New And Interesting

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Having the Sale of Your House Fall Through at the Last Minute

One of the complications that house sellers are having lately is not only trying to sell their property. Getting it ready to sell, finding the right agent, putting it on the market, setting the correct price and then finding a buyer, can be stressful enough.

But imagine you have a contract and you see a light at the end of the tunnel. The problem is that with the more stringent qualifications it is more difficult for the potential buyer to get a mortgage. This makes the sale fall through at the last minute.

Nothing can be more devastating than to be in a bind financially. Trying to sell your house and then having salvation ripped out of your grasp. That is why working with us is so simple. If we say we can buy your house then we can. It doesn’t matter where in the Bay area you may be. We can help you.

We are not beholden to the mortgage companies that can change their standards and decline us at the last minute. We have everything all lined up so that when we go to closing it is smooth and without those pesky problems that usually creep up when dealing with mortgage companies.

That does not mean that there may not be issues during closing, because frankly there always are. Missing signatures, more docs to sign that kind of stuff, but in a typical transaction it is usually the mortgage company that causes the problems. Without having to worry about that you remove a majority of the issues that may arise.

So let us help you, just give us a call or contact us via email. Everything is confidential and with no obligations.

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Up Side Down, Right Side Up sometimes you just need to know your options

Owning real estate right now can be a tenuous proposition. Many people that we talk to bought their houses in the last 7 years or so. Unfortunately they bought their properties at the height of the real estate market. Now so many people are upside down, owing more than their house is worth. Being upside down in and of itself is not necessarily a terrible thing. If you can still make your payment comfortably and are reasonably sure that the value of the property will eventually be worth more than you paid for it, then you can ride out the market.

The problems come when you are stretching to make the payments. Sacrificing other payments to keep up with a property that you are upside down in can be a really bad for your financial future. For the last several years there has been a rash of Strategic forfeitures. People are just turn their houses over to the bank because they are so far in the hole.

In some cases they owe two thirds even twice what the house is worth. How are the banks dealing with this? They are putting up a fight and doing everything they can to stop this practice. Now I am not saying that people should just stop paying their mortgages and give the house back to the bank. For many this is not the option at all.

The Federal government has also made moves to provide relief to struggling homeowners. The red tape involved is often slow and difficult to wade through, resulting in spending a bunch of time that is wasted. I have read that less than 20% of those that submit the application are actually seeing results from the effort.

Also the requirements for government can be quite stringent. Those property owners that have been late in the last 12 to 18 months need not apply. I watched new conferences held by President Obama where he kept repeating, that he wanted to help out “Responsible Homeowners.” Personally I take offense to that. I know many people that have been late in the last 18 months for many good reasons, many of which had nothing to do with them being irresponsible.

Many people come to us, who are struggling; their house is one of those burdens that are often the straw that breaks the camel’s back. Often people make the tactical mistake of letting other payments go so they can pay their mortgage payments. The problem is that by the time they’re in trouble on their house they are not in a position to refinance or receive any help.

The best advice we can give is to seek assistance early. When you think that you might not be able to make your payment then seek help. The problem then is that many organizations will not work with you until you are 30 or even 90 days behind. It really is a catch 22.

If you find that you are in a position where you are in trouble and need assistance. Do not hesitate. Find out your options sooner rather than later. If you do that then you have more options available to you. When you are out of conventional options you can then seek out the more non-conventional options. Even though some of these options may not be well known, they are valid for specific situations.

If you find that you just don’t know what to do or even what you possible could do. Give us a call. We work in these types of situations on a day in day out basis. We work with many financial institutions and resources around the bay area. We don’t charge for a consultation. So don’t hesitate.

