Foreclosure Wealth System: Why Bother With Short Sales?
Dec 19th
Foreclosure Wealth System is a program by DC Fawcett for real estate investors wanting to profit from short sales. Let’s dispense with the basics first.
In theory short sales are cool. Banks don’t want to own houses. They don’t like to foreclose. Going through a statutory process of sending notices, hiring a law firm, complying with timelines for posting a home for a sale, and tfinally taking it to the auction block is already pretty expensive.
Bidding At The Auction
Most loan balances called out for bidding at the courthouse auction are high, so bidders aren’t exactly going crazy. An average EBay auction probably sees a lot more action than a 1,000 overfinanced houses posted for auctions combined might produce.
No wonder banks end up with most houses posted for foreclosure auctions. But they’re far from done yet. They have to endure a lengthy and painful REO listing cycle with more expenses on vacancy, property taxes and commissions, and even an occasion repairs.
Selling REOs Is Expensive
To add insult to injury, investors hunting for bargains smell blood as soon as they learn the house is an REO. These bargain hunters will bombard the REO department with low ball offers.
Considering all of the above, they want to entertain other options whenever they have a bad loan on the books.
Other Options For Bad Loans
One of them is loan modifications when the owners want to keep the house and have the means to pay. However, a lot more common scenario these days is when the owner doesn’t care to continue making payments on a home that’s 25%-60% under wanter. I.e. the mortgage balance is A LOT higher than current property value.
Than a short sale offer might be considered by the bank. I.e., they’ll look at the offers at prices well below the loan balance and will entertain taking less for their loan balance owned to them… Sometimes a lot less.
The #1 Problem With Short Sales
On paper it all sounds good. And yet, short sales are the LEAST favorite buying strategy for most real estate investors. The most annoying part of short sales is – they just drag for too long. An average investor doesn’t want to wait that long for a decision, and doesn’t have the skills and patience to keep coming back again and gain to the bank’s loss mitigator to get that short sale approved.
Why Does It Take So Long?
Bankers, just like you, like to keep their jobs. They don’t want to take responsibility for selling off the loans at big discounts on onesy-twosy basis. Certainly, they’re not goin going to discount the loan in response to the the first low ball short sale offer they get. Sometimes there may be multiple investors who own the loan…
Either way the decision making could take a long time.
So Do You Abandon Short Sales Altogether?
Most investors submit a couple of short sale offers that linger in the LA-LA land, never get a response, get fed up with the entire process never to return to short sales again.
Yet some investment companies hire staff, train them and hang on in the game long enough to make short sales pay very well. They do all the paper pushing, play the waiting games, keep tabs on lots of files, establish relationships with bank loss mitigators, learn to negotiate with them, keep re-submitting offers again and again… until the magic happens and they get that ridiculously low offer accepted.
The more successful companies also figured out to play for bigger chips. They specifically target more expensive, high end properties that are harder to sell and cause the biggest amount of disconcert to lenders. Bank tend to be more lenient, negotiate discounts more aggressively and make decisions faster when it comes to high end properties. The investment companies playing in the “luxury home” league also line up short term financing to tie up and flip the property to another buyer.
Short Sales For Small Under-Funded Investors
For those investors who don’t have the stomach to endure short sales paper pushing, waiting game and follow up offer submissions, there is a way to play too. It’s to partner up with one or more companies that run an outsourced short sale negotiations program and have these companies negotiate their deals with lenders. Some companies in this business work for a flat fees. other for fees based on the loan size they negotiate. Yet others work for a piece of action (partnership profit split).
One cotcha in this area is to look out for the upfront fees, so called “submission” fees that negotiators can charge upfront regardless of whether or not the short sale negotiations are successful. Your best bet is to avoid companies like this. It’s always safer to pay of your profits, even if it’s a bigger cut you’re giving away.
Real Estate Money Matrix – what the heck is it?
Nov 30th
Real estate money matrix is a new “kid” on the block.
It’s not a course in the usual sense of the word, though you’ll get some video training with it.
