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Do You Need Money for Financing Your Real Estate Deals?
With the Banks tightening guidelines and requirements it has become very difficult to get conventional financing.
Have you heard of a Private Money Loan?
A private money loan (not to be confused with a Hard Money Loan) is basically a loan made to a real estate investor that is secured by real estate. In other words a individual or even a company becomes the bank. A Hard Money Loan can be from the same sources but usually they are in the business full-time charge more and now days are have a-lot more guidelines and may ask you to sign personally.
The first mortgage that secures your legal interest in the property thus securing your investment. We are not talking about high Loan-To-Value (LTV) ratios the banks and savings and loan institutions make on homes (which is what got them in trouble. All of private money loans are negotiable, you and the Private Lenders decide what the LTV is. Typically the LTV is below 70% for the security of the loan.
As a standard, LTV ratios are under 70% of the value of the property securing the loan and frequently as low as 60% to 65%. This means additional security on the investment for the Private Money Lender so they are always in a good position.
For example, It’s probably safer now the prices have fallen so much. if we purchase a property that is valued today at $200,000, our Private Lender will loan at the most $140,000 dollars on the property. That’s a 70% loan-to-value ratio.
Why Chose Real Estate
Investors typically choose real estate for a number of reasons:
cash flow, appreciation, tax benefits and leverage.
A real estate investor holds property for personal or
commercial investment reasons. This differs from real estate dealer
who holds property primarily for resale to potential clients.
An active investor typically buys a property and then makes repairs
or improvements with the intention of selling the property for a profit.
A passive investor usually hires an investing firm to find
and manage potential profitable opportunities, and is not
actively involved in any improvements or negotiations
related to the property. Unlike a professional Realtor who
has to pass a series of exams and be licensed by local and state agencies, an investor
simply needs capital and confidence.
By putting down payments on a real estate transaction, an investor can
significantly increase his profit percent and better the terms of the
financing loans. By bettering the terms of the
loan, an investor can increase his available cash for other
transactions, thus increasing potential earnings exponentially.
This process creates a strong cash flow. This cash flow is very enticing to real estate investors.
This is in response to CNNMoney.com “The Obama’s Mortgage Loan Modification is underway.”
Full Story Here: CNNMoney.com
So, what does that mean for you?
Well, lets take a look at this two part plan. First the banks get some money for helping you out That really doesn’t effect you to much.
But then it goes on to say “The modification plan calls for the servicer to reduce interest rates so that the monthly obligation is no more than 38% of a borrower’s pre-tax income, and then the government would kick in money to bring payments down to 31% of income. Servicers can also reduce the loan balance to achieve these affordability levels. The government will share in the cost, up to the amount the servicer would have received if it had reduced the interest rates.”
To my knowledge the 38% is pretty standard for a full doc loan. So, where is the benefit?
Then it does say that the home owner will get a incentive if all payment are made in a timely manner. It was not clear who will pay that incentive the Bank or the Government.
What You Don’t know About Loan Modifications Can Hurt You!
Did you know that over 9 million people are in Foreclosure and another expected 9 million on the way. Those are staggering numbers! Most people think they only have a two options to save or delay the NOS (Notice of Sale). First to delay the sale they may try to sell their home with the assists of a Realtor. The bank may allow a couple extra months to try to sell the home. Option two is Bankruptcy. This will put an automatic stay on the sale, generally from 3-6 months depending on the local /state laws.
What many people don’t know is the Obama’s administration pass a new program that banks / lender’s are required to work with the home owner to help them stay in their home. The program, unveiled last month, creates a $75 billion loan modification program that would allow “responsible homeowners” to refinance to interest rates as low as 2 percent. This allows at-risk borrowers to reduce their monthly mortgage payments in an effort to keep them from losing their homes.These loans can be extended as long as 40 years.
Here are some qualifications about the program:
Have you ever wondered who builds those tall buildings in Chicago, New York, Dallas…ect.?Probably some big company that is faceless and even if you were married to the daughter of the owner you would never meet him. OK!
maybe on your wedding day. But, you know what I mean. Those kind of people are very busy and very hard to get in touch with. Right?
I have some exciting news for YOU!!! I recently met “One of those guys” and guess what? He is just like YOU
and me. His name is…Well before I tell you his name. Let me share with YOU his exciting life’s journey through the Commercial Development World.
He started with a Dream…
He is now the author of two best-selling books, “Create & Master Clients For Life” and “Secrets How To Buy Your Dream Home With Little or No Money Even With Imperfect Credit”, read by millions of people in the past 5 years.
His background includes 26 years of real estate investment and development experience with hands-on expertise in hi-rise development, engineering and construction in New York City.
Here are just a couple of his projects:
from wikiHow – The How to Manual That You Can Edit
Real estate investors should start investing via flipping houses (wholesaling houses) first because
it doesn’t takes no cash or credit. Flipping houses is a very simple process but not always easy but that’s
what is valuable about my course is you will have the knowledge plus me to help you along the way. Let’s start
making money flipping houses with none of your own cash or credit.
- Locate deals. The goal every day is to locate deals and you can ride around to locate deal by driving for dollars.
I suggest allowing the deals to find you via marketing your service simply saying, WE BUY HOUSES on
bandit signs, postcards, business cards, radio, TV, website, etc. You know they want something when they call.
