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Showing posts with label REO. Show all posts
Showing posts with label REO. Show all posts

March 15, 2012

Buy-to-Let Deals Are Fast-Tracking UK Recovery

Hi Folks,
   Glad to be here with you.

   Today, we are going to talk "Buy-To-Let". What is "Buy-to-Let"? It's a very popular type of Real Estate Investment in the United Kingdom (the "UK"), where a property is purchased solely for the purpose of renting it out. This is similar to our version, which is a non-owner-occupied property (which oftentimes can refer to "Rent to Own"). So, now that we tied this in with some familiar terms from this side of the Pond, let's discuss how popular this investment has become.

   "For many buy-to-let looks an attractive income investment in a time of low rates and stock market volatility. Lower house prices, rising rents and improving mortgage deals are tempting investors once more", says Simon Lambert in his article, "Ten tips for buy-to-let". We will return to his tips shortly.

   In terms of had figures, David Whittaker, managing director of buy-to-let specialist Mortgages For Business, recently commented in an article ("Buy-to-let lending 'propping up' mortgage market") on the UKs' LandlordToday website, and said that that the increases in both new mortgage and remortgage approvals could have been largely driven by property investors. "Whilst buy-to-let lending to individuals has been lumped in with the total figures, we all know that it’s most likely the professional investors who are making hay while the sun shines", says Whittaker, who adds that "the likelihood is that the lending market is being propped up by the residential investment sector particularly with so much uncertainty surrounding the economy and first-time buyers largely locked out the of market.”

   In the same article, David Brown, commercial director of LSL Property Services, agreed, and commented that "demand for buy-to-let has been a key driving force behind the improved lending picture".

   Not just for Real Estate Investors

   This surge in Buy-to-Let is not isolated to just the Real Estate Investors. In a different, yet aptly titled article on the same UK LandlordToday website ("Build to rent is 'next big thing', says UK's biggest landlord"), it stated that "Developers are to be encouraged to build new housing estates where all the properties will be for rent, not sale". The article says that this would "mark a fundamental shift in the structure of the UK housing market", and that "Institutions and property companies would own, and trade, these ‘build to rent’ developments". The idea has been floated after research by Grainger, the country’s largest listed residential landlord, highlighted the huge shift in public opinion over home ownership versus renting, and the Grainger chief executive, Andrew Cunningham, was quoted in the same article that "build to rent will be the ‘next big thing’".

   Now, back to those 10 tips from the article written by Lambert, to which he refers as "the ten essential things to consider for a successful buy-to-let investment". The list includes the following; Research the market, Choose a promising area, Do the math, Shop around, Think about your target tenant, Don't be over ambitious, Consider looking further afield, Haggle over price, Know the pitfalls, Consider how hands-on you want to be. Great tips!

   This is a big thing in the UK. One of the LandlordToday articles stated that "The Government is taking the issue seriously, looking at how to encourage Real Estate Investment Trusts (REITs) in the residential sector". This is sure to deepen the market for Buy-to-Let in the UK, and the demand for Buy-to-Let in the UK should only continue to increase.

   What do you think this means for the United States? Should we be pushing the Fed to get more involved in this? It looks like they are on the right path when discussing doing something similar with the Foreclosure homes and REOs. What are your thoughts?


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Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #buytolet #realestateinvestment #UK #foreclosure #REO #renttoown #risingrents #residential #mortgagemarket #London #England #buildtorent #developer

February 20, 2012

The Fed Pushes Rent To Own For REO Foreclosures

Hi Everyone,
   I hope you had a great President's Day, especially if you were fortunate enough to have the day off.

   In some previous posts here over the past few months, we have discussed the connection that is music to the ears of Real Estate Investors, which is using Rent to Own for the immense amount of homes that are on the balance sheets of the banks, which are called REOs (basically, Real Estate Owned by the banks). Initially, we discussed this in "Feds Finally Keen on Rent to Own Housing", and then in the post titled, "From A Sad Foreclosure To A Happy Home". This is such a promising topic for everyone, not just Real Estate Investors, that it's important to revisit it here today, with some details and info from Joe Mont in his story titled, "Need a Foreclosure Cure? Try Rent-To-Own", and which appeared on TheStreet website.

   First, some info for those unaware of Rent to Own

   In a Rent to Own Deal, a Seller rents out their home to a Potential Buyer (a Tenant-Buyer), with a set price at which they will sell the home for during or at the end of a specified period of time. There is also an Option Fee, or an option-to-buy fee, which can run 3-5% of the value of the home.

   In the article by Mont, Brett Furniss, president and owner of BDF Realty, a Charlotte, N.C.-based firm that specializes in rent-to-own properties, says that there has been steady interest in these arrangements for the past few years, and says that "sellers realize that they can't sell their house for market value, so they are willing to entertain rent-to-own tenants, whereas in the past they just wanted to get the property sold"

   There are benefits for both sides on these deals.

   For the buyer, they have a vested interest in a property that they would like to ultimately purchase, and the time period of the agreement allows them to check out the area, the schools, and to build up their credit and/or their down-payment before making the purchase.

   For the seller, the mortgage is getting paid, and thus, the bleeding stops. They also have people in the home that they hope will take care of it as if it were their own, as well as taking care of the utilities, taxes, and as Furniss adds, "the risk of vandalism".

   "Fed Chairman Ben Bernanke shared his views on ways to escape the nation's foreclosure crisis", writes Mont. "Among the ideas in that speech" to the National Association of Homebuilders, was the topic of "rent-to-own properties". Additionally, says the Fed, Rent-to-own provisions could help renters and owners. "Bernanke supports the idea that a share of these creditor-owned properties be offered as "rent-to-own" properties rather than linger on the open market", adds Mont.