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Real Estate Market Outlook for 2012

The real estate market is supposed to stay pretty much the same in 2012 as it did last year. There is expected to be a similar round of foreclosures, and a higher than usual amount of houses on the market because of this. Discretionary sellers who are in a position to wait will probably still wait instead of listing the properties this year. The industry expects the interest rates to continue to be low in an effort to spur housing sales. But with the strict guidelines it is harder than ever for people to qualify for a loan. I will probably have to say that I am more pessimistic than the general reports. I don’t think the economy is going to rise before the end of the year. Also it would not surprise me to see an uptick in foreclosures with the 5 & 7 Adjustable Rate Mortgages coming up. People who have been in a position to maintain the payments on their loans may not be in a position to either refinance or to change the loan when it begins to adjust. This may be okay since the interest rates are low right now but there are many loans that have built in increases upon maturity, which may increase the monthly payments. If that is the case there may be another round of foreclosures to wade through before the housing prices begin to settle and rise. So needless to say there may still be another bump in the road as we work our way through summer and into the fall. We will just have to see.

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The Importance of Selling Quickly in the Current Market

We know that despite the political climate and the way the media is discussing the economy and the economic outlook that we still have a way to go to get out of the mess we are in. Our region has been hit particularly hard with a high foreclosure rate and slow housing sales.   As a home owner who may need or want to sell, speed of the transaction will probably be at the top of your mind. Why? Well as you know the longer it takes to sell your property the more money it can cost you. Not just with the direct costs of mortgage, insurance, utilities, interest. But also with the indirect costs, houses that are on the market longer than 60-90 days take a price tumble. Most real estate agents that you talk with will say that if you do not have an offer in the first 30 days you need to revisit the price. So you lower the asking price $5,000, then it doesn’t sell in the next couple of weeks and they recommend another $10,000 - $15,000 to spur interest.   It is a vicious cycle. The original price was not right for the condition of the property and the market. So you need to adjust to get rid of the house. So you have to work hard to come up with the right price in the beginning and then market aggressively to sell quickly.   Let’s take an example of a house for $350,000. It doesn’t sell for 150 days. The agent asks for a $5,000 reduction at day 30, another on day 50, another $10,000 on day 75, another $5,000 on day 120. So at day 150 you get an offer for $320,000. You decide to take it. Then the house is inspected and the buyer wants you to fix about $3,000 worth of “miscellaneous” needs. So you go to closing at day 180 for a grand total of $317,000.   You factor in the cost of the closing, usually 3% and then the real estate agents commission 6%, inspections & miscellaneous fees (1%), and then finally the tax on the sale. So your $317,000 suddenly becomes $272,000 or so. Not to mention the 6 months of payments, interest, utilities and the like and you can see the result of waiting to sell the property the conventional way.   So time is a huge factor when selling. You can be much better off in the long run working with a professional Real Estate Service company that can buy your house at a reasonable price and get you out from under quickly.   So investigate your options and weigh them it could be that your “off the top of your head” thinking that you should only work with an agent could be leading you down a path of no return. Give us a call to see what options you may have. You may decide that you want to continue working with an agent is best for you but you will never know unless you have all the information.

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How The Heck Do You Finance The Deal

If I had a nickel for every time someone asked me that question I would have an extra million dollars just lying around and would be able to give it to someone to buy my house. Financing is really the key to opening up your investing business right now. Over the last eighteen months or so the financing picture has changed drastically. In February of 2007 you could get a 100% LTV non-owner occupied loan with a mediocre credit score, no proof of income or assets and just a signature. Now if you can get funding at all, you have to have a great credit score, fully documented assets and income and a large down payment. Not only that but you need to have seasoned money for the down payment and reserves. The pendulum has swung back the other way almost to the extreme.   If you or your buyers are going to use conventional funding sources, you need to make sure to have your act together. Ensure that everything is documented perfectly. This is the main reason why it is much tougher to sell your rehabbed properties. Buyers are not prepared. The good news is that if you buy the house right, you are sitting pretty to sell your properties creatively and to make a great profit. This brings me back to financing, it is more important than ever to use private lending in your business. Learning the ins and outs of Private Lending can be the difference between thriving in this economy or shutting your doors and missing the best opportunity for wealth creation in our lifetimes. Unfortunately most people don’t understand how to find Private Lenders, or how to be one for that matter. Investors are afraid to talk to people about what they do and ask them if they are happy with their investments. It is amazing what happens when you talk to people. You can find money coming out of the wood work. The other night I was flying home from St. Louis and chatting with a college professor about our lives and jobs. At the end of the 3 hour flight I had a potential new private lender and had sold one of my new courses about how to be a private lending. Most people are in a position where they just lost some significant money in the stock market. Their mutual funds are stagnant or have gone down as well. People are afraid, very afraid. They don’t see any options available to them except a T-Bill that earns less than 3% annually. I show them how they can earn a safe and secure return by lending me money that will be secured by real estate. I talk with them to find out their goals and determine if what I do will fit their criteria or not. I never try to force anyone into an investment. It will never work for either of us if I do. I am careful to stay well within the SEC and State department of securities guidelines. I am careful to only approach people when I have a relationship with them rather than hitting someone up when I first meet them. I get to know them and their goals. I am not a financial planner. I do not present myself as one on TV or through what I say to people. By building a relationship you understand their needs better. You also stay well within the law, which is always a big thing for me. I really don’t look good in stripes. Your assignment this week is to talk to people about your investing business and discover if they are happy with their investments. Find out what they earning from their investments. Don’t push them to reveal everything to you immediately; you can follow up with them later. Next week I will talk about what to say to get them to open up to you.

