Friday, March 31, 2006

Foreclosure Invstors Meet Donald Trump's Wisdom

Foreclosure Investing and Donald Trump Wisdom

The Donald gets paid 1.5 Millions Dollars to give speaches in front of 50,000 crowd about Foreclousre and Real Estate Investing.

As I had mentioned in one of my earlier blog posts, The Learning Annex has apparently discovered a niche in this sector of the Foreclosure Investor crowd.

Learning Annex stated in one of their press releases "Real Estate in San Francisco is now the drug of choice." I have come to see more and more of this as I scout and look for pre-foreclosed properties. I encounter people from every walk of life... from young college age kids to senior citizens looking for below market homes and foreclosures.

Not only this is better than the stock market (in my humble opinion) if all goes wrong, you can always live in a house!

The success of this expo speaks volume of the hightened interest in Foreclosure Investing in the US and specifically in California. So the sooner you educate yourself, the sooner you'll be in the position to spot a good deal.

My main advise is and will always be, Do NOT rush into a deal and don't allow the hype and excitement of the moment get the better of you. Foreclosure and Real Estate investing is the most profitable business I've ever been involved in, however, it is also one that can be very costly if you don't do your homework.

And in closing, I'll leave you with some words of wisdom from Mr. Trump himself!
"Be paranoid, get even and always, always get a prenuptial agreement"


filed under: foreclosure investing

Foreclosures Increase as Adjustable Mortgages Raise

Foreclosure Rates Increase as Adjustable become fully indexed

One of the dirty little secrets lenders don't like to tell borrowers is that those low adjustables and negative arm mortgages will become fully indexed sooner or later and payments will increase, sometimes substantially!

In fact, here in California, Mortgage Bankers can not allow the principal balance on a mortgage to increase beyond 110% of the original borrowed amount. What this means is that if you have Negative Adjustable (or sometimes referred to as a Deferred Interest Payment) and if the interest rates increase substantially, like they Federal Reserve has been doing, then the bank has no choice but to increase your mortgage payment in order to make sure you don't owe more than 110% of the original loan amount.

So in the real life situation, the "Low Mortgage Payments" you started with have been increased beyond your affordibility level because the Feds raised the rates and the banks had to follow suit.

Fed raised interest rates in order to fend off inflation.
The nasty result of that is the substantial increase in Foreclosures.

According to Foreclosures.com President, Alexis McGee, "In San Diego County 50% of mortgages issued between 2003 and 2005 were either interest only, or so-called option adjustable rate mortgages with start rates as low as 1%. According to Dr. Christopher Cagan of First American Real Estate Solutions, when these loans convert to full amortization, the payment shock could be in excess of 300%. This is bound to lead to financial distress in many, many households."

Lessons to be learned here?
1- Foreclosure markets will be on a sharp increase in the coming months
2- Avoid Negatives arms unless you are a short term investor

filed under: Foreclosure Investing

Wednesday, March 29, 2006

Structure The Foreclosure Sales Leaseback Or you Might End up in Trouble

Structuring of Sales-Leaseback in A Foreclosure Investment

One of the more effective methods I've found when I locate a good deal is to let the seller stay in the house!

Now you might ask, how does this help me?
Well. It is really simple.

Most foreclosure investors want the house now. They want to buy it, fix it up and resell it for profit.

The owner has a dilemma. He has nowhere to move to. His credit is shot and he will have a hard time renting a new house.

Now imagine for a minute the following scenario.
What if...
You buy the house.
Take a very low adjustable rate.
Let the owner live in the house.
He pays the mortgage, taxes and insurance.
His current rent payments will most likely be lower than what he was paying before.
After 12 months, you sell the house and split the profits with the owner.

You have a much better chance of getting a foreclosure house under this structure rather than trying to be like everybody else pounding on the door.

You need to approach people with their interest at heart if you want to succeed in foreclosure invetments.
Trying to "steal" a house while someone is in trouble is unethical and also can land you in trouble if not structured properly.

I strongly suggest to seek the advise and help of a good attorney when structuring a sale-leasback especially if the owner of the pre-foreclosure house is currently in bankruptcy.

Courts are very carefull these days in making sure people are not trying to avoid foreclosure proceedings by structuring "creative financing" deals.

These creative foreclosure sale-leasbacks can have serious ramifications if they are not structured properly.

filed under: foreclosure investment

Monday, March 27, 2006

Questions Every Foreclosure and Real Estate Investor Should Ask

Quesions Every Foreclosure and Real Estate Investor Should Ask

"Real Estate Investor Checklist" by Robert Irwin is a unique book which helps new foreclosure and home investor wade throught the challenges when buying a home.

This is a very interesting format and covers just about everything you want to know before getting into that foreclosure home!

He does a great job of covering locating of the best investment property and also does a wonderful treatment of cutting transactional costs involved in buying and selling.

This is defintely a must read for beginner foreclosure investor.
There are a couple of errors in this book which I am sure will get corrected soon.

My recommendation is to get it, read it and apply it!
Book is available on Amazon.com, your local book store and at the Library (for FREE!)

filed under: foreclosure investing

Questions Every Foreclosure and Real Estate Investor Should Ask

Quesions Every Foreclosure and Real Estate Investor Should Ask

"Real Estate Investor Checklist" by Robert Irwin is a unique book which helps new foreclosure and home investor wade throught the challenges when buying a home.

This is a very interesting format and covers just about everything you want to know before getting into that foreclosure home!

He does a great job of covering locating of the best investment property and also does a wonderful treatment of cutting transactional costs involved in buying and selling.

This is defintely a must read for beginner foreclosure investor.
There are a couple of errors in this book which I am sure will get corrected soon.

My recommendation is to get it, read it and apply it!
Book is available on Amazon.com, your local book store and at the Library (for FREE!)

filed under: foreclosure investing

Sunday, March 26, 2006

Real Estate Foreclosures: Four Tips for Investing

Real Estate Foreclosures: Four Tips for Investing

I was reading a great article on Real Estate Foreclosures and Investing tips by David Finkel is an ex-Olympic level athlete turned real estate millionaire and one of the leading investing experts in the nation.

His tips on What to say when you knock on the sellers' door are excellent and I definitely recommend this article to anyone serious about Foreclosure Investing.

Here is the link: http://www.creonline.com/articles/art-229.html

Some of the topics he covers are:

Tip one: Banks do not want to foreclose on real estate
Tip two: Foreclosure tidbits investors don't know
Tip three: Other ways property owners default
Tip four: Don't be afraid to knock on doors
filed under: foreclosure investing

"Have an adjustable-rate mortgage? Brace for an adjustment"

Foreclosure rates might jump in the coming months due to upcoming adjustments in the adjustable mortgage rates.

Michele Derus of MILWAUKEE JOURNAL SENTINEL reports:

"About 25 percent of outstanding home mortgages carry adjustable interest rates due to adjust upward soon, said Douglas Duncan, chief economist for the Mortgage Bankers Association in Washington, D.C."
I anticipate the rates and economy to play a big part in the rise of foreclosure rates.

filed under: foreclosure investing