Archive for October, 2010
Successfully Buying Foreclosures Online
Posted by Peter Vekselman in Uncategorized Thursday, 28 October 2010 03:59 12 Comments
Buying at an online foreclosure auction is the riskiest way to purchase property and should only be done by experienced investors with the assistance of a real estate mentor.
Bidding online for your favorite DVD on EBay is one thing. Buying foreclosed property via an online auction is completely different. Foreclosures carry unique risks that you need to be aware of. A few of the most important are:
- Foreclosures do not come with money back guarantees. Foreclosures are bought ‘as is’. If the roof leaks or the furnace doesn’t work, too bad, it’s your problem not the bank’s that sold it to you.
- Approximately half of the states have ‘redemption periods’. This is a period of time following the sale that the previous owner can reclaim the house by paying off the delinquent mortgage. That means it won’t be generating any income and you don’t want to make improvements for a resale. The period varies from 10 days in New Jersey to 730 days in Tennessee.
- Rarely is there an opportunity to have the property professionally inspected. You should assume there are problems with the property and bid accordingly.
- You almost always have to pay in cash at the time of the sale. Usually you have to prequalify with a letter of credit from a bank.
- There could be hidden costs like unpaid property taxes or other liens. You want to learn about these before bidding. If you can’t, don’t bid.
Finding the Right Neighborhoods for Wholesale Purchases
Posted by Peter Vekselman in Uncategorized Friday, 22 October 2010 03:58 11 Comments
Determining the best neighborhoods to purchase wholesale properties depends on your income strategy. In today’s market it’s almost a given that you will be looking for REO unless you want the hassles that come with purchasing a short sale. There are exceptions to this but why not take the easy route with REO.
The good news is that you will find REO properties in almost every neighborhood these days. You can buy wholesale in low, moderate, middle, and upper income neighborhoods. The critical point to consider is how you intend to make money from the investment.
What attracts investors to low income neighborhoods are high renter occupancy rates. Typically, more than 80% of the properties in these neighborhoods have absentee owners. The people living here are renters. That makes it a good investment choice if you want to add rental property to your investment portfolio. It makes it a bad investment choice if you intend to flip or rehab the property because there are few people looking to own here.
Fannie Mae and Freddie Mac Short Sale Guidelines
Posted by Peter Vekselman in Uncategorized Wednesday, 20 October 2010 04:35 10 Comments
Freddie Mac and Fannie Mae have worked towards standardizing processes for HAFA backed short sales. While not identical processes, the differences are much more aligned than before.
Highlights include:
- Providing the borrower with pre-approved short sales price and terms prior to listing.
- Prohibits servicer from demanding an agent commission reduction.
- Requires the borrower to be fully released from future liability (no deficiency).
- Provides financial incentives to borrowers, servicers, and investors (loan holders).
- Borrowers must meet HAMP eligibility criteria but have been denied a HAMP Modification.
What the Foreclosure Stoppage Means to the Real Estate Market
Posted by Peter Vekselman in Uncategorized Thursday, 14 October 2010 05:40 15 Comments
Banking executives have again been caught not following the home mortgage rules and regulations. At the height of the real estate market they were approving predatory and highly questionable loans without justification. Basically, the recent foreclosure scandal is the same thing in reverse. Banks have been caught foreclosing on houses without proper documentation. In many cases, the loss mitigation department was trying to work out a loan modification or a short sale while the collections department was proceeding into foreclosure. And there are many cases where the bank had no idea what is suppose to be happening with a particular piece of property. Often, they can’t be sure if they have a right to foreclose or if the property has been securitized and sold to Wall Street. In some cases it appears they were using fraudulent affidavits and other illegal tactics to foreclose on distressed homeowners.
For these reasons and more that will be exposed in the coming weeks, Bank of America, JP Morgan Chase, and other national banks have stopped most or all foreclosures amid charges of flawed and fraudulent procedures.
Low Risk Online Tax Lien Investing
Posted by Peter Vekselman in Uncategorized Friday, 8 October 2010 05:17 10 Comments
As a successful real estate coach, one of my passions is introducing you to new or often overlooked investing opportunities. In this blog, you are introduced to the opportunity to purchase real estate tax liens online. If you are not familiar with tax liens already, the two biggest investing opportunities they offer are:
- Interest rates starting at 18% or higher the first year and as high as 50% (Georgia) the second year.
- Assuming title to the property if the tax lien is not redeemed by the property owner within the specified time period.
That’s right, if the back taxes aren’t paid, you can end up owning the property out right for dimes or even pennies on the dollar. Tax lien sales are typically held monthly at the county level in every state in the nation. But what any worthy real estate coach will tell you is that the processes and interest rates paid vary widely across the 6,000 counties in the country. It’s a great opportunity but it takes knowledge of the process at the county level.