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Wealth Acceleration Strategies for Real Estate Investors

We will all agree that real estate is the best way to build wealth. Using real estate helps by using one key method that almost every other investing strategy does not offer. That being Leverage or borrowing against your property to control something more valuable than the amount of money invested. I can hear you yelling; “What about trading stocks on margin?” Yes, you are right that with a trading account you can trade limitedly on margin or only putting a fraction of money up for the stock. But that is very limited compared with real estate. I have done a 100% LTV mortgage on an investment property before. Now since the Sub-prime melt down you will not be able to do that for a while. But still, people routinely buy property with less than 20% of the purchase price down. Assume you are going to buy a single family house to rent out for 5 years and then sell my house. So you buy a $400,000 single family house purchased using a 80/15/5 conventional mortgage. What does that mean? 80% LTV first mortgage, 15% LTV second mortgage and 5% down payment. You bring $20,000 plus closing costs to the escrow company when you buy my house. So for $20,000 you control a $400,000 piece of property. Your monthly payments on your mortgages are $2,100 including your taxes and insurance. You receive $1,800 rent on the house. And it is vacant for 1 month out of every 12 months because of finding new tenants. Now this is a very conventional deal but very realistic in our current market. Let’s take a look at the numbers:

	Monthly	Annually	Total
Costs	$2,100	$25,200	$126,000
Income	$1,800	$19,800	$99,000
Net	($300)	($5,400)	($27,000)

So looking at the numbers this way it does not look like a very good investment. Paying someone to live in your property $27,000 for 5 years. Remember this does not take into account any repairs or tax implications these are just the raw numbers. But let’s look at it a different way. We are going to assume for the sake of argument that the property appreciation is 10% annually using round numbers. This a absolutely achievable in the Seattle market but will vary depending upon area.  Here is really what you are controlling: Purchase Price: => $400,000   Future Value 60 Months 10%annually: => $644,204   Total Equity Growth: => $244,204   Total % => 61% total growth   So your investment of $20,000 plus your additional expenses of $27,000 of holding cost will bring you an additional $197,204 over that same 5 years. How many of you would spend $47,000 to make $244,204 bringing you a rough profit of around $190,000. That is really the true path to wealth in real estate investing. The use of leverage is really what makes this happen for you. If you were to just invest the same $10,000 at a 10% annual interest you would only make $6,105 instead of the more than $190,000. So using the leverage only found in the real estate make you very wealthy when used over time. Now most of you know that I am a big proponent of creative real estate investing and may think that there is something hypocritical about talking about going and getting a loan and investing for the long term. Remember. This is tactics that I use to make money to invest long term for growth. So this is very true of all real estate. So please take the time to develop a strategy to use the best of both worlds.