   Will the banks take this advice from Bernanke?

   We will see, however, as Mont writes, "the concept of rent-to-own and lease-to-own housing may be gaining traction among individual buyers and sellers". However, it is important to also look at the risks and the precautions.

   One risk that is important to understand is that of a financial nature, For example, if the buyer was unable to purchase the home by the end of the lease, or, if the price of the home is higher than the agreed upon purchase price (i.e, the seller could have sold it for more). Another such risk is the option money, and how it is credited towards a purchase or if any or all of it is refundable if they don't, says Mont.

   Some more good tips revolve around potential scams. A recently growing scam involves sellers who "pocketed their money even though the house was well on its way to foreclosure", writes Mont, so it is imperative to confirm ownership of the home. As always, involve your attorney and have them review all terms of the agreement. To learn more about Rent to Own, please see the E-book, "Secrets of Rent to Own", by clicking this link.

   So, after that mouthful, do you think the Fed will continue to push the Rent to Own path? If not, what would the reason(s) be?


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Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #REO #foreclosure #RealEstateInvestor #bank #housing #optiontobuy #properties #tenant #mortgage #leasetoown

October 18, 2011

Shadow Inventory As a Lurking Threat to Recovery

Hi All,
   There happens to be a very real threat lurking out there. One that hangs over us like the sword of Damocles. Indeed, I will most certainly elaborate.

   "Officially, there are 3.5 million homes for sale nationwide. But there are millions more lurking in the shadows", writes Toluse Olorunnipa for The Miami Herald, in her article, "'Shadow inventory' of homes could topple real-estate recovery" (Sacramento Bee reporter Rick Daysog contributed to this story). Additionally, Olorunnipa says that this ballooning shadow inventory stands as the most "menacing problem" for the Housing Market, and it is "threatening to stifle recovery for several years".

   "The question that you might be asking is; "Well, what is Shadow Inventory?".

   Basically, Shadow Inventory falls into 3 categories, as broken down by Olorunnipa; Real-Estate Owned (REOs), which are repossessed properties which are not for sale, properties in the midst of the foreclosure process, and "severely delinquent" properties that are headed for, but not yet in foreclosure.

   The national supply of homes is officially listed at about 3.5 million, or nine months' worth of homes (home sales are on track to reach about five million this year), writes Olorunnipa, but adding shadow inventory more than doubles that to "at least 7.5 million", but a "healthy housing market", writes Olorunnipa, has about six months' supply of properties, which would be about 2.4 million.

   South Florida has one of the nation's largest collections of unseen inventory. "A lot of people don't understand how much inventory is set to come online in the next 18 to 24 months," said Jack McCabe, CEO of McCabe Research & Consulting in Deerfield Beach. "When you compare what the Realtors show is inventory to what's out there, you realize we have a long way to go."

   Economists say that the housing industry "will not normalize and recover" until most of the foreclosures work their way through the system (several years, writes Olorunnipa).

   However, if mortgage lenders were to list and sell these homes and flood the market, it could be a disaster (due to the deep discounts and also the potentially poor condition of these homes). Selling off these REOs would basically crush their bottom line due to write-offs, and thus, Olorunnipa writes that "a growing number of vacant homes have idled on banks' balance sheets for several years."

   Going forward, things are looking to remain bleak due to the "robo-signing" chaos (false or incomplete foreclosure documents were signed), leaving banks "struggling to prove that they have legal standing to foreclose", writes Olorunnipa, who cites info from the data firm Lender Processing Services, which found that it now takes an average of nearly two years to repossess a property.

   Nearly two million homeowners who haven't paid their mortgage in three months or more have not received a foreclosure filing, writes Olorunnipa, with 800,000 of those that haven't made a payment in more than a year, (according to LPS). As Olorunnipa writes, there is a "lesser-of-two-evils" option at work here, where Lenders are basically letting delinquent homeowners stay in their homes (quick foreclosure would mean empty homes, additional maintenance costs, and more documentation woes).

   With the slow pace that banks are selling off homes, they would not be able to keep pace if they start aggressively foreclosing on homes, and Olorunnipa writes that even at the currently slowed pace, "national foreclosure starts are three times higher than foreclosure sales". Some struggling homeowners are doing "strategic defaults" to take advantage of this precarious situation for the banks.

   The alternatives to foreclosures? Short sales have been on the rise, and additionally, some banks are "cutting deals with homeowners who agree to hand over the keys to a house, rather than go through a legal battle.", writes Olorunnipa (basically, "lenders are forking over wads of cash to convince troubled borrowers to leave their homes amicably.").

   With some ugly options on the table, it looks like Lenders will need to be creative to ride out the storm, and to walk the balance sheet tightrope. What would you suggest to the banks?

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Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #shadowinventory #foreclosure #reo #housingrecovery #mortgagelenders #robosigning

August 9, 2011

Really? They Are Doing THAT To Foreclosures?

Hi Folks,
   Happy Wednesday to you.

   As some of you may be aware, when a person cannot afford their home, it's very easy for late payments to start accruing, and the bank letters come, and all of those other ugly things.

   Before that, a homeowner can try and bring their mortgage current, do a Rent to Own, along with a few other salvage techniques. Ultimately, they may decide to short sale the home, if the price of the home is less than the outstanding mortgage(s). Additionally, they can walk away, and the home will ultimately go into foreclosure. At this point, it remains on the bank's balance sheet as an REO (Real Estate Owned), and the bank uses agents to try and sell the homes to recoup something to cover the losses.

   But this raises the question...what about the "Orphans"...the homes that won't even sell at substantial discounts. What do the banks do with these homes? Bulldoze them!

