Top Real Estate Articles

Seller Financing Creates Solutions

Oct 4, 2009 Real Estate

Seller financing can be a great way to get a house sold without slashing the price. By recognizing the millions of people who can’t get traditional financing as potential buyers, resourceful property sellers (and their real estate agents) can minimize their time investment in getting a property sold. Even better, sellers who offer financing can usually get a higher asking price for their property, even in the slowest markets. Clearly this is a win-win situation.

There are many sellers that do not even consider the idea of seller financing because they are not familiar with how it works or they simply have not heard of it before. The seller of a property can benefit from providing their own financing in three distinct ways. These benefits are more buyers, more money, and long term profit. Following is a closer look at these benefits.

Benefit #1 is MORE BUYERS. In a slow economy like the one we are in now, it is very difficult for buyers to get qualified through conventional financing. The market is full of similar type of houses that sit on the market. When a seller willingly advertises , “Owner Will Carry” or OWC, more buyers will automatically be attracted to your house. This gives buyers a better opportunity to qualify to by your house, while not counting strictly on the bank to provide financing.

Properties sell for a higher asking price when the seller offers a carry back or a note to the buyer. Buyers are often aware that the only way they will be able to acquire the property is from seller financing because often times they have already been turned down by the bank. The buyer is face with buying the house at a higher price or not buying the house at all. For this reason the seller’s second advantage is more money.

The seller acts just like the bank when offering seller financing or carrying a note for the buyer. The buyer is making interest payments each month which over time can accumulate to hundreds or thousands of dollars to the seller. The longer that the buyer makes payments the more interest payments the seller with accumulate over time. The third advantage to seller financing is long term profits. Seller financing creates a great opportunity for the buyer to get a house while providing great advantages to the seller.

Tags: cash for notes, cash payment, financing, Loan Payments, Note Buyer, note payments, note seller, Owner Financing, Property Buyer, property seller, Real Estate, Real Estate Notes, real estate purchase, Seller Financing

No Money Real Estate Investing - Part Two

Aug 24, 2009 Real Estate

When people ask me how to find money for their real estate deals, they often aren’t happy with my answer. Looking for easy solutions that don’t require any work or sacrifice on their part, many people turn away disappointed from my advice.

So when people ask me:

- “Should I approach other investors for partnering when I have no money for startup? I feel like I will be swallowed by sharks, even though they all seem nice enough. I have seen several potential properties and I need to make the big leap to action.”

- “I hear a lot about using credit cards, home equity line or owner financing for a down payment on a new investment property. What is a realistic time line to see a positive return on investment (ROI) to reimburse funds?”

- “How can I do deals like Robert Allen - no money down, cash back on closing?”

My best advice for someone who wants to get started in real estate investing is to track income and expenses every month- the goal is to see whether you are spending more or less than what you make. Once you’ve figured that out, you should adjust your lifestyle so that you are spending less than you make and any excess money should be used to pay down your debt and start saving money for your first real estate purchase.

The one piece of advice I give universally is that you should NOT use your credit card to finance your real estate investment - EVER. No matter what the end game is, there is far too much risk involved with that.

What if something goes wrong with your investment and you end up paying 18% interest on that $5,000, $10,000 or $20,000 you borrowed from your credit card for years to come? Do you want me to do the math on that?

Some people turn to the equity in their homes. This can be good or bad depending on your situation. For example, if you’re about ready to retire or are over 65, then this could be a bad idea. On the other hand, if your home has about $200,000 worth of equity and you’re younger than 50, it could be an excellent choice- as long as you think you can handle the extra payments if something were to go wrong with your investment.

On a good deal, your rental income should pay for the monthly payment increase that the additional $50,000 that the home equity loan will cost you, along with all of the other expenses on the rental property. In this case, I think that it’s a great source of money to use for a down payment on your first property.

Owner financing (or vendor take back financing) is one of my favorite methods to use when buying property. It’s a win-win situation- you win because you can proceed with the purchase and the owner wins because he/she gets a loan payment from you every month and the loan is secured against the house. However, if a bank will only finance 75% of the purchase and you have no down payment, owner financing is not what you should use to finance the rest.

Take it from us, however- buying properties with no money down does not mean it won’t cost you in other ways! We’ve learned from experience.

No money down investing is much riskier than making a down payment without using your own money.

What makes no money down so risky? Well, for starters, you would have to borrow 100% of the value of the property. That means if property values drop, even by as little as 5%, you’ll owe more money than it’s worth. And you probably won’t be able to afford it, which will result in foreclosure. This sort of thing has been happening frequently in North America lately.

It is very hard to find a property that will make you money if you’ve purchased it using 100% financing. On top of the purchase price of the house, you’ll also need to come up with 2-3% of the purchase price to pay for a lawyer, property inspector, taxes and things like that.

