Comet Settlement Real Estate

Some real estate investing “teachers” advise beginning investors to find many houses and to flip the houses quickly for outrageous profits. Perhaps you’ve seen the claims of real estate gurus telling you how you can make $30,000 to $50,000 per month, without any physical work, and for little or no money out of your pocket. In fact, these promoters tell you that you can get money back when you close.

Let’s take a closer look at these fast flips.

How do you find a bargain for $30,000 or more under market, for no-money down, and flip it right away? First, you would need to find a seller so desperate that they sign over their home to you. I’m not saying that this can’t be done. It’s just nearly impossible in today’s real estate market. Today’s sellers know they can sell their home fast and still get a fair price by only discounting the property by $10,000, without the seller carrying the financing. This is because there are so many home buyers looking to purchase a home to live in.

How does this affect the beginning real estate investor who was promised they could find many houses for drastic price reductions? These investors soon get discouraged because the promised method is so difficult to do. Not only does the investor have a hard time finding a home for way under market value, the investor with no money to put down has two obstacles to overcome. No money down and finding a bargain house. These aspiring investors, some who charged hundreds of dollars for bogus investing courses, just give up.

If you’re thinking about getting into real estate investing as a way to secure your financial future, be wary of investing systems that worked last century. Learn about real estate customs in today’s fast-paced market.

The real way to make money on fast flips is to get yourself ready to cash out a desperate seller fast. You can begin with your first investment home realistically two ways:

1. Buy a home to live in so you can purchase with no money down.

2. Refinance your own home and use the money for a big down payment to encourage a desperate seller to sell fast.

This method works because sellers who need to settle their affairs quickly will sell at a big discount to a buyer who doesn’t ask them to be the bank.

You can still build wealth by flipping houses. But, you need to have your finances in order when you go bargain shopping.

© 2005 Jeanette J. Fisher

Jeanette Fisher teaches beginning real estate investors how to find, finance, fix, and sell houses to build wealth. The difference in Jeanette’s system, fixing houses with Design Psychology, helps investors make more money on each house. Free “Design Psychology for Selling Houses” ebook http://www.doghousetodollhousefordollars.com/

Tags: build wealth, flipping houses, real estate investing

You may not know exactly how much to tell the potential buyer of your home about the property. Disclosure to potential home buyers about problems and issues has been a much debated subject. Many areas actually have laws that require certain disclosures to be made at the time the real estate contract is entered into.

Personally, I tell all. Everything from the once or twice the wind blew down the chimney the wrong way one windy spring to the small little hole in the guest room window screen. Nothing is too small and nothing is to large.

Caveat Emptor — “let the buyer beware” — used to be the law when it came to real estate transactions. Unless the buyer specifically asked about the defect, the seller didn’t need to disclose any problems.

But over the years, the Courts noticed that this was unfair. Car buyers get to test drive cars, so why should home buyers be so blind? If a seller knows about a problem in the home, the problem should be corrected or disclosed to a potential buyer.

Modern consumer protection acts have led to disclosure requirements for sellers.

Although the laws vary from place to place, the purpose of these diclosures remain the same. Sellers of residential real estate must disclose to their purchasers any known defects or information concerning the water and sewer systems, insulations, structural systems, plumbing, electrical, heating and air-conditioning systems, fixtures and much more.

These laws require the seller to complete a disclosure form at the time the real estate purchase contract is entered into and give it to the purchaser. If the purchaser has not recieved the form, he or she will have the right to terminate the contract and receive a full return of the earnest money.

What is considered a defect? Must it be something large? Do bones in the backyard really qualify as a defect?

Yes, they do. The courts have even ruled that land discovered to once be a graveyard or a scene of a heinous crime must come with a disclosure.

For example, in 1964, Mr. Louis Hickman created and recorded a piece of land that was once a graveyard. Mr. Hickman had removed the tombstones and all other surface evidence, leaving the graves underground.

In the 80’s, a couple built a house on the lot. Fifteen years later, they discovered the graveyard.