   "Increasingly, it appears banks are turning to demolition teams instead of Realtors to rid them of their least valuable repossessed homes", which comes from an article aptly titled, "Bulldoze: The New Way To Foreclose", written by Stephen Gandel for Time.com. As Gandel writes, "There are nearly 1.7 million homes in the U.S. in some state of foreclosure.". Now, with the market laws of supply and demand, if there are too many homes on market, prices stay low. Gandel poses the question, "But what if some of those homes never hit the market."? This could be good for the market.

   Just recently, per the article, Bank of America (BofA) announced "plans to demolish 100 foreclosed homes in the Cleveland area.", and most of there homes, according to a BofA spokesman, are "worth less than $10,000". How many so far? Approximately 100 in Detroit, 150 in Chicago, and more cities slated by end of year. It's not just BofA...Fannie Mae, Wells Fargo, and JPMorgan Chase were also mentioned.

   Why is this good? Who does this help?

   It's good for the banks since they no longer need to pay tax and upkeep, writes Gandel. They might even get a write-off for the donations.

   It's good for the local governments since they have the land donated back to them, and they get to develop it or use it as open space,

   The story says that "Housing economists like these deals because they remove homes from the market that would otherwise sell for a low price or not at all", which would drop prices (supply/demand).

   Gandel writes; "we are at the point where banks would be better off knocking down houses that reselling them", and adds that this shows there is "still something very wrong with the housing market." I find it very encouraging that banks are thinking outside the box to stir things up. What do you think?


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Have a Great Week, and Happy Rent-to-Owning !

Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #REO #foreclosure #shortsale #renttoown #repossessedhomes #mortgage


May 31, 2011

Foreclosures Flooding The Market And Diluting Prices

Good Morning,

   Hope you are making most of this short week (short for the lucky ones).

   The woes of the housing market surface and resurface in many different ways. The S&P/Case-Shiller Home Price Indices were just released, and the numbers indicate that home prices in the Nation hit a new low in Q1 of this year. The figures showed a 4.2% drop, along with a, "new recession low" with the latest data. Additionally, home prices posted an annual decline of 5.1% when compared to Q1 of 2010. The release of these figures from Standard and Poors indicate that, "Nationally, home prices are back to their mid-2002 levels."

   "There's a three-year inventory of homes in foreclosure for sale, and that's devastating home prices.", says Les Christie, in a story titled, "Foreclosures for sale: Big supply, low prices", in a story on Yahoo Real Estate/CNN Money. The story points to data from RealtyTrac, and says that more than half of homes sold in Nevada are, "in some stage of foreclosure". California and Arizona are not far behind, with foreclosures representing 45% of sales.

   Rich Sharga of RealtyTrac was quoted very accurately as saying that this, "is very bad for the economy.".

   Homes, such as REOs (bank-owned homes), are selling dramatically lower than comparable properties, at an average of 35% less, per RealtyTrac. On the high end of this data is New York State, with a 53% discount for REOs in Q1. It is also worth mentioning short sales, which average at a 9% discount.

   Sharga says that it will take 3 years to sell the nearly 2 Million distressed properties, and about 2 years to clear out the REOs, to which he says, is, "without any new foreclosures at all coming into the system."

   This goes along with the S&P/Case-Shiller figures, where Minneapolis, for example, posted a double-digit 10.0% annual decline ("the first market to be back in this territory since March 2010 when Las Vegas was down 12.0% on an annual basis."). Always eager to end on a bright note, Washington DC was the, "only city where home prices increased on both a monthly and annual basis."

   Where do you think we'll go from here in terms of home prices and inventory?

Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com

TAGS: #foreclosure #realestate #REO #shortsales

May 22, 2011

Fear Over The Closing Of Escrow Process?

Good Morning,

   Monday has rolled around today, and summer is fast approaching (WOW!).

   On the topic of "Heat", one of the times we sweat to most is during Closing on a property. As on Ron J. Kuhn, a Sr. Mortgage Planner, says, "Closing" or settlement or "escrow" is listed as one of the top ten problem areas that occurs in a real estate transaction. It is probably the least understood, and most feared, aspect in a property purchase. Misunderstandings about closing costs can result in hundreds or even thousands of dollars of needless expenses, and put seemingly solid deals at risk". If that's not enough to make you sweat, let's examine this topic today.

   "In general: The process is dependent upon conditions set by the lender", says Nigel Swaby of Primary Residential Mortgage, Inc.. Swaby says that the conditions are quite often set by the investor that will, "end up buying the loan on the secondary market.", and adds that With loan buybacks becoming more prevalent, "this is very, very important as no originator wants to buy back loans that can't be sold." Susan Anderson, a Broker with Inspired Real Estate, adds that, "The closing process is generally the same in any transaction, but there are some definite differences depending on whether the transaction involves a traditional sale, short sale, or REO (foreclosed property), as well as whether the(re) is financing involved or the purchase is all-cash."

   As you can imagine, each state has their own unique process, and as Swaby says, "State law will impact the closing process.", and provides the state of Maryland as an example. "Maryland has transfer taxes that are levied on buyer and seller.", he says, but adds that the state specific requirements are "handled by the closing title or escrow company."

   Anderson says that one thing that is unique in California is that, "in Northern California, the escrow and title are usually handled by the same company. In Southern California, they are often different companies. Also, the buyer gets to pick the escrow/title company and the offer negotiation determines who pays for it (usually 50/50)." She says that usually, the escrow officer is in the local community, but says that, "However, with an REO, the selling bank usually picks the escrow/title, but they also pay for it, saving the buyer a big chunk of money. In that case, the escrow is most often handled by a company out of town who is working in a 'bulk' arrangement with the seller."

