Real Estate Investing Blog - DiscountedProperties.com

If you are in the real estate investing business and looking for financing for your next real estate deal, you may have a difficult time, given the current state of the credit market.

However, all is not lost, as you may want to consider securing a hard money loan. Hard money lenders are financing companies that use real estate as collateral. In other words, the real estate you plan to purchase for your investment property will back the loan. Most hard money loans are secured for non-owner occupied properties.

Hard Money Lenders 101

Hard money loans are short-term loans, backed by private investors, who charge a much higher interest rate than traditional loans because they do not conform to traditional banking standards. Soft money loans, on the other hand, are those traditional loans that are secured through a traditional lending institution.

Hard money loans serve a very useful purpose, particularly for real estate investors who are looking for a short-term loan to finance their investment properties. Although the interest rates on hard money loans are much more than traditional, soft money loans, this typically does not affect the investor, as he or she carries the loan for a very short period of time.

How Hard Money Lenders Calculate the Loan

Hard money lenders typically calculate the according to the ARV (after repair value) of the property. Most hard money lenders will loan an investor about 70 percent of the ARV. This protects the lender in case the borrower defaults on the loan and the lender must foreclose on the property and resell.

Interest rates vary between hard money lenders, but they typically range between 12 and 20 percent, depending on the investor’s credit score and real estate investing experience. Most hard money loans last anywhere from a few months to several years, depending on the investor’s needs.

Benefits of Hard Money Loans

* Hard money lenders may provide you with the loan quickly, which is important for investors that must move rapidly on a real estate deal.

* Hard money loans are ideal for beginner investors who may not have much capital.

* Hard money loans are often used by investors with poor credit that may have difficulty securing traditional loans, as they are equity-based and no asset or credit-based.

* Hard money loans can be used to refinance a default personal mortgage loan.

* Hard money loans are ideal for today’s investors that cannot secure a traditional mortgage loan due to more stringent lending guidelines.

If you are looking for ways to finance your next real estate investment, consider looking into hard money lenders to help you turn your property into profit.

In today’s economy, many real estate investors have found that there is lucrative money to be made on government tax foreclosure properties.

Government tax foreclosure properties are essentially properties that have a tax lien against them. Tax liens, which take priority over any other types of liens, are usually a result of a homeowner not paying his or her property taxes. When this happens, a lien is levied by the county, and the tax foreclosure properties are sold in an effort to collect the taxes owed.

How Do Investors Make Money on Government Tax Foreclosures?

Frequently, the government will sell these government tax foreclosures to investors, who are essentially looking to buy the tax lien certificate from the county.

In other words, if you purchase liens on tax foreclosure properties, you are essentially paying for the lien and collecting the state-mandated interest rate on the amount for which you originally purchase the lien. Depending on the state, the state mandated tax can be anywhere from 8 to 50 percent on tax foreclosure properties! This means that you can get a tremendous bargain on a real estate property, or you enjoy collecting the taxes and interest rate on government tax foreclosures.

The Benefits of Purchasing Tax Lien Certificates for Tax Foreclosure Properties

The best part of this situation is that tax liens on government tax foreclosures are one of the safest investments because you either (a) collect the money for the lien, plus the state-mandated interest charges or (b) take the property. In other words, government tax foreclosures create a win-win situation. You either collect the money or sell the property – either way, you make out profitably on the deal.
Because counties rely on property taxes for the majority of their revenue, they are happy to sell the liens to investors and get out from underneath the properties, of which they have no interest, other than to collect the owed taxes.

Counties often sell the tax liens from tax foreclosure properties because it may take months for the property owner to finally pay on the lien – which often never happens. On the other hand, if an investor purchases the liens for their government tax foreclosures, then they essentially collect their taxes and pass the liens onto someone else.

The liens on government tax foreclosures give homeowners a predetermined amount of time to pay the taxes. During that time, interest accrues. If the taxes are not paid during the predetermined amount of time, then the homeowners lose their properties. The time during which the county has given the homeowners of the tax foreclosure properties to pay their taxes is the time that you, the investor, can make money from the accrued interest.

Because of the downturn in the economy, government tax foreclosures have made a resurgence, which therefore means that many investors can stand to make a great return.

