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Due to economic downturn, foreclosure rates are increasing in the United States. With a lot of people unable to make their house payments, they are confused on what to do and how to avoid foreclosure on their property. You cannot expect the homeowners to do the right thing and handle this situation without some assistance from someone who knows what to do. And there are not a lot of options out there but nowadays, homeowners can look into mortgage short sales so they can satisfy their debt with less than the outstanding balance to prevent their home from foreclosure.

The popularity of mortgage short sale has increased in the recent years due to rising loan defaults. Although, this is still not a common way to avoid foreclosure, the short sale can only work if you have a committed buyer and a willing mortgage company.

However, not everyone knows what a “short sale” is and how it works. Basically, it is when the borrower sells the property for less than what is owed on the mortgage. The lender will either accept, decline or counter the offer. In order for the short sale to be eligible, the homeowner must present some proof of financial hardships that will show that they cannot afford to pay for their mortgage.

Some lender will just accept it as a pay off to cut their losses and to avoid the expensive and time consuming foreclosure. This will release the borrower from the mortgage obligations. But you also have to keep in mind that not all lenders will accept discounted payoffs or short sales if they will gain more from foreclosing. They will still have to weigh their losses and will only approve the loss that is less.

Mortgage short sales can be a good option for homeowners when they are behind their payments. This allows you to arrange with the mortgage company to sell the property for less than the amount of your mortgage. But before you even begin the process you have to be sure that you have a formal offer from a buyer and the necessary documents that you can present to the bank like the letter of hardships, financial statements, tax returns, pay stubs and a purchase agreement.

After a few weeks of paperwork, you will be contacted by the lender. Sometimes they will collect the unpaid debt first and not give the approval. So mortgage short sales can be tricky, and if you don’t have enough understanding on how the system works, you should contact a real estate professional who has more experience in these types of dealings. They will be able to help you negotiate with the lender.

The mortgage short sale process is a great solution for people who are looking for answers to their bad mortgage situations. This is usually for the best interest of the homeowner as he can avoid bad credit rating.  Short sale may hurt your credit score but at least it will not be damaged as much as foreclosure.

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Your help needed to counter anti-landlord activists

It seems, thanks to fellow DIG members and the Pottstown Mercury, the borough is starting to rethink how they write these new ordinances. I was hoping some more people would reply, but it is in the past. Pottstown investors need some help once again. There is a small group of activist running 2 blogs. Code Blue, and Save Pottstown. I need to ask you to read the following quote, go on to their sites and speak your feelings. I find them discriminatory and offending, and we need to stand against them. I believe it is due to their lobbying at Boro hall that this ordinance started in the 1st place. Go to www.pottsmerc.com and read the posts by DaisyBeGreen on the 2 threads on July 6th and July 9th concerning landlords and these ordinances. She is one of the instigators involved. We need to show power in numbers to let them know we will not allow this slander to continue. Please google code blue pottstown, then link to the save pottstown site and post how offensive you find them. If we can get the people of Pottstown to stop reading their blogs, we can diffuse their offensive tactics to turn homeowners against landlords. Please help!!

Doug Campbell

The article which was in the Pottstown Mercury can be found at http://www.pottsmerc.com/articles/2010/07/09/news/srv0000008784431.txt

Note: You don’t  need to be from Pottstown to post your comments. This kind of legislation creeps from place to place to eventually affect us all.  We should all be posting to get the other side heard from.

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CLICK HERE to see what CD’s are currently available for purchase.

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Register NOW!

This is a great time to sit one-on-one with the LOCAL experts at DIG. We have some new experts this time around as well as some of the old favorites. Bring a guest and plenty of business cards and enjoy the fun.

