Reale Estate Treks » hard money lenders

Home Depot And The Housing Market

Home Buying Treks — Mon, 03 Oct 2011 13:51:14 +0000

Home repair giant Home Depot recently announced that its 2^nd quarter net income rose 14% from the previous quarter prompting an upward adjustment in expected earnings for the year. Compared to the anemic GDP growth of only 1.3% in the same quarter the promising Home Depot numbers could mean one or both following scenarios are true:

1) Since big box stores like Home Depot and Walmart (who also increased expected earnings) tend to be good indicators of consumer spending as a whole, consumer spending could be on the rise.

2) With the stale housing market, many homeowners are deciding to invest in their current homes to increase value or make the home more livable for the future.

Economists watch certain leading indicators to predict where the economy will go in the near future. Indicators such as unemployment, the stock market and housing starts are the traditional numbers that economists watch but certain industries and even retailers within the industry can signal an upcoming change in the economy.What does Home Depot’s growth mean for the economy?

Other similar stores have increased their annual projections too.One quarter increases are not a trend, but its a start.

Another possible explanation for the increase in Home Depot’s growth in the last quarter is homeowners’ lack of confidence that they will be able to purchase a newer home in the future. Many see the stagnant housing market as a signal that it may be a good idea to improve their current living space as opposed to upgrading to a newer one.Low prices are scaring people away from selling.

In addition to homeowners, real estate investors have been picking up all the properties that the banks release and rehabbing them. Low sales prices mean investors can get the properties cheap, rehab them, and get them back on the market near the market value. The remodeling supplies used in these rehabs could also play a role in Home Depot’s increased sales.Hard money loans are helping real estate investors with their projects.

Whether Home Depot is seeing growth due to the confidence of consumers as a whole or lack of confidence in the housing market, any spending is good for the economy and you can bet economists will keeping a close eye on the numbers.

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Investors Help Housing Recovery Using Rehab Hard Money Lenders

Home Buying Treks — Thu, 29 Sep 2011 09:42:16 +0000

Now more than ever, housing as an investment seems to poin to the fact that there is so much opporunity in real estate investing . The prices for properties are at lows we have not seen for more than a decade. In the next 3 to 5 years we can anticipate a great comeback will be made on real estate that is purchased during this window of opportunity.

Weathering recessions and even depressions, real estate has rebounded and each time the values of properties continued to reach new highs. This does not mean that we adopt a “bubble” approach to our investing strategy. It simply means that we focus our attention on the underlying demand for housing.

At the present time, construction permits are way down simply because of the available housing inventory. However, during the past year, the housing inventory has been tightening and in some areas of the country, construction developers are now again buying land at low prices in anticipation of a rebounding market. Even rehab hard money is on the upswing as investors acquire REO properties, freshen up them and sell them for profit or rent them out for long term appreciation and rental income . This is not difficult to understand because, when we consider the fact that the available housing inventory now stands at about 11 months meaning that it would be wholly low within that timeframe if there were no new construction. Once the housing inventory reaches approximate 6 to 7 months, the market has changed from a buyers market to a sellers market. Once the housing inventory is less than 6 months, it is considered a very tight market and housing prices begin to rise rapidly.

What fuels the demand for housing ? Let’s consider the fundamentals. New homebuyers first come to mind, because the new homebuyer will be people who are starting a family and prefer not to live in apartments. Therefore, we anticipate home buyers will be creating a lot of demand in the next 12 months while prices remain low. Next, immigrants are getting housing at unprecedented rates and foreign investors have begun buying up housing, including bulk REO purchases in some of the most prestigous areas of the country .

For the real estate investor, more new lending opportunities and programs will develop as the market conditions rebound. Banks who have avoided investors will come back into the mix and again offer programs for investors to finance and refinance property. Until then, the investors are using primarily private hard money lenders to help them acquire property. Soonafter the real estate markets have stabilized , the investor will be able to utilize hard money to acquire property and again use traditional bank financing to refinance cash out and to facilitate long term strategies of acquiring property for short term holds, from strategies including short sales, and to pick up long term appreciation, tax advantages including depreciation, and a more diverse investing strategy. All of this is good for the economy because it stimulates the demand for housing including new construction and the unveiling of jobs in the construction, finance, and related industries. Housing is the mainstay of the economy and for a full recovery to occur, the banks and financial institutions will have to get squarely behind financing housing and devising loans for homebuyers who are starting out or trading up .

