The demand for home loans rose last week, giving rise to further speculations that the real estate downturn may be easing. According to the Mortgage Bankers Association, mortgage applications rose to 6.6% for the week ended June 19, 2009 and it was 17.2% higher when compared to the same week last year.
Yesterday, the National Association of Realtors stated that existing home sales rose 2.4% from the April 2009 levels. Low interest rates, affordable prices and the $8,000 tax credits are helping to absorb the housing inventory.
First time home buyers accounted for 29% of the sales in May. Also, the number of buyers actively looking is up almost 10% from a year ago.
Wednesday, June 24, 2009
Tuesday, June 23, 2009
May existing home sales rose by 2.4 percent
The National Association of Realtors has reported this morning that existing home sales rose 2.4% in May 2009, which represents the third month of gain in the housing market this year. Another piece of information released was that the number of foreclosures comprising the resale market has dropped.
In my opinion this are good news. However, the media continues to instill fear in the american public by providing only part of the information or manipulating data to continue keeping people from thinking positive, so we can get out of this recession. The media continues to focus on the fact that the published information “missed economists’ expectations”. Personally I do not care if the economists got their calculations wrong (that is what the media is saying), I look at the overall picture of the housing market. Do we have signs of improvements? The answer is yes.
1. Home sales continues to show positive signs.
2. The number of foreclosures that comprises the number of homes sold is lowering.
3. The unsold home inventory continues to drop, currently it is at 9.6 month supply. If you recall about a year ago, the supply was at 12 months, and the same economists predicted that the supply was going to continue rising. A normal market is considered 6 months supply and we are moving towards that direction.
What does this mean for real estate investors and home buyers?
In my opinion the housing market may have put in a floor on prices for this year. I expect to see the prices in many areas of the United States to stabilize and experience modest appreciation. This provides great opportunities to the real estate buyers’ market.
What are your thoughts? Let us know your thoughts about this subject.
In my opinion this are good news. However, the media continues to instill fear in the american public by providing only part of the information or manipulating data to continue keeping people from thinking positive, so we can get out of this recession. The media continues to focus on the fact that the published information “missed economists’ expectations”. Personally I do not care if the economists got their calculations wrong (that is what the media is saying), I look at the overall picture of the housing market. Do we have signs of improvements? The answer is yes.
1. Home sales continues to show positive signs.
2. The number of foreclosures that comprises the number of homes sold is lowering.
3. The unsold home inventory continues to drop, currently it is at 9.6 month supply. If you recall about a year ago, the supply was at 12 months, and the same economists predicted that the supply was going to continue rising. A normal market is considered 6 months supply and we are moving towards that direction.
What does this mean for real estate investors and home buyers?
In my opinion the housing market may have put in a floor on prices for this year. I expect to see the prices in many areas of the United States to stabilize and experience modest appreciation. This provides great opportunities to the real estate buyers’ market.
What are your thoughts? Let us know your thoughts about this subject.
Sunday, June 21, 2009
Is Wholesaling Legal?
Today I want to address a question that after many years in real estate investing, I still hear people asking the question: Is Wholesaling Legal? Recently I heard from a Realtor (I am not going to mention names nor agency, due to professional courtesy) that to make wholesaling legal you need to keep the houses for three to four months before selling them AND that investors cannot put it under contract and assign it anymore because this is “illegal”. I cannot believe we are in 2009 and still addressing this issue, but I found it necessary for my friends on this blog to be clear about this issue once at for all.
I would start by saying the following:
1. Wholesaling is NOT illegal and the assignment of contracts is NOT illegal either.
2. I like Realtors.
3. Many Realtors have not heard of wholesaling and many do not understand a “Sandwhich Lease Options”.
4. Many times when I make an attempt to explain to Realtors the only thing they say is "Your not a licensed Realtor, how can you do that?"