Here is the line up so far:

• Don Beck-Landlording
• Bill Kratz- Successful Wholesaling
• Dennis Cline-Creative financing
• Rich Heller- 1031 Tax exchanges
• Anil Dham- Commercial RE
• Tom Gilles- Section 8
• Marc Sherby- Sheriff Sales
• Mike Mumma-Public adjuster, Repair expert
• Raymond Lemire-OPM, Private financing
• Jim Kilgannon- Foreclosures
• Marc Halpern- Lease- option
• Jim Bennett- Hard Money lending
• Don Rotanz- Rehabbing to rent or flip
• John Hepner– Taxes and tax strategies
• Bruce Shaw – Real Estate Law, Title issues
• David Artigliere- Home inspections and 203K Financing options
• David Witsen- REO Expert, Short sales, Investor friendly realtor
• Doug and Deb Campbell- Recovering from Fire in your investment properties
• Jeremy Ricci-‘investor Gadget’- Tech to grow your RE Business
• Phil Falcone- Getting Rich using Phil’s Strategy of Residential to Commercial RE
• Greg Davis-Environmental Liabilities AND Getting Started in RE
• John Erdek- RE Law, LLC’s Partnerships and Corporations (oh MY!)
• Patty Burgess- Shortsale expert, Back to back Shorts
• Kathy Gilmore- Realtor, Business and Life Coach, Wholesaler, rehabber

Also, all attendees will be automatically entered for their chance to win a $100 gift card!

“Phenomenal line-up!!! Great diversity of topics that covers almost every aspect of RE investing!!! This type of meet-ing represents a combination of networking and education at its best. This has even more huge value for many newer investors, especially those who are somewhat shy, who would otherwise not get the opportunity to get one-on-one answers from experienced local experts. If I were not a speed netwoker myself, I would line up to absorb wisdom from everyone on the list. DIG membership is already the most cost-effective investment a local investor can make. This event enhances the DIG membership decision as a slam dunk!” – Marc Halpern

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The recent economic downturn may have affected the business world but it did not stop the investors to find opportunities and ways in making more money in real estate industry. We can’t always guarantee a higher rate of return or even expect that there will be a return on your investment, but once you get to learn on how the system works in buying tax lien homes, you will know that you have found the safest form and reliable source of investing.

Some people may have heard of tax lien but does not have a clear understanding on what it is. This usually happen when the homeowner becomes a delinquent taxpayer so the government will set a lien against their property thus, giving them the right to put the lien certificate up for sale.

If you are interested with tax lien homes or if you want to learn more about it or even just observe on how things work, you should try attending a tax lien sale. You need to be ready to pay it upfront to acquire the lien certificate, so this may come as a challenge for small investors. Most tax lien homes that are worth owning will be sold near retail price and will be given to tax lien companies who can afford to bid on the said property. There will be agents from these firms who will be on standby since they are confident to have enough resource to outbid you.

The highest bidder will be granted the lien certificate and will in turn have to pay for the homeowner’s unpaid taxes.  This makes the homeowner indebted to you just until they can pay you back before their redemption period is over.

You also need to be aware that there are two types of tax investing.

There is what we call deed investing, so if the owner will not be able to his due taxes, this gives the government the right to place a tax lien and put it up for deed sale. The bidder who wins the auction will have a full claim or ownership of the property.

The other one is certificate investing where the only thing that will be put up for sale is the tax lien certificate. This give sthe investor the right to collect due taxes and interest only but does not give you any claim on the property.

That is why if you are interested to invest on tax lien homes, you have to find out if there is a chance to end up owning the property.  The regulations vary from state to state, so it is important for you to determine if you can acquire the property in case the homeowner will fail to pay during the redemption period. As the next step will be foreclosure on the property and that will make you the new owner.

Although, there is a great percentage for homeowners who will be able to pay their taxes before their redemption period, you have to keep in mind that this is still a win-win situation for you. If they can pay you back, you can gain profit on the interest. But if they fall short in paying their taxes, you will still have full ownership of their property once you have foreclosed. It is like you buy a house for pennies on the dollar.  However, you will need to investigate if the property is worth a dime or you will get stuck in owning a house you don’t want and end up losing your investment.

