It’s also important to know what your price cap
is so you don’t waste time on listings that are out of
your price range.

That said, when you know how to find private
lenders, then you have the chance to start buying
bank reo property in bulk, which can add up to even
bigger discounts.

When you have lists of wholesale buyers and retail
buyers, you then have a chance to sell these bargains
quickly, still at a discount so people continue to line
up for your next real estate deal.

The Department of Housing and Urban Development put forward the proposed changes to the Real Estate Settlement Procedures Act (RESPA) in March 2008 and issued a final rule in November after a public comment period that was extended at the industry’s request.

Lenders want more time, clarification of new disclosure rules

By Matt Carter, Friday, October 16, 2009.

Inman News

Click Hrere For Full Story

Below are your options to consider: If you are unable to get your lender to work with you on Options 1 – 4 and you don’t have time to sell your home because of late payments, the SHORT SALE option truly is your best solution.

1. Forbearance
Lender may be able to arrange a repayment plan based on the homeowner’s financial situation. The lender may even be able to provide a temporary payment reduction or suspension of payments. Information will be required from the lender to show that you are able to meet the new payment plan requirements. Both loan modifications and special forbearance agreements are legal contracts so be sure you can meet the revised obligation or you can put yourself in jeopardy of renewed mortgage default proceedings.

2. Refinance
If your credit is not too badly damaged and loan to value ratios on your property are low enough, you might qualify to refinance your current mortgage loans. Recent tightened restrictions on home loan refinance programs have caused increased difficulties for mortgagors. With this option, there should be equity in the home.

3. Reinstatement
A lump sum payment by remitting the entire default amount plus interest, attorney fees, late fees and taxes. You can request an updated statement of total amount due to bring the loan current by contacting your lender.

4. Loan Modification
Utilizing the existing mortgage company to change the interest rate, add missed payments to the balance or extend the terms of the loan. This option can be successful for homeowners who are just recently back on financial track due to say, re-employment. The lender will require a substantial down payment toward the total arrearage and then divide the remaining balance over 12 to 18 months. These payments will be required in addition to the original payments on the note.

5. Sell your home
Homeowner may sell the home without lender approval for a conventional home sale. If the property has equity (money) left over after all loans and monetary encumbrances are paid), the homeowner will get cash from the sale. At the other end of the spectrum, a short sale, also known as a pre-foreclosure sale, can be negotiated with your lender by your real estate professional if what is owed on your home is more than the property’s value.

6. Deed in Lieu of Foreclosure
If you owe more than the home is worth, this is not an option for you. Deed in Lieu is when you give the property back to the bank instead of the bank foreclosing. Banks generally require the home be well maintained, all mortgage payments and taxes must be current. Your lender will fully analyze whether your current title is burdened by subsequent interests…I.E. Is the title clean? If not, a formal foreclosure will extinguish those other encumbrances and the lender may see this as their best option.

7. Short Sale
Short selling your home my be your only hope. It is often a difficult and long process. If you are successful, the difference between what you sell the house for and what you owe on the house is forgiven. If you owe more than your home is worth, and don’t want to declare bankruptcy or face foreclosure, then a short sale of your home is the best option. A short sale does have potential tax implications.

8. Bankruptcy
This option can liquidate debt and/or allow more time. Bankruptcy law changes of 2005 now require more stringent filing rules. Debtors must qualify by meeting an “income means test” and complete pre and post petition trustee approved credit and financial counseling courses. Certain debts such as student loans and some taxes cannot be liquidated. Chapter 7 (Liquidation) Complete settlement of personal debt Chapter 13 (Wage Earner Plan) Payments are made toward a plan to pay off debts in 3 – 5 years.

9. Foreclosure
If a homeowner does nothing, they most likely will lose their home at foreclosure auction. Loan applications generally ask if the applicant has ever been foreclosed upon. Credit reports also disclose this damaging information. Most homeowners prefer to preserve their personal integrity by attempting some form of resolution.

