Your Missing Link in Real Estate Investing.
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Whether you are planning to Invest your first home or just want more information reagarding anything Real Estate, contact us today!
We'd love to hear from you!
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Do's and Don'ts of Investing
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Recommended Do's and Don’ts
Don't Look for a home without being pre-approved. As a potential buyer competing for a property, you'll have a better chance of getting your offer accepted by being as prepared as possible. Consider this hierarchy of preparedness:
- Neither pre-qualified nor pre-approved
- Pre-qualified
- Pre-approved
The benefits available at each level can be easily understood when viewed from the seller's perspective. Imagine you're a seller in receipt of multiple offers to purchase your property. A complete stranger (buyer) is asking you to take your property off the market for at least the next two to three weeks while they apply for a loan. As the seller, let's consider the type of buyer you'd prefer to deal with.
Neither pre-qualified nor pre-approved
This buyer provides no evidence that they can afford to purchase your property. You may wonder how serious they are since they're not at least pre-qualified.
Pre-qualified
This buyer has met with a mortgage broker (or lender) and discussed their situation. The buyer has informed the broker regarding their income, expenses, assets and liabilities. The broker may also have seen their credit report. The buyer provided you with a letter from the broker stating an opinion of what the buyer can afford.
Pre-approved
This buyer has provided a broker written evidence of income, expenses, assets, liabilities and credit. All information has been verified by a lender. As a result, much of the paperwork for this buyer's loan has been completed. This buyer will probably be able to close quickly. They provide you with a letter (pre-approval certificate) from the lender. You're as certain as possible that this buyer can close. As a potential buyer, you can see that being pre-approved will give you the best chance of getting your offer accepted. This is critical in a competitive situation.
Don't choose a lender just because they have the lowest rate. While the rate is important, consider the total cost of your loan including the APR , loan fees, discount and origination points. When receiving a quote from a lender or broker, insist that the discount points (charged by the lender to reduce the interest rate) be distinguished from origination points (charged for services rendered in originating the loan).
The cost of the mortgage, however, shouldn't be your only criteria. Have confidence that the company you select is reputable and will deliver the loan with the terms and costs they promised. If in the final hours of the transaction you determine that the lender has suddenly increased their profit margin at your expense, you won't have time to start again with a different lender. Ask family and friends for referrals. Interview prospective mortgage companies without giving out your social security number.
Do buy a home with professional inspections. Even if you're buying a new home with warranties on most equipment, it's highly recommended that you get property, roof and termite inspections. This way you'll know what you are buying. Inspection reports are great negotiating tools when asking the seller to make needed repairs or to renegotiate the selling price. If you are a new investor it is especially important to understand the true depth of needed repairs.
Do shop for home insurance when you sign the contract. Start shopping for insurance as soon as you have an accepted offer. Many buyers wait until the last minute to get insurance and do not have time to shop around. Your mortgage company should be able to recommend 3 or more companies for you to try.
Do allow for delays in the transaction. In a perfect world, all real estate transactions close on time. Unfortunately, transactions are often delayed a week or more. Title may not be clear, appraisals may not come in time, repairs may not be completed, and the underwriters may be behind. Any number of reasons can delay your closing.
Don't pay for an appraisal when you think your home value may be too low. Have the appraisal company prepare a desk review appraisal (typically at no charge) to provide you with a range of possible values. Your mortgage company's appraiser may do this for you. Do not waste your money on a full appraisal if you are doubtful about the value of your home.
Don't use the county tax-assessor's value as the market value of your home. Mortgage companies do not use the county tax-assessor's value to determine whether they will make the loan. They use a market-value appraisal which may be very different from the assessed value.
Do provide documents to your mortgage company in a timely manner. When your mortgage company asks you for additional documents, provide them immediately. They are doing what's necessary to get your loan approved and closed. Delays in providing documents can result in costly delays.
Don't go auto shopping prior to closing your loan. Dealerships tend to send your finance application out to several lenders at once, all of whom will pull your credit. Multiple hits can hurt your scores.