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The Grunt Work of Motivated Seller Marketing

When I am asked by new and experienced investors about how to find deals I stun them when I tell them that I have motivated sellers seek me out. They are at a loss because either they are not getting any leads or those leads that they are getting are by people who do not need to sell my house quick they just want to sell. I have never understood why people would do their marketing in such a general manner. They are getting leads from all over the place. Worse yet they are getting people who are really just kicking the tires, rather than serious people who need to do business the way that we do business. I know the reason that most investors do their marketing in this way is because that is what they see other investors doing or they were told to do that from a seminar speaker. I always have been asked about using the “Yellow Letter”. This is a letter that is hand written or appears to be hand written on a yellow legal pad of paper so that it looks like an investor actually took the time to mail each one individually. This is a good technique used in the proper neighborhoods. It does get people calling in and it makes the investor seem very busy. I spoke with several speakers about this mailing and one confided in me that he teaches this method because the investor gets responses from it and that it makes him, the speaker, look good. The funny thing about it is that this speaker knows that the number of useful leads is actually below average from his other mailings. When I do my marketing I do it in such a way that I only talk to motivated sellers rather than every Tom, Dick and Harriet that wants to sell their house. I would rather direct them to my website or automated information line rather than talking to all of these people. Recently I had a mentoring student who used the Yellow Letter call me frustrated. She mailed out thousands of yellow letters and had over 200 phone calls in less than two weeks. Her days were spent trying to get the answers to her questions from these people. At the end of the exercise she swore that she would be happy with just buying a single house from those leads. Frustrated at spending over a week following up and tracking down she had come to realize that there was not a single motivated seller in the bunch. All wanted full retail; a few others wanted more than the house was worth and a few figured that by discounting $10K was enough for an investor to make a profit on the deal. She finally realized that putting people through some prequalification before she spoke with them is much better than dealing with all of these phone calls.

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No Money or Credit Investing is a Crock

No Money or Credit Investing is a Crock! Why are you still teaching it? I am going to take a time out from my article series this week. I received an email from a person who got into real estate investing a couple of years ago practicing “No Money Down” investing. I have talked to him several times over the last year or so and yes, he got himself into a pickle. He watched those same TV infomercials that you and I have seen late at night. He heard about this wonderful world of real estate investing with no money down. He decided it was for him. The problem is he did not educate himself. He decided that he knew enough watching those 30 minute success story shows that he could go out and do it himself. He began by working with a real estate agent and mortgage broker. Please keep in mind that this was in a good market during 2005 to 2007. He found a typical “good deal” on the MLS that his agent “told” him was a good deal. He went to a mortgage broker who lined up a “really good” no down payment, interest only, negative amortizing loan that allowed him to roll in his closing costs. He then rented out those properties with negative cashflow. He did this several times. Over and over again, he buy my house at full retail. Over leveraged it and then rented it out for less than his monthly payments. You know, this is a real life version of the old story that if there is enough “Gross Revenue” there has got to be some “Net Revenue” around here somewhere. He was all set… All set for disaster that is! Anyway, with the market change and renters not paying on time and then having to evict them; problems started. The adjustable loans began adjusting and then the financing criteria began changing, so there were no loan programs to do a “cash out” refinance. Soon he was in a bind. Long story short… he is in big trouble. He lost his credit and properties and everything else. Foreclosure and Bankruptcy, Ouch. Unfortunately this is typical in today’s real estate market. But in his email to me he asked why I still taught “No Money or Credit” investing. Well frankly, because it works. I believe in getting trained properly to do what I am setting out to do. I don’t believe in trying to learn from a mortgage broker and real estate agent who are just trying to make commissions off of my transactions. I would rather spend $5,000 or $10,000 for training where I can multiply that same money over and over again. If I paid that same money in commissions I only learn from that one transaction. Paying someone who has been there and done that, I learn from every transaction that the teacher has ever done as well as from the people in the audience. I am not blaming the broker or agent for this transaction. (Well, yes I am… but really they did their job, which was selling their service to the investor. Not teaching him to be an investor.) The root of the problem was the investor. He didn’t educate himself and didn’t know enough about the endeavor to make money. He still sees me and other people who teach successful creative real estate investing techniques as the problem rather than he who got in over his head and listened to the wrong people as the problem.  I teach “No Money or Credit” Investing. The difference is I have yet to put a mortgage into my name and I have a solid exit strategy going into the purchase of the property or selling my property. He would have been fine if he would have took it slower, found a deal and then used his buy and hold exit strategy with the proper fixed rate mortgage that allowed cashflow. The problem was he lived in Southern California and when the market tanked, so did he. Remember there are Winners or Whiners, you choose which you want to be. Take responsibility for your own actions. He made the mess and he is cleaning it up. In a few years he will be in a position to try again. It is his choice to be a Winner rather than a Whiner!

