Archive for Articles
Proving Lender Negligence and Fraud Part 1: The Paper Trail
Posted on January 1, 2013 byThere are two approaches you can take to determine whether or not there has been negligence or fraud in the loan process. Both paths can be equally effective in uncovering lender misconduct and providing you with leverage for negotiations with the bank. One path follows the documentation from mortgage application through foreclosure documentation, and the other approach follows the money trail. This article will examine how the documentation can lead to a damaging case against a pretender lender. Our next article will cover the money trail method.
In order to prove that they have the right to foreclose on a property, it is becoming standard for lenders to be required to produce the original note on the property. The note is required before a court will allow a lender to sell a property. It must show that the lender is named with a recorded economic interest in the property. However, in many cases these original notes have been either lost in the securitization shuffle or purposefully destroyed as the note bounced around from entity to entity. The note could even have been Photoshopped or otherwise forged to make it appear that the entity trying to foreclose has the standing to do so. Fortunately, the lenders are being called on it by the courts. Read More→
Real Estate IRA Investing – The Purchase
A young couple found a home they wanted to purchase with their real estate IRA. The purchase price was $50,000. They borrowed $55,000 and had $800 worth of repairs. I know that $800 worth of repairs for a house purchased with 1,400 square feet, three bedrooms, and two baths through a short sale sounds absurd, but these are actual numbers from an actual deal.
Real Estate IRA Investing – The Repair Bill
I’ve personally never seen $800 worth of repairs in my entire life and I’ve been in this business for 40 years. I can’t even walk through the house for $800. I don’t know what it is but I’ve never done that, so that was phenomenal to me. The deal’s great but how did you get $800? They actually got a little cash back at closing since they borrowed $55,000 for a $50,000 purchase. Read More→
The Winners and The Losers
Posted on January 1, 2013 by“Such wicked people are detestable to the Lord, but he offers his friendship to the godly.” (Pr 3:32, NLT)
As a business person, have you ever considered that honesty produces a substantial financial gain? Or, that dishonesty inherently produces huge monetary losses? I realize that everyone might not agree with this conclusion.
However, the biblical evidence suggests there are many advantages to being honest and there are dire consequences to dishonest practices in business and in life. It is clear that ethics do have a profound impact on the bottom line. An even more basic thought, indicates that our business practices dictate our relationship with God! The Book of Proverbs contrasts the financial outcome of the honest versus the economic decay of the dishonest. Let’s examine some of these profound truths. Read More→
WARNING! Short Sale Lender Has Mandated Deed Restrictions On Deed For Closing!
Posted on January 1, 2013 byThe Short Sale lenders are getting crazier and crazier. That is why you need to stay current with the short sale changes. Approximately 3 years ago, Bank of America was the first short sale lender to start requesting that the new buyer of the property consent to not resell the property for less than 30 days. This statement was included in their short sale approval letter. This statement alone caused a lot of challenges to investors who were still looking to close back to back on transactions. A few short sale lenders thereafter, such as GMAC and Wells Fargo, started adding 60 to 90 day resale clauses on their Arm’s Length Affidavits, but not their short sale approval letters.
Recently, I was in the process of purchasing a property where I needed to get an extension on the short sale approval letter. The reason was that the Homeowner Association advised us that, pursuant to their by-laws, their 35% ownership of investment properties had been reached and only homeowner occupants can purchase the property. The servicer for the lender was Seterus. I received a brand new approval letter for the same exact buyer as before, but with a few different statements: Read More→
Answers to Your REI QuickBooks Questions
Posted on January 1, 2013 byIt is the goal of this column to answer questions about QuickBooks and how it is used in the REI arena. Know how to record transactions in the proper way and have your set of books in good shape when it comes time for taxes. It is our intention to do this by you the members submitting questions to Karen@smallbusinessadvisor.biz, and getting answers here in this column.
Q: I need to segment my balance sheet AND income statement into three departments (classes). Which version of QuickBooks can provide me with this capability?
A: The lowest edition you can use to have classes on both the balance sheet and the income statement is the QuickBooks Premier.
Q: If I change the reporting basis in the Reports & Graphs preferences from Cash to Accrual what reports will this change?
A: When you change your reporting basis the main area that will change is the Balance Sheet. On a Cash basis it will not show the Accounts Receivable or the Accounts Payable; on an Accrual basis these two accounts do show up. While you can modify reports back and forth between Cash and Accrual any reports you run for your CPA or for any loan request or other reason you are providing financial reports you should always run them the same basis that you file your tax returns. This way your balance sheet at 12/31 of any given year should match those tax returns you are providing. Read More→
How We Structured That Subject-to Deal
Posted on December 31, 2012 byTwo weeks ago, our column was about a lady who, because of a divorce, was being forced to move back home to Mississippi. Problem was, she owed a lot more on her house than it was worth.
In that column, I briefly described the seller’s situation and touched on the creative deal structure I used to construct my offer. Since that column ran, I’ve gotten a bunch of phone calls and emails asking for more details about my offer and whether it was accepted by the seller.
Today, let’s tie up these loose ends.
