Business Capital:
The Life Blood of Your Real Estate Business

By Matt Fagerness

We’ve all heard about the numerous ways you can successfully do real estate transactions with no money down (or at least with a bare minimum of operating capital) and I am a believer in these techniques myself. After all, I was also a Wealth Intelligence Academy® student before becoming a trainer and a mentor for the Academy. I have done deals with owner financing and I have done my share of wholesale deals too, which goes to show that the no money down concept is alive and well, and that these kinds of deals are also something you can do.

With that said, let me shift gears just a little bit. It is often said that businesses (particularly small ones) usually fail for three common reasons. One is the business owner selects the wrong business to begin with. With real estate being as diverse and commonplace as it is, I am not concerned about this pitfall being in your way. Another reason that businesses may fail is they are poorly managed. Right now, your business is likely so small (personnel-wise) that management is not really a factor. On top of that, remember none of us need to be experts on all facets of the business and what you do not know can and should be delegated to your professional power team.

Continue reading "Business and Finance: Business Capital for Real Estate Investing Businesses" »

Posted 01:20 PM | Permalink | Comments (0)

While not the primary reason, mortgage fraud has certainly played a role in the current mortgage crisis and has had an impact on real estate markets across the country. It's easy to understand how a naive homebuyer could become a victim of mortgage fraud, but don't think you're too smart to fall for a scam -- even sophisticated investors are at risk. According to the FBI, losses due to mortgage fraud are $4-$6 billion annually.

For tips from the FBI on how to avoid becoming a victim of mortgage fraud, visit http://www.fbi.gov/page2/august08/mortgagefraud_081408.html

Posted 01:21 PM | Permalink | Comments (0)

A report from the Center for Media Research reveals some interesting facts about the wealth of Americans. The report says that a new segment of wealthy Americans has emerged in recent years:

“Known as the New Mass Affluent, this new crop of wealthy Americans were born of the post-war boom, raised in middle-class suburbs and benefited from college educations and years of economic prosperity during the bull market of the 1990s. Today they're the empty-nesters converting their kids' old rooms to home gyms, the well-heeled shopping at Costco and the workaholics fiddling with their BlackBerry on the express commuter train.”

These people are also investing and could be ideal financial partners for real estate investors.

Click here to read the full post by Jack Loechner (you have to sign up, but the account is free), then look around at the people who know who fit the demographic he describes. You may have some funding sources right in front of you that you never thought about before.

Posted 09:01 AM | Permalink | Comments (0)

HUD announces offering Grant-Writing Workshops

HUD (Department of Housing and Urban Development) is currently offering Grant-Writing Workshops all around the county. These workshops are free of charge and open to the public. The classes will discuss topics such as organizational capacity building, grant proposal writing techniques, accessing government funds, HUD common factors for award, and tips on working with local government agencies. The following is a list of upcoming workshops in May and June:

Workshops for May/June:

May 28-29: Baltimore, MD
email contact: James.C.Shay@hud.gov, Baltimore HUD CFBCI Liaison

June 2-3: Pittsburg, PA
email contact: Cynthia.L.Haines@hud.gov, Pittsburgh HUD CFBCI Liaison

June 9-10: Norfolk, VA
email contact: Anne.Davis@hud.gov, Richmond HUD CFBCI Liaison

June 12-13: South Bend, IN
email contact: Teresa.M.Jeternewburn@hud.gov, Indianapolis HUD CFBCI Liaison

June 18-19: Shepardstown, WV
email contact: Evelyn.Young@hud.go, Charleston HUD CFBCI Liaison

June 18-19: Warwick, RI
email contact: Ernest.Zupancic@hud.gov, Rhode Island/New Hampshire HUD CFBCI Liaison

June 24-26: Culpepper, VA
email contact: Anne.Davis@hud.gov, Richmond HUD CFBCI Liaison

June 30-July 1: Erie, PA
email contact: Cynthia.L.Haines@hud.gov, Pittsburgh HUD CFBCI Liaison

June 30-July 1: Chicago, IL
email contact: David.K.Cole@hud.gov, Chicago HUD CFBCI Liaison