Therefore, the risk to no money down deals is very high because you would have no equity in the property and would not be making much income from the property due to the high monthly payments. If you’ve found the perfect property to invest in but have no money for a down payment, then there are some things you should try:

1. Start controlling your destiny by controlling your money. Get out of debt and start saving. You don’t necessarily need a lot of money, but no one will want to partner with a person who can’t handle their own finances.

2. Evaluate the equity of the home that you already own. If you’re still several years away from retirement and your home has equity, then consider using a small part of that equity (about 25%) to finance the purchase of your first investment property.

3. If you rent or don’t have any home equity, then you need to do some research to find a great property that could be purchased with as little as 10% down. In this case, a great property is defined as one where the rent will pay for the expenses of the property. Once you find it, you need to get a partner with money to invest and no time to do research of his own. This requires you to sell yourself as well as the property.

Trust us, between the two of ‘no money down’ and finding a partner, finding a partner is a much better way to purchase a property. We’ve done deals with no money down, and they’ve always ended in disaster. But on those occasions when we’ve found a good partner, those deals have all been huge successes. When you have a partner, they bring money for the down payment to the table; and what you bring to the table is the research and the promise to do the work involved with overseeing the property. Working with a partner enables you to buy good properties in good neighborhoods instead of wrecks in bad neighborhoods. This also gives you equity right from the beginning and lowers mortgage payments. When the property needs repair and the rental income won’t cover it, costs of the repair are divided with the partner 50-50. Ownership between us and the partner is also 50-50.

When the investment property is sold, the split goes this way; the partner gets back the down payment before anything else. Then the remaining profits are split 50-50. Reduced equity for us is worth the reduced risk.

Tags: buying rental property, INVESTING, money-making, Negotiation, Owner Financing, personal finance, property management, Real Estate, real estate investing, vendor take back, wealth

How To Get The Money

Jun 30, 2009 Real Estate Properties

What does the Investor Do with the money? Q: If an investor gets a private money loan, how does he use it and is it safe? A: Like in any business professional Real estate investors have a need to finance new real estate purchases, get money to repair, maintain and lease up their properties. It also can be used to cover other costs associated with purchasing or selling homes. For properties which the investor already owns and manages, there are occasions when an investor may have the need to change equity into liquidity - cash without having to sell the property. This cash can be used to buy another house, fund operations pay off other real estate loans that come due or deal with unexpected cash needs.

Why private money? Q: Why don’t you borrow from banks? A: The problem Banks and other lenders present is that they require detailed applications, bureaucratic approval processes and they must follow guidelines imposed on the banking industry. Then there are self imposed (and FHA imposed) limits to the number of loans they are willing to make to any one company or investor at the same time (currently 10 per investor). On top of that, the duration of their approval process is never certain and can take weeks or months. As Investors following the High Equity Deal Program generated by Richard Roop for example, we can move much quicker without these limitations by using private funding sources like private lenders. That allows us as investors to negotiate deals faster and more profitable while offering sellers a fast and easy sale without the red tape from banks .

Why are the returns so attractive! Q: How can the investor be able to pay double or triple CD rates? A: Investors make profits by providing services to the different parties involved in a real estate transaction, sellers, buyers, renters and private lenders we work with. They cut out the middlemen, and therefore avoid the costs normally associated with real estate commissions, property management fees, mortgage broker fees, loan application fees. Investors are also knowledgeable in how to get full value (appraised value) from buyers without having to make price concessions. They can get a house filled up (sold or rented) fast and avoid large holding costs and they know how to repair and keep properties in good condition for less money then most people pay. They always make purchase offers such so that all parties including buyers and sellers get a great deal. At the same time they realize a minimum profit of $20,000 or $30,000 between the time the house is bought and sold down the road. They just wont buy a home until and unless it makes economic sense for all parties involved.

Help for buyers and Sellers Q: How do you help Owners/seller? A: A lot of sellers today are facing problems finding a buyer when they decide to sell their house. And there are typically a lot of inconveniences and problems a seller must face and get through in order to get their home sold. Using a long-term investing vision, like it is promoted by Richard Roop, we can offer these frustrated and motivated sellers an attractive selling price, we can close the transaction or take possession of the home whenever the sellers want us to and give them an opportunity to avoid all the issues of selling a home.

Q: How do investors like Richard Roop help buyers? A: Investors in High Equity Properties like Richard Roop, offer several programs and opportunities for buyers. This includes offering seller (owner) financing, a down payment assistance program and a program where the buyer can build up sweat equity over time. Buyers today have more and more problems qualify for loans than ever. The Investors programs help buyers get into the house they want quickly allowing them to start building wealth for the future and helping them avoid wasting their money on rent.