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Determining the True Value of the Deal

I don’t know about you, but when I first got started in this business I had a hell of a time determining the true value of selling my property, when I bought it, as well as the After Repaired Value (ARV). There were so many variables in determining the value it just eluded me. When I first began learning about investing everything regarding value was cut and dry. Run comps using the MLS, Real Quest, Data Quick or some of the free comp-ing services from title companies. They would give you the sale prices and the list prices of all of the properties within a radius around the subject property. I did learn that proximity, size, age number of bedrooms and baths are important when determining the value. Amazingly enough you can have two houses built in the same subdivision, same age and size and yet the value of the properties can be radically different. Contrast that with a house built by the same builder but in the next development over and the prices can be different as well. All of this has made for a very confusing problem when determining the value of selling a home. A perfect value would be having a house that was the same size, same number of beds and baths in the same neighborhood built by the same builder and the comparable property was sold and closed only 30 days previously. You can then be assured that the values would be the same. Then you have to take a look at the motivation level of the seller and the buyer; just because the appraised value would be the same the market value could be radically different. Suppose the seller was willing to offer better terms for the sale or the buyer was in a pinch and needed to close quickly. This could add 3-7% to the selling price of the house. I know that I have added many different dimensions to something that should have been simple, determining the value the property. I just want to encourage you to think about the complexity of real estate investing. What may seem like a simple item can become tricky very quickly. This is one thing that will trip up a beginning investor, but surely not the only thing. This is why I encourage you to work with the Best Expert Professionals like appraisers and real estate agents when first getting started. Once you have done several properties you will become an old hand at figuring out what the property is worth.

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Creative Marketing for Creative Real Estate Investors

We all know that we make money when we buy a house and we pocket the money when we sell my house quick. To have a successful business we need to have good cashflow that covers our expenses and throws off money for us personally. Without this we are not going to be in this business for very long. In order to get good cashflow we need to have deals come our way. To get deals we need to have leads and to get leads we need to market for them. As you can see marketing is the “Key” to this business. Without good marketing everything falls down on top of us. Unfortunately this is where most people make mistakes. Either they don’t do enough marketing or they don’t do good enough marketing. Some people think that sending out a postcard once is marketing. Really if you send a mailing once, you are just wasting your money. You need to have multiple steps as well as multiple avenues of marketing. I advocate that you are using 5 different types of marketing to bring in leads. If you don’t have a marketing budget then you have to use more guerilla types of marketing. You have to do more tasks yourself to stretch your budget. If you have a decent budget set aside you can do more and outsource everything. You can use many types of marketing to obtain quality leads. Just pick any five and run with them. Here is a list for you to pick from: Take this list and pick 5 of them and use them on a weekly basis. Send out letters, hand out flyers, hand out 5 business cards per day, place 10 bandit signs per week, and distribute door hangers to your target neighborhood. Quite frankly, if you are not getting enough lead flow, you are not doing enough marketing. Spend your money where it counts. If one of these methods has not been working for you, change it up a little. Test to see what works and then do more of that. Marketing is the key to a successful business. Be different; stand out from the crowd by being more effective. Effective marketing is a business builder and will prevent your competitors from taking your deals away from you. Take action; make a difference for yourself and others. ___________________________ Need more information, give us a call at (800) 518-0215. See how Ascent Property Solutions can brighten your future.

Alameda County • Contra Costa County • Marin County • Napa County • San Francisco County • San Mateo County • Santa Clara County • Solano County • Sonoma County