- Locate the owner. If you’re driving for dollars you would have to find the owner. Obviously, you would simply
do a search online for free to find the owner of the property but if that doesn’t work there are several skip tracer
services to help find the owner. Of course, you can start a marketing campaign and they will find you.
- Talk with the owner. Whether you called the owner or the owner called you about their property, you want to make
sure you get strait to the point about the property and gathering the info to start negotiating the price. Some of the
info you will need will be repairs needed, how many bedrooms and baths, etc. and of course price.
Bernie Madoff went to jail, but his wife is still living in the big penthouse. There is still a good possibility she will spend some time in a cell, but it won’t be because she owns lots of assets. Her problem is she was working in the business and has committed the same types of illegal acts as her husband. There are a whole bunch of asset protection lessons that can be learned from the Madoff disaster. There are several on the investor’s side of the fence and a number on the business owner’s side of the fence.
As you read the next couple of paragraphs, I know you will say, “Duh, Phillips! Everybody knows your little lessons.” I am sure you already know the lessons. But, please evaluate your situation. Stand back and take a long unemotional look at your situation from a third party’s perspective. Yes, the lessons are stupidly simple, but they were overlooked by thousands of bright people that lost billions and billions. They lost their life’s savings, because they ignored the rules.
The obvious lesson learned by many of the investors that “lost everything” is as old as dirt. It is a hard fast rule that simply can’t be violated. Never put all your eggs in one basket. That lesson dates back long before the stock market ever existed. It is just plain stupid not to have your assets held in a lot of different areas. Invest in real estate. It is probably a great time to buy, if you can get in on the deals. Do some of the securities stuff. Use bonds. Get some gold. Try oil, it has some great tax advantages.
from wikiHow – The How to Manual That You Can Edit
The real estate markets around the country are hurting for buyers. It is now the time for the investor who has been sitting around or wanting to diversify their portfolio can make real estate purchases today like no other time in history. With most markets flooded with properties, you can really make wise educated decision on any property on the market.
- Make a detailed plan as to where you want to buy as to area. In today’s market and with the power of the Internet you can make purchases anywhere.
- Go partners with someone else that you trust. This is especially important if you do not have a lot of cash and your credit is not over a score of 720
- Make an application to a mortgage company. You need to know what they can do for you and let them know what it is that you are looking to do. If you are going to buy single Family Homes or Multi-family buildings. Make sure they can make the loans and how much of the rental with they use towards qualifying you for a mortgage.
- Get a commitment fro the the bank Make sure you tell the loan officer what you want up front. Once you find the property you want to purchase you can make the deal a cash offer subject to appraisal.
After property value falls of 2.9% nationwide during 2008, 2009 has bought some good news with a number of capital city markets now showing positive growth
In terms of property value growth performance, 2008 was a poor year with most regions of Australia seeing falls in property values. In the context of the overall economy both nationally and globally the Australian property market got off relatively lightly with value falls of just 2.9%. Markets in the US and Europe saw property values plummet by up to 20% whilst the Australian share market was down more than 40% from its peak.
On a national basis sales volumes have plummeted. Keeping in mind that December and January are usually slow months, sales volumes during January 2009 were 64% down on the 10 year average and 53% lower than volumes at the same time during the previous year. This data highlights that low consumer confidence and economic uncertainty has resulted in fewer property transactions.
With the new year comes rejuvenated hope with regards to the performance of investment classes. The latest data shows that within some capital cities throughout Australia, property values have actually increased during the last 3 months. On a national basis property values have increased by 0.1% indicating a flat market. It’s certainly too early to call a wholesale recovery of the market but these are encouraging first steps. Importantly, the possibility of significant gains through 2009 are likely to be tempered by low consumer confidence and rising unemployment. However, the two largest capital city markets, Sydney and Melbourne, have shown slight positive growth and this is an encouraging sign given these two cities tend to lead the national markets direction.
Sunnyvale, CA (PRWEB) April 3, 2009 — Real estate investors across the country might be salivating over bank-owned properties and short-sales offered at bargain-basement prices, but how do they know the ideal time to buy? How will they find buyers to purchase these properties? How do they create cash flow in this economy? Many investors need to shift their strategies and offer new services to stay in the game during these tough economic times. MyPropFolio, an online software solution for real estate investors, has changed their strategies as well, to help investors and other real estate professionals stay up-to-date with current market trends.
The number of homeowners looking to short-sale their property or get loan modifications continues to grow at a rapid pace. This is a great opportunity for real estate professionals to diversify their services, in order to capitalize on these market conditions.
In today’s economy it has never been more critical to streamline your investing process, manage your properties closely and keep expenses at a minimum. MyPropFolio’s Community Event May 2-3, 2009 in Tempe, is designed to educate real estate professionals on the technology tools, marketing strategies, investing techniques and new business opportunities they need to succeed . Experts in the fields of online marketing, real estate investing, loan modifications, and real estate technology tools will be there to teach investors skills and new strategies to ensure their profitability in 2009 and beyond.
“Making money in today’s real estate market is possible if you have the tools to adapt to current trends. I have gathered leading industry experts who have identified those trends and will be presenting cutting edge solutions that will help you stay profitable and ahead of the game!” Heather O’Brien, Co-Founder MyPropFolio.