Real Estate Investing - Short Sale - Real Estate Foreclosures
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Bill & Dwan Twyford are professional real estate investment coaches and members . With over 1,800 real estate transactions under their belts, they have created a duplicatable system to help you find the same success. Their goal is to educate you on everything related to real estate investing from short sale invesments to real estate forclosures. You will get in action and making money! Their home study courses, proven methods, internet training program, and live classes not only teach you how to become a multi-mullionaire real estate investor... they also hold you accountable for your progression along the way.
Real Estate Investing - Short Sale - Real Estate Foreclosures
Bill & Dwan Twyford are professional real estate investment coaches and members . With over 1,800 real estate transactions under their belts, they have created a duplicatable system to help you find the same success. Their goal is to educate you on everything related to real estate investing from short sale invesments to real estate forclosures. You will get in action and making money! Their home study courses, proven methods, internet training program, and live classes not only teach you how to become a multi-mullionaire real estate investor... they also hold you accountable for your progression along the way.
Real Estate Investing - Short Sale - Real Estate Foreclosures
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Real Estate Investing
Understanding Why Homeowners Want To Work With You
You have submitted your first offer. Do you have any idea why a homeowner wants to work with you? Take a moment to think about it as your move forward with your deal.
Word of mouth goes a long way when trying to build your business. If you create win/win solutions, you will certainly be the person that is referred to friends, family and even strangers as deals arise. It takes understanding the mind-set of the homeowner, good ethical practice, and willingness to go above and beyond for the homeowner. Many investors have given this business a bad reputation due to their "unethical" practices. Don't become one of those investors! It feels good to know that you made a difference in the homeowner's life, and have given them a chance that they may not have otherwise had.
Understanding what motivates sellers will help you determine your process for meeting their need(s). You cannot convince someone to be motivated. First, you have to find out what their motivation is for selling their property and what they want out of the deal. We teach our students to ask, "What are you seeking as a result of my help?" If the homeowners need money, or a car, or want to move closer to their relatives...they will tell you. They may simply need help repairing their credit. Listening to your homeowners will not only show them that you care, but it will help you understand their motivation behind their situation.
Homeowners in distress need real help from someone who is not there to take advantage of them. If you sincerely help people while you are doing this business, you will find that good comes back to you ten-fold.
Word of mouth goes a long way when trying to build your business. If you create win/win solutions, you will certainly be the person that is referred to friends, family and even strangers as deals arise. It takes understanding the mind-set of the homeowner, good ethical practice, and willingness to go above and beyond for the homeowner. Many investors have given this business a bad reputation due to their "unethical" practices. Don't become one of those investors! It feels good to know that you made a difference in the homeowner's life, and have given them a chance that they may not have otherwise had.
Understanding what motivates sellers will help you determine your process for meeting their need(s). You cannot convince someone to be motivated. First, you have to find out what their motivation is for selling their property and what they want out of the deal. We teach our students to ask, "What are you seeking as a result of my help?" If the homeowners need money, or a car, or want to move closer to their relatives...they will tell you. They may simply need help repairing their credit. Listening to your homeowners will not only show them that you care, but it will help you understand their motivation behind their situation.
Homeowners in distress need real help from someone who is not there to take advantage of them. If you sincerely help people while you are doing this business, you will find that good comes back to you ten-fold.
When Lending Guidelines Loosened - The Beginning of Our Current Problems
As the 2000's progressed and property values skyrocketed, many banks loosened their lending guidelines to boost the economy. Banks began to allow 50 percent to 60 percent of your income to be used toward a mortgage payment. Most banks offer an 80 percent first mortgage and a 20 percent second mortgage to total what you are borrowing.
For example, if you are borrowing $200,000, you might get $160,000 on a first mortgage and $40,000 on a second mortgage to total $200,000. By borrowing 80 percent on a first mortgage, the banks lessen their risk if you were to default. The riskiest part of a loan is the top 20 percent. If the bank takes the house at the foreclosure sale, it might lose the 20 percent second mortgage, but would recoup the 80 percent first mortgage by selling the house at the sale or by selling the house later via a real estate agent.
Typically, when you have a first mortgage and a second mortgage, the interest rates are different:
- The first mortgage offers lower interest rates, typically has less closing costs, and is a 30-year loan. Based on good credit, you might pay a 6 ½ percent interest rate and pay two points. A "point" is one percent of what you borrow. On a $100,000 house with one point, you would pay $1,000 toward closing costs.