Don’t let the stagnant housing market stop you from considering real estate investing. By incorporating timeless real estate investing secrets, there is always money to be made in the real estate market.

Real estate investing secrets are tried and true rules by which the most successful real estate investors live. It is possible to invest in real estate in today’s market, and it is certainly possible to make money in today’s real estate market; you simply must do your homework, incorporate real estate investing secrets, and educate yourself on the process before jumping in with both feet.

Top Ten Real Estate Investing Secrets:

1. Watch the market and pay attention to trends and shifts. Real estate investing secrets do not focus on knowing what others do not. Instead, it’s simply about paying attention to the changes in the real estate market and becoming aware of what the changes mean. The most successful real estate investors constantly have a realistic pulse on the market’s supply and demand trends.

2. Don’t rely on your real estate agent’s research alone. Use the available public records and real estate transactions to scope out potential properties and determine their value based on other similar properties in the neighborhood. Your own judgment as an investor is invaluable. The most successful investors will admit that their real estate investing secrets focus on trusting their own sensibilities.

3. Don’t underestimate the power of being straightforward with home sellers. Many home sellers in today’s tough housing market are simply looking to get out from under their home debt. Instead of dancing around offers and counter offers, simply ask the sellers what they need to walk away from the property.

4. Understand the difference between investing and gambling. There is always a risk when it comes to real estate investing, but decisions should be based on solid evidence, research and trends, not on a guess that property values will continue to rise or rebound in the near future.

5. Don’t consider real estate investing until you first purchase your own home. There is no better education regarding real estate investing secrets than owning a home. Owning your home will give you a crash course on the sheer cost of maintaining a home, and how changing market conditions can affect the value of your home.

6. Obtain an education on real estate investing. Don’t assume you know already the ins and outs of real estate investing secrets and fundamentals. Take a course, read the books and talk to other individuals who have been successful in the real estate investing market. Your best real estate investing secrets are often found by talking to others in the industry!

7. Learn about your particular investment market. Every single market has its own dynamics. Don’t assume that because a nearby market is thriving that your market is too. There are countless variables to consider when determining if your market is viable for real estate investing, and looking at other markets isn’t one of them. One of the most powerful real estate investing secrets is focusing on your own niche market and becoming an absolute specialist in your area.

8. Don’t act before you are ready. Many real estate investors worry so much about passing up a good opportunity that they move forward without first understanding the risks involved with the purchase. One of the most practical real estate investing secrets is to not allow the excitement of other buyers and bidders prompt you to make a rash, quick decision that is not carefully analyzed.

9. Remain educated about real estate tax laws and how they will affect you. If you don’t feel like you have the time to stay on top of the tax law changes, then it is probably a wise decision to hire a tax law attorney.

10. Don’t ever overlook the importance of common sense. Don’t let the trends dictate your decisions when it comes to real estate investing. Instead, your common sense should always be your guide.

The most important theme amongst all real estate investing secrets is that you must remain level-headed and practical at all times. Greed and excitement should never play a role in your decisions; rather, cold hard facts and your rational intuition should guide your judgment regarding a good real estate investing decision.

Good luck!

Because of the national real estate crisis, there has never been a better time than now to dive into the wonderful world of wholesale real estate investing, especially if you want to secure your financial future without actually taking title to property and dealing with late night calls from tenants or putting up with other property management nightmares.

In case you’re not familiar with the process, you simply need to locate a motivated seller, negotiate a sales price for the property, and place it under contract. Instead of closing on the sale yourself, you assign – or sell – your right to purchase the property to an interested real estate investor or retail buyer. By utilizing this wholesale real estate investing technique, you can pocket the difference between what you would have paid for the property and the amount you’re able to get another buyer to pay.

The wholesale real estate market is larger than you might think because millions of homeowners are stuck in homes they can’t afford. Rather than go through the foreclosure process and suffer the pain and embarrassment of being forced from their homes, many homeowners are motivated to sell before their lender takes action.

A good way of ensuring that you can assign a wholesale real estate contract before you sign on the dotted line is by lining up a few real estate investors that are interested in buying wholesale real estate. They’ll gladly tell you the types of properties that they are seeking – and how large a profit they want to make on each deal. Then all you’ll need to do is find properties that meet their parameters. You can use the money you earn from wholesale real estate investing to supplement your income, build your business, or provide additional funds for your own investing activities.