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People refinance investment property to replace the present loan to another loan secured on the same property. You have an option to refinance if the prior loan had a fixed interest mortgage rate that has declined and you want to acquire a new loan with a better interest rate.

You would normally refinance investment property when there is already a loan against your home and you are applying for a new loan for paying off the first one. It is not a simple matter when you discuss about refinancing. There are so many things to consider if you want to refinance so it is vital that you make the right decision when you determine if the savings on interests balance the fees you will pay during refinancing.

Here are some of the benefits you will gain when you refinance investment property.

The interest rates alter every time so there is a greater opportunity for you to get lower interest rates. Maybe at the time when you applied for your first loan for buying your house, they happened to be following a higher interest rate. So if you will refinance investment property when the interest rates are low you will have a chance to trade the higher rate that you have to a lower one and you will be able to pay less every month.

This can also shorten your mortgage rate. If you have been paying for seven years already for a thirty-year loan, you can shorten the term to ten to twenty years. This will save you a lot of interest rates and can build equity on your home faster.

You can change the adjustable rates that you had before to fixed rate. It may have been a good option back when you purchased the property and you were worrying about your financial future but if you are financially stable now, you can try a more convenient fixed rate instead of your previous fluctuating rate. Banks will take advantage of adjustable rates for make up for the bank and economy’s losses, so you may as well take a fixed rate.

When you refinance investment property, it will allow you to tap into the equity on your property and make a cash-out refinancing.  So that you can refinance at a higher amount and use that extra cash if you want to upgrade or remodel your property and equip it with modern amenities. This can increase the market value of the property, so if you are leasing, you can also increase your monthly rent. It is a good idea to refinance if the interest rates drop, but you always have to watch out if you refinance and take extra money out because there are times that the economy is rough and when there is a high rate of vacancy, you will still need to be able to pay your mortgages on your investment property.

There are a lot of benefits that you can gain from refinancing investment property so it is important that you educate yourself on what involves the processes and how will you be able to gauge the rate as they will always be changing. Refinancing is tricky so you need to be careful when you handle this matter. If you are not too sure, you can always seek professional help to know if refinancing your investment property is a good option for you.

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OWN YOUR LIFE THROUGH REAL ESTATE INVESTING

If you are enrolled in DIG’s R.E.A.D. Program or have access to the Answer Line, then you will certainly have had the pleasure of learning from Marc Halpern. Marc is the co-Author of  “We Buy Houses, Sometimes” . Not only is his book hard to put down but Marc is also  an engaging speaker!

Marc has a PHD and is a full time Chemist, but don’t let that scare you away! He is also a successful part- time investor. Marc’s topic ‘Own your Life through Real Estate Investing’ is a simple logical approach to combining Life and Real Estate investing.  Learn Marc’s process to achieving happiness while securing your financial well being, utilizing the tools of motivation, and take control of your life!!

** DO NOT MISS THIS OPPORTUNITY!  You will NOT be disappointed!**

CLICK HERE TO REGISTER NOW!

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Most owners or investors either just buy or sell real estate but they don’t really have an idea or lacks knowledge on the advantages of the 1031 exchange that the IRS offers to people. This article will help those who want to know and benefit from learning more about 1031 exchange properties.

For many real estate investors and traders, once they were able to sell an estate, they will keep the money for future use or for other purposes. This is unfortunate, because it can actually be used to acquire another piece of real estate with the help of the 1031 exchange.

This 1031 exchange is also known as a tax deferred exchange. It is one strategy used by savvy real estate traders. The policy is quite simple: when you sell a property which is qualified, you have a specific timeframe to use it to buy or, more accurately, exchange it for another property. In this way, the transaction is treated as an “exchange” and not as an act of buying and selling properties.

Some people actually say that it is illegal, and that it is abusing the loophole in the law. And if you are a law-abiding person, for sure you have thought about this at least once when you heard about it.

But actually, the law is well-informed about this, and it is not illegal. There are actually rules and regulations surrounding the exchange which, when violated, the person who executed the exchange will accrue tax liability.