Don't change or quit your job. Lenders want to see a 2 year job history, same line of work or two years self employed. Once they have checked your employment, be aware they will check it again the day prior to your loan closing even after the loan has been cleared to close.
Don't put your property on MLS if your exit strategy is to refinance. If the lender thinks you are still trying to sell the property, they will not want to do the loan on it. If you are still trying to sell the property, let your broker know so they can find a lender who won't have issues with that.
Don't leave a lease option, for sale, for rent and owner financing sign in the yard when the appraiser is coming out. The appraiser will have to take a picture with the sign in the yard and the lender does not want to see the sign.
Don't use your credit cards for down payments. When you max out your credit cards you will lower your scores which will affect your refinance ability.
Don't use all of your cash to pay bills leaving your account dry. It is better to have a little debt than no cash in the bank. Lenders want to see 6 months principle, interest, taxes and insurance in the bank or as reserves in a purchase or refinance. They will not count the cash out on a refinance as your reserves.
Don't take cash for rent payments. You must keep a paper trail on rent received. Copying the money wont work (yes, we have had clients do that).
Do keep all pages of your bank statements every month. Lenders may ask to see up to 3 months worth. There are also some lenders who will verify income through bank statements only.
Do keep copies of all receipts, invoices and checks with your name on it. You may need them to prove repairs paid, mortgages paid etc.
Do notify your broker if you intend on using a Home Equity line, Loan or Gift Money to use as a down payment. Most lenders don't allow gift money or sellers seconds on investment loans. A Loan or use of home equity line will change your debt to income and could kill the deal if the loan officer is unaware of your intent.
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Having the proper tools are important, but knowing how to use them is critical. You will need guidance, advise and strategy.
As part of our service,
Peggie Davidson and The Home Buyer Specialist Team can provide you with proven tips, ideas, and access to Real Estate Resources.
Call Peggie direct at 404-557-4228 or Gloria at 404-822-0643 and let's get started !
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We have personally been involved in investing in real estate for the last 12 years and have had many successes and a few headaches. We have studied and learned much through experience along the way and our passion for putting together real estate deals to help others achieve financial freedom has only increased.
Wherever you may be at in the process, chances are we have been there too and can relate. Whether you are a beginner, still trying to learn and work up the courage to do your first deal, or a seasoned, savvy investor who is just looking to add someone to their network who can bring them good deals...we are ready to add value and help you reach your goals.
Investors Wanted!!
We can help you find, buy or sell investment property. If you enjoy seeing your investments appreciate, this has been a great market for that and should continue to.
We are compiling a list of investors who want to be notified when we come across great deals. Please let us know if you would like to be a part of it. Finding great investment deals in a competitive market like we have in is challenging, but it happens all the time. Let us help you build your nest egg.
Despite the hot market and competition from other investors and home buyers, not every property sells for what its worth. There are still sellers out there with problems that make it impossible to sell quickly (or at least quickly enough to meet the seller's needs!) or for full price. It's these sellers that you want to work with, because, in solving their problems, you will be able to make a profit from their properties. I can help you find these sellers and these homes. Perhaps you are not even looking to flip or rent the property but just looking for your own home and would like some instant equity, there are deals I come across every day which are 5 - 10% undervalued. With a skilled agent searching the deals for you and negotiating on price and terms, you can end up saving $10,000 - $50,000 on many of these homes. You should always try to make money in real estate when you BUY. Saving money on the front-end through wise investing is key. Whatever appreciation you realize before you sell is just the icing on the cake. |
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Investor Concierge Service |
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Are you an out of state Real Estate investor looking to diversify your portfolio and invest in property ? Take advantage of our "Investor Concierge" service which includes FREE Transportation from the Airport while you are in town to preview investment opportunities.
We offer a complete turn-key, one-stop-shop solution for the out of state investor.
As part of the service, we will:
*Research properties and match the best available, undervalued properties to your criteria.
*Preview the properties you are interested in and email you pictures and comps.
*When you are ready to come out to view any opportunities and learn more about the area market, we will arrange for your transportation from the airport, show you the properties and the entire area and supply you with a welcome package.
