Archive for September 2016

Probate Real Estate, the Last Frontier

Posted on September 7, 2016 by

Jim BanksFor the real estate investor, knowing how to capitalize on what others commonly overlook can be the key to success. And to that end, probate real estate has become a profitable investing niche for many successful investors.

Probate is the governing process for the distribution of a person’s assets after they pass away. Many investors stay away from probates because of their lack of education. This breeds fear—a fear of the unknown. However, a fear of the unknown is the same as going into a dark house. If you turn the light on, the fear goes away.

Years of television, movies and the media have established the belief that if one goes to law school, that individual knows all there is to know about the law. But that isn’t the case. If your neighbor is a brain surgeon and your child falls out of a tree and breaks his arm, would you take him to your neighbor or to the emergency room? Just like doctors have specialties so do lawyers. However, very few would specialize in probate. Instead, they specialize in personal injury, corporate law, tax law or something more traditional. Attorneys usually take one probate course in law school… estates and wills. As a result, the majority of the attorneys of record that are handling probate cases are doing so because they hand-led other matters for the deceased, such as, divorce, corporate matters, traffic tickets-etc. Probate is not their area of expertise.  Read More→

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Subject-To Real Estate Contracts

Posted on September 7, 2016 by

Existing Loan Stays In Place – No Liability To You!

“In order to carry a positive action we must develop here a positive vision.” ~ Dalai Lama

A Subject-To deal simply means that you get the deed/title to a property and take control over the property. The existing loans stay in place in the original homeowner’s name, negating the liability to the purchaser. The mortgage is not being paid off through a Subject-To contract transaction, just taken over by the purchaser. As long as the purchaser of a Subject-To deal makes the mortgage payment to the existing mortgage lender, there are no consequences to either party. However, if the purchaser stops making the payments on the mortgage, the seller’s credit will be damaged.

Most sellers are in a situation where they may have to relocate quickly, have no equity in the home and just “want out,” or are about to go into foreclosure and want to save their credit. These folks are motivated to sell on a Subject-To deal to get the payments caught up (or maintained) and stay on time to help their credit.

One reason you would purchase on Subject-To is to utilize a seller’s lower interest rate than that is on the market at the time. For instance, if the market rate is 7% and a seller has a 5% fixed rate, the 2% difference can make big difference in your monthly payment. You are able to purchase the home in a 7% market at 5% interest! For instance:  Read More→

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Last month I talked about how I created a near disaster for my family because I got too big for my britches and thought I could buy 100 houses in one year when I truly was not prepared to undertake a monumental task that large that has so many tentacles I had no idea I had to deal with.

I now realize that every one of these people provide a service I desperately needed if I had any chance of buying anywhere near 100 houses in any year. Without the services of these people there would be no way I could have achieved my goal of buying 100 houses in any year

Each of the ten deals I did in that one-week period were good deals and bought at prices that would have given us a good profit. I had bought each of the ten properties with Hard Money loans from local private money lenders who knew and trusted me. Because I couldn’t get the repairs completed, I quickly ran out of the money I had borrowed in a very short period of time. To keep my name good with my lenders, I had to take out personal loans to make the individual monthly payments for each property that was sitting empty and not bringing in any money. I had to borrow money I needed quickly to make those monthly payments. It didn’t take long for me to realize I was out of money. I was scared to death I wouldn’t be able to continue to fund these empty houses and ruin my name and reputation with the lenders.  Read More→

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As a Mentor, one of the biggest things I stress to my Students/Partners is that you can’t buy and flip houses in sloooow motion.  As soon as a Seller calls you, you should fill out a Seller Information Sheet and schedule for the following day (within 24 Hours) an appointment to see the house.  Most of the information that is needed on the Seller Information Sheet you can get directly from the Seller.  I have been asked “How long do you talk to a Seller about their home?”  Since this is your first communication with a Seller and you NEED to build rapport, you should be on the telephone for a long time.  What does that mean to you?

I would suggest at least 30 minutes on the phone to talk to the Seller about their home, their life, where are they going…anything and everything you can think that you might have in common with the Seller.  Sellers like to do business with people they like.  So, if you are only on the telephone for 5 minutes, then did you build rapport or even completely ask all the questions that are on my Seller Information Sheet?  Probably not.  Call the Seller right back and ask ALL the questions on the Seller Information Sheet so that you will know what he/she wants for the house, why they are moving, where they are moving and when they want to leave.  Read More→

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There I was standing on the side lines in one of the hottest housing markets scratching my head as to whether I should buy and get in the game. I was new to the real estate game. I had been buying for a few years. I had limited access to money. The year was 1991. I was wondering what I should do to get more money (that still has not changed I need access to more cash).   I was wondering what I needed to do to get the great deals. I did not think about learning new tricks to buy houses. Then again there weren’t any seminars or real estate investment groups I could attend. So I missed it. Do I regret it? I got an important learning lesson.  The lesson was easy to understand and hard to implement. I needed to get more people involved in my investing business. I put an ad in the newspaper. “I am looking for a few good partners who are looking to take advantage of this incredible market. People who are willing to take calculated risk to get a reward of money.  Those individuals who want to earn wonderful rates of return on their money while enjoying a hands off approach have an opportunity to hit it big in this real estate market.”

The market is hot right now. There was a recent article in the Atlanta Journal Constitution that stated Atlanta was the hottest flipping market in the country. The bad news is a newspaper reporter picks up on the market when the market tends to be at the peak.  I have wholesaled more houses this year.  I have done more flipping this year than in past years. I wrote an article in 2012 that said the market had turned in Atlanta. So where are you?  Read More→

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Since 1999, Kim and I have continually learned from Pete Fortunato how to creatively structure and fund our deals – without going to banks!