It’s not a piece of software that just captures leads or runs buy/sell calculator spreadsheets for you. Rather it’s a real estate investing platform. It combines multipe resources real estate investors need to put together profitable deals under one roof:
1. Funding sources for deals,
2. Ivestment buyers, as well as
3. Leads on properties.
When you combine an access to property leads, a list of cash buyers who want to buy something in this bad economy and have means to close, as well as multiple funding sources to help you take down the property in your name…. Hmmm, what else do you need to start putting real estate deals together?
Not much. Well hear more about the Real Estate Money Matrix from Nate Kennedy, its creator.
Stock Market Drops 1000 Points, Real Estate Investors Perk Up!
Aug 5th
On the question of timing your private money lenders campaigns.
When should you go looking for private money?
The conventional wisdom suggests: (a) Anytime is a good time to be marketing for private money lenders, or (b) When you have a deal tied up under contract.The latter is a really dumb way to go about it. It’s too late to look into funding options when you have a hot deal under contract and just a couple of weeks to close on it. I’ll expand on this in another post.
The “always be looking for money” for your real estate deals is a pretty solid advice to any real estate entrepreneur who wants to be able to make “all cash” offers on bargain deals any time he finds one.
BUT… if you really want to make leaps and bounds in how much money you can raise, you MUST hit the iron when it’s hot. And in the World of raising money from private individuals, it’s when their OTHER investment options aren’t doing that great. Better yet, if you can time your campaigns when they’re taking a bloodbath – you will have a hyper response that will dwarf your usual interest level from these folks.
Guess what? As of today, August 5th, 2011:
The stock market (Dow Jones) lost a whooping 1,000 points in just 5 short days!
Man, oh man. The stock market investors are hurting big time right now. Their spouses don’t like them. Their retirement accounts have dropped lot of dollars. Their portfolios are suddenly looking a lot lighter.
They are wondering what went wrong? How long it’s going to take for the market to rebound? Better yet, WILL the market start going back up soon or will it continue to fumble and lose ground for the next few years?
Years lost in retirement earning cycle
These are some serious questions for lots of people who were hoping the stock market would be a long term investment solution for their retirement money. The answers will have a profound impact on the size of their long term retirement savings. If this sluggish stock market situation continues for a few more years… these would be the years taken out of their retirement earning cycle.
The years that added up to a lot lower amount of spendable income they’ll have by the time they are ready to start dipping into their IRAs. Moreover, for those who are already living on the interest produced by their retirement money – this big market drop is an instant blow that forces a lower standard of living TODAY.
Bottom line, they need an attractive alternative to the stock market. The one that’s safe, predictable, dependable and earns a decent rate of return. The return that can either grow their money, or throw off enough cash flow to leave on today.
That’s where you come in with your private banker attraction program. You could be the knight in the shining armor who comes to the rescue and saves them from losses or poor stock market returns.
Don’t wait for the market to bounce back
The times like NOW are rare opportunities that, if you take advantage of them, will bring you virtually unlimited supply of private money for real estate deals. Unfortunately for slow real estate investors who are too timid to take action NOW, this opportunity will soon pass.
The stock market investors will calm down and won’t be as hot and bothered about their losses. Will your campaign still get response? Yes! Will it get a hyper-response? You know the answer.
Happy bargain hunting!
Resources: Private money lenders video
Why Would Private Lenders Loan Money To Lil’ Ol’ Me?
Aug 5th
That’s a question I am often asked: “why would a private individual with money want to loan me his funds for my real estate deals?”
There are multiple reasons. The real question you should be asking is not “why”, but “who” would likely loan me money? What kind of person might have an interest in loaning me money secured by real estate?
Here is one of my training videos that offers some insights on this matter.
AMPS Strategy Phill Grove – Assignment of Mortgage Payment System
Jun 9th
The video below is just 6 min short. It shows the number of buyers with cash in hand who are looking for properties right now… many in your area. BUT they can’t get approved for conventional bank financing. Therefore they need help with owner financing to get into a home. And you can help them.
Watch the video to see examples of live leads I’m getting right now, in today’s market. Your profit on a deal comes from their down payment. And it’s more than enough to live good life, as you’ll see.
Click THIS LINK to learn more about AMPS and download all the freebies and tools that will help you make these kind of deals a reality.
You will find links to all 5 FREE training videos on this method at the top of the page after you click the link above.
Wow, That’s A Commercial Property Value Increase!
