Sneaky but powerful way to Buy a Foreclosed Property by investing in Delinquent Property Taxes!

Foreclosure Investing using Tax defaulted liens

Investing in delinquent property taxes is one of the best methods I know of to get into Real Estate Foreclosure game.

For one, you get awesome ROI even if you never foreclose on the property. Simply because the owner or the lien holder has to pay you maximum allowed interest rates, as high as 18% or more in some States.

Your investment is secured by the Real Property. And if the property owner or lien holder does not pay you back, you have the recourse of foreclosing on the house and now you're proud owner of a home.

Of course, PLEASE do your research and check your local laws.
For example, here is some Property Tax Lien information for Montgomery County Md.
http://www.montgomerycountymd.gov/apps/taxliensale/
Here is some information on State of New York tax lien sales. This one is very comprehensive so be prepared to spend some time with it.

There are tons of resources pertaining to your own County and State on the internet.

So my advise as always is, be careful, research properly and seek professional advise before spending your hard earned money.

This foreclosre investing strategy using tax liens is very powerful and definitely worth a look.



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Prospects of increased foreclosure inventory on your ROI

Prospects of increased foreclosure inventory on your ROI

As you might have noticed, more and more homes are going into foreclosure.
I've predicted this for over a year now and just read some reports that reveal some interesting stats.

For example, a recent article in the Arizona Daily Star, outlines the exact reasons and problems that have caused this sharp increase in the recent weeks and months

SEE:
"Foreclosures go up sharply here
Trend linked to slowed home sales, inflation, adjustable rate mortgages
By Joseph Barrios
ARIZONA DAILY STAR
Tucson, Arizona | Published: 06.04.2006"

Now, how does this effect your ROI and should you hold off on investing in foreclosed properties.

This is a valid question and one that I am asked often.
Truth is that noone knows what the economy will look like in 3, 6 or 12 months.

We only have historical data and some stats to try to make some intelligent choices.
For example, most of the Real Estate industry experts predict a steady growth in sales and prices over the next 18 months.

Is this biased or factual? I don't know.

This is how I evaluate a property and the exact steps I take when selecting a foreclosed home.

First, I look at the 30 day pricing of houses in the area.
30 day pricing is "what price should I list a home in order for it to sell in 30 days or less"

This data can be gathered by contacting some Real Estate agents in the area, or by looking at sold reports on Yahoo Real Estate section.

Then, I make my offer for at least 20% below that if I don't have a ready buyer or 10% below the 30 day pricing if I do have ready buyers in the wings.

Either of the above situations guarantees me a quick profit.

Another method is the flip system discussed in my earlier blog posts.
This is where I don't even own the propert and simply assign the rights to a new buyer right in escrow for a fee of $5,000 or more.

Ok, so here are some numeric examples.
Pre-foreclosure home with total owing to the bank = $500,000
30 day price for this house = $525,000
I'll offer $420,000 to the bank if I don't have a buyer
or offer $472,500 if I have a ready buyer

I'll take a no point no cost no prepayment penalty mortgage and let the mortgage broker pay all my closing costs.

This will cause the interest rate to be slightly higher, but so what, I'm selling it in 30 days or less.

If my buyer backs out, I'll price it at $520,000 which is below the 30 day pricing and sell it quicker. Even before the first mortgage payment.

Please keep in mind that all of this is speculative and things don't work out so perfectly in the real world.

However, if you follow the example above, your chances of success and repetitive profit is extremely high.

As always, consult a professional before investing your money.
This blog is for general education purposes and not meant to be legal or real estate advise.

Good luck and happy investing

filed under: foreclosure investing




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Can You Really Buy Foreclosure Home with No Money Down?

Can You Really Buy Foreclosure Home with No Money Down?

If you've ever had insomnia and watched late night television you may have seen the infomercials telling you that you can buy

real estate no money down. But can you really purchase investment property without having any cash? The answer is, "yes!".

Anyone can purchase property without having any cash, but it's not nearly as easy as the gurus proclaim. Can you do it even

if you have bad credit?? Yes, but it's a whole lot easier to do it if you have good credit.

In fact, with good credit it's easy to get cash when you buy. Here's how you can get paid when you buy a piece of property.

Example: Property is for sale for $100,000.

1. You ask the owner of the property to give you a note for $30,000 secured by other property you own or even as an unsecured

note (you can put a VA clause in the note allowing it to be moved back to the subject after the closing).
2. You get a conventional loan for 75% of the sales price.
3. You ask the seller to pay your closing costs.
4. You ask the seller for a carpeting allowance of $2000.

Here's how the deal works;

- You buy the property for $100,000.
- You pay the bank on a $75,000 mortgage.
- You pay the owner on a $30,000 mortgage.
- The seller pays your closing costs.
- The seller pays you $2000 for carpeting.

If the property is rented out for $1000, you collect the rents and security deposits.

In the above example the buyer would walk away from the closing with a $100,000 property, $5000 from the over finance, $2000

for the carpeting, and $2000 for the rent and security deposit. That's a total of $9000 for buying a piece of investment

property. NOT TOO BAD.

Will every seller be willing to do this deal with you? No, maybe only one seller in ten or twenty will be willing to do this

deal. But there are sellers who will do this deal. What you have to find is a motivated seller.

What makes a motivated seller?

- An owner who is in foreclosure.
- An owner who got the property as part of an estate.
- An owner who no longer wants to deal with tenants.
- An owner who is in divorce.
- An owner who has been transferred out of state.

Now that you've bought a property and put money in your pocket be prepared to deal with the tenants.

Yet there is another technique that virtually anyone can use as long as the property seller is willing to negotiate with

you. To be fair, not every seller will be interested (or even understand) the concept outlined. Your best bet is to find a

property that the owner has great interest in selling, whether because of moving, divorce or frustration with tenants.

In fact, if you are currently renting and thinking about using this technique perhaps your landlord would be happy to help

you out!

There are a few variations that can be used depending on you and your seller. Do they want the market price or are they just

eager to get out from the monthly payments - perhaps facing foreclosure?

The simplest method is to take over their mortgage payments - called 'assuming' the mortgage. You will need to be approved by

the original lender to assume the mortgage. If you cannot get approved for an assumable mortgage you may also try a 'subject

to' assumption where you merely make payments while the property remains in the seller's name.

WHAT IF THEY WANT A HIGHER PRICE?

You take over the original mortgage AND create a second mortgage on the remaining cost of the house with the seller. Offer a

high, interest-only payment for a short period of time - 2 or 3 years. Instead of having the money sit in a bank they can be

collecting a high interest over 2 or 3 years with the remainder due in full at the end of the term.

When the term ends you should be able to refinance the cost, or you can sell. Unless you hit a real bad market the value of

the property should have risen in that time.


WHAT IF THERE'S NO MORTGAGE TO ASSUME?

Easy. Most mortgage lenders merely want to make a good investment. While your local bank may still shy away there are plenty

of financial lenders that would love to make a deal.

Financiers like real estate. The mortgage is usually based on 60-70% of the VALUE of the property, so as long as they know

they get their money back in the value of the property if you default, they don't care what kind of money you make. Complete

the deal with a second mortgage created with the seller. If you default they can still foreclose on the property and sell it,

paying off the existing mortgage with the proceeds.

As you can see, it can be in the favor of a buyer and seller to work together - especially if the seller is motivated. If

they can't wait for a sale, you can still give them their asking price with a little flexibility on their part.



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