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Getting Rehab Hard Money Funding Non-Recourse

Home Buying Treks — Sun, 31 Jul 2011 14:57:18 +0000

Residential and commercial hard money lenders want to reduce risk. One way for an investor to do that is to create an LLC or Corporation for the specific deal . This is still an advantage for a borrower who can only obtain investment property financing a private hard money lender because of poor borrower credit . This type of loan can be a NON-recourse loan which means, that makes the entity, rather than you personally, liable for the borrowed amount .

Many private hard money lenders also prefer this type of transaction because the “entity” is clean, meaning it has no liens, judgments, and hidden liabilities, including mechanic liens potentially cloud the title of the property. Another way for an investor to set up a non-recourse hard money loan is to put the property intot a self-directed IRA, which also defers the tax on profits and can be an excellent way to build retirement. A third way for an investor to set up a NON-recourse hard money loan is to set up a title holding trust or a land trust. Remember, private hard money lenders are asset based lenders. Numerous options exist to get more or less the need for putting cash into the deal, including cross-collateralization, pledged notes guaranteed by other properties, buying right at the correct LTV, potent exit strategies, pocket buyers, etc .

The entity type you choose for your deal can give you greater flexibility. For example, an self directed IRA can be “assigned” a contract by adding the words “and or assigns” in the purchase contract or making the offer on behalf of a self directed IRA. This has been a great strategy also for deferring income tax on “flip transactions” because profit goes back into the designated IRA .

Both commercial real estate and residential real estate portfolio transactions with limited recourse or non-recourse should consider the options affiliated with setting up feasible investment entities. These entities cost little to set-up and give a real estate investor a considerble quantity of protection and versatility in investing strategy. It is not strange for an investor to set up a different entity for each different property.

Investors have learned to create flexibility in thier offers and will use an “assignable” clause in the purchase contract to acquire the property so as not to create a red flag for the seller. Rehab hard money lenders frequently will consider non-recourse in the commercial segment of the real estate market for income-producing properties, particularly .

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Free Video: The Defaulted Paper Tour (cont’d)

Home Buying Treks — Fri, 20 May 2011 01:07:11 +0000

Several weeks ago, the HMB gang made a group trip to Denver.

My partners had been there before and told me how beautiful it was, and I’d have to agree. But they also failed (purposefully, I’m sure) to fill me in on some very important travel tips. Here are some things I learned, and what you’ll need to know, if you ever travel to Denver:

-You have to drink 4 gallons of water a day to stay hydrated
-Running in Denver makes you’ll feel like you’re having a heart attack
-Alcohol has a much greater effect in high altitudes (let’s not get into how I know this)

While we were in Denver, we caught up with Mike Warren, a friend of ours and a note buyer himself, and asked if he would do a quick video with us on defaulted paper.

He agreed.

Because of everyone’s tight schedules, we didn’t get a chance to get too detailed, but I did get him to introduce our readers to note buying and explain the process a little bit and what he does with the paper once he gets it. It’s interesting stuff.

Here’s the video:

Mike has developed some really good note buying systems, so at the end of our time together, we asked him to help us put on a webinar about note buying. He agreed to conduct a more in-depth training webinar called “Cashing In Defaulted Paper,” where he will show you:

-How to buy notes at 20-40 cents on the dollar
-How to flip notes for big finder fees
-How to do it with no money out-of-pocket and no credit

If this topic interests you, make sure to sign up for this free, information-packed webinar. The links are below:

Thu, Apr 21, 2011 2:00 PM – 3:30 PM EDT https://www2.gotomeeting.com/register/250621563

Thu, Apr 21, 2011 8:00 PM – 9:30 PM EDT https://www2.gotomeeting.com/register/227323282

Til’ next time, Jeff

P.S. In the interests of full disclosure, Mike has an advanced fee based note-buying training system he will introduce during the webinar. You are not required to buy anything to attend the webinar! However, if you’re thinking about getting into note buying and you like what you hear, you may want to pony up some cash to get expert training. I wouldn’t recommend “experimenting” with this strategy until you get properly trained.

All I Want For Christmas Is My Free Con-doh, My Free Con-doh.

Home Buying Treks — Tue, 08 Mar 2011 00:11:57 +0000

By: Jeff Shiller, Esq.