Q: How do you assist renters? A: Renters in today’s world face tougher and tougher application requirements by landlords and property managers. We as Richard Roop style investors have positioned ourselves to be flexible and creative in getting reliable folks into our houses at reasonable prices, thereby providing a much needed service. Contrary to others we can even lease to people who recently had a foreclosure or a bankruptcy.

Tags: "mortgage, business, finance, free and clear, INVESTING, Owner Financing, Real Estate, real estate funding, real estate investing, Real Estate Properties, Rental Houses, richard roop, Seller Financing

How to Create a Cash Flow Machine ” Part 1

Jun 24, 2009 Real Estate Properties

We all have heard about and are living through the biggest Downturn in US Real Estate Values since the 1930s. This has created a lot of challenges for Real Estate Investors but it also has create some incredible opportunities if you’re willing to make a few adjustment in the type of Real Estate Deals you pursue.

The majority of investors are stuck in their ways of doing business that worked last year, but today the world is different.

The key today is to look for Proven methods for collecting big checks as a Real Estate Entrepreneur while looking at the tighter financial markets which make getting loans for YOU as well as for the people you SELL to more difficult.

And one of the ways you can successfully leverage this exact scenario of a Market Flooded with Properties, Very little Credit is investing in “Free & Clear” Properties with “Owner Financing”

Free & Clear Owner Financing One of the easiest and safest ways to create a quick and profitable Real Estate business throwing off enough cash each month for you and your family to have some options in life is to target and buy free and clear houses… or properties with lots of equity. I call this “The Ultimate Strategy” for buying and selling real estate because:

- It works on Real Estate in any price range including low end, rental markets, bread butter homes, executive homes and even high end luxury homes

- It works in any market condition including slow markets, normal markets, hot markets, post-hot markets, uncertain markets and especially in today’s ’skittish’ market climate.

- It works in any market climate including slow markets, normal markets, hot markets, post-hot markets, uncertain markets and especially in today’s ’skittish’ market climate.

By targeting free and clear houses you can structure offers with owner financing that allow you to collect extra cash on the day you buy, reliable cash flow each month and huge backend paydays for cash later.

Do you think this sounds too good to be true?

Sound too good to be true?

You’ll never try it unless you believe it work for you. Register right Below HERE and learn exactly how many people have done this and how you can also do this.

Here’s some proof to get you excited…

- How Mark from Virginia netted an extra $10,000 in cash at closing buying a $165,000 house with no money down, creating 0% financing with the seller for 7 years at $400 a month.

- How Mike from Washington collected an extra $25,000 in cash at closing when he bought a $120,000 house no money down, creating 0% seller financing at $500 a month for 8 1/2 years.

- How Denise and Mark from California bought a newly remodeled $400,000 house which can rent at $1,800 for just $290,000 with no money down, creating 0% financing with the seller at $800 a month for 10 years.

- How Brenda from Ohio netted an extra $10,000 in cash at closing when she bought a $180,000 house with no money down, getting 0% seller financing for 6 years at $360 a month.

- How Marc from Minnesota buys a free and clear house each month and how he recently collected $50,000 in extra cash buying a $240,000 house for $212,000 with 6 years of 0% seller financing at $1,000 a month.

- How Rob from Oregon created $15,000 in extra cash and a positive cash flow of $1,200 a month buying two houses in just a few minutes with no money down funded with owner financing requiring no interest and no payments for 6 years.

The bottom line… Regardless of what investing models you’re using today, you’ll enjoy more consistent success and be able to generate more immediate cash profits by targeting houses with more and more equity.

Tags: "mortgage, b, business, business;finance, f, finance, free and clear, home based business, i, INVESTING, m, Owner Financing, r, Real Estate, real estate funding, real estate investing, Real Estate Properties, real;estate, Rental Houses, richard roop, Seller Financing

Austin, TX Owner Financed Homes: What You Should Know

Feb 19, 2009 Real Estate Properties

If you want to purchase your own home but do not have the deposit or meet other criteria to obtain a mortgage from a traditional lender, an owner-financed home in Austin may be a solution to your dilemma. Rather than continuing to pay rent to a landlord who benefits from property ownership, you can build wealth yourself. Every home payment you make brings you one step closer to owning your own home outright.

Owner financed properties in Austin, TX can allow you to borrow the sales price of the home from the lender in full or in part. This means that if you only need to cover the deposit in order to qualify for a traditional mortgage, the owner will finance that portion of the asking price. However, if you require a hundred percent owner financing from the owner this can also be organized depending on the terms offered.

If you are seeking your home through real estate advertisements, you may not have seen Austin area owner financed home opportunities advertised. This doesnt mean that they are not there. If an owner has had a property on the market for some time and does not want to reduce the price in order to make a sale, he or she may be willing to consider owner financing. Obviously, they would have to have the financial capacity to do this but you wont know if you dont ask.

