MiamiRealEstateKing

Archive for the ‘Investing’ Category

Six Ways Investing in Real Estate Can Save You Money

In Buyers, Commercial Real Estate, florida, Investing, Investor, IRS, miami, miami beach, Miami-Dade County, Multi-Family Real Estate, real estate, Roth-IRA, Self-Directed IRA, Sellers, tax deductions, Tax Matters on May 10, 2013 at 1:28 pm

There are many investment vehicles. Stocks, bonds, art, coins, postage stamps, toys, commodities and real estate, among others.

Some economists even suggest that as long as you are disciplined and can comfortably pay for it, you should buy any investment you can. If you can finance the purchase, even better.

However, real estate is probably the only one against which you can borrow and have the asset pay itself off through rental income, EVEN as it pays YOU.

In fact, I have spoken to property owners who have managed to leverage a property two, even three times in their lifetime, by borrowing against the property they now own free and clear, to buy another.

What’s more, the income from the new property (let’s call it property B), paid with borrowed funds from say, property A, plus the income they still generate from that newly leveraged property A, can over time, pay back the loan on A from rent collections on A and B, while proving the owner with a boost in passive income. In other words, party money.

Even if you can purchase property in cash, many recommend you consider financing after the fact. Leveraging allows you to possibly, acquire two or more properties, update or fix them up and let themselves carry the burden of paying down the loans with rental income.

Over time, you would have the ability to acquire even more properties and eventually, when you are at the right stage in your life, own them all free and clear while enjoying all that income in retirement. The ultimate 401K or IRA.

Of course, you must buy right and be disciplined throughout. With every payment received in rents, you must set aside a portion every month to pay for licenses, taxes, insurance maintenance and miscellaneous repairs, improvements, etc. In short, you must budget as you would with any business.

Below, we examine some of the advantages for owning investment property and in particular, multi-family property.

1. Economies of Scale

When you buy a single family house or condo unit, small investors often feel they’re easy to manage. That may be true to some extend. On the other hand, consider that with a multi-family building, you only deal with one roof and/or one yard to mow, you are the board that approves tenants or how many times a year you rent your property and in one single trip, you can fumigate, inspect and have a punch list ready for your handyman, plumber and/or electrician to take care of, minimizing headaches.

2. Lower Taxes

There are several tax incentives for real estate investors. If you are employed, deductions from real estate investments may be used to offset wage income. In addition, there are a number of tax breaks for real estate investment which often allow property owners to turn a loss into a profit. Deductions can include any actual costs involved in financing, managing and operating the property, to include maintenance, repairs, property management fees, travel, advertising, and utilities. In addition, the IRS allows a depreciation deduction that accounts for a portion of the building (not the land portion of the property) over time, usually some 27 years.

3. Cash Flow

A property can generate negative or positive cash flow. Cash flow simply refers to the amount of money that flows in and out in pursuit of maintaining a property. Rents are an example of cash flowing in while taxes and insurance must be paid out, typically from a portion of the rents received. When the amount of income received exceeds the payments, it is said you have a positive cash flow. There are times when the amount of payments exceed your income and in these cases, you are said to have a negative cash flow. Regardless, when it comes to real estate investment, there are two more important concepts involved: pre-tax and after-tax. A pre-tax positive cash flow for instance, may also be said to occur when income received is greater than expenses before taxes are paid. However, even if your are experiencing a negative cash flow, you may end up with an after-tax positive income when your expenses are more than your collected income, but the tax breaks bring you back in the black. Depreciation can often help turn a negative into a positive.

4. Use Leverage

An old rule of thumb in real estate is to never spend a dime on your real estate investment unless you have to and/or unless it will save you money. Leverage is an important aspect of saving money through real estate investment because a real estate investor uses leverage to increase their assets without spending their own money. By taking advantage of your equity, you also improve your return on equity and it provides you with tax-free funds to help fund your next deal or improve the value of your existing property by making updates, upgrades or repairs that entice tenants (to come in or stay) and should allow you to raise rents and improve your bottom line.

5. Equity Growth

The best way to save money and earn money, is to build up equity from real estate investments. That way, with high equity you are able to save on your mortgage while earning a nice chunk of profit. However, idle equity is like idle funds in the bank. Ideally, you are always utilizing your equity to improve the value of the property and/or pursuing and acquiring new opportunities. Often, selling is a great way to take advantage of existing equity, which would allow you to reposition yourself in a potentially better property with better opportunities. For instance, you may own a building sitting on prime land which may allow you to build a much larger structure for more potential. However, you are not a builder and you’re not in the mood to start. Even if that property is making money, selling it may bring enough to allow you to purchase a more suitable property or properties.

