not really have a very good idea of how to get started on the process. Subject-to investing is actually pretty simple in concept, but many new real estate investors – or just investors new to the process – can easily get bogged down because this is not necessarily the simplest type of real estate investing to implement.
Getting Creative with Subject-To Investing
Bob is a real estate investor. He has been very frugal with his money and has had good results from the real estate properties that he has been investing in for the past decade or so.
The Role of Creative Financing in Subject-To Investing
When it comes to subject-to investing, a legitimate argument can certainly be made that the whole thing, from start to finish, could be considered creative financing.
Making Subject-To Investing Work in Any Economy
Many people think that subject-to investing and other types of “creative” real estate are only good when the economy is also good. They may believe that they need easy credit or lots of available money for down payments in order to insure that they will be able to make money on subject-to properties.
The Subject-To Investing Pitfall that Many Real Estate Investors Miss
Imagine that you have located an available property that is just perfect for your requirements. You have a motivated seller who is willing to work with you in order to get the property off their hands. You also have a buyer who is interested in the property, and they are eager to get their hands on it.
Buying Foreclosure Properties in Today’s Real Estate Auctions
Real estate investors have been getting great deals on properties at bank auctions for years. However, in the past decade, the entire nature of the real estate auction has changed dramatically. I remember personally when a real estate auction was a subdued, simple affair with only a few people in attendance and the properties were sold from the courthouse steps.
Creative Real Estate Investing Through Non-Traditional Lenders
As a real estate investor, you are probably pretty clear on the value of having a source of private money and funding. Many real estate investors work very hard to develop relationships with private capital lenders so that they do not have to rely on traditional lenders like banks and mortgage companies.
Bulk REO Insights into the Reality behind Purchased Proof-of-Funds Papers
If you pay attention to real estate investing trends, then you probably already know about Bulk REO Investing. This type of investing is huge right now – both literally and figuratively. Bulk REO investing involves buying large numbers of foreclosed properties (Real Estate Owned or REOs) from banks or other lenders.
Investing in Foreclosures Successfully in a Changing Real Estate Market
When I first got started in real estate investing over a decade ago, foreclosure investing was a very different type of real estate strategy than it is today. I would show up at bank auctions with a pretty clear idea of how much money I was willing to spend on a given property.
3 Factors that Can Make or Break Short Sale Negotiations
If you have been involved in real estate investing for very long, then you have probably heard of short sales before. A short sale is the term used for a transaction between a lender and a buyer in which the buyer pays a discounted amount for a property and receives the title and the owner of the property is not compelled to go through foreclosure. Everyone wins. The buyer gets a great deal.
An Introduction to Short Sales
Short sales are a great way to make money by negotiating with lenders to get discounts on properties. In many cases, you can buy properties for literally half the price of the property, which means that even if you sell at a steep discount, you can generate a great deal of income off of just one property.
3 Signs that the Time is Right for You to Be in Real Estate Investing
You have probably heard a lot lately about how the time is “right” for real estate investing. The people saying this are absolutely correct. The state of the market currently is ideal for people who want to invest in real estate and get some real bargains on property.
The Key to Selling High in a Bad Real Estate Market
Now, when the going is good, as they say, then you may have no trouble flipping properties, selling for big profits and generally turning most – if not all – of your real estate deals into gold. In fact, many real estate investing “gurus” recall the market of just a few years ago very fondly because, in one guru’s words, “You could mess up big time and still make money.
Getting Into Real Estate Investing at the “Wrong” Time
If you have been interested in getting involved in real estate investing, then you may have had a niggling feeling in the back of your mind over the past 18 months or so that you missed your chance. Perhaps you have been influenced by all the negative press that has surrounded “America’s Housing Crisis.”
The Perennial Buying Option that Real Estate Investors Often Overlook
You have probably heard before that the “real money” in real estate is made when the market is bad. Now, we have to say up front that we count all money as real money.
3 Keys to Success with Creative Financing
Creative financing describes any way outside of the traditional home-buying experience that you can buy or sell real estate.
An Introduction to Creative Financing
In today’s real estate market, real estate investors are hearing the words “creative financing” more than ever before. These words mean different things to different investors and sellers, but nearly everyone agrees that creative financing happens outside the bounds of the traditional mortgage application and loan approval process.
How to be an Instant Real Estate Investing Expert
In reality, the answer is pretty simple: Look to an expert. In fact, you probably already know – and have seen proven thousands of times – the types of payoffs that come from investing in your real estate investing education. However, sometimes just the education is not enough.
The Major Oversight that Will Leave Your Real Estate Investing Deals Dead in the Water
Stacey was really excited. It appeared that finally her first real estate investing deal was going to come together. She had located a motivated seller that really needed her help, and the property was ideal for a short sale negotiation with the bank. Eagerly, she contacted lending institution’s customer service line and asked to be connected with the division that handled short sales.
The Question that Only Smart Real Estate Investors Ask
You have done some serious legwork when it comes to your real estate investing career. You have searched your local area for deals that meet your criteria, located three properties that all appear to be great investment opportunities, and gotten background on all three deals from the sellers.
Mistakes Even Experienced Real Estate Investors Make
Real estate investing is one of the most exciting arenas in the business world. In fact, many people consider real estate to be one of the classic “millionaire-makers” because so many people with massive fortunes generated part or all of those fortunes in the real estate market.
When Networking is Not Enough
If you have ever attended a real estate investing seminar or even just read an article about real estate investing online, then you probably are very clear about the advantages and importance of networking. Knowing people in your line of work and whose abilities work with your abilities and goals can be a big advantage when you are working with real estate. Everything you have read about the importance of networking is absolutely true.
Jumpstarting Your Real Estate Investing Portfolio in the Next 24 Hours
Bob had been learning about real estate investing for years. He had attended probably fifty seminars, and considered himself an expert (on paper) in short sales, flipping and commercial property.
The Simple Oversight That Could Ruin Your Real Estate Investing
Whether you are new to real estate investing or you have been around the block a few times, you are almost certainly aware of the importance of watching the details. After all, in the end, whether a deal makes or breaks you will be in the “little” details.
3 Major Mistakes Every Real Estate Investing Novice Makes
Real estate investing is an extremely exciting way to generate wealth. After all, there are not that many business arenas in which a single deal can potentially mean major changes for every aspect of your life. However, this life-changing facet of real estate investing can work both ways. Mess up, and you could literally cost yourself a fortune.
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