Making a foray into investment properties is not quite as easy as it once was. The best way to make a million dollars has always been to “borrow a million and let other people pay it off for you,” but the credit crunch is still affecting the loan markets and finding property investment loans is still difficult.

Until such times as the credit markets loosen up – which does not seem to be happening just yet – there will be stringent requirements applied meaning anyone wishing to borrow that million dollars will have to come up with at least $300,000 of their own money and around 1.5 million in collateral. There is still a lot of ill health in the system and an undisclosed amount of bad loans that will need writing off over the next 18-24 months. The markets are not going to loosen up until such times as all of the bad loans are out of the system. Although, even then, we will need a recovery period that may be years.

Perhaps the best option if one is considering investing in property, would be to look for non-traditional sources of funding, outside the banking system. Even the luxury homes segment of the market is suffering, with the so-called “jumbo loans,” a thing of the past and the inventory of luxury homes for sale still rising. It is unlikely we will return to the heady days of 125%, loans of any size, regardless of your income. So – thinking outside the box is required. Borrowing from family members, joining a collective investment club, or even starting one of your own, may be viable alternatives.

The other consideration is the interest rate. There is no possibility that interest rates will stay as low as they are today and any one taking a variable interest rate loan is going to be under severe pressure when interest rates go back up. Like property values, interest rates tend to over shoot on the way up and down. They have overshot quite drastically this time and will most likely over shoot t a similar level when “normality,” is restored. Expect rates in the 15-18% range within the next 2 years.

Luxury homes for sale

Investment property loans

The decline in real estate prices is not only affecting lenders and borrowers but also state and local governments whose property tax base is quickly loosing value. All across the country local and state governments are looking for ways to crimp their budgetary shortfalls. Departments are being asked to look for ways of increasing their revenue sources. Of particular interest to risk managers is the step-up of code enforcement activities seen in most major municipalities. With the decline in new construction nationwide many building and zoning departments are expanding staff duties to include code enforcement. Instead of laying them off to cut expenses government maintains personnel by increasing revenue streams from fees for services and fines. In some places violation fees can quickly escalate if not addressed to the tens of thousands of dollars.

Code violations ride with the property and become the responsibility of the new property owners whether they created the violation or not. For the borrower making an investment in a home regardless of it being a market rate, short-sale, or foreclosed property, a major code violation or the cost of legalizing an illegal addition can be prohibitive thus seriously decreasing the value of the property and increasing the risk of the real estate loan. Many borrowers simply do not have the necessary financial resources to address serious violations or repairs unseen at the time of purchase resulting in default.

Banks have relied on a property appraisal by state licensed companies that they trusted as the way of establishing the value of the asset. The typical residential appraisal relies on one of two methods for determining value, the cost approach and the direct sales comparison approach.

1. Cost Approach – In this approach, the replacement cost of the building and improvements is estimated, estimated depreciation is deducted, and the value of the site is added.

2. Market Data or Direct Sales Comparison Approach – The essence of this approach is to determine the price that similar properties have sold for recently on the local market and, through an appropriate adjustment process, to estimate the fair market value of the subject property based on these comparable sales.

Both have serious flaws in the current market. Current real estate prices in many parts of the country are lower than what it would cost to build the structure without considering the cost of land or depreciation leaving appraisers to give land negative values or use other adjustments to meet values arrived at by the sales comparison approach. Additionally these appraisals do not consider unseen code violations or illegal additions not disclosed by the seller and that appear to be legal at first glance leaving open a tremendous hidden risk potential for the lender. Appraisers are not always schooled in architecture or engineering or construction and are unable to determine the value of a structure based on undisclosed structural inadequacy, zoning code violations, encroachments, or illegal additions that might appear to be legal.

The lack of a comprehensive assessment of physical needs that includes not only the condition or expected life of the structure but also deficiencies and above all zoning violations leaves the buyer and equally important the lender at risk of buying into a property that will lose its value if found to be in violation with local laws.

Governments are stepping up in places like Miami Dade County, Florida. A recent law effective April 1, 2009 requires that a “Disclosure of Findings” report must be prepared by a Registered Architect and recorded in with the “Clerk of the Courts” for bank owned properties (REO) prior to offering the property for sale. When the report is approved and filed the county issues a “Certificate of Use” for the property.

The “Disclosure of Findings” report is prepared upon completion of an inspection by the architect. The inspection determines if there are any code violations, inadequacies or other illegal or life threatening conditions not usually spotted during a conventional home inspection or appraisal of the property. The report includes an estimate by the architect of what costs are to be expected to correct deficiencies. When the service is properly performed, an architect will search historical zoning records and codes to determine what requirements were applicable to the property when it was built. It is not sufficient to judge the legality of a structure based on current codes and ordinances since codes have changed over time.