6. The Benefits of Inflation

Generally speaking, inflation can help you save money on your real estate investment because as rent increases, your mortgage costs will remain static (assuming it is a fix-rate loan), which means you will improve your position with the increased cash flow from the rent and equity growth. Although inflation is quite low these days, there is a typical amount of appreciation properties experience as a result of even low inflation, which adds to your equity without a single penny out of pocket.

Of course, it is not all rosey with real estate investing. There are a LOT of factors that deter people from getting involved. It is scary, you could lose a lot if you engage from an emotional standpoint and there are headaches and horror stories borne from bad tenant situations to fill a few books.

Regardless, I reiterate that if you buy properly, budget properly and stay involved, you may never have to worry about money when it counts – throughout the live of the property and during your retirement. What could be more beautiful than that?

Most real estate professionals can help a buyer or seller make the right buy or sell decisions. Obviously, as you would listen to a quality attorney, doctor or accountant, listening to a quality real estate professional’s valuable information will go a long way in helping you achieve your buying or selling goal. Budgeting however, is a function of habit and here again, you must proactively seek qualified, quality, professional advise.

15 Ways to Prep Your Multi-Family Building Exterior for the Spring Market

In international buyers, Investing, Investor, miami, Miami-Dade County, Multi-Family Real Estate, real estate, Sellers on April 6, 2013 at 8:46 am

Spring is the season for rain, sun, flowers and humidity buildup. It is also the season buyers and sellers traditionally come out of hibernation. It is a time when folks turn to spring cleaning, regardless of whether they are selling their property or not.

However, if you are in fact, looking to sell, you will definitely want to pay close attention and properly prepare. This article will hopefully, help you get started and get you to a fast closing that nets you the most money in your pocket, ready to enjoy, retire other debt or reinvest.

As I flip channels and sometimes watch a particular product they may be selling, particularly jewelry, I notice that ‘shine’ is critical. I also notice the effect I feel when I walk up to a car dealership that keeps its cars sparkling clean versus when I walk up to a car that seems poorly maintained.

Similarly, I notice what I feel when I approach a property. As I walk through it, I notice the big and little things that say WOW. The question is, what follows that “wow”? Is it, wow this is great or is it, wow this needs a lot of work!

As rents climb or stabilize, buyers are watching for opportunities. Your job as a seller is now to convey the message to the buyer that your property has been well taken care of and that it will provide a handsome return and that it is therefore, worth their investment.

The tips below will cost little money and could go a long way to convey the right perception that attracts buyers to make an offer. Even if you are a distressed seller, the more appealing your property looks, the higher the perceived value and the more money you could net.

With this in mind, here’s how to get the exterior of your building shipshape so it tell buyers, “yes, this is a good investment”:

1. Clean the glass covers of all light fixtures and make sure to remove all bugs. Also, replace any broken or missing glass covers. Make sure they all match. If not, replace them all to match and improve the look of the fixtures.

2. Replace missing or burnt bulbs. Consider replacing every bulb with bright white energy efficient bulbs. They brighten up the common areas making it more appealing and saves energy while helping deter crime.

3. Clean or replace mailboxes. Busted mailboxes often convey a sense of neglect.

4. Clean or paint all doors and frames and replace or polish their hardware so they all match throughout.

5. Make sure the building address number and each unit number are clearly visible and neat.  You may also want to consider replacing them for a clean look.

6. Make sure all stairs, hallways and stair guardrails are clean and/or painted as needed.

7. Wash all windows and seal them right to avoid water leaks while improving energy efficiency. See that tenants cooperate by keeping old tape used during a prior hurricane watch or warning and even odd window coverings, off windows.

8. Make sure to pressure clean parking areas and that they are swept clean. If necessary, cover driveway and parking areas with a fresh coat of tar. Check that all parking stoppers are painted and if appropriate, labeled.

9. Rake the lawn and ensure all green areas are trimmed.  Use fresh mulch or stones accordingly to cover patches, driveways and other areas. Plant fresh flowers or plants if possible. These are often inexpensive and greatly ‘green-up’ common areas.

10. Clean all debris from gutters and drain spouts and repair or replace them as needed.

11. If there is a community barbeque, be sure to clean it thoroughly and wash down the lid if there is one.  Replace a worn cover if needed.

12. If there is a community swimming pool, make sure it sparkles. Treat or repair any surrounding pool ground area that isn’t perfect.