If you are looking to get into investing in real estate there are many places you can go to find assistance with your endeavors.  Finding places to go for real estate investment resources will be crucial in starting the process.  There are actually many real estate investment resources available to you in a variety of areas.  Because real estate investing is on the rise, many people are capitalizing on the trend and getting into it.  There are websites and blogs like ours, books, clubs, magazines and networking opportunities for real estate investment resources.

Blogs and forums dedicated to investing are some of the best real estate investment resources available today. These are real people giving valuable advice often for free. There are also websites devoted to real estate investments that will give you a variety of additional websites on more specific topics. Likewise, if you are looking for one particular aspect of investing there are plenty of real estate investment resources on the Internet.  For example, there are many resources on the Internet that deal strictly with house valuation like zillow.com. Similarly, there are lots of them on the Internet that deal strictly with funding like bankrate.com.  You will be sure to find answers to your questions regarding investing if you use your favorite search engine to find the particular topic you need. Get some real estate investment resources in our learning center.

Books and magazines are another popular place to find real estate investment resources. Check your local bookstore, half price store or library to find them. Similarly to the Internet sites, you can find them on general topics that give an overview of the various market conditions, or you can get as specific as you want. Look through the reference sections of the bookstores to find niche real estate investment resources and read as much as you can get your hands on.

Networking is another invaluable source of real estate investment resources. Finding others in your area who do investing will give you a wealth of information.  There are clubs that have formed all over the country with the idea to share their real estate investment resources and ideas. These clubs meet regularly and trade tips and ideas with one another. You can also look around at local real estate offices and try to network in those places. Finding real estate investment resources will be an easy task if you just know where to look. You can find new resources just by talking to some people in the market, by buying books and magazines or by looking on the Internet for websites devoted to real estate investment resources.

Right now the sky’s the limit and there’s never been a better time to get involved with real estate investing so seek out the resources you need to get your hands wet and start investing today!

Knowing how to short sale is one thing, but actually pulling it off is another thing entirely.  Once you’ve sold the distressed homeowner on the concept, you’ll need to walk them through the “why to” as well as the “how to”.  Short sale real estate investing isn’t rocket science, but you do have to convince both the seller and the lender that it’s the most sensible solution.

The seller can usually be convinced fairly easily, especially when you point out that their property isn’t worth nearly what they hope it is.  Because of the massive number of foreclosures taking place in today’s troubled economy, lenders are more open to the short sale transaction than ever before.  Knowing how to short sale is simply a matter of knowing how much a lender will settle for as full payment for a property.

How to short sale also involves having specific knowledge at your disposal – and knowing how to use this knowledge.  For instance, does the lender prefer you contact a specific loss mitigation specialist or will whoever answers the phone be able to help?  Knowing the ins and outs of how to short sale can vary from lender to lender.

The basic process of how to short sale will be the same no matter what:

• Submit packet to lender demonstrating you know how to short sale, consisting of a cover letter, a hardship letter, list of comps, a net sheet, etc.

• You negotiate for the lowest possible price, preferably in the range of 50%-60% of current value

• You close the transaction once they accept or you walk away if you can’t agree on a price

So learn how to short sale and put the profits in your pocket, while helping desperate homeowners to avoid the pain and anxiety that comes with foreclosure.

If you are just getting your start in real estate investing, FAQs will probably pop into your head with stunning regularity. Part of your education lies in answering all of your questions and learning winning techniques that will take you from a wannabe rookie to a seasoned, successful investing veteran with a fat portfolio and an expanding bank account balance.

Regardless of how or where you choose to answer your real estate investing FAQ, the questions you have will likely revolve around:

• How much money you can make
• What techniques you’ll need to learn
• How to overcome objections
• Whether investing will work where you live

The simple truth is, investing is a tremendous way to earn the kind of living that we all dream of – and very few of us actually ever achieve. You can reach all of your hopes and dreams, but there is a certain amount of work involved in the process. It will not happen overnight and current market realities can lengthen the time it takes to reach your destination in real estate investing.

FAQ – while they may sound silly at times – are a necessary part of unlocking the door to your future.