*Introduce you to our preferred list of local lenders, property managers, handymen, insurance agents, general contractors, home inspectors, lawyers, etc.
*Negotiate the best price and terms for you on the properties you select and ensure a smooth transaction from start to finish.
All of this is absolutely free to you and offered exclusively by the Home Buyer Specialist Team1
(requires signing exclusive agency agreement) |
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As the oft-used acronym implies, investing in Real Estate has many advantages that make it compelling choice to help you build wealth.
I = Income. Properties can deliver positive cash flow.
D = Depreciation. Properties can offer significant tax savings.
E = Equity. The tenants pay the mortgage down and help you build equity.
A = Appreciation. Think of how much your own home has appreciated in the last few years?
L = Leverage. A powerful force, if used properly, that helps you make money with relatively little of your own invested.
There is something about investing in real estate that is satisfying in a way that the portfolio of mutual funds and stocks in your 401K can not touch. It is a real investment and a limited resource. They are simply not making any more land and properties do not go 'out of business' the way companies do. Consider the house you and your parents lived in while growing up. Chances are good it is still there or at least the land under it is, while many of the companies that were in the stock pages at that same time are long gone.
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Avoid Paralysis By Analysis |
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Most real estate investors start out with great intentions of becoming well-informed before getting themselves into a deal. They watch infomercials, read books, listen to tapes or cd's, scour the real estate ads in the Sunday paper and attend seminars. Then, too often, they quit or start repeating the research process indefinitely.
Don't misunderstand me, I think that educating yourself and doing all the due diligence is critical and would recommend it to everyone before rushing into an investment. I also think you should never stop learning and it's always good to brush up on the latest news and techniques that are out there. Sometimes just one piece of information can lead to a lot of money if you put it to use. Ahh, that is the key. Putting it to use. Real Estate knowledge for its own sake is not of much use. But if you combine that knowledge with action and allow it to shape your decision making then you are on your way.
So if you find yourself in perpetual research mode, always learning and never acting, then you may be crossing the line into "Paralysis by Analysis".
Common causes of Paralysis by Analysis...
*Fear of making a mistake (it is often easier to buy yourself time by appearing busy with research or just dreaming than to make a decision and risk something).
*Insisting that everything be perfect before you make a move (it will never be the perfect time. There will always be one more book to read, one more seminar to attend. You don't have to hit a 'home run' with every investment. Hitting 'singles' will get you where you want to be).
*Lack of goals (if you are not sure what you really want, then you probably lack the motivation to get there).
*Conflicting information (if you are receiving input from numerous sources, chances are you are also getting some conflicting advice about the best way to invest. Some gurus swear the best way to make money is with multi-family, others swear by ugly homes or new construction or foreclosures or flipping or buy and hold or lease/options, etc. There is a lot of information out there. Ignore most of it).
What is the cure?
Set realistic goals with deadlines. Write them down. Take Action!
There are many ways to make money in real estate. Do your research, find one you are comfortable with, assemble your team and take action. Don't confuse or substitute activity with accomplishment. Is it possible not to succeed in real estate investing ? Absolutely. But merely talking, analyzing and dreaming about it without taking action are guarantees you will not make any money.
When you are ready to make a SmartMove and take action, we are here to assist you. |
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Information We Need to Serve Our Investor Clients |
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Do you have a preferred area?
What is your price range?
What other criteria do you have on properties?
What level of rehabs are you interested in? (minor cosmetic changes or major jobs)
Are you interested in flipping or holding and renting, investing for maximum cash flow or appreciation ?
How many properties/deals are you looking to do each year?
Can you close with cash immediately? Do you need assistance in getting financing arranged through a hard money lender?
What goals are you trying to reach through investing? What has worked for you so far and what do you want to change?
We will need your contact info: name, phone, fax, email
When we call you with a property that is available, you will be encouraged to look at it right away. Good properties with legitimate margins to not last long and they go to those who are in a position to act fast.
Even if you don't end up with a particular property that we call you on, there will be others. Can we call you or email you in the future with good deals? |
Finding good real estate deals is an art that takes time to master. Like any business, customers are what drive it. Your primary customer is the seller who is motivated to sell below market value. Finding motivated sellers requires advertising, marketing, salesmanship, and, like any business, keeping your nose to the ground.