13. If there is patio or pool-area furniture, make sure it is clean. Remove or replace any broken pieces.

14. Check your roof and make sure to repair or replace any missing or damaged shingles or tiles. Make sure to apply a sealant to flat roofs. Even if it does not seem necessary, this is a small expense compared to what a poor roof inspection result may represent.

15. Paint. Although this could be the costlier of the cosmetic preparations, I can’t say enough about this, especially if the building has not been painted for 3+ years. When it comes to selling, remember, ‘sparkle’ is key and nothing sparkles more than a fresh coat of neutral color paint. Make sure it is properly done and that cosmetic cracks are patched prior to application.

Now, go ahead and comment on any of the above or add your own to the list.

As a buyer, what items do you look for when you walk through the exterior of a building you are considering?

Also, as a buyer, HOW is your offer price affected by either a positive or negative impression you experience while walking the exterior of a property? How much more or less would you offer be as a result of your experience?

July home sales in Miami – a reflection of the economy at large

In Buyers, Condo rules, FIU, Fl, Florida Legislature, government, HAMP, Home Warranty, HomePath, Investing, Lease Agreements, Leasing, lenders, Loan Originator, scams, SIOR, Treasury on September 3, 2011 at 9:52 am

Some say our economy will not recover until this or that is changed. Some feel housing must recover in order for everything else to recover. Others blame the low dollar, the amount of money that is printed, Europe, earthquakes and climate change.

I still feel that the key to a recovery is JOBS. Without jobs, folks’ confidence and ability to spend and qualify to buy homes, will remain low – hec…non-existent.

With unemployment stubbornly high above 9% (well over 18% according to experts if one includes the under-employed and all those who just…quit looking), it is no wonder housing can’t seem to recover.

In spite of Miami’s ability to appeal to the affluence of non-residents and investors (and THANK GOD for that), Miami’s home resale market looms.

One great aspect is that Miami’s available real estate inventory for sale has been rapidly dropping from a high of 24,368 units in Sept., 2010 to our July, 2011 low of 15,578 units available for sale. A 63.9% drop in inventory, 4.3% lower than June, 2011’s inventory of 16,272 units, 35% lower than the 23,976 units in July, 2010 and almost 32% lower than at the end of the same quarter in 2010. The drop of New listings has also helped inventory levels continue to drop.

By all accounts, less inventory is great. This generally means that buyers have less inventory to choose from and that prices should begin to pick up. Supply and demand. Yet, low supply continues to be coupled to low demand as reflected by the meek Pending sales number between June and July, 2011 (2.2% lower) and the much weaker Sold (Closed) units which dropped 21% between June and July, 2011.

Thankfully, Pending Sales (an indicator of future closed sales), had been quite strong in July, 2011 as compared to July, 2010 (up 19.4%) and as reflected by the Pending Sales number between the end of Q1-2011 as compared to Q1-2010 (up 21.1%).

Will these numbers improve? Again – I say, not until JOBS recover.

Comparing sectors of our market, sales in properties valued at different price ranges appear to be mimicking the market at large, including market segments under $500,000 and between $500,000 and just under $2M as shown in the two charts below

Under $500,000

Between $500,000 to just under $2M

Between $2M and just under $5M, we begin to see some changes, though Pending Sales – the so important forward looking indicator of future closed sales has completely stalled.

Above, are the numbers for properties valued at between $2M and $5M

However, by the time we get to homes valued at $5M and above, the difference is stark.

Above, properties in our highest market segment – above $5M

As you can see, properties valued at $5M and above are among the only market segment displaying improvement on all accounts. Between June and July, 2011, between July, 2011 and July, 2010 and between Q1-2011 and Q1-2010. Most impressive are the improvements between July, 2010 and July, 2011. I mean, 10 properties Sold and 12 under contract may not seem like much until you are reminded that these are at least $5,000,000 a pop and financing…well…this is not their bag.

So, the $5M and above market segment is where most affluent buyers are doing their bidding. After all this is Miami!

5 Buyer tips for Distressed Properties

In bank-owned properties, Buyers, closing, credit, Distressed Sales, Downtown Miami, fannie mae, FHA, First-Time Buyer, Fl, florida, forclosure, foreclosure, Freddie Mac, government, Home Buyer, home sellers, HomePath, HomeSteps, HUD, Investing, Investor, lenders, Loan Program, miami beach, Miami-Dade County, mortgage, real estate, REO, Short Sales, South Beach on January 24, 2011 at 4:56 pm

Miami Beach, Fla. – Jan. 24, 2011 – Wenceslao Fernandez, Jr, a Florida real estate agent with Keller Williams Realty who specializes in Downtown Miami and Miami Beach properties, has come up with five tips to help distressed property buyers. These tips should work in virtually any U.S. market.