Get Some Help
If you have tried many of the options mentioned here and weren’t successful then a SHORT SALE MAY YOUR BEST OPTION. You will want to find an experienced real estate agent who has done a Short Sale before. The agent will be able to deal and negotiate with the mortgage company(ies) on your behalf. And most often, the lender will want to know that the house is being marketed on MLS. An experienced short sale agent will give you a much better chance of successfully short selling your home.

Because there is often so many different entities involved in a mortgage (1st mortgage, 2nd mortgage, the investor on the loan, etc) you really don’t want to do this on your own, with no experience. Yes, you’ll have to pay commission to the agent, but you’ll have a much better chance at getting your debt forgiven with a successful short sale.

WARNING! Just because an agent says they specialize in “short sales” does not mean they have actually successfully done one! There are many classes agents attend regarding short sales, but nothing compares to real world experience.

Get Started Now
The longer you wait to get started with the short sale process the less chance you have of success. Every state is different with their foreclosure process. You need to decide quickly to start the short sale process if you’re getting behind on your payments and especially if have already received a notice of default. Your Short Sale agent should know the foreclosure process in your state to better serve you.

Follow Instructions Exactly
An experienced short sale agent will tell you what you need to do to get the house ready to sell. Don’t get too hung up about the price. If the agent wants to set a low price on the house, there is a reason behind that. Don’t get hung up about the price, all you need to care about is getting the place sold.

The goal is to get a contract offer on your home very quickly. You will need a buyer that is willing to stick around for a potentially long period for the closing to take place. It can take up to 4 months and sometimes longer from the time of contract acceptance to the time of closing to take place.

Know The Tax Implications
Congress recently passed and the president signed a law last December 2007 that likely releases you from any tax implications of a short sale.

Talk to a Qualified Tax Attorney or CPA about this for your particular situation. Your real estate agent should know about this! A good agent will have a quality referral for you to handle the tax implications of your short sale.

Prepare to move quickly
Because your closing date may not be set in stone, you need to be prepared to leave your home quickly if needed.

A minimalist lifestyle is nothing to be ashamed of; in fact it should be venerated. Your possessions are just inanimate things; it’s the relationships in your life that really matter. OK, enough life advice! Sell anything you don’t need or haven’t used in the last 6 months on craigslist! The less you have to deal with on moving day the better.

Prepare yourself emotionally
If you are already in default, or have a foreclosure pending, this whole scenario and process of trying to short sell your home can be very emotionally draining.

You will receive many solicitations from Investors. You may even have people stop by your home while you are still there. It can be a very difficult process.

Make sure you have people in your life to talk to about your situation. You will need a support network to help through this time in your life. It will pass. And you are being proactive in seeking a short sale of your home. You are taking the right steps, and in time, everything will work out. I can’t promise it will be easy, but you will make it!

References are one of the basic ways in which you can make sure that a contractor is a good one. Ask the contractor itself for references on past jobs, and do a little research to see what kind of information you dig up. Remember that when you find a contractor that you know you can trust, it will make things a lot simpler for you down the line when you want to get things done quickly. Form a good relationship with your contractor by picking the right contractor early on – spend the time that is necessary and do the research into the quality of work you can expect!

In the real estate investing business you want to be able to bounce back from any problems that may arise. This is why it is important that a contractor you are vetting has the right kinds of insurance. Accidents can happen on the job, and if your contractor is not properly insured there may be no one for pay for these accidents other than you. A good contractor in the real estate investing business carries general liability insurance for damage to the property that may occur, as well as worker’s compensation insurance for situations in which a worker is harmed on the property.

Finally, you want your contractor to be licensed (make sure that you see the license and that it is not expired), a member of the National Association of the Remodeling Industry or the National Association of Home Builders, and diligent about pulling all of the building permits that are required for the area. A contractor who is diligent about the paperwork aspects of the job as well as the on the ground aspects of the job will be of invaluable service to you while you are working in the real estate investing sector!

What You Really Need To Know Before You Hire A Contractor

Take advantage of the internet. You can find a “hidden gem” by searching through the millions of properties listed online, and viewing the property’s description, pictures, asking price, and legal information. Usually, the only way to avoid a real estate agent fee is to look for property listed For Sale by Owner, or posted on other free sites.

Look into getting your own access to the Multiple Listing Service (MLS). A license is required in some areas, but some places you can buy into the service for a fee.