The concept of 1031 exchange properties is the like-kind exchange regulation. Basically, if you exchange two things, they should be of the same value. This is a simplified summary of the two major rules for 1031 exchange properties. The actual rules state that 1) the replacement exchange property must be equal or greater than the total net sales price of the property that you sold, which in this case is exchanged, and that 2) all equity received from the sale must be used to acquire the replacement.

If they these rules are violated, the person who initiated the exchange is liable to pay tax for acquiring of estate.

You can also process partial exchanges for partial tax-deferral, with the difference taxed as “non-like-kind” property.

It was previously stated that there is a timeline for the two properties to be considered 1031 exchange properties. The timelines are the Identification Period and the Exchange Period.

The Identification Period is a crucial time where the initiator must point out a property he or she wishes to take as an exchange. The period is 45 days, including weekends and holidays, from the day the property was sold.

The Exchange Period is 180 days after the transfer of the first property, or the tax return due date for the taxable year or whichever is earlier.

These are just a few things you need to know about 1031 exchange properties, and you may find more information on the internet and seek the help of professionals to assist you with your real estate needs.

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Financing investment property is a good way to gain income. This would usually mean that you will renovate or fix the property and then sell it at a higher price, or you can have the place rented or leased to get a continuous source of income.

However, some people with no adequate funds make the mistake of using their own money to buy or fix a property. This can usually lead to losing a lot of money before gaining some of them back, or worst case scenario, they might go bankrupt. You may be asking now whether there really are other options when it comes to getting some funds for an investment.
There are a few options in financing investment property which you would be wise to learn about so that at least you have some more ideas. Learn about the advantages and disadvantages of each for your benefit.

Personal Funds

This is where an investor simply use their own funds without any outside support for financing. Profit will be all yours and you do not need to pay interest and other things to other sources of funding. While this will help an investor avoid having to do a lot of paperwork and following some strict requirements from financing companies, this can also lead to bankruptcy if the person is not too careful.

Bank Financing

This is the most common way of financing investment property. This includes borrowing from a bank or securing a line of credit. You will be able to pay off from the income that flows every month if you had the property leased or rented. Many people use this because it is the easiest and possibly most conventional source of getting some funding for an investment.

Partnership Financing

Another good option is to find one or more investors in financing investment property. This means that you do not have to use all your personal funds for financing a property, and you do not have to deal with a lot of paperwork. This is usually done with commercial property, but it is also useful to keep in mind if you wish to invest in a residential property. This is a good choice if you and your partners have a good relationship.

Getting funds from your own personal money is not the only option for you in financing investment property. You need to find out and learn which one would benefit you more, such as having a bank to finance your investment but you also have to secure a line of credit, or take some business partners who, although will share in the profits, can also help and support you with your funding.

There may be other ways in financing investment property and these are just a few that you can start with in obtaining funds for your business. It is best that you learn and study the best option for your planned investment before you make further actions.

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Patty Burgess and Kathy Gentner, two local DIG members will be coming to talk about how they have navigated the stormy economy by using proven methods in Philadelphia markets. Don’t miss this opportunity to learn:

• the advantages of a short sale over traditional transactions
• why a Lender/Buyer/Investor would be a party to a short sale
• the foreclosure timeline regarding a short sale
• options in lieu of a short sale
• 2 Different deal structures for short sales
• Fannie Mae, Freddie Mac, and title guidelines for flips (is flipping fraudulent?)
• how to calculate a deal
• short sale challenges with Seller/Lender/Buyer
• how to manage the seller’s expectations
• what it takes to do short sales
• the short sale process (Leads/Offers/BPO/Negotiations/Approval/Close/Title)
• the goal of the process
• how to develop your team
• seller documentation
• the BPO and lender negotiation
• the approval
• short sale title issues – getting to settlement
• exit strategies
• how to fund your deals

CLICK HERE TO REGISTER

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