Wenceslao says that, “even seasoned investors don’t always follow or understand these practical tips”.

1. Work with a full-time Realtor(c). After the bust, many agents left the business so, not all real estate agents are in the business full time or even Realtors(c) any more. The term Realtor(c) can only be used by members of the National Association of Realtors (NAR), who adhere to their strict Code of Ethics. When it comes to distressed properties, a specialist is your best bet. Look for a Realtor(c) who is also a Certified Distressed Property Expert (www.CDPE.com), and who’s able to guide you with the right strategy for making offers on Short Sales or REOs. Many buyers assume that all agents have the knowledge to help them with these two distinct types of distressed property sellers. Like with hiring any professional (doctor, attorney, plumber, CPA), hiring the right agent to help you through this process, is key.

2. REO properties have the advantage of faster closings. Their disadvantage is that, more than 90% of the time, they only sell for cash and there may be multiple, competing offers on the table. On the other hand, although you can also pick up a Short Sale at a bargain price, there is nothing “short” about the amount of time they take to even be accepted. Some lenders negotiate quickly, others still drag their feet. It is not unusual to wait two or three months or longer, just to hear whether your offer was accepted by the seller’s lender – then the actual sales and closing process begins. Their advantage is that often, they are in better condition, especially if they are still being lived-in by the owner(s), and your offer may be the only offer the lender is considering for approval – minimizing the bidding wars of multiple offers often seen with REO sales.

3. Bargaining for less than the asking price will be a function of many factors. Many REO’s are listed well below market and attract a lot of attention. Making sure you offers wins the “bid”, may require a full-price offer and often, even a slightly more aggressive offer. Short sales may allow you a little more flexibility – as long as the offer is within reason for the property condition and local (building or area), market condition. Sellers of REO don’t typically want to hold these too long and are usually motivated. Lenders who have been going through a long, pre-foreclosure process are also motivated but may only be “servicing” the loan and the bulk of the decision, may be dependent on the investors behind the loan and/or mortgage insurance folk.

4. Avoid complicated offers. REO sellers typically prefer clean offers. The less contingencies you attach to your offer, the cleaner the transaction flow is expected, the better the chances are that they’ll agree with your offer. Lenders looking to approve a short sale may agree to some concessions. The worst that can happen is that they say no. In either case, sometimes lenders are quite accommodating – even REO lenders who already have possession of the property are known to give concessions if inspections reveal certain problems not previously known or problems which were not readily visible. Otherwise, most of these purchases are “as-is, where-is” and you should know what you are getting into. Being “handy” may not qualify you to throughly inspect and understand what you are about to buy.

5. Get the right pre-approval from the right lender. Regardless of which type of property you intend to buy (whether distressed or not), having this approval letter ahead of time will ensure you move forward. Most offers to be considered, must be accompanied by this letter. REO properties are typically sold for cash. However, properties now held by Fannie Mae, Freddie Mac or HUD, will often consider financing offers during the first 15 days a property is listed, as long as the buyer is an owner-occupant. Even if the REO or Short Sale property needs repairs, there are loans that allow the buyer to borrow additional funds for repairs. Make sure you lender understands FHA-203k, Home Steps and Home Path loans and that they have a thorough understanding of any other government program you may qualify for.

Want to know more? Contact Wenceslao Fernandez Jr HERE.

MIAMI’S CLOSED PRICES UP FOR SECOND MONTH IN A ROW

In Buyers, First Time Sellers, First-Time Buyer, florida, Home Buyer, home sellers, homeowner, Industry trends, Interest Rates, Investing, Investor, Kiyosaki, miami, miami beach, Miami-Dade County, real estate, second home, Self-Directed IRA, Sellers, Short Sales, South Beach, Trends, Wenceslao on December 10, 2010 at 3:16 pm

Not surprisingly, Miami-Dade county’s Average and Median Closed prices were up again, for the second month in a row.

Recently, you read my blog post “LISTENING TO NATIONAL REAL ESTATE NEWS MAY BE DANGEROUS TO YOUR FINANCIAL HEALTH” where in response to recent news claiming that national resale prices were down 2% in Q3/2010, I reported that these were already stale reports that were 2-months old and that by contrast, in October, 2010, the Average Closed Price in Miami-Dade had gone up 6.3% while the Median Closed Price went up 5.5% from September, 2010.