Nothing happens and nothing matters in real estate until you find a deal. You cannot put together a deal without a motivated seller and you can only convince a motivated seller to do something creative or that involves a discounted price. A motivated seller is one with a very good and pressing reason to sell below market.
The most common problem new investors face is finding bargain properties. Many who start out in real estate investing quit without ever buying their first property. They go through the motions of looking for deals for a few weeks or months and then decide it doesn't work. They forget that finding motivated sellers is similar to the salesman finding his first customer . . . it takes persistence and hard work.
FIND THE MOTIVATED SELLER
At the cost of sounding redundant, the concept is simple: find motivated sellers that are willing to sell their properties at a discounted price or "soft" terms. Currently, the real estate market in some parts of the country is hot, hot, hot! Many people are complaining that the strength of the market precludes investors from finding deals on properties. The popular misconception is that in a rising market, even the most motivated seller can find a buyer for his property at full market price.
The truth is, you can find deals in ANY market. Real estate legend A.D. Kessler once said, "There are no problem properties, just problem ownerships." The definition of a motivated seller fits squarely within Kessler's idea. A logical person knows that time, money and effort can solve virtually any real estate problem. However, some people are too emotional about their real estate problems or have other motivating issues to deal with.
Some of these issues include:
· Divorce · Lack of concern· Inexperience with real estate repairs· Time constraints
· Death of a loved one· Job transfer· Landlording headaches· Impending foreclosure
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FARMING NEIGHBORHOODS
Successful real estate agents utilize a technique called "farming" to increase their business activity. They pick a neighborhood or two and focus their marketing efforts within that area. You should try the same technique. Start with a neighborhood that is relatively convenient for you.
1. DRIVE THE AREA
Spend a few weekends driving around the area. The goal for you at first is to learn about the area, the style of houses and the average prices. Over time, you may expand your farm area, but stick with areas that contain the type of homes you plan to purchase. It is not necessary to begin your investment career by learning every square mile of a large metropolitan area; it is important to learn the value of "typical" homes in your target areas. This knowledge will enable you to make quick decisions about whether a particular prospect is a bargain.
2. ATTEND OPEN HOUSES
Visit open houses and "for sale by owner" (FSBO) properties on weekends. Speak directly with owners and their agents. Pass out your business cards. Make friends. Word of mouth and referrals are a big part of any business.
Part of the process of finding a deal is to know how to recognize one. Take a good look at the property and its physical features. After viewing a couple of dozen open houses in the neighborhood, you will get to know the value of the properties and the different styles of houses. When someone calls you about a house in that area, you will know the value by its description.
3. LOOK FOR UGLY & VACANT PROPERTIES
While you are driving around neighborhoods, look for vacant, ugly houses. How can you tell if a house is vacant? Look in the window! Of course, this practice may get you shot, bitten by a dog or arrested. First look for the obvious signs of vacancy - overgrown grass, no window shades, boarded windows, newspapers, garbage, mail piled up, etc. If you are not certain whether the property is vacant, knock on the door. If the owner answers, be polite, respectful and ask if he is interested in selling. In many cases, it may be a rental property, so ask the occupants for the name and telephone number of the owner.
If the property is vacant, ask the neighbors if they know the owner. Most neighbors are helpful, as they know "ugly" houses hurt their own property values. In addition, ask the mailman - they know all of the empty houses on the block. Leave a business card and write down the address of the ugly or vacant properties. When you get home, look up the name and address of the owner. Finding the owner of a vacant house can be difficult, which is why the persistent people who find the information make the most money. The name of the owner can be found by calling your local tax assessor's office or by looking up the deed recorded with the County land records.
If you want to contact the owner, it takes a little more digging. Try speaking with the neighbors or asking the post office for a copy of a change-of-address form on file for the property. Online services, such as www.infousa.com, will search public databases, such as the Driver's License Bureau and the Department of Motor Vehicles.