- A second mortgage usually has higher interest rates, more closing costs, more points, and is a ten-year loan. You might pay nine percent interest and have four points at the closing. If the banks give enough second mortgages, they make a lot in points and interest, and it offsets the mortgages they lose in foreclosure.
Types of Creative Loans - Heloc Loans
Homeowners love HELOC loans - Home Equity Line Of Credit - because you only pay interest on what you borrow. For example - say you originally bought your property for $125,000. Over the years it has gone up in value - it's now worth $200,000. Instead of refinancing your property for the $200,000 it is now worth, you take a HELOC loan. You get approved for $75,000. Along with the $125,000 on the first mortgage, you also have $75,000 line of credit.
The great thing about a HELOC is that you only pay interest as you use the money. If you use $10,000 of the $75,000 that you are approved for, you only pay interest and payments on the $10,000 you are using. The bad thing is that people often have a hard time controlling a credit line like that. They use the money to pay off credit cards or buy things and then run the credit cards up again and get back into debt. If you used your line of credit to pay credit cards off, now you owe credit cards and your credit line is used up.
Many would-be investors use HELOC's to buy rentals. I suggest that you never use your primary residence as collateral to buy investment properties. If things go wrong, you don't want to lose your place of residence.
It is very easy to get into financial trouble with a loan like this. They are easy to get, payments can be low, and it is tempting to buy stuff with the money. You think, "I'll just buy this one thing and then I'll pay it off." Next thing you know, you're buying a second thing and the first one isn't paid off. It doesn't take long to get out of control.
As the debt builds, you decide to refinance your house to pay off the HELOC. The banks are offering an attractive, low monthly, interest-only loan. Property values drop and now you owe more than your house it worth and - boom - you are in financial trouble.
The great thing about a HELOC is that you only pay interest as you use the money. If you use $10,000 of the $75,000 that you are approved for, you only pay interest and payments on the $10,000 you are using. The bad thing is that people often have a hard time controlling a credit line like that. They use the money to pay off credit cards or buy things and then run the credit cards up again and get back into debt. If you used your line of credit to pay credit cards off, now you owe credit cards and your credit line is used up.
Many would-be investors use HELOC's to buy rentals. I suggest that you never use your primary residence as collateral to buy investment properties. If things go wrong, you don't want to lose your place of residence.
It is very easy to get into financial trouble with a loan like this. They are easy to get, payments can be low, and it is tempting to buy stuff with the money. You think, "I'll just buy this one thing and then I'll pay it off." Next thing you know, you're buying a second thing and the first one isn't paid off. It doesn't take long to get out of control.
As the debt builds, you decide to refinance your house to pay off the HELOC. The banks are offering an attractive, low monthly, interest-only loan. Property values drop and now you owe more than your house it worth and - boom - you are in financial trouble.
Types of Creative Loans - Liar Loans
These loans are killer. They allow a homeowner or an investor to buy a house based on stated income. Investors went nuts over these loans.
Typically, homeowners as well as investors have to prove their income in order to purchase a property. The more you make, the bigger the house you can afford or the more rentals you can buy. Liar loans allow you to buy a property based on what you "state" that you earn. As long as you had good credit, the banks were not asking for much else. I used to make jokes that as long as you could fog a mirror, you could get a loan. Unfortunately, you need to do more than fog a mirror to own a home, but the banks made it so easy.
You might make $50,000 a year and qualify for a $100,000 property. By stating that you earn $100,000 a year and with an interest-only loan, you can buy a $200,000 property. The problem is that you really qualify for a $100,000 property and based on the reality of things, that is what you can afford. Again, you have an emergency and next thing you know, you're using your mortgage payment money to pay for things. The term "liar loans" is a bit harsh, but it states exactly what it is - people lied to get a bigger house or to buy more rentals.
Typically, homeowners as well as investors have to prove their income in order to purchase a property. The more you make, the bigger the house you can afford or the more rentals you can buy. Liar loans allow you to buy a property based on what you "state" that you earn. As long as you had good credit, the banks were not asking for much else. I used to make jokes that as long as you could fog a mirror, you could get a loan. Unfortunately, you need to do more than fog a mirror to own a home, but the banks made it so easy.
