Foreclosure Viewing Instructions: Remove the Front Door Yourself!

Most experienced real estate investors and rehabbers have figured out a way to bypass being accompanied by a real estate agent when viewing vacant homes including bank owned properties.  Some investors have real estate agent friends that get the lockbox combos for them, while others sweet talk or persuade the listing brokers into offering up the combos.  This may not be legal in some cases, but it is a fact in our business.  Some agents listing vacant properties including REO’s, will actually instruct investors to bring a power drill with them to remove the front door to gain access to the house as long as the door is screwed shut upon leaving.  This is understandable given the number of real estate investors just kicking the tires and rarely ever buying anything.

Viewing… 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

Private money sources are the most flexible sources of cash an investor can obtain.   When time is of the essence nothing beats cash.  Hard money lenders and the investor friendly community banks still require some form of underwriting and an approval committee prior to obtaining your funds.  The constant demands of the underwriting loan process take away from the investor’s true money making activities which are locating great deals and managing (cost control) of the rehab process.

Cash is still king when placing offers on foreclosed properties.  Lower cash offers are often accepted over higher purchase offers that require financing, within reason.  Banks have a glut of REO’s on their books that they are trying to liquidate as fast as possible and they are sick of all the financing (this includes hard money) deals that fall apart prior to closing. … Read the rest

“So what’s your rate?” she asks…

You can see that twinkle of anticipation in her eyes, almost hearing her heart pounding as she awaits your response.  You look at her confidently but it’s a front; deep down you’re stomach is churning, there’s a lot riding on your answer and you know it all too well, you’re experienced and you have been here before…

Nervously you think to yourself, “If I quote her too high she’ll leave me for someone else… but if I quote her too low, can I really be the Mortgage Broker she expects me to be?”  If you play it just right you know it can lead to more… a completed loan application perhaps??  Possibly a customized Good Faith Estimate??  Your mind begins to go into overdrive…  She looks so intent… Is she the type to sign… Read the rest

Did you know that you do not have to invest your retirement funds in the stock market?  Real estate prices are at historical lows and there may never be another buying opportunity like this one again.  Lifelong, conservative investor friends of mine that have always believed real estate investing was too risky are now purchasing and rehabbing properties using the money in their 401k’s and IRA’s.

The concept of investing in real estate or other assets in retirement plans has been around for more than 30 years.  These kind of retirement accounts are called self directed IRA’s/401k’s and are governed by the IRS.  There are strict rules that the investor must abide by in order to receive the tax benefits associated with these retirement savings accounts, but they are fairly straight forward.  ALL expenses associated with the purchase, rehab, and… Read the rest

A busy rehabber and real estate investor does not have the time to view every foreclosure that comes on the market and work out the detailed costs of every purchase.  That approach is not an effective use of the real estate investor’s time and resources.  You will miss out on many good deals trying to analyze the cost of every rehab prior to submitting an offer.  Let’s make life as simple as possible here.

Follow these steps to start submitting multiple offers on foreclosures, REO’s, and HUD properties without ever seeing the property.  Learn to submit offers based on price points and spend that quality time with family and friends instead.

1.  Learn the neighborhood

The first thing an investor must do is learn the neighborhood inside and out that is going to be targeted for flipping homes.  … Read the rest

A hard money lender makes short-term loans based on the value of an asset, in this case a property, with little regard to the borrower’s credit and/or finances.  Hard money lenders charge higher interest rates than standard banks due to the high risk nature of these loans.  Unlike traditional banks, hard money lenders can provide funds quickly, usually in 10-14 days, to purchase and rehab distressed properties.  These properties can be in need of significant repairs or be in various stages of foreclosure. This makes these loans popular with first time real estate investors that have little working capital or poor credit scores.  Look to use hard money loans to rehab foreclosures as your means to long term wealth and financial freedom.

Hard money lenders will only provide loan terms of 4 – 6 months at which time the investor… Read the rest

First, Why Buy REO’s?

Because REO properties or bank owned foreclosures, will be the easiest properties to acquire and locate and therefore the best properties to start your real estate investing career with.  REO homes have already been through the foreclosure process, they have been returned to the bank, and are being offered with clear titles with no negotiating necessary other than the price.  Real estate investors interested in starting a fix and flip or fix and hold business should focus their initial efforts on construction cost control and marketing of their affordable housing rather than spending three to six months using creative techniques to find a property for $5K to $10K less than what is already on the MLS.  These savings will quickly be lost when the unprepared investor winds up blowing their construction budget or holding on… Read the rest

Rehab Financing Made Easy – Develop a Strong Relationship with your Local Community Bank

Find that investor friendly community bank located in the neighborhood where you will be buying and fixing foreclosures.  Be upfront, truthful, and communicate openly with your bank’s lending officer.  Develop a strong relationship based on open communication and most importantly consistent on time payments. Keep the lending officer abreast of your work so they get to know you and eventually the bank will treat you as a preferred customer.  They will be more willing to work with you in hard financial times or with special requests.  It makes smart financial sense for lending institutions to work with their borrowers during difficult financial times rather than enforce their strict guidelines with no flexibility.

3 Month Payment Deferral

Here are two examples… Read the rest