As it turns out in November, 2010 and for the second month in a row, the Average Closed Price in Miami-Dade went up another 5.7% and Median Closed Prices also went up another 3.8% from Oct./2010.

Although the number of properties Sold went down 9.4% from October, 2010, and 1.1% from October, 2009, the number of Pending Sales was up again by 4.1% from October 2010 and up 38.3% from October, 2009.

So, is this proof certain that we’ve hit bottom? I don’t know.

What I do know is that, if you are looking to buy in Miami-Dade county, and you are looking to close before the 12/31/2010 deadline so you can get the deductibility and Homestead Exemption, you must hurry.

Although you do not need to have the deed recorded by 12/31/2010, all documents must be executed by then.

Also, waiting may already cost some people about 12% more based on the recent increases in the Average Closed Price since September, 2010 and 9.3% more based on the Median Closed Price since September, 2010, which stood at $125,000 then and stands at $135,000 as of November, 2010.

Sellers must also understand that, this is NO time to play or allow greed to take over. It is time however to get serious about discussing your marketing with your Realtor.

There are several components of marketing and Sellers control one of the most critical: PRICE

Although a buyer’s ability to have easy access to see the property and how the property shows (is it staged or cluttered), are also two-critical components sellers control, price is a function of almost everything else, including property condition, market condition and other factors we cannot control.

Your professional Realtor controls the promotion and marketing of the property. However, when a property does not show very well or making showing appointments becomes inconvenient for buyers, your Realtor’s best efforts to get the property sold at the highest price, within the shortest time and the least hassles, may be (at least to a degree), negated.

Buyers on the other hand are competing for deals with other buyers and investors. This is no time to hesitate, over-analyze or waste time before looking at the potential deals your Realtor is sending you. It is also no time to second-guess prices if you are at risk of suddenly, being priced out of the market.

With prices on the rise and interest rates also on the rise (even if marginal), the combination of higher prices and higher rates could be lethal to a border-line buyer.

If you are looking to make a purchase or selling decision in the next 15-30 days, don’t hesitate to contact a professional Realtor (remember, not all real estate agents are Realtors – members of the National Association of Realtors who adhere to a strict Code of Ethics), and one who is additionally trained in helping you navigate through the idiosyncrasies of distressed properties*.

If you are looking to sell (not list for sale but list to sell), you may request a Free Market Analysis at FreeMiamiHomeValuation. There is no cost or obligation and you will also get two special reports with your Free Valuation report and will also entitle you to a 30-minute, no cost or obligation consultation.

For Miami Beach, the numbers are even more staggering.  Closed sales in November, 2010 were up 5.9% from October, 2010 and up a whopping 38.5% from October, 2009.

At the same time, Pending Sales in November, 2010 were up 42.1% from October, 2010 while up an incredible 80% from October, 2009, clearly demonstrating that the beaches, as a localized location, is quite more attractive and continues to produce strong results.

More on Miami Beach on a separate post.

*Visit www.CDPE.com and find a Certified Distressed Property Agent near you.  With about 29,000 CDPE’s nationwide, this is the largest professional association of its kind in the nation.

Open Letter to Obama and Congress

In bank-owned properties, Buyers, credit, Distressed Sales, First Time Sellers, First-Time Buyer, florida, forclosure, foreclosure, foreclosure moratorium, government, Home Buyer, home sellers, homeowner, Industry trends, Investing, Investor, IRS, lenders, Loan Program, Market Report, miami, miami beach, Miami-Dade County, mortgage, NAR, National, new rules, Obama, real estate, REO, Sellers, Short Sales, South Beach, Wenceslao on October 15, 2010 at 11:08 am

With our economy draging (in spite of the recession being over according to “experts”), it is more important than ever to find common ground, leave politics aside, get comfortable, get friendly and come together to find answers, compromises and solutions.

The recent foreclosure fiasco is absolutely appalling. The government and oversight entities, failed; banks and investment houses, failed; borrowers failed and everyone in between, failed; while those who were never even interested and stayed in the sidelines,  are all paying for it.

Some title insurers are already issuing statements refusing to insure recently litigated foreclosure properties.

If we want to see this country come out of the ashes and be the beacon of financial opportunity for everyone again, we need to start coming up with ways to incentivise certain bahaviour and dis-incentivise other.

For instance…for prices to begin to stabilize, even increase, real estate needs to improve. For this to happen, we all agree that jobs must improve.