The case (Carven vs. Hickman) used the Statute of Repose. This statute basically is designed to protect builders from perpetual liability for defective conditions due to the improvement of a property. The graveyard did not count as an improvement and did not protect Mr. Hickman from liability for the “defect”.

This case isn’t your technical lack of disclosure case, but it gives you an idea of what you should disclose — everything. Otherwise, thirty-one years later, you or your estate could be sued for non-disclosure.

Caveat Emptor has no place in today’s real estate market. Disclosure of all known problems isn’t just being honest, it is beneficial for the home seller. You can protect yourself from litigation by simply stated everything. Yes, the price might drop a few hundred dollars, but it may save you tens of thousands in lawyer fees later.

Copyright 2006 #1 Loans USA

Martin Lukac, represents http://www.RateEmpire.com, a finance web-company specializing in real estate/mortgage market. We specialize in daily updates, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies! Visit http://www.RateEmpire.com today.

Tags: home sell, real estate selling

Nothing down? Exactly why would a seller want to walk away from closing with nothing? The truth is, they normally wouldn’t, and that brings up the most important point about real estate investing with no downpayment: A seller almost always needs cash at closing, but it doesn’t have to be YOUR cash.

Nothing Down – A Few Ways

Sometimes sellers are able to offer terms and a low or no downpayment, but often you have to find a way to get at least 70% of the price to them in cash. This is not only so they can get some of their equity out, but also because they will probably need to pay off the existing loan. So to get in with nothing down, you need to think in terms of how to get a primary loan, then how to raise the money for the remainder. A couple examples follow.

A few banks still do “no doc” loans, meaning they don’t require any verification of income, source of downpayment, etc. Since they generally loan only 70% to 80% of the property value, you need a seller who is willing to take a second mortgage from you for the other 20% to 30%, to make it a nothing down deal. They get 70% or 80% in cash, and payments for years to come. Since you’ll have two payments, you need to be sure the numbers work.

Another way to buy with none of your own money is to borrow against your home or other property to come up with downpayment. You might borrow for a “vacation,” and leave whatever you don’t spend in your checking account for a while. In this way, you can use it without violating bankers rules about borrowing for a downpayment.

Most towns have a few “note buyers.” These investors buy land contracts, mortgage loans and other “notes” at a discount. When a seller takes a purchase money mortgage from you for $100,000, for example, a note buyer might pay him $85,000 for it. How does that help you or him? I’ll explain with an example.

Suppose a seller prices his property at $195,000, expecting to sell it for $180,000. You offer $205,000 in the form of a mortgage for $160,000, and another for $45,000. As part of the offer, you have arranged for the sale of the first mortgage at closing for $136,000 to a note buyer. The seller gets that cash now, plus payments from you on the second loan for $45,000. $136,000 plus the $45,000 adds up to $181,000, which is about what he expected to get out of the deal.

A Personal Example

At the moment, I’m selling a small rental property, and will recieve payments of $400 per month. The buyer has good credit, and the $5,000 downpayment covers the closing costs and even the legal cost of a foreclosure, if necessary. So at this point, I really don’t care where he gets the downpayment. Suppose he took a $6000 cash advance on a low-interest credit card? This would cost him about $135 per month, and give him enough for the downpayment and his closing costs.

The rent is around $600 per month in this case, so he would be okay. However, in some cases, that extra $135 might cause negative cash-flow. You have to be sure that however you do it, the numbers work. I should mention though, that I would have accepted payments of $350, if he had asked, because it’s the price and the interest rate that mattered to me.

Are ther other methods? You bet. Creative real estate investing is all about making the deal work for all parties. If you can find a way to get the seller what he wants, you can buy with nothing down.

Steve Gillman has invested in real estate for years. To learn more, get a free real estate investing course, and see a photo of a beautiful house he and his wife bought for $17,500, visit http://www.HousesUnderFiftyThousand.com

Tags: nothing down, real estate, real estate investing