Jan 5th
Whew, it’s day #5 in the New Year already! Hard to believe.
Letting your subconcious to sit idle is like throwing cash in the toilet. Have you ever noticed how you start attracting opportunities into your life, once you set your subconscious mind in motion and working for you?
I’m on audio CD #6 of my review of Dave Lindahl Commercial Property Investing system …and loving it.
Already started playing with his Commercial property evaluation software, have plugged in a couple of large apartment complexes that were sent to me. One is 260 units in Jackson, MS and another one is 330 units in Orlando, FL (both REOs from banks).
Just got another deal to look at – a 10 story office building in Maryland, also bank owned.
I got to confess, playing “what if” scenarios on these large deals is lots of fun.
For example, on a 300 units apartment property, if you rent up ONLY 5% of the vacant units (say 15 units), here’s what the numbers look like:
15 units X $600/month X 12 Months = $108,000/year in extra cashflow.
This translates in a property value increase of:
$108,000 X 10 = $1,080,000
How cool is that… Just by leasing up 15 vacant units you can create a million dollar value increase in your property.
The strangest thing I’m discovering with these commercial REO properties is – most of them have a receiver appointed by the bank in charge of managing the property until it’s sold and converted back into cash for the bank.
Now, the receiver clearly doesn’t have the right mindset for keeping the property well maintained and attending to tenants’ needs. As a result, the typical picture is – tenants have been unhappy, the vacancies have grown steadily and surely.
Yet with the professional property management company in place committed to servicing tenants, the vacant units could be leased up to the average for the area occupancy level. That level is often quite a bit higher than the actual occupancy under the bank appointed receiver.
Therefore you have a chance to see this kind of MASSIVE value gain as in the example above in a fairly short period of time, even with small improvements in management.
If you don’t know what the heck I’m talking about, check out the recording of the Dave Lindahl commercial property crises investing webinar.
Happy bargain hunting!
-Alex
P.S. If you’re an accredited investor looking to place your money in a project with a big upside like this, shoot me an email to alex (at) getrichlazy.com. Through a few key industry connections I’m getting deals like these referred to me even before they hit the market.
Commercial Property Flipping – Hancock Tower Story
Dec 22nd
Hancock Tower in Boston, the tallest building in New England, has sold for $1.3 billion at the height of the real estate market several years ago.
It later ended up in foreclosure and was bought by an investor for $660 millions. That’s about 50% less than the prior sale.
Recently, within a year and a half, the same building re-sold for $990 millions.
Yes, an astute investor “flipped” this property for a quick $330 million profit in a year and a half time.
Ok, reality check… It’s highly unlikely you’ll play on that scale anytime soon unless you’re already buying and selling huge commercial buildings.
However, with some training on how to:
1. Recognize the right opportunities
2. Tie them up on a contract at wholesale price
3. Attract partners with money to fund the deals and PAY YOU a high 5 to low 6 figures for finding and making them available…
… You too could be playing EXACTLY the same flipping game with commercial buildings. The timid beginners could start with small commercial buildings in the range of half a million. Those who have some experience or just can psych themselves to think bigger numbers could be tying up commercial real estate up to 20 million in prices.
These building are making their ways through the pipelines of commercial property crises as we speak.
With over 700 banks currently in danger of being closed by federal regulators because of “toxic” (read, upside down) commercial property loans on their books, the massive wholesale buying opportunities in commercial real estate will not likely repeat for the next 20-40 years.
Watch a recording of my webinar on how to profit from today’s opportunities with Dave Lindahl commercial real estate investing. See how the Dave created allow his students to generate the kind of paydays flipping commercial buildings that most people don’t make in a whole year working for somebody else.
A new year is just around the corner. 2011 is going to be quite different for those who get involved in risk-free commercial property flipping using other people’s money.
Why not you?
Here’s the page with the webinar recording: Dave Lindahl commercial property system
Selling Home Subject-to Existing Loan – Homeowner Blues Could Be Avoided
Dec 17th
Subscriber Phillip: Alex, I had health issue and sold my house to an investor subject too! The investor couldn’t make the payment and fail to notify me.
The house was sold to another investor and went into forclosure. I think subjedt to deals leave the seller in a terrible fix if the investor/buyer fails to make the payments. It my goal to have a law made againt this.