   Timothy G. Kearney, a Real Estate Attorney in Connecticut, says that Connecticut is an "attorney state" which means, "attorneys do the closings as opposed to an escrow or title agent in a title state." He says that the rules, "can vary from county to county but are, for the most part, standard." Kearney says that the normal process starts with the Execution of a P&S Contract, passes through title search, scheduling of closing, and then all of the settlements and figures are compared and adjusted, ultimately reaching the closing and conveyance of security deeds.

   Anderson says that, "as an agent, I prefer having someone local handle the transaction as it provides the ability to meet face-to-face if a problem arises.", but says that "one of the very best, pleasant, most efficient escrow officers I ever worked with was a woman in Southern California assigned to an REO transaction. And, of course, in California we do not use attorneys as part of the closing process. The real estate agent and broker are responsible for the entire process. I believe have the most rigorous broker license testing in the US."

   Kuhn adds the following comment about the Closing: "This final step to your purchasing a home or property can go smoothly if you take a few precautions beforehand. Knowing what questions to ask and reviewing all documents well in advance of the closing day will prepare you for a hassle-free and smooth closing.

   Good sound advice and good information. Tell us about your state's procedures and what are your suggestions. We'd love to hear from you.

Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com

TAGS: #escrow #realestate #REO #foreclosure #California #closing

December 29, 2010

Two Points: Selling An REO Property and Home Prices Dropping

Hi Folks,


   Hope you're having a peaceful week. 2011 is just a few days away. Doesn't 2011 sound like such a futuristic year?

   Well, today, I would like to share a post that was written by Bob Corcoran, titled, "Five Tips to Sell REO Properties Faster", and the reason that I am sharing this with you is that this post goes hand-in-hand with my post of November 26th, which is titled, "Post-Foreclosure REO Property Maintenance". Corcoran's post looks at how to prepare an REO for sale from a Realtors point of view, but is also applicable to investors or any other parties.

   Corcoran says that, "The house needs to look just like any other house on the market in the neighborhood.", and he points out his 5 tips as follows:

1. Be a cleaner: Corcoran emphasizes that you, "have to be willing to do what it takes to get the house sold."

2. Think colors: Corcoran states that, "Red says to stop and yellow adds a warmth and coziness."

3. Add smells: "If it smells like bad, it doesn’t matter what it looks like.", says Corcoran, who suggests using air fresheners and a fresh pot of coffee. He says that, "The smell of coffee imparts the best of emotions. It tells people this is a good place to raise kids, it gives a warm and a comforting feeling."

4. Put up signs: Corcoran says that when you're marketing an REO property, "you need to make sure that it’s depersonalized and use cue cards – white piece of paper on the wall – that explain to prospective buyers the positives on what’s been done to the property."

5. Communicate often and regularly: This tip refers to the relationship between the bank and the Realtor, and Corcoran advises that, "When banks assign the Realtor to a property, it expects them to become the eyes and ears for everything that has to do with that property."

   These are some fantastic tips, and are of great use to the entire Real Estate community.

   Now, on to Part 2 of this post: The S&P/Case-Shiller Home Price Indices were released yesterday, and as per the report, "Six markets – Atlanta, Charlotte, Miami, Portland (OR), Seattle and Tampa – hit their lowest levels since home prices started to fall in 2006 and 2007". Bright Side? It looks like the major cities in California bounced back. Do you live in California? If so, this might make you happy?

   Thanks for hearing me out! Comments? Questions? Suggestions? You have tons of options for feedback here.

Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com

TAGS: #reo #foreclosure #realtor #realestate

December 20, 2010

Drumroll...Your Top 5 Favorite Blog Posts of 2010

Hi Folks,


   Welcome back to Christmas week. If you were anywhere near a mall or a shopping center this week, you know that the traffic was at a crawl and the stores were bursting with people. You would think there was no such thing as a recession !

   Well, it's time to get all nostalgic with you. You have all gravitated to certain posts this year, and we are going to give you your Top 5 Favorite Blog Posts of 2010, starting with #5 and rounding it down to the Top Post of the year !

   Coming in at #5 is the Blog Post titled, "Post-Foreclosure REO Property Maintenance", in which we investigated into how the REO properties are being maintained while they are unoccupied.

   Coming in at #4 is the Blog Post titled, "Buying a Foreclosure? What You Need to Know First...", in which we spoke to numerous experts and foreclosure "gurus" for their suggestions on how to navigate the foreclosure property marketplace.

   The #3 Top Blog Post is titled, "Private Money...Any Available For Real Estate Deals?". In this post, we spoke with members of the lending community to gauge the availability of private money to fund Real Estate deals, and we received a number of different perspectives on this topic.

   Coming in at #2 is the Blog Post titled, "Top 5 Concerns When Selling a Home FSBO", which received a lot of traction and was ReTweeted and used in many articles and write-ups, due to the useful tips provided in the post. The sub-topics of selling a home as a "For Sale By Owner" (FSBO) that were covered in this post were Legal Concerns, Preparation of the Home, Mechanics of the Sale, Addressing Security Concerns, and Marketing the Home.

   Drumroll Please !! Your #1 Blog Post based on views, Tweets, Diggs, etc, was, "Right Time to Buy? Top Real Estate Investing Markets", in which we discussed the hottest markets for Real Estate investments. We spoke with many experts and investors across the country to provide you the best possible information. Even though this post was written a few months back, not a lot has really changed, so it is still worth a read and worthy of sharing with your peers.

   So, there you have it; The Top 5 Blog Posts of 2010, based on your views and usage of the content. We hope that we can continue to provide you with valuable and useful content, and all we ask of you is your faithful readership, your valuable comments, and for you to Retweet and Share our posts using the handy little buttons and links below the posts and on the side column of the Blog.

Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com/


#realestate #foreclosure #realestateinvesting #reo #forsalebyowner #fsbo

November 29, 2010

Caveats When Using a Foreclosure Rescue Company

Hi Folks,

   Hope you're Holiday weekend was great, and I hope you remember to toss out any leftovers from Thanksgiving, as they should be spoiling just about now !

   We are proud to share some great coverage we received in an AOL Daily Finance article titled, "How to Avoid Getting Conned by Foreclosure Rescue Scams", by Sheryl Nance-Nash.

   The two excerpts where we are quoted are as follows:

   "The problem has skyrocketed, and may get worse before it gets better, predicts Robert Eisenstein, president of HomeRun Homes, a rent-to-own marketplace operator."

   And...

   "Don't panic," cautions Eisenstein of HomeRun Homes. "Once you panic, you lose. Don't take the bait from the first company you meet. Make sure you don't create exponential problems along with the current problems of impending foreclosure."

   This was a very good article, as there has been a spike in these tragic stories since the housing market turned sour, i.e., Rent to Own deals where the owner went into foreclosure and the tenant/buyer was left in a very, very bad position (we have suggestions to help minimize the risk of that happening - please contact me for details).

   For more on the topic(s) of Foreclosures and REO's, be sure to check out the following articles:

   Foreclosure Prevention, Improved Housing Markets...
  
   Buying a Foreclosure? What You Need to Know First
  
   Short Sales - What Do You Need to Know?

   Post-Foreclosure REO Property Maintenance
  
Have a Great Day, and Happy Rent-to-Owning !
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com

November 26, 2010

UPDATED: Post-Foreclosure REO Property Maintenance

Hi All,

   I hope you had a wonderful and relaxing Thanksgiving dinner, and we are glad to have you back here with us today, from wherever you may be reading this.

   We have had a tremendous amount of requests to cover the topic of REO properties and the manner in which they are kept from becoming eyesores and danger zones. In order to garner the best information, we spoke with a few people who deal with REO properties on a daily basis, and we have received some valuable information from them that we would like to share with you today.

   How are Foreclosure/REO Properties being Maintained in while they are Unoccupied?

   Edward Harris, Owner of REO Clean Up, tells us that the REO maintenance process for his company starts once the, "HUD/Bank receives a foreclosed property into their inventory and that property is turned over to their integration contractor/Broker.". Once they receive the property they send his company a "work order to go out and perform an, 'initial inspection'." Harris say that this report provides detailed information of anything left behind by the previous owners and also any visual problems with the home. The next step after this report is sent back to the IC/Broker is that a, "a work order is generated from the 'initial inspection report' regarding any issues. This work order is referred to as. 'Initial Services'."

   Another professional we spoke with, Mia Melle, President of West Coast Property Specialists, says that, "How these properties are managed during times of vacancy differs from company to company and also depends on what the owner intends to do with the home - rent or sell or sometimes nothing at all.". Melle provides an example of Fannie Mae, which, "uses the agents who are going to list the home as interim property managers and usually they are unpaid!", so basically it is the listing agent's responsibility to, "coordinate lock changes, landscaping, board ups, etc.", and surmises that the fact that they are unpaid for this service, "speaks to the fact that so many homes go uncared for and turn into neighborhood eyesores."

   Adam Roberts, a Community Development Loan Specialist in the St. Louis/Midwest Region, concurs, and says that, "many of the REO properties are not being maintained to a "neighborhood friendly" level. Lenders are neglecting to manage these properties because there is an overwhelming(ly) large number."

   Melle says, however, that she has seen other types of financial institutions use property management companies to handle their vacant inventories but she reiterates that, "the companies are often doing this for the opportunity to either list or manage the property in the future and are offered next to nothing (in) compensation to oversee the homes."

   Who is Keeping these Properties from Becoming Overgrown?

   Harris says that once his company receives an "Initial Services work order", they perform the following; "trash out services, Janitorial, grass cut and any safety issues are given immediate attention. Once we receive a work order the property is in our inventory for routine services until the property is sold." He says that "Routine Services includes bi-weekly visual inspections, grass cuts, picking up any trash, re-fresh janitorial cleaning, re-fresh of winterization during the winter seasons, snow removal", and, "If a roof problem for example, is found during a routine inspection I would have someone rectify the problem ASAP."

   Roberts says that "fortunately" through local law enforcement and code enforcement the properties have some maintenance such as, "occasional lawn mowing and boarding up windows and doors." Still, however, Melle says that, "Landscaping is one of the issues that lack thereof is the most noticeable to the neighborhood and it's one of the harder services to obtain for anyone whether you are a bank, property manager, or listing agent.", and says that, "The reason for this is that gardeners are a very local type businesses and you cannot find them on the Internet, the yellow pages or elsewhere. Normally, if you live in the neighborhood they will drop a flyer off at your door periodically but other than that.they are extremely hard to locate and hire from off site. So, as a result the landscaping may or may not get done regularly or at all.", and says that, "It's definitely an issue that we've had in our company with these types of portfolios."

   Who is Protecting these Properties from being Burglarized (for Copper Tubing, etc)?

   Harris says that during the "initial inspection", the property is secured, locks changed, hasp/pad locks if needed.", but he says that, "Obviously we can’t have someone at the properties 24/7, the visits of the routine inspectors and neighbors aware of the home can be/hopefully a deterrent for any theft. But if there is a burglary we notify the authorities, find out how the burglar got into the home and re-secure the property."