Looking at the stabilization of real estate, there are certain actions that can be taken with government policy/legislation that will motivate lenders to act in a way that will, in my view, improve market conditions.

The now on-going foreclosure fiasco, has investors/first-time buyers in the sidelines or competing for less properties. An unintended consequence of this may be that prices may begin to rise as buyers/investors compete over remaining inventories, raising the bottom to new highs during this period.

Temporarily, this may also drive investors across the proverbial fence if they insist in avoiding Short Sales and feel that they don’t want to compete at higher prices for the REO inventory now in play.

The higher prices go, the more diluted their returns can be if they feel that the increases are still unsustainable until the employment/ tax situation is sorted.

Lenders must be given a choice to either continue to pay more attention to the REO area of their business, rather than to actually begin to pay attention to short sales and to divert attention and resources that lead to the settlement and conclusion of these, less costly deals.

To continue to ignore this cheaper, friendlier and still competitive alternative that helps save money in legal and other REO related expenses and legal responsibilities and liabilities, while helping to stabilize neighborhoods further, would be a shame.

Worst still…for the government to continue to incentivise rather than dis-incentivise lenders to take the REO route with pain – pleasure oriented programs that help lenders “choose” to continue rather than to abandon the REO alternative (unless absolutely necessary), in favor of the short sale route, would be aweful.

Leadership, starts with our government and the policies they create on behalf of and to help the citizens they represent. If the policies implemented create an environment where sellers can get their property sold with dignity, while keeping a gleam of hope for some future chance of home ownership again, then we are helping multiply the blessings in the future.

Otherwise, foreclosed home owners loose their chance of buying again while required to answer whether they’ve ever had a property foreclosed on or gave it back to the bank in lieu of.  Lenders in the future will be reluctant to lend to these folks.

To create policy that “overlooks” the foreclosure / character side of the mortgage application process in the future as a patch to address the needs of these borrowers 10 years from now, will be in that future, a hindrance to good lending practices. Instead, those borrowers should be allowed to sell with dignity today so they can perhaps buy again tomorrow.

Diverting resources and creating policy that “encourages” lenders to make a deal in a short sale rather than foreclose, will help stabilize prices, will help buyers get into good properties, and will help those outgoing homeowners get their act together so they can consider buying again in 3 to 5 years.

In the meantime, investors will consider buying short sales (once expediently processed), so they can enjoy rental income and then sell to future home owners when things improve, or continue to repair and resell to end-users and other investors as they have. Again, only if they can avoid the pain of the current short sale process.

I’m not coming up with anything that hasn’t been thought of. However, it is time for simple, sensible leadership, NOW.

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OPINIONS WELCOMED

Americor / Vacation Finance Lunches New Lending Product

In Buyers, credit, Distressed Sales, florida, forclosure, foreclosure, government, Home Buyer, Industry trends, Investing, Investor, IRS, lenders, Loan Program, Market Report, miami, miami beach, Miami-Dade County, Military, mortgage, National, Qualified Retirement Plan, real estate, Roth-IRA, second home, Self-Directed IRA, South Beach, Tax Matters, Trends, vacation home, Wenceslao on October 13, 2010 at 7:51 am

Using your IRA to buy Investment Real Estate

Posted: 12 Oct 2010 09:35 AM PDT

Americor Mortgage is launching a new loan program for investors who are buying investment property with their self directed IRA. Our mortgages will be NON-RECOURSE, and the individual does not need to qualify, the property does.

So even borrowers with recent credit challenges, low or retirement income, can get a mortgage through their IRA.

IRAs can buy condos, single family residential, and commercial income producing properties.

Contact Americor-Vacation Finance for more info: info@vacation-finance.com

To learn more about Self-Directed IRA rules visit http://www.IRS.gov

You may also contact Jason DeBono at Entrust Florida (www.EntrustFl.com) at JDeBono@EntrustFl.com who are qualified administrators for Self-Directed IRAs

Government moves toward foreclosure moratorium

In Distressed Sales, forclosure, foreclosure, foreclosure moratorium, government, Home Buyer, home sellers, Investing, Investor, lenders, Market Report, mediation, miami, miami beach, Miami-Dade County, mortgage, new rules, real estate, REO, Sellers, South Beach, Wenceslao on October 12, 2010 at 4:43 pm

WASHINGTON – Oct. 12, 2010 – Despite concerns about its impact, some legislators are pushing for a nationwide moratorium on all foreclosure sales.