The spirit of the law is “consumer protection” but clearly it offers the county an additional income stream not only from filing fees but also from violation fees and new permit fees. Banks lending on properties with a Disclosure of Findings report have found an added level of security. More lending institutions are implementing similar inspection requirements on properties they are lending on and passing the cost of the inspection to the buyer much like the conventional inspection paid by the buyer. These inspections in Florida can also be used to satisfy the required insurance inspections commonly required by providers. The net result to the consumer is minimal considering the added security of the investment received and potential savings in insurance premiums.

Armando M. Montero is a Florida Architect and Co-Founder of Property Assessment Group, LLC a firm providing due diligence services and Loan Risk Mitigation to Banks, Lenders and Asset Managers.

For further information on how Property Assessment Group, LLC can help you reduce your real estate loan risks contact info@propertyassessmentgroup.com

http://www.propertyassessmentgroup.com

There has been a tremendous amount of recent focus on the housing crunch and the impact it has had on our economy as a whole. As a dedicated investor in multi-family real estate, I can tell you that the housing crunch has created a mass migration of consumers. Where are they migrating from? The homes that they purchased a few years ago, can no longer afford, and have since had to sell or unfortunately lose via foreclosure.

When consumers sell or otherwise have to leave a home, they have a number of options for where to go next. The one common element is that they generally all need to go somewhere because, after all, people still need shelter, the proverbial ‘roof over their heads’. This is where multi-family real estate gains tremendous value.

The options available to consumers who need a place to live include:

· A new single family home/condo that they purchase
· A new single family home that they rent
· A multi-family apartment unit that they rent

Given the current housing crunch and that many displaced home owners are now credit challenged, you should be able to see that being an owner of multi-family real estate makes you a source of housing, at a time when many people desperately need it.

I don’t want to overly make light of the current problems many consumers are having with real estate, as I know the current housing market has dramatically impacted many Americans. What I do want to emphasize is that multi-family apartment owners are now able to provide a valuable service to consumers who need a place to live, in addition to being able to pursue a solid and proven medium for investment.

The bottom line here is that, the sooner you see the present economy as a source of opportunity instead of a cause for panic, the better your portfolio will become and the sooner it will happen. Multi-family real estate represents one of the most logical and lucrative investments to consider and, especially in the current economy, it couldn’t be a better time to get started.

David Lindahl, also known as the “Apartment King” has been successfully investing in single family homes and apartments for the last 14 years and currently owns over 7,000 units around the US. David regularly shares his secrets and experience on the same stage as Tony Robbins, Robert Kiyosaki, and Donald Trump! For two FREE copies of his highly recognized newsletter Real Estate Insights, please go to http://www.davesoffer.com/ezine

The foreclosure crisis had its roots in the housing boom years around 2005. Deregulations in the financial world had allowed sub-prime mortgages to be given practically to anybody with a pulse. The market became flushed with money from sub-prime loan sanctions and there was feast of spending on housing construction and transactions.

There were two types of investors broadly speaking – those who bought the house to make it a home and those who speculated on selling it later on netting in profits. Even those who knew that their income would not permit continuation of the mortgage were confident that the market could never go down and by selling later the mortgage would be easily cleared. Appraisers increased the value of houses so that more money could be sanctioned. Brokers took handsome commissions. It seemed there was a party going on until it struck midnight and the magic faded – the golden coach became an ordinary pumpkin!

Foreclosures have a domino effect with one thing leading to another. Directly the two affected are – the lender who gains a house and the borrower who loses a home. The lender now has the responsibility of looking after the house and when it runs into million of houses the lender is in a tight corner. These houses are all white elephants that have stopped paying monthly remits. The borrower goes away with a bad credit history and empty pockets trying to find shelter. The community now begins to pay the price with empty houses inviting crime and disease and those without shelter roaming from motel to friend’s homes and finally ending up in tent camps – a breeding ground of discontent. Traumatized children bide their time to grow up – the future citizens of America. When the people are without money the shops don’t sell goods. Industry gets hit.

The government at all levels suffers revenue loss from low house sales but added work pertaining to law and order. With government coffers low welfare programmes take a big hit.

The effect of foreclosure does not confine itself to its national frontiers but crosses the Atlantic and Pacific to reach distant shores. Many countries like Japan and China as well as European nations had invested in the securities created from the sub-prime mortgages. But when these collaterals became worthless their investments too suffered.

The effects of a single matchstick named foreclosure started off the fire in the forest!

Kevin Simpson, has been working on ForeclosureListings studying the foreclosures market, helping buyers on the finer points of foreclosures for sale. Try to visit ForeclosureListings and begin your foreclosures by state search.