   Roberts concurs and says that Local law and code enforcement, "report the break-ins and then requires the lender to board up windows and doors.", and that, "Unfortunately after this happens the home becomes unmarketable to "real people" and the best chance of the home moving on the market is now in the hands of an investor, which means another short sale."

   Who is Keeping Squatters from Living in the Property?

   "There have been cases of squatters but not many with our company.", says Harris, who continues to say that, "If our routine inspector doesn’t find evidence of a squatter then we are called by a neighbor. Keeping the squatters out can sometimes be a task." Harris says that, "At one property, the squatter broke the door three different times. The first two we re-hung the door and put two padlocks and hasp on the door. The third time our inspector arrived for his routine inspections and found the person in the house and was able to call the police. They were able to apprehend the squatters." On a positive and hopeful note, Harris says that, "Our continuous presence at the properties we hope prevents illegal activity."

   Roberts says that, "Unfortunately these homes are sitting unoccupied for extended periods of time which makes them highly susceptible to burglary and squatters." He says that, "After initial vacancy the home has windows and doors, (and) in a few months, squatters and burglars target the home. They begin by stealing the air conditioner. Then when they realize neighbors are too scared to come out and confront them, they break in doors and windows and start cutting out the copper and other valuable items in the home." he says that in the end, at best, "local law and code enforcement are mandating maintenance to the best of their ability", but, "unfortunately these dismal efforts are only making the public aware that these properties are foreclosed, unsafe and jeopardizing the stability of the neighborhood."

   How many vacant or unoccupied properties have you been seeing popping up lately? Have they been maintained fairly well or do they have the "REO 5'O'clock shadow". Let us know so we can all share some information and new ideas and strategies to help our neighbors.

Have a Great Weekend, and Happy Rent-to-Owning !
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com


TAGS: #foreclosure #shortsales #reo #realestateinvestors #realestate #propertymanagement #hud #property




UPDATED: Top 5 Blog post for 2010 (For more information, CLICK HERE)







November 24, 2010

Do the Housing Numbers Make You Dizzy?

Hi Folks,


   Hope you've had a great short week, and you're ready for the Feast !

   As we discussed on Monday, there were quite a bit of pivotal numbers coming out, and I wanted to take a look at them together with you. Whether this will aid in your digestion tomorrow will remain to be seen.

   New Residential Sales: October came in at 8.1% below September and 28.5% below October 2009, and compared to the same numbers released last month, which showed a 6.6 percent short term increase, but was also substantially below the previous year (21.5 percent decrease). What happened to another short-term increase? Where did that go?

   Existing-Home Sales: The figures for October came in 2.2% below September, and 25.9% below October 2009, reflecting, of course, the tax credit frenzy during that period of time.

   FHFA Quarterly Index: This purchase-only FHFA house price index showed a 1.6% drop from the 2nd Quarter to the 3rd Quarter, and a 3.2% drop from the same period in 2009. The biggest movers were the Mountain Division of the US, which was down 4%, while the New England Division rose 0.9%

   We still have a long way to go until we start seeing rock-solid numbers coming out with every new release, and it certainly will, as we cannot create more land, just more houses!

   As a final note, we will be doing a very informative piece on Friday, which will cover the topic of Bank REOs and Foreclosures, so be sure to tune-in (and digest).

Have a Safe and Happy Thanksgiving
...and Happy Rent-to-Owning !
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com

November 10, 2010

UPDATED: Private Money...Any Available For Real Estate Deals?

Hi Folks,


   Happy Mid-Week to everyone, and welcome back.

   When we posted on the topic, "Best Markets For Commercial Real Estate Investing", we had a few requests to cover the topic of "Private Money", so as per your request, that is our topic for today!

   We spoke with 3 respected figures in the field to gauge their feeling on the topic. All 3 of them seem to agree that there is private money out there that is available for Real Estate deals, and we present their viewpoints below.

   Alfred Miller, President, Private Lending Solutions, LLC, states that, "Capital isn't scarce; vision is. There is tons of money available for real estate deals.", but says that he wants his, "money invested in solid deals (diamond in the rough)!" and the deals can be either residential or commercial.

   Vernon Martin, a commercial appraiser with American Property Research, who specializes in serving private lenders (96% of his work is for private lenders), says that, "There's no shortage of money waiting to be lent, but there also seems to be a shortage of credit-worthy deals.", which is similar to what Miller has said. "Most loan applications to private lenders are for refinancing deals which are already over leveraged, so there is no way the borrower can pay off existing debt at a safe loan-to-value ratio", says Martin.

   Martin also says that private lenders are, "very interested in financing REO purchases by new investors.", and provides an example, where last week, he worked "on a $35 million construction loan that is being purchased for only $5.2 million. The private lender feels safe in lending $2.8 million. The difference is that loans can be underwritten at today's market values without any disappointment to the borrowers.". Martin points out that some private lenders are looking overseas for deals in potentially "stronger markets" (i.e., "Canada, Australia, Fiji, Barbados, South Africa, Mexico, Costa Rica and Jamaica.")

   Dennis P. Fassett, a Real Estate Investor who interacts with many sources of private money, says that, "there's quite a bit of private money out there. But it's gotten more difficult to get to, despite what the late night gurus want people to believe.", which he attributes to, "the stock market crash and Bernie Madoff scandal". The impact of the crash and the scandal had a few ripple effect impacts on private lending, Fassett says, such as, "with people out of the market, there is a lot more money on the sidelines looking for a reasonable rate of return", and "the Bernie Madoff scandal has made a lot of people quite wary of where they invest their money.",and says that, it's ironic that the scandal has also helped make local real estate investing more attractive, because the investor can go drive by the asset that they either lent against or have an equity piece of."