5. A lot of Realtors adhere to the following policy: “When in doubt, say it's illegal”.
6. Realtors are not the only professionals allowed to transact with Real Estate.
7. I think some Realtors look at Investors as either competition or crooks, the good ones see a potential customer.
8. I have Realtors tell me all the time that what I'm doing is illegal. Now I don't even argue anymore. I do not think you should waste your energy in arguing with them either.
9. You can sell things you own. If you buy the right to purchase something you can sell your rights.
10. Realtors are not attorneys. If you have questions about the legality of what you are trying to accomplish- ask an attorney.
Let’s address the two points that this Realtor mentioned in the conversation:
1. Legality of the transaction – Once again after 18 years in real estate investing, I have not found one attorney that has told me that the assignment of contracts is illegal. The only time I know flipping is illegal is when you are defrauding a lender. Therefore, make sure your buyers are cash, and if they are not cash then make sure they are using bank funds not regulated by fannie mae or freddie mac. e.g. a portfolio loan. Full disclosure.
2. Holding period – We do need to understand that FHA has a 90 days seasoning policy in any state. I do know that banks are exempt, but private owners must hold property for at least 90 days before a new buyer may enter the loan process with FHA.
Another point I wanted to mentioned to those that are interested in wholesaling REOs, is that banks do not allow assignments of contracts on short sales or REO's but that is their own rules, there is nothing illegal about it. Wholesaling of REO cannot be done using the traditional methods; therefore you need to go around it if you want to wholesale REO (Double close, LLC, etc).
I think that the Realtor may have overheard a conversation about seasoning requirements and felt compelled to share with everybody his/her new knowledge. The good news is that Realtors like the one above won’t last long in the industry. The same way ill informed investors won’t last either. There is a lot of good information available to all of you out there, training courses, ebooks, etc. Educate yourself about your profession, ask questions to those that have been in the industry long enough that can share some wisdom with you, ask question to the proper person, for example ask legal questions to your attorneys, property structural questions to property inspectors or engineers, etc.
Finally, do not waste time arguing with Realtors about the legality of Wholesaling. It is not your role to educate them, especially if they are closed minded people. Educate yourself and consult with professional that can keep you from trouble. Promoters of their “get rich quick schemes” will always tell you that what they are selling is legal; after all if it was illegal they won’t be selling it to you. Just be certain that you as an investor is performing a legal transaction and go to the bank with a smile in your next closing.
I would start by saying the following:
1. Wholesaling is NOT illegal and the assignment of contracts is NOT illegal either.
2. I like Realtors.
3. Many Realtors have not heard of wholesaling and many do not understand a “Sandwhich Lease Options”.
4. Many times when I make an attempt to explain to Realtors the only thing they say is "Your not a licensed Realtor, how can you do that?"
5. A lot of Realtors adhere to the following policy: “When in doubt, say it's illegal”.
6. Realtors are not the only professionals allowed to transact with Real Estate.
7. I think some Realtors look at Investors as either competition or crooks, the good ones see a potential customer.
8. I have Realtors tell me all the time that what I'm doing is illegal. Now I don't even argue anymore. I do not think you should waste your energy in arguing with them either.
9. You can sell things you own. If you buy the right to purchase something you can sell your rights.
10. Realtors are not attorneys. If you have questions about the legality of what you are trying to accomplish- ask an attorney.
Let’s address the two points that this Realtor mentioned in the conversation:
1. Legality of the transaction – Once again after 18 years in real estate investing, I have not found one attorney that has told me that the assignment of contracts is illegal. The only time I know flipping is illegal is when you are defrauding a lender. Therefore, make sure your buyers are cash, and if they are not cash then make sure they are using bank funds not regulated by fannie mae or freddie mac. e.g. a portfolio loan. Full disclosure.
2. Holding period – We do need to understand that FHA has a 90 days seasoning policy in any state. I do know that banks are exempt, but private owners must hold property for at least 90 days before a new buyer may enter the loan process with FHA.
