Most of the residential loans in the United States today or not owned by big banks. They’re owned by funds. Conservative investors that seek safer investments, in this case real estate-based loans secured by real property, wish to protect and mitigate against downside risk to the portfolio. As most investors see a mortgage fund to be relatively safe, they are usually willing to accept a smaller return on investment.
Buying Notes from a Fund Read More »
In 2007, the housing and mortgage markets crashed hard…very hard. The real estate market began to spiral downward in a self-feeding crash that left many families in the US facing homelessness. In 2010, the Federal Government created the Hardest Hit Fund (HHF) to help families save their homes. Originally, $1.5 billion was allocated to assist families, but available funds have increased to $9.6 billion. This means that note buyers have a tool to not only convert nonperforming loans into more profitable performing loans, but they have the opportunity to help families in need.
When you have been doing something as long as I have, you sometimes think that everyone knows what you know about a particular subject. I have been dealing with real estate lending and collections for nearly 30 years. I speak at national conferences on the subject to an audience that has a background in buying loans and real estate. Sometimes when I speak about purchasing first mortgage loans, a question I often get is “what happened to the bank?”
But What About the Bank? Read More »
Fear is rampant all over the globe over the Covid 19 Virus, commonly known as The Corona Virus. The unprecedented steps that have been taken by not only governments but also the private sector have most feeling angst over the state of the economy. Many are asking about the short and long-term impacts of the Covid 19 Virus response on the real estate sector. Although there are many concerns, there is also tremendous opportunity for homebuyers and investors alike.
The Corona Virus Impact on Real Estate Markets Read More »
Recently, one of our clients entered into a contract to purchase a large property from a seller that was selling by owner. The house was a bit pricey, but it really fit what our client was looking for. He was borrowing money, so an appraisal was ordered on the property. Much to everyone’s surprise, the appraisal indicated that there were 400 less square feet than was disclosed by the seller in the listing.
Square Footage Fallacies Read More »
There are few things in business as thrilling as selling a flipped property for a handsome profit, but what happens when you’ve renovated a property and it simply sits on the market. If you have a hard money loan on the property, you can practically hear the interest ticking up as you pray for someone to buy your flip. This scenario happens…even to the best real estate investors, but what can you do to get out from under the albatross.
When a Flip Doesn’t Sell Read More »
Levers and pulleys have been used in construction since before the ancient Egyptians built the Pyramids. They allow force to be multiplied so that, if enough levers are used, a person can move a large, heavy stone. The ancient Greek mathematician Archimedes famously stated “Give me a lever long enough and a fulcrum on which to place it and I can move the world.” Similarly, borrowing, or using leverage as it’s known in the industry, can help multiply your investment efforts as well as your returns, but it also can have dire consequences to your portfolio if things go wrong.
Archimedes Was Right Read More »
One of the items that buyers remember when they are purchasing a home are the countertops. Putting in a cheap countertop can cost you much more than you save. The old axiom is that kitchens and bathrooms sell a house and what really sells a kitchen or bathroom is a great countertop.
The Countertop Quandary Read More »
Everyone knows that elephants are grey in color. That’s just common sense. If I asked a third grader to color in a picture of an elephant, they are probably going to reach for a grey color, but have you ever seen a white elephant? They would certainly be unusual. They are different and stand out from the crowd. In our society, being different is a good thing…except when it comes to real estate investment. White elephants aren’t something that can be easily valued.
Being told “no” by a bank when you have non-W2 income for less than 2 years is a common story. Unfortunately, banks have to set up a stringent credit policy and adhere to it in order to keep federal and state regulators off of their back. That policy is going to be universal, but there are ways around it.
Cosigners, Co-Makers, and Hypothecation Read More »
A general durable power of attorney is a key part of estate planning. Wills and trusts are usually the first things that come to mind as an individual considers their estate plan or potential estate plan, but the importance of having thorough and detailed power attorney documents cannot be overstated.
What is a General Durable Power of Attorney? Read More »
I never learned to read. Well, it seems that way. As a long time banker, I tend to get right down to the numbers. Whenever a business owner spends a long period of time polishing their prose in a business plan, I must be honest, I skip it and head straight to the financials.