   Fassett provides a hint into the mentality of the private investors. He finds that, "the private investors that I deal with are looking for a track record for one and a sense of stability by me as well. I'm fortunate that I have couple of dozen deals and now own or control 54 rental units in nice areas that are all doing well. I had one investor tell me that one of the reasons that he invests with me is because I have a whole lot to lose if I screw up in terms of reputation in the community.", and he continues to say that he's also finding that, "the direct approach to getting private money doesn't work anymore, as people are getting pitched to death about everything under the sun, so I have switched to an oblique approach that focuses on drawing people into being interested in my business to the point where they ask questions and close themselves."

   As the recession lingers on, Michael Stark, a licensed real estate broker in California, is clear about the future. "The greatest transfer of wealth since the Depression is underway.". Where this will ultimately channel the private funds is yet to be seen, however, we all hope and pray that it stokes our housing market and the economy. Comments are welcomed !

Have a Great Day, and Happy Rent-to-Owning !
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com





UPDATED: Top 5 Blog post for 2010 (For more information, CLICK HERE)

September 17, 2010

Lucky Number 100 !

Good Morning,

   As you may be wondering about the odd title of this post, today we're celebrating our 100th Blog Post (Woo Hoo!). In looking back over the past 99 previous posts, we have listed our top 5 posts (based on traffic and votes), in descending order:

#1: "5 Tips For Buying a Second Home/Condo for Investment or Vacation"

#2: "Has the Housing Market Impacted Curb Appeal?"

#3: "Short Sales - What Do You Need to Know?"

#4: "Are Timeshares Truly Related to Real Estate Investing?"

#5: "Right Time to Buy? Top Real Estate Investing Markets"


CONTEST NEWS FLASH:


   We want to take the time and thank you for being loyal readers of our Blog, and we invite you to receive a hard copy (PDF) of some of our earlier posts ("oldies, but goodies").
   For the first 10 people who send an E-mail to homebuyer@lease2buy.com with the subject, "Lucky Number 100 Blog Contest", we will send you a copy of this via return mail.

   Did you send the mail yet? These contests close very quickly, so don't delay.

   We hope to post 100,000 more entries that will entice you, inspire you, and enlighten you.

Have a Great Weekend, and Happy Rent-to-Owning !!

August 18, 2010

Short Sales - What Do You Need to Know?

Hi All,


   Happy Wednesday to you. In keeping with our promise to tackle every topic you threw at us a few weeks back in that now "famous" Blog Post, today we are going to discuss some tips and strategies when pursuing Short Sales.

   A conversation about Short Sales would be incomplete without looking at it from two viewpoints: that of the Buyer (Broker or Investor), and that of the Seller (The Homeowner), and we have spoken with a few experts in the field who will discuss both viewpoints.

   First, we will examine things from the vantage point of the homeowner (the Seller). Geena Becker, of Geena & Company/William Raveis Real Estate & Home Services reminds us that the credit score is bruised on a short sale vs a foreclosure - "whereas foreclosure your credit score is driven down 200 points and banks will loan money to a bankruptcy victim before they loan to a foreclosed victim.". Becker also states that the banks pay for the attorney, realtor commissions, and back taxes, but will, "not pay any liens on the property. Those liens have to be negotiated OFF before the approval."

   In addition, Allan S. Glass, President of ASG Real Estate Inc. adds that, "The bank is settling a bad debt. Anything and everything they can extract from you regarding financial information will be used to that end, there are no casual off the record conversations with the banks while they are collecting your debt". Glass warns that you need to make sure you are working with an expert in the field of short sales, and that, "not every agent/broker is created equal and there is a learned skill to negotiating a debt settlement."

   Glass also provides additional pointers, such as to never pay any fee under any circumstance up front ! ("Professional agents will not charge until they are successful in completing your short sale or modification"). Further, he says that you should never sign over title to an investor who will then negotiate with the banks, as you do not need to sign over title to your home to be helped with a short sale. Finally, Glass reminds us that investors who help you with short sales are attempting to buy your home for a discount in order to make a profit, and that, "Not that anything is wrong with that when reasonable, however make sure you ask what happens if they cannot negotiate a purchase price low enough for them to invest."

   From the Buyers point of view (broker or investor), Becker provides some important pointers:
   1. You Will be buying "as is"
   2. You may be subject to more than one banks approval
   3. The Buyer won't know if the seller's loan was an FNMA (takes longer).
   4. If seller has it in their contract to make it subject to not receiving a deficiency judgment tied with short sale appraisal - there is a 50/50 shot of getting that wish.

   Further, she says that she will, "always find out if the mortgage they are late on was their mortgage that they first had when they bought the house. If so, nationally the bank CAN NOT go after the sellers with a deficiency note or promissory note on the difference. With the bank knowing it can come into play in a short sale negotiation since they know they can't come after the seller or borrower for the deficiency. If they have re-fi'd meaning it was not the "original" mortgage they will not have that slam dunk protection."

   Glass also provides some pointers in reminding us that, "the banks are motivated by values. They will do a short sale if they make more money by doing so compared to completing the foreclosure process", and that, "the bank and the seller are NOT working together to get the highest price from the buyer." Glass tells us that the best strategy is, "for the seller and buyer to work as a team to deliver the best value to the bank.". He warns that you must, "understand the numbers (as a broker or investor) and have a strong understanding of market value. Compare what the bank will net as a short sale vs. foreclosure / REO sale".

   As for timing, Glass says that it is key to, "follow up, follow up, follow up. If you are not following up the bank is not working on your file!", and Becker suggests that you make sure the buyer is very clear that this will not be a normal closing time frame, and that the buyer has to be able to, "wait without having to move in." and tells us, "I have had a lot of short sales last year especially where the buyers walk 1/2 way through my negotiating process and I have to start all over again. The buyer's agent must get it through to their clients that they can not be in a hurry. Good deals come to those who wait..."