June 2008: Salt Lake City, UT
email contact: Pauline.Zvonkovic@hud.gov, Salt Lake City HUD CFBCI Liaison

June 2008: Rochester, NY
email contact: Michele.E.Bernier@hud.gov, Buffalo HUD CFBCI Liaison

June 2008: Wyoming
email contact: Christian.Stearns@hud.gov, Casper HUD CFBCI Liaison

For a list of later workshops (July-September), please consult the following site: http://www.hud.gov/offices/fbci/grantwriting08.cfm

For other information about HUD's Center for Faith-Based and Community Initiatives, consult the site here: http://www.hud.gov/offices/fbci/

Posted 07:45 AM | Permalink | Comments (0)

A survey of 1,049 voters revealed that 53.8 percent thought this is a good time to buy a house, according to a recent article on CNBC.com. Click here to read the full story.

Posted 10:28 AM | Permalink | Comments (0)

Real Estate Fundamentals:

Hard Money Isn’t Necessarily Hard to Get

If hard money sounds like borrowing the hard way, relax. The term is used primarily in the United States and Canada to describe a specific type of asset-based financing where the loan is made based on the value of the real estate with little or no consideration given to the creditworthiness of the borrower. [An increasing number of hard money lenders are asking borrowers to complete credit applications and taking credit history into consideration when making a lending decision, but their primary consideration is still the collateral being offered.]

Continue reading "Hard Money Isn’t Necessarily Hard to Get" »

Posted 11:06 AM | Permalink | Comments (0)

On Dec. 20, 2007 President Bush signed the Mortgage Forgiveness Debt Relief Act of 2007. The goal of the legislation is to help Americans avoid foreclosure by protecting families from higher taxes when they refinance their home mortgages.

Under current law, if the value of your house declines, and your bank or lender forgives a portion of your mortgage, the tax code treats the amount forgiven as income that can be taxed. The Act creates a three-year window for homeowners to refinance their mortgage and pay no taxes on any debt forgiveness they receive.

Continue reading "President Bush signs Mortgage Forgiveness Debt Relief Act of 2007" »

Posted 11:39 AM | Permalink | Comments (0)

Finish this sentence: “I’d like to invest in real estate, but ____________.”

If you said, “I don’t have the money,” there is a solution.

Remember that while it takes money to invest in real estate, it doesn’t have to be your money. If you have a good deal, you can find the funding. One alternative is a simple partnership.

Continue reading "Partnerships are a Great Way to Fund Real Estate Investments" »

Posted 07:55 AM | Permalink | Comments (7)

Community Redevelopment Agencies (CRAs) are great resources for real estate investors, especially if you’re interested in rehabs and/or areas that have been rundown but are being revived. For an article showing what CRAs can do, read “Governments turn to CRAs to pay for a better future” in today’s Orlando Sentinel.

Jackie

Posted 07:38 AM | Permalink | Comments (0)

When Robert Kiyosaki, entrepreneur and bestselling author of Rich Dad Poor Dad, spoke at the Wealth Intelligence Super Conference, he said that the audience was in the right place at the right time getting the education required to be a winner.

“Capitalism means there are winners and losers, and the uneducated are the losers,” he said.

With his characteristic humor and tell-it-like-it-is bluntness, Robert stressed the power of leverage, pointing out, “Real estate is the only investment my banker will lend me money for.” You can’t borrow money to invest in stocks, bonds, mutual funds, or other investments—but with real estate, banks and other lenders are only too happy to let you use their money to make yourself rich. The key to it all, Robert said, is to use your greatest asset: your brain.

Posted 10:00 AM | Permalink | Comments (0)

Does all the bad news about mortgage lenders have you nervous? If so, step back and put things in perspective.

Today’s Orlando Sentinel included an article titled “Not all lenders reeling from mortgage mess” and quoted Peggy Thomas, found and president of Thomas Mortgage & Financial Services.

Thomas said: “We’re a prime lender. … the prime market is not really affected by all the turmoil you’re hearing. It’s not a horrible market out there. People are buying houses like they’ve always bought houses. People need to move, they need to move up when their families have expanded, so life goes on and it’s still the same market.”

