What are Lease Options?

Lease options is short for “Lease with the Option to Purchase”. As the name suggests, two events are expected to take place – the lease and purchase of a property, where the latter action is at the discretion of the buyer/tenant. In this contract, you as the seller are bound to sell, but the buyer/tenant is not bound to buy.

How Do Lease Options Work?

By paying a valuable consideration upfront, the buyer/tenant gets an option to buy a property at an agreed price at the end of an established period of lease, typically one to three years for residential properties, but could get longer due to the present credit environment. The consideration, which is often nonrefundable, is usually at two to three percent of the market value of the home. This is preferable for… Read the rest

There are numerous opportunities in real estate investing, but you have to have a skilled eye at identifying them. Inexperienced investors pass up on great opportunities because they lack the know-how to spot the gold from the seemingly uninteresting properties. Discussed below are five ways you can profit from real estate.

Retailing – Buy, Fix, and Profit

Retailing, in three words, is buy, fix, profit. Many newbie investors enter the real estate trade using this strategy. I’m sure you already know all about this strategy. You buy handyman specials at great prices, rehab them, and sell them for profit. One costly mistake a handful of fledglings commit is underestimating the cost of repairs. Savvy rehabbers already have a network of contractors and a checklist of repairs to watch out for and their estimated costs. They do not rely on… Read the rest

Property Flipping – The Good

These days, the term “property flipping” or “house flipping” carries illegal or fraudulent undertones. It used to just innocently mean buying a property or house below market value or at a discounted price from a motivated seller and selling it quickly with little to no renovations done on the property, thus, quickly generating profit. This real estate game plan includes wholesaling, contract assignment and fix and flip schemes. Property flipping is a good starting point for real estate investors as they can generate quick cash using this strategy with little to no money required.

Property Flipping – The Bad and the Ugly

Then unscrupulous and greedy individuals enter into the already topsy-turvy realm of the real estate market and sullied the innocence of the term through their twisted schemes. They buy a… Read the rest

Foreclosure defense is a legal strategy in which a homeowner retains the services of an attorney to complete a forensic loan audit of all the documents associated with the mortgage. The attorney is looking for fraud and predatory lending violations than can then be used to aggressively counter sue the bank for damages and in return force the bank to negotiate with the homeowner or investor. Remarkably, on average over 80% of all residential loans since 2003 contain such violations. During the housing boom, banks could not push new mortgages through their system fast enough to satisfy the appetite for profits by Wall Street.

FHA Admits They are Hindering the Real Estate Recovery

The FHA has finally come to the realization that many investors buying and fixing foreclosures are taking much less than 90-days to rehab their homes.  Good rehabbers can actually have an ugly house ready for occupancy less than 30 days after its purchase.  So beginning February 1, 2010, the FHA is suspending the 90-day resale restriction imposed on sellers selling to buyers using FHA insured financing.

In order to re-sell a home to a FHA buyer in under 90 days, the following conditions must be met.

This chart was created using the information listed in the Waiver of Requirements of 24CFR 203.37a(b)(2) which is located on the HUD website at http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf.

Here are two more points not listed in the chart.

1. The 90-days flip restriction waiver will expire one… Read the rest

The #1 rule is to actually be there!  If you, as the real estate investor, cannot make it to the appraisal, then send your partner, construction manager, or reschedule if permissible.  A bad appraisal or a failed inspection can be the difference between a transaction closing or falling apart or weeks of delays being incurred while waiting for another home inspection from the section 8 inspector.  A section 8 tenant will not always wait around for a failing property to pass its inspection when there are a handful of other rehabbed homes readily available for rent.  Similarly, a bad appraisal may scare off potential buyers or reduce the amount funds available for an investor’s cash out refi.

Bring Favorable Comps to the Appraisal

Whether the property needs to appraise high or low, find the three most favorable comps… Read the rest

This rehabbed foreclosure will be paid off in 5 years and 3 months!

Real estate investors across the country are acquiring foreclosed properties for pennies on the dollar, rehabbing, refinancing, and renting them out for incredible cash flows. So what’s holding you back? Is it the lack of funds? Or is it no interest in being a landlord? If dealing with tenants has you scared of starting your own million real estate portfolio, hire a good property management company to handle those headaches. If it is for lack of funds, then you haven’t looked hard enough. Hard money, private money, local community bank money is available. The deals that are out there right now are too good to pass up.

Here are real world numbers of a rehab near Chicago, IL.

Bank Foreclosure – 4 bedroom, 2

… Read the rest

Home Buyer Tax Credit Update

The Senate has passed a bill to give homebuyers another three months to close on their homes and receive tax credits up to $8,000. The Tax Extenders Bill would apply to homebuyers who met the April 30, 2010 deadline with a signed contract to purchase a new or existing primary residence. The amendment would extend the deadline to September 30, 2010 for homebuyers to close on their real estate transaction. The previous deadline was June 30, 2010. The bill now goes to the House of Representatives, where it is expected to pass.

The National Association of Realtors estimates that as many as 180,000 homebuyers have qualified for the tax credit and met the contract deadline of April 30, 2010, but might not be able to close their transaction by the June 30, 2010 deadline due… Read the rest