Who Needs Banks?

With the current lending atmosphere, and the tremendous opportunities in the market, investors are scrambling to get loans for bargain priced properties. The only problem is, banks won't work with us like they did a couple of years ago. Requirements have increased and the loan limits have decreased.

So what's an investor to do? The best overall answer is private lenders. There is a huge pool of people out there today who have money setting in a cd, savings account or other such temporary parking spots, because they have pulled them out of the stock market due to uncertainty. Would they love to make more than these avenues are returning to them? You bet they would and they are begging to make their money work for them, rather than being eaten up by inflation.

There are many real estate investors with great deals available but these deals need some sort of funding, whether it's short term money for a flip or closing cost on a subject to deal. There are mainly two ways that the private investors can work with the re investor, to increase their ROI. First there's the joint venture equity partner, where both parties share a percentage of the profits made on the deal. Another approach is the set a higher that average interest rate on their money, which usually averages 8% and higher, depending on the amount borrowed and risk.

One thing to keep in mind is the security that is involved for the private lender. They are included in the property insurance policy, they have title insurance, a deed of trust and the fact that these deals have at least a 65% LTV, if anything should come up.

So, there is quite an advantage to all parties involved in the transactions and a lot higher ROI than most other investment tools. Then there is the fact that if the cash comes from a self directed IRA, all profits are not taxed. This is the subject of a future blog.

Time To Buy A House?

With all of the crazy news we hear every day about the economy and how bad the housing market is, it's easy to get caught up in the doom and gloom. But WAIT! Look at the past and you will quickly discover, that at previous times like this, some people actually made their fortunes.

It looks like things are starting to turn around in some aspects, a few new homes are starting, interest rates are at all time lows and even some existing homes are selling. Is the market going to turn around as quick as it declined? My opinion is NO, but there will be some significant recovery in the next 18 months.

SO, now is the time to take advantage of the situation. Houses have been sitting on the market for an extended period of time, job markets have changed and ARMs are adjusting, which all are supplying us with a giant pool of motivated sellers.

True, rates are low, but qualifying is tough and the number of buyers is still very limited. Recent statistics are showing that only about one in ten can actually obtain a loan in today's market.

Combine the huge pool of motivated sellers and offer financed homes to the buyers and you will have a combination that can't be beat, for a financial freedom plan. But in order to gain from the situation I cannot stress enough that education is the key to cracking the financial code. Money spent on education today will greatly reduce the amount of time and money spent in the future on a "real life seminar."
I would encourage anyone interested in financial freedom through real estate to get started NOW before this opportunity passes.

Buying Homes in Todays Market

With the nation reeling about the burst of the housing bubble, there are some options for those who are still looking to buy. Lenders have tightened up their standards, which should have happened long ago, in my opinion. This is a great opportunity for those who can offer unique programs for their buyers.

One way to assist the buyers is through seller financing. A form of this is the lease with an option to buy. With this strategy, the buyer leases the property and has an option to purchase the home at a later date. This allows the buyer to try out the home. while working to restore their credit and build up a down payment for the future purchase. Most sellers will allow some of the lease payment to be used as a down payment when the time comes to close on the home.

Another strategy is to use what is called a wrap around mortgage. In this situation, the seller keeps the exiting mortgage in place and creates a new mortgage for the buyer. This makes the qualifying easier for the buyer and provides the seller with some money down and an annuity for the period of the sellers note. To be even more creative, if the seller needs more cash now, they can sell the note for a chunk of cash immediately.

These are just two of the many options available to buyers and sellers in today's tough market.

To find out more about these and other options contact me and I will be glad to structure a plan for your personal situation.

WHAT MARKET DOWNTURN?

We hear it every day on the National news, "the housing market is in terrible trouble and it might not rebound for years." Here in Mid-Missouri, things are still looking great.

Yes, the inventory is up some from a year ago, but we are still seeing homes being sold at a steady pace. Calls are still coming in for showings and why not, interest rates are very low, and money is still fairly easy to come by for most borrowers.

Also, now is a good time to buy, because some folks here in the Midwest are actually listening to the forecasters of gloom and selling their properties at a huge discount. For the savvy investor or home owner, this is a great time to buy.

Added together, low prices and great rates, what a profitable time to be in the housing market!

As an investor, the sub prime market situation has opened up a market for rentals, lease to buy homes and owner financing as exit strategies for these bargain homes.

So let those who may, listen to the doom and gloom of the housing market. As for the rest of us, let's take advantage of the situation and help those who need to rid themselves of a burdensome property and make it a win-win situation for all involved.