U.S. Rep. Edolphus Towns, a New York Democrat and chairman of the House Committee on Oversight and Government Reform, says the top 10 mortgage lenders should immediately suspend foreclosure proceedings in all states.

“The implications of ignoring the foreclosure problems are far too great to be ignored,” he said Friday.

Other legislators are moving to revive cramdown legislation, which would give judges the power to reduce mortgage principal to market value in bankruptcy cases. The controversial bill had passed the House earlier but was stuck in the Senate.

But the Mortgage Bankers Association of America and the Financial Services Roundtable said Friday in a joint statement that, after reviewing paperwork, nearly all bank foreclosures are legitimate.

“Calls for a blanket national moratorium on all foreclosures are a bad idea and would cause significant harm to communities at risk, the unstable housing market and the fragile economy,” the statement said.

Source: The Wall Street Journal, Ariana Eunjung Cha, Steven Mufson, and Jia Lynn Yang (10/09/2010)

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So You Want To Buy a Condo, huh….Get Ready Then to Take Some Responsibility

In Buyers, credit, fannie mae, First Time Sellers, First-Time Buyer, florida, forclosure, foreclosure, foreign nationals, Freddie Mac, Home Buyer, home sellers, homeowner, Industry trends, Interest Rates, international buyers, Investing, Investor, Lease-Option, lenders, Loan Originator, miami, miami beach, Miami-Dade County, mortgage, real estate, REO, second home, Self-Directed IRA, Sellers, Short Sales, South Beach, vacation home, Wenceslao on October 6, 2010 at 2:43 pm

Here’s the scary part…I don’t recommend anyone in particular – you must consider the professionals you work with carefully and examine several before you can make the right choice.

Once you’ve chosen which seller type you will pursue (there are at least three and some will argue, four – they are at least, those in distress, REOs and regular sellers), you’ll need to consider what strategy will work for each, and for this, you’ll need at least two professionals: a Realtor and a Lender/Broker

Like you, I have also worked with a number of professionals in different industries and, you get good and bad in each.

One of the first things you need to do BEFORE you find that “ideal” place you want to buy or BEFORE you decide to sell, is to interview several real estate agents. If you are buying, you must also choose, in a close second, a mortgage professional.

Focusing on your financing alternatives, you’ll need to choose between a mortgage broker and a traditional lender (typically a bank), and make sure they will treat you with honesty and a high degree of integrity and professionalism.

Your agent will not (normally), offer you the name of a lender who may have ever done something to jeopardize that agent’s license or relationship with a buyer.  Remember though that each, will have different experiences, access to different resources and each can be an asset to you in their own way. It is up to you however, to discover which among the many, many choices, is right for you and your needs.

In my humble opinion (and you know what they say: “Opinions are like noses….everybody has one”), mortgage brokers often have access to more than one source of funds and this is why I like brokers best. They’re not tied to what their boss says they must provide as an option to their clients/ borrower-applicants and they are actually…not the boogeyman the media has played them to be.

Remember that, a mortgage broker’s main job is to counsel you on loan alternatives, take your application, collect data and “shop” to find the best lender for your needs. In the end however, it is the actual lender who must evaluate the entire package submitted by the broker on your behalf, during a process called “underwriting” when the lender decides if they want to approve the loan.

Therefore, the funds do not come from the brokers, the brokers act as intermediaries. The funds come from the actual lenders who approve the loan.

These lenders then either keep your loan in their portfolio or sell them in the secondary market to any number of investors, including Freddie and Fannie. This is how our economy takes each dollar lent, and turns it into $10 in a process I now forget what is called.

Just the same, buyers must vett these brokers (or any lender for that matter – after all,  look at all the trouble they are ALL in), and ask all the right questions. Choose one, and keep a backup.

In the end, always remember that is not the company (mortgage brokerage or institutional lender), who provides you professional service, it is the broker/loan officer you select who provides you service on behalf of their employer and you need to vett them both.

Let them know a bit about the property you’re looking to buy, they’ll need to know about your financials, and at the appropriate time, they’ll need to pull your credit and obtain your tax returns, etc in order to give you a valid pre-approval/pre-qualification letter (which we’ll need to provide along with your offer).

Ask them how long have they been in business, how many lenders do they represent, how to find out about their company and their personal license (you can check the status and record of their license online), how do they determine which program is best for you, can they provide you more than one or two choices for the purchase you’re looking to make, how do they communicate with you, how do you keep track of your file, how do they handle your questions throughout, etc.