Or, the alternate title: How To Own a $240,000.00 Prime South Beach Condo For $4 Per Year.

Ever since the 1980’s, I’ve been trying to figure out ways to buy a cheap retirement home in Florida so I could wear white clothes year-round and solve crimes in my Ferrari (hold on a sec. I’m looking for a cheesy picture. Okay. Got it. I’m back).

After much deliberation, I think I’ve finally figured it out, and I’m sharing my top 2011 investment strategy with you.

The collapse of the Miami/Palm Beach County real estate market is legendary. And now, to add insult to injury, a large south Florida law firm caught up in the robo-signing mess had many of their FANNIE and FREDDIE foreclosure files pulled and re-assigned to new law firms. The resulting confusion between lenders, trustees and the local courthouses led to many Palm Beach County homes being sold to investors at foreclosure auction this month for as little as $200. Yes, that’s correct, 200 bucks.

Here’s the article:

http://www.sun-sentinel.com/business/fl-stern-foreclosure-sales-20101209,0,784272.story

According to the article, “56 percent of winning offers were from investors or individual buyers who in some cases spent no more than a month’s mortgage payment to get homes that sold for upwards of $240,000 during the real estate boom.”

It doesn’t take a rocket scientist to figure out that those investment numbers work. So if you’re like me and have thought about buying that dream 2^nd home that could also generate rental income, get off your rocking chair and start thinking about purchasing some south Florida real estate!

Here’s the catch – you’ve got to get your location right and time your exit for maximum profit, so I’ll give you my formula for that.

According to Al Gore and the other global warming crackpots, sea levels will rise by as much as 0.7 meters by 2060.

So here’s the solution. Go down to FLA when the next bulk auction is scheduled. Buy your dream condo for $200. Make sure you buy above the 5^th floor. Hold it for 50 years. Sell when the water hits the 2^nd floor.

Voila… a Florida condo for $4 per year. And you get to sell for at least the insurance money. What a deal!

In all seriousness, look for my upcoming posts regarding condo investments. I’m going to address the dos and don’ts and pros and cons of buying a condo as an investment, and even speak with a real, live south Florida condo expert on the state of the market. Then we can get the bottom of this global warming problem.

Merry ChristmaKwanzaKa.

Til next time, Jeff

P.S. One of our readers sent the following article to me about the SAFE Act. It’s a good summary of my other SAFE Act articles. Thanks Kevin!

Stripping The Facade From The Real Estate Business

Home Buying Treks — Sun, 06 Jun 2010 03:14:34 +0000

Bulk REO Investing

Real Estate Investing is a tough business right now. While the business of buying and holding real estate as a long term investment remains a legitimate and viable strategy for wealth building, profit is no longer guaranteed as it once appeared to be.

With that in mind, the astute real estate investor will consider some specific real estate investment concepts to complement the “tried and true” strategy of long-term buy-and-hold investment houses:

* Virtual Real Estate Investing – the term “virtual real estate investing” has multiple meanings, including the use of the internet to buy and sell property, and the purchase and development of internet websites as a means of generating revenue. With an objective analysis, one can see the conceptual similarity between physical real estate and internet properties including entire websites and even individual pages controlled on larger sites like Facebook, Squidoo and Google Knol. Increasingly, real estate investors are seeing the clear opportunity presented by developing web “properties” into revenue generating assets much like physical rental properties. This trend is on the rise and will continue for the foreseeable future.

* Hard Money Lenders– when real estate investors need cash funding for their deals, they frequently turn to hard money lenders who provide the needed funding in exchange for payment of up-front points and high interest rates. But in many cases, the real winner is the hard money lender who profits from a high-interest loan secured by very low loan-to-value ratios. For this reason, many well-funded investors are turning to hard money lending as an alternative profit strategy. Since the down-side risk for the lender is mitigated by an asset with significantly higher value than the money being loaned, the risk to reward ratio clearly favors the hard money lender.

It’s a different world in the real estate investment business. It would be very, very simple to think that the foreclosure crisis has caused the door of opportunity to be slammed entirely shut. Yet that’s simply not the case. When one observes the state of the real estate market, it is undeniable that fundamentals matter more than ever. For example, the selection of the local real estate market is of greater importance than ever, considering the huge disparity that exists among the thousands of real estate markets across the United States. Additionally, the role of regulatory compliance is greater than ever given the activist nature of the current presidential administration.