Kevin Simpson, GM Sales & Marketing, ForeclosureListings.

Districts like Silver Springs Shores and Marion Oaks, are older, more established residential communities, and are still experiencing robust growth. Other areas like Fore Ranch and Heath Brook are newer subdivisions. The southern portion of Marion County is also home to a selection of massive retirement villages, as well as other other gated communities and villages.

The Ocala/Marion County Building Department has noted that housing growth in the city and county as well has remained strong, ,and like most of central and south Florida, is being driven by the influx of new families and retirees, who are relocating from harsher and colder northern climates, as well as for the area’s growing employment opportunities.

The Indicators For Robust Growth Are In Ocala

According to local housing experts, most indicators that would enable a healthy local new home sale market are reflected in Ocala. These factors, such as low interest rates, lower cost of construction products and services, strong commercial construction activity, and baby boomers reaching retirement age. Overall, the housing sector is optimistic that the new home market in Marion County will be healthy over the next 12 to 24 months.

Ten Reasons Why You Should Invest In Ocala Real Estate

- Availability Of Affordable Housing

Ocala, as well as Marion County, offers many affordable housing programs for income eligible households, and these include the State Housing Initiative Partnership or SHIP and the Community Development Block Grant or CDBG for home purchase or rehabilitation outside of the city limits of Ocala. In Ocala, the CDBG Housing Rehabilitation Program, which uses federal funds, is among the programs offered to income eligible residents within the city limits.

- Wide Array Of Employment Opportunities

The slowdown in the housing, credit and construction sector has led to higher unemployment in recent months, with the jobless rate rising to 4.8 percent. However employment in the manufacturing and service sector has risen, and the result is an availability of job options.

- The City Has A Thriving Retail Sector

Ocala’s retail sector is expected to further grow. The new Market Street at Heath Brook mall is scheduled to open early next year, bringing new options to shoppers, including Dillards and Talbots. Paddock Mall, the county’s first mall, is slated for a renovation and expansion in 2008, and newer centers are being developed nearby. A new shopping center, Berkshire Oaks, will add major retailers Kohl’s and H.H. Gregg to the fold.

- Easy Access To Modern Medcal Facilities

Of the county’s largest private-sector employers, two are in health care, three in retail sales, three in manufacturing, one in finance and one in support services. The Munroe Regional Medical Center is the county’s largest single employer, with 2,427 employees, followed closely by Wal-Mart with 2,385. The proximity of the county health facilities to the city offers residents better, and convenient access to medical care.

- Presence Of High-Tech Industries

Ocala’s high-tech industries are expanding too. Aircraft and tech firm Lockheed Martin continues to build missile control systems in its Ocala facility, and Intellon is expanding its line of integrated circuits into new products.

- Booming Tourism Market

As tourism continues to grow, the Ocala/Marion County Visitor and Convention Bureau recently authorized a feasibility study to determine whether the area can support a convention/meeting facility. New hotels have recently opened on both the east and west sides of Ocala. A new Holiday Inn Express opened near the Silver Springs attraction, joined by a Value Place extended-stay hotel nearby.

- The City Hosts A Number Of Housing Events Each Year

Each year, several home events are hosted to showcase potential home buyers to area builders. Two of the area’s largest events are the annual spring Parade of Homes and the Fall Showcase of Homes. The Marion County Building Industry Association sponsors both events.

- It Is The Horse Capital Of The World

Carl Rose, who made millions in the limestone industry, opened his Rosemere Farm just east of Ocala in the 1930s, However, it was men like Bonnie Heath and Jack Dudley that began breeding Triple Crown champions in Marion as early as the 1940s and 1950s. Today, Marion, as well as Ocala, proudly calls itself “The Horse Capital of the World” because of the hundreds of farms that raise dozens of equine breeds.

- The City Offers Many Educational Opportunities

There are many educational opportunities in Marion County, and these range from public and private elementary schools to colleges and university opportunities. Among them are Central Florida Community College, and its main campus on State Road 200 not only offers associate degrees, but also features a University Center where students can earn bachelor’s and master’s degrees through online classes at seven universities.

- It Has A Vibrant Nightlife

The city has a healthy assortment of recreational, dining, and entertainment facilities. Whether you’re looking to dance the night away, go have a few drinks with friends or just unwind, there are several nightspots here for individuals who are looking to have fun.

http://www.fountainsatgolfpark.com/fountains/index.htm – Ocala Real Estate

Vanessa A. Doctor from Jump2Top – SEO Company

1. Hard money lenders. You can ask around or find these online. They specialize in short-term loans at high interest. You typically use this type of financing for a “fix and flip.” You can often get the money fast, and if you make $30,000 on a project, who cares if you paid $10,000 interest in six months.