Keep in mind that using a good Real Estate Agent does have some advantages. If time is an issue for you, leveraging an agents time and resources may be the way to go. As investors, our job is “negotiating”. With that in mind, who says that we shouldn’t try negotiating with an agent on their commissions especially if it makes or brakes the profitability of the deal for you. Remember that 3 percent of something is much more than six percent of nothing.

Get out and investigate the area that you’re considering buying in person. Will the price be held down because of the condition of the neighborhood?

If possible, talk to the neighbors. They might give up information about the property that the seller hasn’t mention, like the front yard that floods after two days of rain.

Get a professional inspection. When you make your offer, add a satisfactory home inspection contingency. Use a trusted professional inspector and carefully review the detailed inspection report. Few properties, even new construction, are perfect. Use the report to negotiate the repair of problems or an adjustment to the selling price.

Before you decide to buy a home, you should always think things through and be sure to look around different areas and neighborhoods. Even though there are many cheap homes out there, you can get just as good of a deal through negotiating.  Most wholesale homes sell very quick, which is why you should always be on the lookout for one. When you find a discounted home that fits your needs, you should act on it.

that you will repay them and that they will make a profit. To judge if you are capable of meeting those two criteria, lenders look closely at your current financial position and your historical financial situation.

When judging your finances, lenders will look at:

1. Credit history. They’ll review the size and number of previous loans and the repayment history on those loans. They will also look at your FICO scores and various other raw data.

2. Income history. What is your profit history on your other investments? Over what length of time? They’ll look at the last three years of income statements and tax returns, your debt, and any legal judgments that may impact your financial standing.

3. Your experience with loans. Basically, the lender wants to know that you are trustworthy and will hold up your end of the loan agreement. This means you need to be reliable and make good business decisions.

4. Current holdings and financial situation. Lenders are most interested in liquidity – your cash flow and income.

When lenders are looking at your ability to make a profit, they will want to know about your total expenses related to the property. How much will it cost you to take care of the property? What will your insurance rates, taxes, and cost of  repairs be? The lender wants to see that you can cover your costs associated with home ownership, as well as their interest charges.

Lenders often want short repayment periods, while it usually more beneficial for the buyer to have longer periods. Longer repayment periods mean that you can avoid origination fees, additional appraisal fees, and other costs. When it comes to loans for investment property, a 20 year fixed rate loan is considered a long loan. Normally this includes a balloon payment five to ten years into the loan.

If your lender tries to push you into a shorter repayment period, you can set up an arrangement that you re-price after five years, instead of having to pay a large amount of cash in one lump sum. A common alternative is the prevailing prime interest rate plus 1%.

Keep in mind that most things in real estate investing are negotiable, and that your lender can be your partner in real estate investing. Developing a positive long-term working relationship with your lender can only help you.

There are now several finance options available to the real estate investor. One popular way to finance your purchase is to have a second mortgage. The buyer makes a 5% down payment, and borrows the remaining 15%, usually at a higher interest rate, on a different loan.

Even though it’s nice to invest less on a property, the higher interest rate isn’t the only drawback. Usually, if the buyer does not meet the 20% minimum, they are required to get costly private mortgage insurance (PMI).

You are able to remove PMI when the loan-to-value (LTV) ratio reaches 80%. This is achieved by paying down the second mortgage and appreciation of the property value. This does not happen often because the property is usually sold or the buyer refinances before PMI can be removed.

For creative investors, other financing sources exist. Manufacturers of homes in planned developments are often willing to provide financing to early buyers.

Another risky and rather complicated way of financing a property is called ‘sub2’ which stands for ‘subject-to’. This type of deal is when the seller gives you the deed to the property, the loan stays in place, but the buyer never legally takes over the loan, just the payments. There are many different versions of this kind of transaction. Because of the complexity and risk, this method of funding an investment is not recommended for beginners.

You can also consider forming a limited partnership to finance your real estate investment. There are many different arrangements on this method. Some types involve each person in the partnership contributing in a portion of the cost, usually 50% each. However, sometimes the profit is distributed relative to the original amount invested. Another arrangement is that one half of the partnership contributes the capital, and the other half provides the needed services, such as repairs on a home that needs to be fixed. There are many different variations of this method.