Another point I wanted to mentioned to those that are interested in wholesaling REOs, is that banks do not allow assignments of contracts on short sales or REO's but that is their own rules, there is nothing illegal about it. Wholesaling of REO cannot be done using the traditional methods; therefore you need to go around it if you want to wholesale REO (Double close, LLC, etc).
I think that the Realtor may have overheard a conversation about seasoning requirements and felt compelled to share with everybody his/her new knowledge. The good news is that Realtors like the one above won’t last long in the industry. The same way ill informed investors won’t last either. There is a lot of good information available to all of you out there, training courses, ebooks, etc. Educate yourself about your profession, ask questions to those that have been in the industry long enough that can share some wisdom with you, ask question to the proper person, for example ask legal questions to your attorneys, property structural questions to property inspectors or engineers, etc.
Finally, do not waste time arguing with Realtors about the legality of Wholesaling. It is not your role to educate them, especially if they are closed minded people. Educate yourself and consult with professional that can keep you from trouble. Promoters of their “get rich quick schemes” will always tell you that what they are selling is legal; after all if it was illegal they won’t be selling it to you. Just be certain that you as an investor is performing a legal transaction and go to the bank with a smile in your next closing.
Sunday, June 14, 2009
Remember last week's post alerting you to HR-1728?
Is this Bill being fast-tracked through the House and
Senate, apparently threatening not only creative real estate
investors but even the property rights of all Americans?
Well it seems that since the last posting a lot has happened.
Some real estate investors have taken both sides of this issue.
Some believe that this Bill is not a big deal and some people
are just causing a lot of hype about the issue. There are some,
including myself that believe that we must gain an understanding
of this Bill and take action against the potential danger caused
by the actions taken in Washington.
Bottom-line, not all of us in the real estate investing world are
in agreement. I invite you to take a look at this information and
be fully informed ==> Click Here
... then decide for yourself where you stand. I would like to hear
your thoughts. Share what you think about this Bill and the
potential effect in real estate investing.
Senate, apparently threatening not only creative real estate
investors but even the property rights of all Americans?
Well it seems that since the last posting a lot has happened.
Some real estate investors have taken both sides of this issue.
Some believe that this Bill is not a big deal and some people
are just causing a lot of hype about the issue. There are some,
including myself that believe that we must gain an understanding
of this Bill and take action against the potential danger caused
by the actions taken in Washington.
Bottom-line, not all of us in the real estate investing world are
in agreement. I invite you to take a look at this information and
be fully informed ==> Click Here
... then decide for yourself where you stand. I would like to hear
your thoughts. Share what you think about this Bill and the
potential effect in real estate investing.
Monday, June 8, 2009
HR 1728: The Restriction on Seller Financing and The Impact on Real Estate
As you may know, Congress passed HR 1728 under the name of “Mortgage Reform and Anti-Predatory Lending Act”. Now without getting into a conversation about finger pointing who is responsible about the current financial crisis we are in, regulations towards better and safer lending and the protection of consumers are needed. I know the government is concerned about predatory practices, but shouldn’t the local district attorney be a more effective tool to regulate these activities? Does our government want to take over the lending business?
I think that HR 1728, 1) is over-reaching and 2) has a negative effect for real estate. In summary HR 1728 limits you as an individual to sell real property using seller financing to only once every 3 years (HR 1728 Sec 101 Definition (3)(E)). Seller financing is where the buyer and seller negotiate a price, a payment plan, and interest rate. Seller financing is an installment sale where the buyer pays the seller monthly and the buyer gets the use of the property. This is a frequently used method of buying and selling real estate especially in this economy of tight money and it can be used as a tax strategy.