Regardless of your experience level, you can generate a lot of cash in very little time – even in today’s troubled market – if you use your head when you flip real estate. That’s the easy part. The challenging aspect is knowing how to get property inexpensively enough that you can still turn a clear profit when you flip real estate.

By dealing only with highly motivated sellers with a clear need to sell quickly, you can negotiate terms that will allow you to buy low. You can then make any needed repairs on the property, mark up the price, and successfully flip real estate, while putting the profits into your pocket.

In order to flip real estate, you have to know what a property is actually worth, and a wild guess based upon outdated information isn’t good enough. Since the market is still declining in many parts of the country, getting recent comparables is critical. It’s also imperative that you remember that it’s possible for a property to lose value between the time you buy it and the time you re-sell it to someone else.

If you estimate that a property has an after repair value of $150,000, it’s always a good idea to factor in a buffer for human error as well as further depreciation. Targeting properties with owners willing to sell for roughly half of it’s value will protect your profit margin and increase the likelihood that you’ll generate fast cash when you flip real estate.

This can be challenging, but it’s not impossible. So have at it – and take charge of your future today.

It seems like a lot of people nowadays are interested in getting into real estate as a means of investing. There are many ways to do this including flipping houses, buying fixer upper houses, wholesaling houses or purchasing an investment house to name a few. For someone who wants to start off or for those who simply want one particular type of investment, purchasing a single investment house may be the best way to go. It can be a good start to get your feet wet in the real estate industry. Also, having one solid investment house that turns a tidy profit each month because of rents is a highly lucrative plan.

Before purchasing an investment house there are a few things you should consider. You’re in this to make a profit, right? So, you need to calculate how much of a profit you will actually be making based on the particular investment house you are considering. The first thing to think about is your initial investment. If you are buying an investment house to make money off of rental income, the basic questions you need to have answered are:

• How much will it take to purchase the investment house?
• What will be the monthly mortgage price?
• Are there any repairs or maintenance that need to be performed immediately?
• What is the potential sale price of he home?
• How is the rental market where the house is? How long should I anticipate before the house is rented or how long will it potentially stay vacant?
• What are current rental rates in the area?

Before committing to an investment house make sure that first you are purchasing the home so that in case you have to sell it you will make a profit on the sale whether that is thirty days from now or thirty years. Next, make sure your monthly expenditures on the investment house will be less than the monthly income. As a landlord you will be responsible for the maintenance of the home and you should factor in those expenses each month. You won’t likely have monthly maintenance expenses but over time if you have to have a large purchase, that amount was factored in to the overall profit.

Being well informed and unemotional about the business transaction is the key to finding the ideal investment house. Be patient when looking for an investment house. You want to maximize your profit potential, not get into the first house you find. Most importantly, know when to walk away from a deal. If in your calculations, the investment starts to creep a little too close to earning potential for comfort, reconsider the deal. You want a solid cushion between income and expenses with your income well exceeding the expenses in the long run.

Buying an investment house can be a great deal and a perfect long term investment for those willing to deal with being a landlord. But be aware that, as with all investments there are risks. You can never guarantee your investment house will be rented the entire time you own the home. Make sure to have an exit strategy that accounts for the sale of the investment house at a profit if you need to get out of the deal or if you simply get tired of dealing with rental properties.

The decision as to whether to form a corporation or LLC for flipping houses is one that you’ll have to make based upon sound advice given to you by a professional. The best people to help you make this decision are your lawyer or a CPA – preferably one that concentrates on real estate.

The factors that they’ll probably be most interested in discussing with you will be how many properties you intend to flip and how frequently you intend to do it. Your answer to that question will determine whether they’ll advise you that you’re better off having a corporation or LLC for flipping houses.

There are legal and tax advantages to both forms of ownership, but there can also be substantial drawbacks. For instance, an off the cuff decision about forming a corporation or LLC for flipping houses will determine whether the IRS classifies you as a dealer. If they do, you’ll face substantially higher taxes.

So should you form a corporation or LLC for flipping houses? That depends upon your goals. One thing is for sure. Sound advice about whether you should form a corporation or LLC for flipping houses can mean the difference between being an investor – and one that actually makes money.