Bankers and Business Plans Read More »
There are two types of people in this world…those that pull into a parking space and ones that back into it. I’ve never understood the need to back into a parking place, but I always back into my offer prices when it comes to real estate investing. I’m often asked how I come up with my offer prices. Well, let me tell you how I do it.
Back into the Parking Space Read More »
In real estate investing, blankets aren’t something that keeps you warm. When an investor owns several properties, a lender might give them one loan and use several or all of their properties as collateral. When the mortgage/deed of trust “blankets” all of the properties, that is known as a “Blanket Mortgage/Deed of Trust.”
What About Blankets? Read More »
Taking out a loan against your primary residence could benefit your tax situation in a couple of ways, but you should talk with your tax advisor. Full disclosure…although my degree was in accounting 30 years ago, I have never practiced as an accountant. Be sure to talk with your tax advisor for what I am about to tell you.
Investing and Taxes Read More »
We often here from members that they are unsure of using hard money and equity lines as a way to finance flips. I was a banker for over 25 years before leaving to do what I am doing now. Back in my banking days, I did many HELOCs for real estate investors. I’ve also worked with many investors that use hard money.
HELOCs and Hard Money Read More »
Finding the right realtor proved to be a challenge for us as well. When Castle Rock first started, I quickly realized that the realtors that we were using simply slapped our listing on the MLS, put a lock box on the house, and showed up at the closing to collect their check. What really got my goat was when I saw that the realtors were making more money on our projects than I was.
What to Expect from a Great Realtor Read More »
Risk is a part of investing. Without risk takers, America would not be where it is today. Real Estate Investing, Loan Investing, and Private Lending are no exceptions to that rule. It’s why the National Institute of Lending and Real Estate exists…to help investors build wealth while mitigating the downside risk to their portfolios as much as possible. Before you start your journey into the world of real estate-based investing, you need to understand that risk and sacrifice are a large part of our business.
Risk and Sacrifice Read More »
An investor asked us about a property that they were bidding on that had been on the market for several months. They made their offer only to be told by the listing agent that there were now multiple offers on the property and they wanted everyone’s highest and best offer by a certain date. The investor questioned whether there truly were multiple offers or not and what course of action they should take.
Multiple Offers and “Highest and Best” Read More »
Not all deeds are the same. When property is transferred, the language in each deed will provide certain warranties from the seller. It’s important to understand the types of deeds that are out there as you might not be getting the protections that you deserve with some deeds. In this article, we are going to discuss three common types of deeds and what they generally cover.
Not All Deeds are Created the Same Read More »
A prequalification letter from a lender isn’t worth the paper that its printed on. I know that sounds harsh, but it’s true. When you list that property for sale and you are trying to determine which offer you should choose, it’s not all about price. Close-ability is also a huge consideration. Can and will the prospective buyer actually sign the closing documents? Will their lender actually approve the deal?
The Prequalification Predicament Read More »
We recently explored several reasons why you should consider investing in notes. It can be a very lucrative place to invest, but investing in notes does have its challenges. These ten things that you must know shouldn’t be enough to keep you from considering buying notes, but you certainly should understand these ten items in order to build a thriving practice.
Ten Challenges to Buying Notes Read More »
When was first asked to speak about purchasing nonperforming loans at a national conference, people couldn’t wrap their heads around the concept of buying the mortgage on a property instead of owning the property itself. I was even laughed at by some of the real estate groups who were certain that I had lost my marbles. Fast forward a few years and no one is laughing now. As a matter of fact, many of the larger real estate funds have turned to note buying to provide them with a strong return.
Why Buy Notes Over Real Estate? Read More »
Question: I need to set up bank accounts for my rental business. I also want to have a separate “reserve” account to put away money for repairs, maintenance and for future purchases. What would you suggest?
Setting Up Your Bank Accounts Read More »
Perhaps the #1 factor that goes into making a profit or taking a loss is controlling your costs. Whether you are purchasing a nonperforming loan or a property to flip, it’s all about the math. Regardless of how well you rehab and present a property, you are still limited by the local market with respect to the amount you can sell the property for. Cost controls are essential for hitting your profit goals.
Mind Your Nickels and Dimes Read More »