You might make $50,000 a year and qualify for a $100,000 property. By stating that you earn $100,000 a year and with an interest-only loan, you can buy a $200,000 property. The problem is that you really qualify for a $100,000 property and based on the reality of things, that is what you can afford. Again, you have an emergency and next thing you know, you're using your mortgage payment money to pay for things. The term "liar loans" is a bit harsh, but it states exactly what it is - people lied to get a bigger house or to buy more rentals.
Short Sale
Types of Creative Loans - Interest Only Loans
These loans were among the most popular. With a typical payment, you pay principle, interest, taxes, and insurance. The bank takes your full monthly payment and uses the money to pay for the various items. The bank keeps the interest and principle portion of the payment and saves the balance to pay the property taxes and the homeowners insurance when they come due.
These loans were extremely popular with investors because they figured property values would continue to climb and they could collect rent for a few years and then sell the properties for a quick profit. Many investors made the smallest payment possible to get as much cash flow as they could. This is called "pick a payment."
Unfortunately, it didn't work out very well. Property values fell, the mortgage payments reset to a higher amount, rent didn't cover the new payment, investors home mortgage payments also reset, gas prices went up, people moved into cheaper rentals, properties became vacant, and investors started losing their shirts across the country.
The biggest problem with interest-only loans is that people borrow based on the payment. If $725 is the most you can afford, you don't buy a house with an interest-only payment of $725. You buy a house with a PITI payment of $725. I feel that the lending industry used extremely poor judgment giving loans that people could barely afford with the low interest payment knowing the payment was going to reset soon. Since most of us think in the "here and now", people weren't prepared when their payments started rising.
Like investors, many homeowners figured they would refinance their houses when the new payment came due because property values were rising. Unfortunately, property values dropped and people found themselves owing what their house was worth and unable to refinance. The fact that no one could refinance caused a recession. Most of the initial interest-only loans were given with a two, three, five or seven year fixed rates. This is why foreclosures are going to continue to rise - the three, five and seven year loans haven't reset yet.
These loans were extremely popular with investors because they figured property values would continue to climb and they could collect rent for a few years and then sell the properties for a quick profit. Many investors made the smallest payment possible to get as much cash flow as they could. This is called "pick a payment."
Unfortunately, it didn't work out very well. Property values fell, the mortgage payments reset to a higher amount, rent didn't cover the new payment, investors home mortgage payments also reset, gas prices went up, people moved into cheaper rentals, properties became vacant, and investors started losing their shirts across the country.
The biggest problem with interest-only loans is that people borrow based on the payment. If $725 is the most you can afford, you don't buy a house with an interest-only payment of $725. You buy a house with a PITI payment of $725. I feel that the lending industry used extremely poor judgment giving loans that people could barely afford with the low interest payment knowing the payment was going to reset soon. Since most of us think in the "here and now", people weren't prepared when their payments started rising.
Like investors, many homeowners figured they would refinance their houses when the new payment came due because property values were rising. Unfortunately, property values dropped and people found themselves owing what their house was worth and unable to refinance. The fact that no one could refinance caused a recession. Most of the initial interest-only loans were given with a two, three, five or seven year fixed rates. This is why foreclosures are going to continue to rise - the three, five and seven year loans haven't reset yet.
Easy Money Home Loans
In the mid 2000's, the mortgage industry came up with what seemed like a good ideal at the time - easy loans to boost the economy. These loans were designed to give as many people as possible the chance to live the American dream - property ownership. People are often so focused on owning a home that they are willing to stretch themselves just to do it. This is where is all started to go downhill. Too many people went out on a limb. These creative loans did just what they were supposed to do - boosted the economy. The problem is that no one really thought it all the way through.It also became very easy to buy investment properties. So many people jumped on the bandwagon and invested in more property that they could actually afford. Many investors went to several different banks at the same time and borrowed from more than one just to buy multiple properties. Without landlord experience, owning multiple properties can be a recipe for disaster.
How Did so Many of Us End Up With Underwater Houses?
If you are like many homeowners today, you feel overwhelmed by what is supposed to be the American dream - home ownership. We have this vision of what it is supposed to be like - cute house, white picket fence, a couple of kids, a dog in the back yard, summer barbeques, family time, and so much more.