The BEST real estate investing meeting we attend is the weekly Real Estate Exchangers meeting in St. Petersburg, Florida.  It’s creative deal structuring and funding at its most pure.

Here’s an example of a deal that was put together at yesterday’s meeting.

Rich has a SUV that he’ll sell for $3,000 cash.  Pretty straight up deal, right? 

Pete offers to trade his Nissan truck for Rich’s SUV.  But Rich doesn’t want a truck; he wants $3,000 cash!  Does Pete have a hearing problem or what?

Here is a classic example of Use What You Have, To Get What You Need, To Get What You WantRead More→

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As an agent for 35 years, I am that real estate agent that truly loves real estate.  Yes, at the gym, or riding in a car on vacation, or, sunning on the beach, you will find me reading the Atlanta Journal-Constitution, Atlanta Business Chronicle, Neighbor Newspapers, Realtor Magazine, and the list goes on and on.  I have this keen thirst for knowledge about what is happening and where and when in my home of over 50 years, Atlanta. Therefore, I decided local investors and rehabbers would really appreciate a synopsis of events affecting value in our city.   I am breaking these events into area factors or areas of town for your convenience.

Several factors in Metro Atlanta are affecting area growth:  Read More→

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If you own rental property or investment property within a real estate IRA, it’s important to be careful with the money you spend making improvements. While many people make improvements and upgrades to their own homes to increase their enjoyment of their homes, not every home improvement immediately adds to the dollar value of a home, net of costs.

But some do, depending on the property and the market. This is especially true if you are bringing a home up to the standard of the surrounding neighborhood.

Except in special circumstances, or when transforming an unlivable home to a livable one, most major renovations don’t add immediate resale value once you account for the costs of professional work, licensed contractors, etc.

However, there are a few projects that have proven themselves over time, when used in the right homes – chiefly things that improve the cosmetic appearances of a home and enhance curb appeal.  Read More→

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Seven Touch-Ups to Help Sell Your House

Posted on September 7, 2016 by

In the world of real estate investing, knowing the key elements to make your current or next deal ready to sell fast can add huge profits to your pocket. After all, time is money.

I have to stress real estate investing using REIA comps to see all the transactions in your market area is key. Quickly looking up prior sales, reviewing the previous listing can give you keys to the types of finishing touches that are most desirable for your market area. Here are the Seven Touch Ups which produce fast sales.

  1. Door Detail

    If you want buyers to come rushing to your door, make sure it’s well painted. A fresh coat of paint will make a great first impression. Stats show Red is the best color drawing excitement to the focal point of the dwelling.  Read More→

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Since this scenario has arisen for me in the past on a couple of really good deals with a lot of income potential, I thought I would take the time to explain to you how to deal with this kind of problem.

Sometimes you will put a property under contract with a seller, get all the way through the closing process right up to the time of closing and for some reason the seller changes their mind and decides not to sell to you. While this is not a usual occurrence if you are following through correctly with your deals, it does arise occasionally and you need to be prepared.

There are a lot of reasons this situation can occur. One main reason is that the seller may have gotten a better offer on the property after putting it under contract with you. Or maybe a relative or friend tells them they didn’t sell for enough money or maybe they just get cold feet and decide not to sell. None of these are a good reason for them not to sell to you, especially when you have a valid contract with your seller and have followed through as you are required to within the confines of the contract.  Read More→

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Cash flow and equity are the two main reasons for doing a master lease option (MLO) deal. Both can be had using this creative technique to close real estate deals. Proper management will create both and make your next deal a cash cow!

Business is not about making money, it’s about keeping it. It doesn’t matter how much money you bring into your business if you lose it all in the expenses of running that same business. When discussing real estate keep this simple formula in mind.

Income – Expenses = Net Operating Income (NOI).

NOI – Mortgage Payment = Cash Flow

If we cut the cost of operations then we will increase cash flow.  The two main ways to do this with a MLO is to have the property create more income and less in expenses. In this article I will be focusing on managing the deal to cut down on operational expenses. Most people will hire a management company to take care of the daily operations of their real estate. If you are not managing the property yourself you will need to work closely with the manager/management company to achieve this.  Read More→

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Who Can Foreclose on Your Home?

Posted on September 7, 2016 by

Picture this: a man purchases a house in 2007 with a loan from a major mortgage lender who then securitizes the loan.  After 9 years of making payments, the homeowner loses his job and defaults on the loan.  The lender sends a foreclosure notice to the homeowner, claiming the ability to foreclose on the loan.  But does the lender actually have the right to foreclose?  The answer is a bit complicated, and does not look good for the major banks.  To understand why, let’s take a closer look at exactly what the banks did and what it means for homeowners and real estate investors.

When a loan was securitized it was lumped together with a massive pool of loans and then sold in parts to investors around the world.  The investors were then paid from the principal and interest payments on the loans based on their percentage of ownership.  It sounds simple enough.  If it was that simple, why did mortgage lenders begin the process by selling each loan in the massive pool of loans through a sequence of sales?  And why was the last sale almost invariably to a single-purpose entity, usually a trust with a major bank as the trustee?  The point of this sequence of sales was to separate the pool of loans from the assets and liabilities of the originating lender.  They did this in case the lender was to file for bankruptcy or go into receivership.  If the loan had not been completely separated from the lender, the lender could then claim the loan by right of redemption, effectively leaving the investors with nothing.  Read More→

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