The creative deal structure I used is known as a Subject-to Deal. This is where you buy the seller’s property, but instead of getting a new mortgage, the seller leaves her mortgage in place. You agree to make the seller’s mortgage payments on the seller’s mortgage for the seller. Think of it as a form of owner financing. Read More→
How to Learn About Real Estate Investing
Posted on December 29, 2012 byAfter last night’s real estate investors meeting, three new folks came up and asked me the best ways to learn about real estate investing.
The two short answers are: 1) Sit down with a seller and ask, “Why are you selling such a nice house like this?” 2) Meet regularly with other real estate investors and discuss landlording, along with creative deal structuring and financing techniques.
There’s nothing – nothing, nothing, nothing – that takes the place of simply meeting with a seller and finding out why they’re selling and what they need to get in order to sell. How do you do this? Try calling a seller whose home is advertised for sale in the newspaper, and then make an appointment to meet with her.
The method that works best for me is to knock on the door of everyone in our area who has a For Sale sign stuck in their yard. When the door opens, I say, “Hi, I’m Bill. I see your house is for sale. I’m looking for a home in this area. Would you mind telling me about yours?” After answering a couple of questions, eight out of ten homeowners invite me in. It’s simple as that. Read More→
Is Financial Freedom A Choice?
Posted on December 19, 2012 byFolks, this week’s column is very different from my usual. I’m afraid a lot of you will think it’s overly harsh and that I’m one big jerk. Who knows – you may be right on both counts. It’s just that I truly feel that success – financial freedom – is a choice. Actually, it’s more like millions of little-bitty, every-day choices – maybe call them habits – that we make each day. If you make more bad choices than good, you won’t be pleased with the results. Make more good choices than bad, and you’ll end up on easy street. Simple as that!
Yesterday, I met with a friend (we’ll call him Ben) who is going through some tough times. This is the letter I wrote him this morning.
Ben, sorry for the troubles you’re going through. The thing is, you are where you are because of the past choices you’ve made. On the other hand, ten years from now, you’ll be where you’ll be because of all the little choices you make from this day to that. It’s all up to you!
Your window is closing fast. You’re not 30 years old any more. On your current path, you won’t like where you’ll end up at 65. You must start RIGHT NOW cutting every expense you can in order to free up every penny you can to invest in appreciating capital assets. Time is a luxury you no longer possess! Read More→
Where’s Your Emergency Fund?
Posted on December 17, 2012 byWe’ve all heard the wise, old saying: Save for a rainy day. Dave Ramsey calls it an emergency fund. Whatever you call it, it should be enough cash to support you and your family for three to six months. Because these funds need to be liquid – in case of an emergency, you want to be able to get to your money quickly – it’s best to keep this money in a money market account.
This morning, I met with a couple of other real estate investors to discuss year-end and 2013 tax strategies. Part of our discussion was about our emergency funds and the question of when is enough really enough?
Right now, if you’re lucky, your money market accounts are paying a whopping 0.9%. This means that if you have $10,000 in your emergency fund at the beginning of the year, by the end of the year it will have grown by a whopping $90.00! Oh be still my beating heart! Read More→
Best & Worst Deals in 2012
Posted on December 14, 2012 byThe December meeting of North Georgia REIA is one of our favorites. Real estate investors from around Georgia, Tennessee and Alabama show up to answer this question: What was your best and/or worst deal in 2012?
Why is it such an important question? Because one of the best ways to learn how to be a better, wiser investor is to learn from the experiences – both good and bad – of other investors around you. This keeps you from trying to reinvent the wheel. Remember the old saying: A smart man learns from his mistakes. A wise man learns from others’ mistakes.
During the meeting, the first thing we determine is how the deal was found. You quickly realize that there’s not a “the” way to find a profitable investment property. Some folks knock on sellers’ doors. Others do lots of internet marketing. Then there are mail-outs and the foreclosure steps. The list goes on and on. Read More→
Change Is Gonna Do You Good!
Posted on December 12, 2012 byI was born a blonde, but as I got older my hair turned auburn(ish). When I was diagnosed with cancer, my sister colored my hair red to give me a much-needed lift, both mentally and physically. But now that I’m pushing 55, my hair is turning grey and I find that it’s harder to keep it colored red.
Ah, everything in life changes, doesn’t it? If we are fearful of change, and reject it, then we miss out on so many great opportunities.
Change is happening to our real estate business, as well. Years ago, Bill and I worked hard to buy properties before they hit the ‘steps’ at the foreclosure auction. We dealt face-to-face with homeowners in distress, and really worked our ‘deal-structuring’ muscles to find ways to purchase homes prior to the auction. Read More→
Financial Calculator – A Wealth Builder’s Most Valuable Tool
Posted on December 11, 2012 byYou’re probably asking “Are you really gonna talk about financial calculators?” and thinking: Yawn, yawn, yawn – wake me when it’s over!
Here’s the thing: Our real estate investors group is geared for experienced investors. To master creative deal structuring and financing, we all need to know how to speak the same language. A great communication device that accomplishes this task is a financial calculator.
Remember, a financial calculator is about MONEY, not math! Knowing how to make it sing and dance is critical to achieving financial freedom. I promise, once you know how to use a financial calculator, your real estate investing world will never be the same. Plus, you will be head and shoulders above most any investor you meet – including the so-called gurus!
Let’s use a financial calculator to answer this interesting question: Can you become a millionaire by delivering pizzas part-time for five years? If you think you can’t, then you’d be W-R-O-N-G! Read More→