Some cities, towns and counties will "tag" a house with code violations. This is often a sign of a neglected or vacant property. Ask your city if you can obtain a list of such properties or find where this information is publicly recorded.
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You'll NEVER get HUGE discounts on foreclosures - Until You Know How to Ask
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7 Secrets Every Investor Must Know Before Making a Short Sale Offer!
INSIDER SECRET #1: Just order the package already!
A common mistake with new and experienced investors alike is to ask the lender IF they will accept a short sale on a property. When you make contact with the short sale department for the first time, all you need to do is order the package. And when you order it you should ask them to FAX it to you. Don't ask them to mail it to you, as you can't afford any delays.
INSIDER SECRET #2 - Information Overload
Every short sale pro knows that you should always give the bank more information in the short sale package than they ask for. The more information you give them, the faster the lender will be able to give you an answer.
Even if the lender doesn't ask for these items, the successful foreclosure investor knows to include (among other things):
- Paycheck stubs, tax returns, and recent bank account statements (if they support your case)
- A handwritten hardship letter
- A Purchase and Sales agreement with few (or no) contingencies
- An estimated net sheet / HUD-1 (could this be a shameless plug for EasyHUD.com?)
The estimated net sheet (HUD-1) that you will submit is one of the first things that the lender will pull from the package. They will begin looking for instantly recognizable RED FLAGS. Do you know how to make your HUD-1 "Short Sale ready"? Get your HUDs RIGHT NOW by going to www.EasyHUD.com!
INSIDER SECRET #3 - On your mark, get set, GO!
As soon as you get your short sale package, get it completed and back to the lender within 24 hours. Don't forget to include the items we discussed in the Insider's Secret # 2.
Remember that you are working with a very tight timeline and the sooner you get the package in the lender's hands, the sooner they can start reviewing your offer.In some states you may only have 21 days from the time the bank starts the foreclosure until the house is sold at auction! Once the lender starts reviewing your package, the pressure gets turned up! You are about to start the negotiating process, which is where the REAL money is made.
Insider Secret #4 : What's your number?
Unless foreclosure filings slow down soon (which ain't happening!), you may have a difficult time actually getting the lender on the phone.
When you do make contact with the loss mitigation specialist who will be handling your offer, make sure you get the following information:
- The Loss Mitigation specialist's direct extension,
- Their email address (always try and get their personal email address as a backup)
- Their fax number, and whether or not you should include a cover sheet each time you transmit
- Their mailing address in case you need to send pictures, a Thank You note (hint, hint), or other documents.
So now, when your voicemails don't get returned, you will be ready to start your communication blitz and increase your chances of making contact.
Insider Secret #5 : How low can you go?
When making your offers, a rule of thumb I have used with great success is to offer 50% of the writ amount on first mortgages and 10% of the second. If you are lucky enough to have a third mortgage to discount, they can kiss their hopes of getting more than 1% - 10% goodbye!
Don't be afraid that these offers are too low because all the bank can do is tell you to raise your offer. They won't laugh at your offer or hang up on you, so don't worry.
When you decide to get serious about the business of foreclosure investing, you will need to access to the same tools that the "gurus" use. You will need www.EasyHUD.com!
Insider Secret #6 : The squeaky wheel gets the grease.
Now that the lender has your package and you know how to track them down you MUST follow up, follow up, FOLLOW UP! It will show the bank you are serious, and you will know about any potential snags with your deal as soon as they pop up. If you wait on the lender to take the initiative to call you, you may be in for a long wait. With all of the files the banks have in their short sale departments, they actually appreciate your diligence.
One more Insider Secret to go! We at EasyHUD.com have a FREE forum for foreclosure investors. This forum is moderated by our most successful members, and problems are solved daily over here!
Insider Secret #7 : What do you mean "NO"?
Although most lenders nowadays are giving discounts, just because you ask for it doesn't guarantee you will get it. That is why you should always have at least a couple of deals cooking just in case.
Nothing is worse than getting all excited about a huge discount that never happens.
The better you get at handling simultaneous deals, the sooner you will start carving out your slice of the big money being made on Short Sales.
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