About investing in real estate, she said: “Investing in real estate is never risky … as long as it’s long term. It is not a liquid commodity, so it is never a short-term investment. Can you buy and flip? Of course, if you know what you’re doing, but that’s risky.”

It’s a good time to be investing in real estate, but get the education you need to make good decisions and reduce your risk.

Posted 04:13 PM | Permalink | Comments (0)

As shake-ups continue in the mortgage industry, we have seen reports that Trump Mortgage has closed. Originator Times makes some interesting observations in “Trump Mortgage – You’re Fired!”

Jackie

Posted 07:51 AM | Permalink | Comments (0)

If you buy a property with less than 20 percent down, many lenders require that you also purchase private mortgage insurance (PMI). Do not confuse this with mortgage life insurance (click to see my earlier post on that topic), which you should think carefully about buying.

PMI is the promise of a private insurer to repay your lender if you default on the loan. It’s a contract between your lender and the insurance company for which you pay the premiums. And the monthly PMI premiums can make a significant difference in the amount of your total mortgage payment.

Depending on the specific terms of the PMI contract, if you default on the loan, the lender can collect 20-25 percent of the total outstanding loan from the PMI insurer and then foreclosure on the property. Or the PMI insurer can pay off the entire loan and gain title to your property. Either way, you and your family are not protected—the lender is the entity that is protected with PMI.

Most lenders that require PMI also have provisions in their contracts for when the coverage can be dropped—typically after the loan is a certain age or the loan-to-value ratio reaches a certain point.

If you are required to buy PMI coverage, understand that this will not protect you from the consequences of defaulting on your loan or pay off your loan in the event of your death or disability. Read the contract carefully and make a note to follow up and get the insurance canceled when your lender allows.

Jackie

Posted 04:46 PM | Permalink | Comments (0)

3-29-07 Owning Real Estate in an IRA

While it’s possible to own real estate in a traditional IRA, it may not always be the best strategy to take. This issue requires some serious thought and planning. Click here to read one financial planner’s opinion – and be sure to scroll down and read the comment from a reader who is not in complete agreement.

Jackie

Posted 10:03 AM | Permalink | Comments (0)

When we talk about financing real estate investments, we tend to focus on finding the money, whether it’s from a traditional lender, a hard money lender, or another source. But there’s an aspect to real estate financing that investors and homeowners need to be aware of: loan servicing.

Once a conventional mortgage loan is closed, lenders may turn the account over to a loan servicing firm for management. And borrowers have absolutely no choice in this decision, and little recourse if the service is bad and the firm engages in predatory practices, such as profiting from loans in collections, failing to report positive payment histories to credit bureaus, converting a loan to simple interest (more money for the lender and servicer), and more.

For an interesting look at this issue, read Jack Guttentag’s column, "Predatory servicing deserves a cleanup." Guttentag is a syndicated columnist and professor of finance emeritus at the Wharton School of the University of Pennsylvania.

Jackie
Chief Blogger
Wealth Intelligence Academy

Posted 11:21 AM | Permalink | Comments (0)

A press release issued by MortgageDaily.com says that the Federal Bureau of Investigation is going to release a report soon that will show mortgage fraud losses totaled $1 billion in 2005. Click here to read the release.

The FBI says that “The increased reliance by both financial institutions and non-financial institution lenders on third-party brokers has created opportunities for organized fraud groups, particularly where mortgage industry professionals are involved.”

The problem this situation is presenting for honest real estate investors is multi-fold.

Continue reading "FBI involved in preventing mortgage loan fraud" »

Posted 09:46 AM | Permalink | Comments (0)

Most experts agree that the rising rate of foreclosures across the United States is being driven in large part by the creative financing packages lenders have been offering in recent years.

So what’s the status of these types of loans now? Interestingly, they’re still very popular. According to Realty Times, lenders are paying more attention to the collateral by scrutinizing appraisals, home inspections, market conditions, and other property value indicators, but the “alternative loans” are still popular and being made at an increasing rate.

Click here to read Broderick Perkins’ article on this hot topic.

Jackie
Chief Blogger
Wealth Intelligence Academy

Posted 10:14 AM | Permalink | Comments (0)