Alex:
Phillip,
I hate to disagree, but I will in this case.
Most homeowners take “subject-to” route because they can’t sell the house any other way and are nearing a foreclosure. Getting someone else to step in and take over payments on a house often is the only solution out of the problem.
I think you didn’t research the strings attached to the subject-to sale well enough before entering the transaction with the investor-buyer. If you did, you’d know that you have the right to (a) monitor investor’s payments on your loan, and (b) foreclose on him and take the property back to resell or rent it out yourself when he misses the payments.
Even after the property has been transferred to the 2nd investor, you still have the same rights and remedies against him too, and any subsequent buyer who doesn’t pay off your loan at the time of purchase.
You still have a phone number to your lender, your loan number and your SSN to be able to access the loan information via the phone any time you want.
To check that the payments are constantly being made is your responsibility, if you’re concerned about the buyer falling behind and hurting your credit. Even if you didn’t have at your fingertips something like Bill Bronchick Alternative Real Estate Financing course that covers the nuances and paperwork for buy houses subject to strategy, as well as several other creative financing techniques, you always have an option to get the contract reviewed by a lawyer.
Paying $200 to a real estate attorney to review the docs prior to closing is a small price to insure you’re not being taken advantage of, and you have the proper rights reserved that survive the closing.
Hopefully your next deal, buying a home with subject-to as an investor, is going to work out a lot better and will make you some money. It’s a lot better use of your time than trying to change laws.
Best,
Alex
Investing In Commercial Real Estate Crises – The Big Money Pie for 2011 and Beyond
Dec 14th
Every year when December rolls around I take some time off to review the current industry trends and try to uncover BIG “up and coming” opportunities for the next year or two.
And many of my Real Estate Magic ezine subscribers take notice and profit from these end of year tips. In 2003, when the market was picking up, I was teaching how to buy pre foreclosures and how to be first in front of the homeowner in default.
In 2004 I was teaching investors how to sell quick turn houses with lease options and owner financing to ride the wave of increasing property values to quickly build massive monthly cash flow. Those who listened, did extremely well for themselves and skyrocketed their profits with houses producing $500-800/mo in NET cash flow after payments and expenses.
In 2005, at the peak of the real estate market, I was the first to talk about the impending tsunami of foreclosures we were soon to see. I also introduced to real estate investors the “loan modification” avenue for tackling pre foreclosures to successfully compete against the rest of the market chasing owner in default.
In 2006-2008 I was telling my subscribers to get loaded on cash from private money lenders and get ready for buying REOs. Those who proactively worked on developing their private money sources made lots of money since.
Well, here we are at the end of 2010. Some investors (you too?) will be smart to listen to my advice again.
Want to know what I think the biggest trend for the next 2 years is going to be and where you can get wealthy in a relatively short period of time? It’s (drum roll)…
Commercial Real Estate Tsunami!
Around 2005-2007, at the height of real estate markets, lots of commercial properties changed hands. Most of the purchases at the time were financed with short term loans that were supposed to be refinanced by the new property owners within 3-7 years. Does this remind you our residential markets 5 years ago? You bet.
Take a look at these numbers. Between 2010 and 2014, about $1.4 trillion in commercial real estate loans will reach the end of their terms. Nearly half are at present “underwater”. That simply means, the borrower owes more than the underlying property is currently worth. Commercial property values have fallen more than 40 percent since the beginning of 2007.
No Commercial Mortgage Refinancing Sources
Now that the financing markets collapsed, there is NO commercial mortgage money available to replace all the trillions of dollars in loans that have recently come due, or will be coming due in the next year or two.
The information from trusted government sources was released recently indicating that as many as 700 US banks are running a serious risk of being closed by regulators.The reason? Non-performing commercial real estate loans. And a lot MORE of them are in the pipeline.
Second Bailout Is Out of The Question
And since the government has already spent 700 billions on bailing out our residential markets, there will be NO tax payers money available to bail out banks overloaded with both – bad commercial loans and foreclosed commercial properties on their books.
Once FDIC closes the troubled banks and places them into receivership, the old fashion liquidation process will have to be used to convert these loans and commercial REOs back into cash for depositors. Most of these assets will be sold off through the auctions to the highest bidder.