   This is good sound advice from some seasoned Short Sales Professionals. Do you have any additional tips to share with our readers? We welcome your comments below.

Have a Great Day, and Happy Rent-to-Owning !

August 13, 2010

UPDATED: Buying a Foreclosure? This is a Must Read...

Hello Everyone,

Welcome to Friday !

We have been receiving a lot of questions about foreclosures from people who are asking us specific questions on how the foreclosure market works. In order to paint the best picture for you, we have spoken with some of our peers who are active in the foreclosure property marketplace in one function or another.

Sheriff Sale guru Marc Sherby uses a 10-point checklist to tackle all aspects of purchasing a foreclosure home. His Process is as follows:

1. Do Your Homework (research the liens, mortgages, comps, bid price, etc. before going to the auction). NEVER bid on a property without doing this first. Joanne Cleaver of ForSaleByOwner.com says that it is important to, "Understand the micro-economics of the neighborhood. On some blocks, a foreclosure is an exception. On others, it's the rule. This affects your ability to quickly get good comps when you've fixed up the foreclosure and are trying to resell; this also affects its marketability as a rental." Additionally, Jan Green, an Arizona Realtor, suggests to, "check the health of the Home Owners Association (HOA)" (if applicable), and to, "Check the date of the last reserve study that was done in the HOA, making sure it was within the last year if not 6 months. A lot can change in 6 months in a neighborhood. If it was 1 year, then check the number of foreclosures currently in the neighborhood and ask if more than 10 - 15% are overdue in paying, another hint." She also suggests checking to see if, "there is an Environmental Report available that will disclose information the surrounding area for airports, landfills, soil conditions or other abnormal findings that could pop up."

Alfred Miller President, Private Lending Solutions, LLC, adds that it is important to know, "how long it takes to sell a home in your price bracket", to, "study the sale prices of comparable homes in your area.", and to remember that, "the sale is for the home as is."

2. Set up your support team (real estate attorney, accountant, realtor, Title Company, contractors, insurance agent and so on). Find people you are comfortable working with. Miller concurs, and suggests that you, "Find an agent specializing in foreclosures."

3. Learn the rules for your particular area FIRST. Rules and “conditions of sale” are different for each county and for different types of sales. You can obtain a copy of these rules the Sheriff or auctioneer. Green, who works in the Hot Arizona market, states that, "The deed issued in Arizona for REO's is a "Special Warranty Deed" and not a "Warranty Deed" that is the typical deed in a regular sale. Why is this important? There is no title coverage for past problems with the title prior to the bank taking ownership of the home. And always always buy title insurance to cover the transaction against any liens on the property, no matter the type of financing used to purchase the home." Know your market !

4. Get the list of auction properties. In most cases depending on your area, you can obtain the list of properties going to auction for free. If the sheriff or auctioneer has a website many times the lists are also posted on them.

5. Line up your funds BEFOREHAND. In most cases you will not be able to obtain a traditional mortgage beforehand to pay for the property. This is one thing many people do not realize. Cleaver agrees, and suggests to, "Have lots of cash. Banks will negotiate a little, but they will mainly listen if your money talks loudly.", as well as Miller, who suggests that you get, "Get pre-approved for a mortgage."

6. Go look at the property (before you bid), and try and determine if it is occupied or unoccupied. Green suggests that you, "Knock on neighbors' doors to ask for details about the area. Neighbors can be your best source of information about a neighborhood and can provide the names of others serving on the HOA board.", and Cleave similarly says that you should, "Get neighbors on your side. They are well aware that the foreclosure next door has eroded the value of their own property. Position yourself as as hero, not as a bottom feeder."

7. Know how to bid. Bidding is a psychological game as well as numbers game.

8. Have a plan. What type of property are you looking for and where? Is the area up and coming or in decline? Are you buying as your own personal residence, as a rental, or to rehab and flip? If it’s a flip, what type of buyer will you be looking for? How much money and time can you commit to this project? Know these answers ahead of time because as the old saying goes “those who fail to plan, plan to fail.”

9. “Sit on your hands.” Begin by attending several sales and just watch what goes on. Most sales happen very quickly, usually in just a matter of minutes, so you’ll need to pay close attention. See who the players are and take lots of notes.

10. Get Educated. Many of the people you will be bidding against are auction pros and you’ll need to become one yourself. Reading books, attending training seminars, joining local real estate investing groups, or finding a mentor are just some of the ways you can educate yourself. Additionally, you can check out, "Will It Work In My Town" for some good suggestions, as well.

Green has some additional tips that will be of huge help:

1. Always change the locks immediately upon purchase. REO homes are oftentimes on master keys for other homes in your area. If a home will be vacant for some time, get a security system as the home has a history of being vacant. If it has a pool, make sure it's maintained weekly. Check any other systems around the house to make sure they are being maintained. This way you'll maintain your equipment and have activity at the home.

2. Purchase a home warranty from a company that will cover pre-existing conditions ("hidden defects") for foreclosures.

3. Obtain a very thorough home inspection by a licensed contractor (verify the inspector is licensed, bonded and insured - Lots of home inspectors are not renewing their state licenses in this economy).

4. Check under every sink and water source for past water leaks. If there were leaks and you're still interested in purchasing the home, get a MOLD inspection.

Do you have any additional tips that will help our readers? Please feel free to comment here and let us know.

Have a Great Weekend, and Happy Rent-to-Owning !




UPDATED: Top 5 Blog post for 2010 (For more information, CLICK HERE)