Due to the restrictions we are facing right now from the lending industry, seller financing is an alternative available for real estate investors and property owners to sell their properties in this economy. Here is a simple scenario I see how this HR 1728 could negatively affect a real estate investor:
Let’s say you are an investor and have reached your retirement age. Let’s assume you have as part of your retirement plan six rental houses that you own free and clear. Your plan consisted on selling these properties using seller financing with a 6% interest rate providing a nice, monthly income. You decided that you don’t want cash because CDs only pay 2% AND as part of your tax planning you want to defer the impact of taxes on the sale of the properties over a period of time. The bad news is that under this act your retirement plans are affected since you can only sell one property every 3 years using seller financing.
What will be next, consider private money lending illegal? Or Limit FSBOs or require a homeowner to get a real estate license to sell his/her house?
Our founders did not intend for the Government to restrict landowners from being able to sell their land. The Founders were pretty clear on this. This bill takes away our right to use seller financing as we see fit. House Bill HR 1728 should exempt anyone who offers or negotiates terms of a real property sale financed in whole or in part by the seller and secured by the seller’s real property.
Even though the proposed legislation offers some significant changes to the lending industry, most of them are common sense (like a mortgage broker should not offer a loan to someone that is not capable of paying back), it is hugely detrimental to the overall real estate marketplace, and will create severe financial damage to our economy.
Please act now and contact your representatives and senators. Exempt Seller Financing From HR 1728. Please forward this to anyone you think should know about this issue.
"Give me control of a nation's money and I care not who makes it's laws" — Mayer Amschel Bauer Rothschild
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety."
- Ben Franklin
I think that HR 1728, 1) is over-reaching and 2) has a negative effect for real estate. In summary HR 1728 limits you as an individual to sell real property using seller financing to only once every 3 years (HR 1728 Sec 101 Definition (3)(E)). Seller financing is where the buyer and seller negotiate a price, a payment plan, and interest rate. Seller financing is an installment sale where the buyer pays the seller monthly and the buyer gets the use of the property. This is a frequently used method of buying and selling real estate especially in this economy of tight money and it can be used as a tax strategy.
Due to the restrictions we are facing right now from the lending industry, seller financing is an alternative available for real estate investors and property owners to sell their properties in this economy. Here is a simple scenario I see how this HR 1728 could negatively affect a real estate investor:
Let’s say you are an investor and have reached your retirement age. Let’s assume you have as part of your retirement plan six rental houses that you own free and clear. Your plan consisted on selling these properties using seller financing with a 6% interest rate providing a nice, monthly income. You decided that you don’t want cash because CDs only pay 2% AND as part of your tax planning you want to defer the impact of taxes on the sale of the properties over a period of time. The bad news is that under this act your retirement plans are affected since you can only sell one property every 3 years using seller financing.
What will be next, consider private money lending illegal? Or Limit FSBOs or require a homeowner to get a real estate license to sell his/her house?
Our founders did not intend for the Government to restrict landowners from being able to sell their land. The Founders were pretty clear on this. This bill takes away our right to use seller financing as we see fit. House Bill HR 1728 should exempt anyone who offers or negotiates terms of a real property sale financed in whole or in part by the seller and secured by the seller’s real property.
Even though the proposed legislation offers some significant changes to the lending industry, most of them are common sense (like a mortgage broker should not offer a loan to someone that is not capable of paying back), it is hugely detrimental to the overall real estate marketplace, and will create severe financial damage to our economy.
Please act now and contact your representatives and senators. Exempt Seller Financing From HR 1728. Please forward this to anyone you think should know about this issue.
"Give me control of a nation's money and I care not who makes it's laws" — Mayer Amschel Bauer Rothschild
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety."
- Ben Franklin
Sunday, June 7, 2009
The Time To Invest In Real Estate Is Now!
A couple of years ago everyone was involved in
real estate investing. It was “in” to be a real
estate investor. It was easy then, you could buy
anything, mark up the price, and turn it for a
quick profit. The lending industry joined the
frenzy, giving non-sense loans to anyone who was
breathing. Everyone was making money, it seemed
like a never-ending party!