The bad news is these commercial properties are pricey beasts and there is no easy financing for them. They are far beyond financial reach of an average single family home investor. But there is good news too.
Foreign Investors Are Gearing To Buy US Distressed Commercial Properties
First, turns out US commercial real estate markets are perceived to have a great recovery potential over time…. by foreign investors! The US commercial real estate markets are of great interest to foreign investors who are loaded with massive amounts of EUROs and are looking to place them in larger US apartment complexes, retails centers, and other commercial assets.
While they have the money to invest, they don’t always have the eyes locally to scout the bargain properties. And with potential profits in millions and even tens of millions on larger properties, these foreign investors don’t mind compensating knowledgeable real estate investors who can lead them to commercial deals at big discounts. They’ll pay with lump some cash upfront in “acquisition fees”, as well as equity and cash flow participation in the project.
How Small Investor Can Get Paid On Big Deals
On these large commercial deals, the acquisition fees start in at $50,000 or more… paid to you at closing. Add to this built-in cashflow almost from day #1, and equity you’ll realize when the property is sold eventually… and you can see how it is pretty smart to learn all you can about how to find and evaluate these big commercial properties.
Developing at least some expertise in this area quickly is how a small fish could get involved in a game with big stakes without strong financials, cash, credit or monster size liabilities for multi-million dollar real estate loans.
Free Upcoming Commercial Property Training Class
I’ll be interviewing one of country’s leading authorities on this commercial properties strategy. This man happens to control almost a quarter Billion dollars (yes, billion with the “B”) worth of these commercial deals. Today even he is finding it difficult to keep up with the demand for great properties from foreign investors.
He will show you how you can get involved in this market and go from nothing to big chunks of cash and equity by working with big, cash rich investors hungry for commercial deals in the US.
Use this link to register for the webinar dave lindahl commercial real estate investing.
Private Money Lenders Can Create A Surge of Juicy Real Estate Deals
Nov 26th
Access to private money lenders can have a multitude of positive effects on your real estate investing business. It’ll help you close more deals and make more money.
One of the least obvious perks of using private money lenders is – you can get highly profitable deals trickling down to you automatically. You won’t have to spend money on marketing or spend hours of your precious time scouting MLS for bank owned REOs or other distress properties, making dozens of low ball offers… And hope one will get accepted.
There is a better alternative. And it happens in the natural process of buying and selling houses with private money financing. It works almost like a self-fulfilling prophecy.
When you use cash from one of your private money lenders to buy a house, you can fund and close your deal in a week, instead of taking 30-45 days typical for a closing with a conventional mortgage loan. Every time you use private money loans to close fast – more title companies and real estate agents will become aware of the fact, you’re one of the few, very few real estate investors who can perform. In real estate industry a fast, problems free closing is a commodity in high demand.
For real estate sales professionals – fast closing means they get paid sooner. In today’s tight financing climate when buyers take forever to get approved for loans, Realtors will love you for helping them get a commission check in days rather than months. While many contracts never get to the closing, the fact that your deals funded with private money are sure to close will make you even more valuable to both title companies and agents.
Real estate agents who routinely list REOs will keep your name and number handy. They’ll call you every time they have a foreclosure listing they’re getting ready to put on the market. Clearly, they’d rather have you submit an offer with cash from private mortgage lenders than an unknown buyer who needs an approval for a bank loan.
Imagine a different scenario. A real estate agent has a listing on a bank owned property. The property sells to an investor at a huge discount as a result of drawn out negotiations with the bank… But the buyer couldn’t close on the deal. Now the agent has to find another buyer quickly, before he loses the bank listing.
He’ll have to go through his Rolodex to find his most reliable buyer who can close fast with cash or quick financing arranged through private money lenders. If he doesn’t have one already, he’ll ask the title company and his office colleagues. Who gets the call about the deal? You, of course! You’ve proven yourself in the past in your marketplace. You slide right in and pick up a juicy bargain delivered to you literally on a silver platter at the same low price.
The more deals you close using private money lenders, the more professionals will like and trust your ability to deliver fast, guaranteed closing. And the more deals will “magically” find their way to you. Buying properties at discounted prices using private money lenders doesn’t get any easier than this.