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.

Bankruptcy alone does not relinquish ownership of the property. The bank has to legally foreclosure on the investor in order to take back the property. This means the investor could actually keep collecting any rents received until the property is sold at auction assuming the bank does not assume the rents as they are entitled to. The main thing bankruptcy accomplishes is that it eliminates the right of the lender to collect a deficiency judgment from the investor when the property sells for less than its loan amount.

Renter’s Insurance

I never used to require my tenants to obtain a renter’s insurance policy when leasing one of my properties; I just suggested it.  I figured it was a good idea to have but it was ultimately the tenant’s decision not mine.  The landlord is not liable for the tenant’s personal belongings in almost all cases of loss (unless it can be proven that the landlord’s negligence caused the damage), so why should I care?

Well after years of owning many rental homes in blue-collar neighborhoods, I have changed my views and now require all new tenants to obtain a renter’s insurance policy as part of the lease agreement.  In many cases it’s only about 50 cents a day.  Check out this link for a good overview of the benefits of renter’s insurance to the tenant.

http://www.themoneyalert.com/rentersinsurance.html

Here is… Read the rest

Over the past year, I have talked with several investors down on their luck because of the real estate market crash.  Everyone seems to have the same story, “I didn’t see this coming”.  More accurately put, I would say that most of us had our blinders on and tried to enjoy this gravy train as long as we could.  So what does an investor do to get through this downturn?

Banks are Approving Loan Modifications for Investors

Bank of America (Countrywide), Harris Bank, and local community banks are some of the banks that we have first hand experience with in successfully modifying the loans on rental properties.  Surprisingly, contrary to all the news you here about how difficult this process is, all the loan modifications we have done have been fairly easy!

Here are some of… Read the rest

Upside Down Investor Mortgages

Did you get way in over your head during the housing boom? Are you now drowning in debt trying to keep up with the payments on your upside down investment properties? Did you cash out refi every penny of equity you could squeeze your mortgage broker to find for you? Do you have tenants that constantly miss payments and there’s nothing you can do about it because you have run out of money to evict them? Unfortunately, there are many real estate investors that can answer yes to these questions.

Upside Down Mortgage Options

First of all, don’t panic. The worst thing that can happen to you is that your credit score will be ruined for some time, maybe a long time.  But remember, this is NOT a life or death situation and there is no… Read the rest

Bank REO’s

These are properties that the bank now owns after the foreclosure process has run its course culminating in an unsuccessful attempt to auction off the property at a sheriffs sale.  Your local real estate agent can put together a list of properties in the price range you are looking for.  Most of my purchases have been REO’s since they provide the least amount of headache to obtain.

HUD Homes and Government Seized Repo Homes

Go to www.hud.gov or www.homesales.gov to find government owned properties in your target areas.  These areproperties that Fannie Mae or Freddie Mac have insured and the homeowner defaulted on the mortgage.  I have purchased some heavily discounted HUD homes with almost no money down.  There is usually less competition for these homes as long as they are not… Read the rest

Put that Positive Cash Flow to Good Use

In the years leading up to the real estate debacle which began in May of 2007, many real estate gurus were touting that even if a property barely breaks even on a monthly cash flow basis, it’s still a good deal because of skyrocketing home values.  The option arm mortgages were also marketed on this same premise, that home values will never go down.  That game is over.  The easy money loan programs are gone and interest rates will most likely rise in the future.  This will keep prices in check and property values will appreciate very slowly over the next 5-7 years.  This makes cash flow king once again; speculation is dead. Fortunately for rehabbers and investors alike, positive cash flow has never been easier to obtain given… Read the rest

Real estate investing and especially rehabbing is not a one person show.  The interaction of several different real estate professionals is needed in order to operate a profitable real estate investment business.  In simple terms, real estate investors are basically project managers.  A project manager brings together and directs the right people to accomplish a goal.  The project manager has the vision of what the outcome will be, and it is his or her job to put to together the right team of professionals that can make that goal come to fruition.

The synergy of an effective team is always greater than the sum of the individual contributors.  This synergy is created by the real estate investor through his or her leadership, determination, and vision.

Here’s a tip:  You can find each one of these professionals at your local real… Read the rest

Smart investors will get pre-approved to refinance their hard money loan prior to obtaining the loan!  Hard money lenders are not in the business of lending their money for the long term.  They will not refinance your project once complete.  Even if the plan is to sell the property for a handsome profit, one never knows what may happen so be prepared to deal with any scenario.

Rehab finance is not a topic that every mortgage broker or banker is familiar with.  I have learned this lesson the hard way and almost lost a property due not being able to find a suitable end lender for my first rehab project.  Especially in today’s difficult financial and real estate market, the rehab investor MUST have a solid exit strategy when using short term loans.

I once thought that if I bought… Read the rest

For investors with little to no cash to start with, hard money loans should be considered as the first financing option for buying and fixing foreclosures.  Looking for private investors at the beginning of one’s rehab investing career is difficult due to the lack of experience and no proven track record which is very important to private lenders.  For those investors with some cash to invest, look to the local community bank in the neighborhood you are planning to do business in for your best lending options.

Not all community banks are the same, but there will usually be at least one bank that is tied into the community with investor friendly programs to rehab realestate in the local community.  Rehabbers provide an important service that commercial builders and large corporations cannot compete with.  Rehabbers keep their overhead low and… Read the rest