We find a house and fall in love with it. We then find a mortgage broker who offers us an amazing deal - zero down or a low down payment or low fixed payments for two-years or something along those lines. We buy the house, move in, and all is right with the world.
Soon, our two-year low monthly payment resets, the payment raises, then it resets again and the payment continues to rise. Now the stress of making our mortgage payment is all we think about and we become disillusioned with our American dream -
The dream continues to crumble when you try to sell your house to get free of the payments only to find that property values have dropped nationwide and you now owe more than your house is worth. Sadly, there are hundreds of thousands of houses on the market that aren't selling because folks, just like you, owe more than their house is worth.
If you have the time and money, you can wait out the market and sell your property when values come back up. If you are like most American's, you don't have the time to wait it out. You want to be relieved of the stress today.
Many of us might be another type of homeowner - real estate investors disillusioned by the dream of getting rich buying and selling real estate. There are so many late-night television shows that make real estate investing seem like a breeze. You bought a property hoping to make some money on it, and now it's costing you more than you can afford-every month.
The good news is that there are many solutions available that most people don't know exist. Did you know that you can negotiate with your bank to accept less than you currently owe as full payment? Are you aware that there are government programs that will allow you to rent out your house for three times the current market rents? No matter where you are in your property situation - there is a solution for you.
We find a house and fall in love with it. We then find a mortgage broker who offers us an amazing deal - zero down or a low down payment or low fixed payments for two-years or something along those lines. We buy the house, move in, and all is right with the world.
Soon, our two-year low monthly payment resets, the payment raises, then it resets again and the payment continues to rise. Now the stress of making our mortgage payment is all we think about and we become disillusioned with our American dream -
The dream continues to crumble when you try to sell your house to get free of the payments only to find that property values have dropped nationwide and you now owe more than your house is worth. Sadly, there are hundreds of thousands of houses on the market that aren't selling because folks, just like you, owe more than their house is worth.
If you have the time and money, you can wait out the market and sell your property when values come back up. If you are like most American's, you don't have the time to wait it out. You want to be relieved of the stress today.
Many of us might be another type of homeowner - real estate investors disillusioned by the dream of getting rich buying and selling real estate. There are so many late-night television shows that make real estate investing seem like a breeze. You bought a property hoping to make some money on it, and now it's costing you more than you can afford-every month.
The good news is that there are many solutions available that most people don't know exist. Did you know that you can negotiate with your bank to accept less than you currently owe as full payment? Are you aware that there are government programs that will allow you to rent out your house for three times the current market rents? No matter where you are in your property situation - there is a solution for you.
Real Estate Investing Marketing Tips
As you begin your career in the awesome, and lucrative, world of real estate investing it is extremely important that you understand the benefits of multiple types of marketing strategies. There is no one definite and "foolproof" system of marketing for anything that is being sold, including real estate investing, so it is important that you understand how several different cost effective strategies can help you. The following are some of the more tried and true methods with a little description of each; they could save you a bundle and make you even more!* "Bandit" Signs: These are the annoying little signs that are posted around the traffic lights at high traffic intersections, you know, the ones you remember the number for an hour later when you are trying to remember an important number. Think of all of the genius ideas you have while you are driving; now imagine that in that same mode of thinking you solve something that has been bothering you for days! The benefit of the bandit signs!
* Flyers: You've been to the Laundromat or local grocery store that has a bulletin board, leave your name and number and have them get back to you! Fax these flyers to local financial institutions, mortgage brokers, real estate agents and the like so that they know you are out there. The cost here is practically nothing, just print the paper and fax it out all over the area.
* Convenience Items: When was the last time you went to the bank, borrowed a pen and saw a business name on it? Recently, right? Pass out enough pens, notepads, and key chains and your name will continue to get the feeling of being "the" name in the game, just get it out there as much as possible!
* Classifieds: The classified advertisement section in your local newspaper is a great source of leads due to its feeling of being a board for the "ordinary guy" because there are supposedly no businesses there. Put a simple note about you buying houses and leave a phone number, this can be tremendously helpful and productive. Never underestimate the power of the classified advertisement; it will never let you down.
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- mcgummer mcgummer Oct 22, 2008 @ 1:54 pm
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- ShortSaleRealtor ShortSaleRealtor Oct 17, 2008 @ 7:11 pm
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