In short, you need to determine if they’re a good fit for you, just like folks may want to know about you and your services before they hire you – you’ll want to know about any service provider, including Realtors(c), attorneys, doctors and CPAs.

Brokers can only control how they qualify “you”, and as a second step, help you determine if a property you like, meets financing criteria. Once they can put a checkmark on both…we have the potential for a deal.

After that, or when they advise, you’ll need to complete a formal loan application (AKA: 1003 application), provide any additional documents they require from you, request a Condo Questionnaire from the association (which will typically cost you between $100-$150), verification of employment and domicile, request appraisal, etc.  In other words…that’s when the fun begins.

Up to the day of closing, they’ll need to re-verify that the building is not in worse financial shape than when the process began, that your credit has not dropped, that your DTI (debt-to-income) ratio is still within guidelines, that there are no new surprises (in conjunction with the title agent), that can affect closing (lien, open permits or other title issues that may come up), make sure property insurance coverage is in place, that you have condo association approval, etc.

In short, there’s a LOT of paper and behind-the-scenes work we all have to do (I also need to keep all parties communicating and all dots or links in the chain connected throughout), and working with a professional that will help you the way you expect them to, is critical.

A professional Realtor(c) (remember that, only a real estate professional who is a member of the National Association of Realtors, and who adheres to their strict Code of Ethics, can call themselves Realtor(c)), will want to make sure to guide you and empower you to make the right decision. By the same token, you nust make sure you are being served by the right professionals along the way, including the lender you choose – and the choice is yours.

Speak to them (there’s no charge or obligation for this process – we all get paid when we close the deal), reach them by email, ask them to call you, see how responsive they are, do they answer all your questions to your satisfaction and like in a beauty contest – you’ll need to then choose a winner  😉

With the situation in condo financing the way it is, you don’t want to waste your time using an agent who does not know how to qualify your buyer (if you are selling), or if you are buying, qualify and guide you as a buyer. Either can kill the deal and potentially cost you money.

Other points to consider is the recent Halt of all foreclosures by some of the major lenders (see previous post), and the fact that condo units in some buildings simply, can only be purchased with cash since no financing may be possible in many of them due to current market conditions.

In short, buying real estate is not like buying a can of beans at the supermarket. You  don’t just pick one, pay for it, and enjoy it. Most people find buying a car confusing. Buying real estate is no different and, being that this is among the largest purchase you’ll make, you should approach it responsibly.

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Your comments / opinion welcomed

FORECLOSURES HALTED! What does that mean to you?

In bank-owned properties, Buyers, closing, Distressed Sales, florida, forclosure, foreclosure, government, Home Buyer, home sellers, homeowner, Industry trends, Investing, Investor, lenders, mediation, miami, miami beach, Miami-Dade County, Military, modification, new rules, real estate, REO, Sellers, Short Sales, South Beach, Trends on October 4, 2010 at 1:19 pm

Recent developments have called for a full STOP of all foreclosures (see Awaiting Bailout, Several Big Banks Halt Foreclosures and Foreclosures Halted In 23 States: Plantiffs’ Lawyers Rejoice), including the State of Fla.

It seems that this move will not only affect new and pending foreclosure files, but all properties already on the market as well as pending transactions.

Therefore, if you are currently under contract to purchase an REO, you should contact the listing agent and the closing agent to determine the status of your transaction.

The upside about this new development is that it will make it the best time since the recession began to get short sales and regular sellers on the market, priced correctly and sold.

“I anticipate that this foreclosure stoppage will create a supply shortage in the short term and you will have a greater chance now than ever before to get your listings sold!”, says Natascha Tello, Broker, Operating Partner, Keller Williams Realty Partners SW, Pembrooke Pines.

So, if you are a seller that is looking to sell your home and avoid foreclosure or is considering selling your home, this new development should provide a favorable opportunity to do so.

Our market may be Shifting Again!

If you are an investor, home buyer or home owner, make sure you screen your real estate professional. Make sure they are in business full time, that they are members of the National Association of Realtors (which is the only way they can call themselves Realtors(c) and adhere to their strict Code of Ethics), and make sure they are additionally trained for this market.

If you feel you must sell and you owe more than your property is worth, make sure you consult a Realtor(c) who is also a Certified Distressed Property Expert (c) (CDPE). Search for one near you at http://www.CDPE.com.

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For any questions or for a complementary 30-minute, no obligation and confidential consultation, feel free to contact Wenceslao Fernandez Jr, CDPE by calling 786-361-6463 or by writing to Wenceslao@KW.com

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