There are also sites on the Internet that specialize in owner finance homes in the Austin, TX market. Do be aware that even though you won’t need to meet the stringent standards of a conventional home loan, you will need to prove your creditworthiness and ability to pay before most sellers will consider owner financing. Also, you can expect your house payments with an owner financed home to be higher than what you would pay with a traditional lender, but if you have the ability to make these payments, owner finance homes can be a means to an end if you can’t get any other kind of financing. After you’ve built a solid payment history, you can always refinance with a traditional lender later on for a lower interest rate.

Before you decide to buy an Austin area owner financed home, make sure to hire an attorney to review the purchase and sale agreement. You need to clearly understand the terms of the loan and any associated risks of buying owner finance homes. Make sure there are no steep pre-payment penalties for early payoff ” you’ll want to be able to pay off the loan should you choose to refinance later on. You’ll also need to be very clear about your rights and responsibilities under the contract.

The benefit of owner financing for sellers is the ability to sell a home at full price quickly. But, buyers should be cognizant of the fact that sellers are not doing you a favor. Buyers must make sure to obtain a formal inspection of the property, survey property boundaries, and otherwise review all of the details about the property and the purchase contract.

In some cases, overeager buyers are quick to jump the gun and enter into an owner finance contract without really thinking it through. Make sure you’re not buying someone else’s problem home or being taken advantage of with a predatory lending contract. Doing your due diligence is important ” resist the temptation to jump in with both feet without good research and planning.

If approached wisely, owner financed home in Austin, TX can provide the way to your own home when other avenues are not available. If you approach owner financed home ownership with a long-term plan in mind, you will be able to move to a traditional mortgage in the future if it offers a better deal.

Tags: "mortgage, Austin, credit, down payment, financing, home loan, mortgage note, owner finance, Owner Financing, Real Estate, Real Estate Properties

Owner Financed Homes: What You Should Know

Feb 18, 2009 Real Estate Properties

If you’re looking to buy a home of your own but don’t have adequate funds for a deposit or meet other criteria for a traditional mortgage, an owner financed home could provide an alternate path to homeownership. If you are paying rent every month, you’re not earning any return on that money - you are helping your landlord build equity in his property. Instead, you should build your own wealth through homeownership. When you own your home, every payment is an investment in a home that you will someday own outright.

Owner financed properties can allow you to borrow the sales price of the home from the lender in full or in part. This means that if you only need to cover the deposit in order to qualify for a traditional mortgage, the owner will finance that portion of the asking price. However, if you require a hundred percent owner financing from the owner this can also be organized depending on the terms offered.

If you’ve been searching real estate listings and advertisements, chances are you haven’t come across many owner finance home buying opportunities. This doesn’t mean they don’t exist - you just need to be creative in knowing how to approach a seller with an owner financing proposal. This is more likely to work if a home has been sitting on the market for a while and the seller isn’t willing to lower the price in order to sell. In cases like these, the owner might be willing to consider financing all or part of the sale price - the only way to know is to ask.

There are also websites, which specialize in marketing owner finance homes. You may not have to meet normal lending criteria but you will have to be able to prove your capacity to pay the required monthly payment. These payments are often higher than if you took out a traditional mortgage, however if you are able to make them they can be a means to an end. Once you build a history of payments and create equity in your home, you may be able to refinance with a bank or other traditional lender at a lower interest rate.

One of the most important things to do if you are considering buying an owner finance home is to hire an attorney to go over the contract and any other pertinent paperwork. You need to clearly understand what you are agreeing to, and you will want to make sure there aren’t any stiff pre-payment penalties that would prevent you from refinancing down the road. Understanding your rights and obligations is very important before signing a contract.

Owner financed homes are a popular way for owners to sell their properties at prices they want and do so quickly. However, buyers need to beware that sellers are not doing them a favor. Buyers need to be very careful before agreeing to purchase using seller finance. You should obtain a building inspection report and have the property professionally surveyed.

It is important to proceed carefully, even though you may be eager to seal the deal quickly in your quest for homeownership. Owner financed homes can allow you to become a homeowner, but don’t rush - make sure you aren’t buying a problem home or succumbing to a predatory loan contract. Treat owner finance homes with caution, and make sure you do your research before signing on the dotted line.

With careful planning and research, an owner financed home can create a path to homeownership when other avenues are not available. If you have a long term plan for your success in buying an owner finance home, you can switch to a traditional mortgage later on when circumstances allow.

Tags: "mortgage, bad credit, credit cruch, financing, home loan, housing market, INVESTING, loan terms, owner finance, Owner Financing, Real Estate, real estate investing, Real Estate Investor, Real Estate Properties