Commercial Short Sales – Seize the Opportunity
Posted by Peter Vekselman Tuesday, 31 August 2010 11:04 No Comments
Just like residential properties, many commercial properties are in default with their mortgages. And just like residential mortgages, they have the same alternatives to resolve the default. One of those is a short sale of the property. But one difference between the two is how a lot of commercial property gets into foreclosure trouble.
Most Commercial mortgages have a balloon payment. Typically, these come due anywhere from 5 to 10 years after the loan is originated. This is fast becoming a big problem with large amounts of commercial real estate. Typically, the balloon payment would be refinanced and business would merrily go on. But not today. There are several reasons the loan will not be refinanced.
How big is the problem? A congressional oversight committee recently estimated $1.7 Trillion in commercial loans will come due between now and 2014. Of that, $700 billion will not qualify for refinancing. With a national 42% drop in commercial real estate values, the properties simply no longer secure the loans.
Closing a Sandwich Lease Option
Posted by Peter Vekselman Thursday, 26 August 2010 03:46 No Comments
The sandwich lease option is a great way to control a property for a profit for very little money but it can be a little difficult to close the sale transactions. You generally have two problems when your name does not appear on the title. First, is if you become involved with an unscrupulous seller. One that tries to take the profit you have built into the deal when they learn you have a future sale for more than they sold it to you.
They may well approach the tenant/buyer and offer slightly better terms for the same price and close the deal without you. There are two ways you can deal with this and it’s best to use both. First, be completely transparent with the seller about what you are doing. Let them know before you enter into the first purchase option that you will be bringing in a tenant with their own purchase option. That’s why you are in the deal. This should weed out any seller that intends to go around you at closing.
Online Want Ads Find Hidden Treasures
Posted by Peter Vekselman Sunday, 22 August 2010 04:41 No Comments
In today’s blog, I want to show you how to use simple online advertising to find deeply discounted quality properties that no one else knows about. There are three primary ways of using the internet to find these properties. First is having a business website let the world know what type of real estate investments you are currently looking for. Another is running advertisements on craigslist and in major online newspapers for the cities you are interested in investing in. Finally, there is using adverting to put feet on the street looking for unlisted real estate in any city you want.
There’s more to it than just putting up an ad saying: “I buy houses”. What you want to do is called “split testing”. There are a few variations to this but basically you fine-tune the message over time until you have the one that delivers the most and highest quality leads. Craigslist is free so you can run two or more ads at the same time.
What you do is keep tack of which one is delivering better results. Your results can be measured either by the quantity or quality of the leads delivered. Start with a variation in the headline. How the headline reads depends heavily on your particular investment strategy. For instance, if you are looking for a rental house in a particular neighborhood, you run a headline similar to “Seeking to Buy Rental House in Parkland Neighborhood”. A variation on this headline would be “Want to Buy Discounted Rental in Parkland Neighborhood”.
Rental Market Stabilizes in Mid 2010
Posted by Peter Vekselman Thursday, 19 August 2010 03:54 No Comments
While still near historic lows, mortgage interest rates edged up ever so slightly last week but remain at extraordinary lows. The 30-year fixed rate benchmark edged up 3 basis point (0.003%) to 4.77%. The 15-year benchmark went up a mere 1 basis point while the 5/1 adjustable benchmark increased 6 basis points. All remain very good deals on the mortgage market.
On the rental market front, some 20,000 apartment units were absorbed in the first quarter of 2010. The first decrease in vacancy rates since 2008. At the same time, monthly rental rates edged up slightly by 0.01%. Not outstanding news but month after month the numbers continue to improve.
Housing and Urban Development (HUD) maintains rental information on over 21,000 geographical areas across the country that was last updated on June 2, 2010. One bedroom rentals where the lowest in Tuscaloosa, Alabama at $400 per month and highest in Honolulu at $2,100.
Declining Listing Prices Not Good for the Market
Posted by Peter Vekselman Sunday, 15 August 2010 13:12 1 Comment
Price reduction, price reduction and another price reduction. House pricing in today’s market is unnaturally high and misleading the market. The real estate listing website Trulia.com reports that 24 percent of listings currently on the national market experienced a price reduction.
Unfortunately, realtors often allow sellers to set the price of the listing at what they want to get rather than what the market is willing to pay. Most markets have stabilized. Competent realtors know what a specific house will sell for. There is no reason to first give false hope and then allow the over priced house to languish on the market.
It has a three-part effect. First, newly listed houses receive the most attention from buyers in the market. Second, having the houses over priced keeps the listing on the market longer than it needs to be. Resulting in an over abundance of listings staying on the market too long when a decline of inventory is what is needed.
There is NO EXCUSE Not to be Investing in Short Sales Right Now
Posted by Peter Vekselman Wednesday, 11 August 2010 16:27 No Comments
Here are some new statistics about distressed real estate from early July. Nationally, a little over 14% or 1 out of every 7 mortgages is not being paid. When narrowed down to the subprime category, the number of mortgages in default shoots up to 40%. The lenders finally get it – there are many people out there that cannot pay their mortgages in today’s sour economy.
For those able to repay the loan under better terms, the banks are willing to modify the loans. But these are only for people that have extenuating circumstances, like reduced work hours or one spouse is out of a job but the other is still working. There has to be enough income to make the modified payment. Banks prefer modifying the loan to a short sale. Most require owners to first go through the modification process before the bank will look at a short sale.
A New Way to Profit By Offering a Lease Option
Posted by Peter Vekselman Friday, 6 August 2010 03:43 No Comments
You often read about how to profit by taking out a lease option. The recent hot trend is using the sandwich lease option to take control of a property and sell it without ever actually owning the property. But plenty of investors have rentals or even vacancies that they want to sell in this unpredictable market. Beginning July 1, 2010 selling on a lease option comes with a new benefit for buyers that you can use for marketing purposes.
As of July 1, Fannie Mae has a new policy shorting the length of time to qualify for a new mortgage after having a short sale or deed in lieu of foreclosure. It’s a complex matrix of options but under the best circumstances, a buyer qualifies for a Fannie Mae 90% loan to value (LTV) mortgage after 2 years if they have extenuating circumstances such as a job loss. Without extenuating circumstances, they qualify for an 80% LTV after 2 years.
You can view the entire matrix at: https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2010/sel1005.pdf
One word of warning, the shortened qualifying time does not apply to those going all the way through the foreclosure process.