How about the Lease Option? The lease-option allows a potential investor to lease the property and have some, or all, of the lease money applied to the purchase price if the potential buyer exercised the option to purchase. The investor then sub-leases the property with the option to buy or just rent it out.

In a conventional lease with option to buy, the seller charges the buyer a nonrefundable fee for the option to purchase the property at some agreed-upon point in time. The amount can vary depending on how eager the seller is to sell and the size and quality of the house. Typically, the higher the fee, the better the buyer maintains the property.

Because the lessee has made no down payment, the monthly rental fee is typically higher than prevailing market rates. The two parties agree on what portion of the rent will be applied to the down payment. Any amount can be credited.

Government loans are available to low income investors, or buyers who have served in the military. These programs are usually only available for primary residences.

Did you ever think about buying a home on a credit card? This is another method of financing your real estate purchase, although it’s usually not recommended. Obviously, the interest rates on most credit cards are substantially higher than loan rates. Another drawback is that lenders determine your creditworthiness based on your outstanding debt, and if you use credit card cash advances to cover the 5-20% down payment that you need, you’ll probably get turned down for a loan. This is also true for money borrowed from friends or family, unless you can show that the money is truly a gift.

Finding a property that is a good flip requires a few ambitious steps on your part. You’ll be looking, most likely, for an under priced home in need of repair. Or you will be looking for a seller that wants to sell fast, thus getting you a lower price.

One way to find property leads is to talk to friends, family, business associates, real estate agents, or bankers. Go out to the neighborhood you’re considering and look for “For Sale by Owner” signs, or ring doorbells to see if anyone in the area is considering selling.

Check the public land records and look for “fire sales”. This usually means that the owner of the property is having difficulty making mortgage payments. If you contact them and they agree to sell, you’re helping them out of their difficult financial situation. And you’re getting a property that may make a profit. If done
respectfully, there’s nothing unethical about this transaction.

TIP:

Make money without even having to find financing. If you enter into a contract to purchase real estate, and then sell the contract to another buyer before the close of escrow, you can turn up to $5000 in profit!

To be a successful real estate flipper, you will need to hone or develop many skills. You will need to have an eye for the diamond in the rough. You should be able to accurately size up buyers. It is best if you are handy and can take care of basic home repairs. It is very important that you are detail oriented and a multi-tasking project manager. Flipping involves many details, and it’s important to be on schedule with the project to avoid costly delays. Lastly, you will need to have superior interpersonal skills.

Plan to retain the services of a professional accountant, unless you are sufficient at these skills. Also find a good lawyer who can provide you with legal counsel.

To Subscribe to our Newsletter and to Be Notified Immediately When a NEW HOT WHOLESALDEAL becomes available Go To Chicago Wholesale Deals NOW!

By saving as much cash as you can, you’ll have money for the things that inevitably pop up. As it is, you know you’ll need to pay for the closing costs and the initial down payment. Closing costs include the mortgage, fire and hazard insurance, title fees, and many other costly items.

Follow these tips to save money:

1. Get the best financing deal you can find. First and foremost, be sure to have your financing in place BEFORE you make an offer. To get the best deal, research the rates available for your credit score and try to get financing companies to compete for your business. Ask what options are available given your credit rating. Negotiate with your lender to lower or eliminate costly fees and charges. Avoid paying an application fee if you can.

2. Find your own providers. You don’t have to use the companies that your agent or lender recommend. This is important when selecting your title and insurance company. Your agent and lender have lists of recommended companies because they have pre-established relationships. Keep in mind that you are the one paying them. Carefully review their fees and rates before making a decision. You can use any company you wish.

3. Be willing to negotiate. Even a seller in a seller’s market needs to be flexible. People sell for many reasons – death in the family, divorce, job transfers, etc. Sellers in these situations are highly motivated to complete the real estate transaction quickly at almost any cost. If you’re willing to
work with them and be flexible, you may get a good deal.

TIP:

Consider negotiating a deal where the seller pays a larger portion, or all, of the closing costs.