Nobody wanted to listen to those of us that wanted
to talk about Real Estate Investing Principles, we
were called “Party-Poopers”. Then it came the
inevitable, people realized that the principles of
real estate investing were broken and the “bubble
burst” and the bottom fell out of real estate market.
The nuclear chain reaction started, the lending industry
ran away from real estate investors like we had leprosy,
properties stopped selling fast, investors got stuck with
properties they could not afford, builders stopped building,
people stopped making payments, then families were hurt by
foreclosures. What it looked a couple years ago like a
never ending party, turned into a nightmare for many.
So what is the purpose of this post.....
Now is the time to invest in real estate!
Those of us that have survived the nuclear storm are bound
to become wealthy in real estate investing if we follow the
real estate investing principles. Principle #1 Buy Low and
Sell High.
We are in a Buyers’ Market right now, the question is
for how long?
Based on current information I have made available through
the monthly newsletters to my mailing list, there is evidence
that we have hit bottom. I am going to give you two tips here:
1. Prices are starting to trend up in the last couple months, specially for the houses in the middle range($100,000 - $300,000)
2. Inventory levels are decreasing.
==> If you are interested in receiving our monthly newsletter
Please sign up to our mailing list on this blog.
You can check this information by yourself, if you do not
believe me. Once again, the rule #1 of investing is buy low
and sell high. Now we have the conditions that will allow
you to acquire properties at bottom prices and:
1. flip them for a profit
2. fix and flip them for a profit
3. buy and hold and gain on appreciation, while you gain on rent increases, while you maintain your debt low (since you bought the properties at bottom prices)
4. own a home at affordable prices and take advantage of recent incentives geared toward homeownership.
I am excited about the signs of improvements I see on the market right now. The real estate market is changing and I think it is for the better. I think if you want to take advante of this market and create wealth, the time to invest in real estate is now.
To your success!
real estate investing. It was “in” to be a real
estate investor. It was easy then, you could buy
anything, mark up the price, and turn it for a
quick profit. The lending industry joined the
frenzy, giving non-sense loans to anyone who was
breathing. Everyone was making money, it seemed
like a never-ending party!
Nobody wanted to listen to those of us that wanted
to talk about Real Estate Investing Principles, we
were called “Party-Poopers”. Then it came the
inevitable, people realized that the principles of
real estate investing were broken and the “bubble
burst” and the bottom fell out of real estate market.
The nuclear chain reaction started, the lending industry
ran away from real estate investors like we had leprosy,
properties stopped selling fast, investors got stuck with
properties they could not afford, builders stopped building,
people stopped making payments, then families were hurt by
foreclosures. What it looked a couple years ago like a
never ending party, turned into a nightmare for many.
So what is the purpose of this post.....
Now is the time to invest in real estate!
Those of us that have survived the nuclear storm are bound
to become wealthy in real estate investing if we follow the
real estate investing principles. Principle #1 Buy Low and
Sell High.
We are in a Buyers’ Market right now, the question is
for how long?
Based on current information I have made available through
the monthly newsletters to my mailing list, there is evidence
that we have hit bottom. I am going to give you two tips here:
1. Prices are starting to trend up in the last couple months, specially for the houses in the middle range($100,000 - $300,000)
2. Inventory levels are decreasing.
==> If you are interested in receiving our monthly newsletter
Please sign up to our mailing list on this blog.
You can check this information by yourself, if you do not
believe me. Once again, the rule #1 of investing is buy low
and sell high. Now we have the conditions that will allow
you to acquire properties at bottom prices and:
1. flip them for a profit
2. fix and flip them for a profit
3. buy and hold and gain on appreciation, while you gain on rent increases, while you maintain your debt low (since you bought the properties at bottom prices)
4. own a home at affordable prices and take advantage of recent incentives geared toward homeownership.
I am excited about the signs of improvements I see on the market right now. The real estate market is changing and I think it is for the better. I think if you want to take advante of this market and create wealth, the time to invest in real estate is now.
To your success!
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