2. No-doc and low-doc loans. No (or low) documentation of your income or credit required. Again, you can find banks that do these online now. The catch is that you will only be able to borrow up to 80% of the purchase price or property value. If you have 10% in cash, you might be able to borrow the other 10% from a friend or the seller.

3. Seller-carried second mortgages. Sometimes a bank will loan you 90%, and allow the seller to take back a second mortgage from you for 5%, leaving you needing only 5% for a downpayment.

4. Land contract. Called “contract for sale” or other names as well, this just means the seller lets you make payments, and delivers the title upon payment in full. I sold a rental this way for $1,000 down, because I wanted the 9% interest, and the higher price I got this way.

5. Credit cards. If a seller will take $10,000 down on a fixer-upper that you expect to make $20,000 on, why not use credit cards? This is a true 0-down deal for you, and if you turn the project in six months, you will have paid $900 in interest on an 18% credit card. Don’t let $900 get in the way of making $20,000.

6. Retirement accounts. The laws get pretty complex in this area, but you can check with a tax attorney to see how you might borrow from your own retirement account to finance real estate investments.

7. Friends and family. Keep it all business, if you use this source, but loaning you money at 7% isn’t a gift if their money is getting 2% in the bank.

8. Note buyers. The seller needs cash. He raises the price, and sells to you for $100,000 with no money down, taking back two mortgages from you for $90,000 and $10,000. He arranged (or you did) for a note buyer to pay him $80,000 cash for the first mortgage at closing, getting him the cash he wanted. You pay two payments now, one to each note holder.

9. Get a loan on other property. Interestingly, if you take out a home equity loan for a vacation, and then forget to use it for that, you can use it for the downpayment on an investment property, without violating the rules of the bank that gives you the primary mortgage. In other words, you got in with no cash of your own.

10. Partnerships. For bigger projects, you could arrange for five investors to each put money into a partnership, with your share being the management responsibility instead of cash.

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

If rates in the current market are high, you’ll probably get a better price with an adjustable-rate loan. A fixed-rate mortgage means that the interest rate and principal payments remain the same for the life of the loan but the taxes may change. Loan programs for down payments of 20% or less require that you purchase Private Mortgage Insurance (PMI).

Interest rates may go up if a rosy picture is painted that the economy is flourishing – like more jobs being available; this can lead to inflation which will send the rates up. You’ll also need to consider closing costs and the escrow account for your taxes and insurance. Also keep in mind when you’re financing or refinancing that most people move or refinance within seven years.

Most of all you’ll need to decide what you can afford to buy. And if a loan application isn’t approved for the first time, it can always be resubmitted after modifying it, for example, like raising the amount of the down payment. If you’re a first-time home-buyer it is possible that you may qualify for a lower down payment or lower interest rate; check with mortgage brokers, online mortgage companies, your county housing department or your employer to see if they know of any programs like this available.

Revealing a FICO credit score is not a requirement for most conventional or government loans like FHA loans or VA loans. Thirty-year fixed-rate mortgages offer consistent monthly payments for all of the 30 years you have the mortgage; if the market is good, you can benefit from locking in a lower rate for the full term of the loan. 15-year mortgages are an ideal option if you can handle the higher payments and if you’d like to have the loan paid off in a shorter period of time, for example, if you plan to retire.

A 20-year fixed rate mortgage term will mean higher payments, when compared to the 30-year fixed-rate mortgage. If you’ve applied to other lenders, when you finally do select a good lender you may have to explain why there are other inquiries from lending institutions on your credit report. Check with your CPA or accounting professional; you may be able to deduct the interest you pay on the mortgage loan and some of the financing costs of the home, like points, on your income tax return.

Be careful when working on your real estate financing; if you make too many loan inquiries, with applications, it may look like you’re shopping for credit; this can be a red flag for many lenders. Keep in mind that adjustable rate mortgages are best for homeowners who aren’t planning on staying with a property for a very long period of time.

Collect a few of the local home guides you see stacked up at the local grocery stores or supermarkets and look at a few of the ads in the real estate section of your Sunday newspaper for houses you might consider buying. Get lots of advice about real estate financing, mortgages, interest rates, mortgage rates, mortgage refinance, bad credit mortgages, etc., from many different sources, don’t rely on one source, and think about what makes sense to you. And thinking positive about real estate financing is important but so is being realistic.

For more information on bad credit real estate financing and finding the best home or commercial loan or mortgage go to http://www.Real-Estate-Financing-Tips.com a real estate broker’s website specializing in real estate financing tips, help, quotes and resources including refinancing and creative financing

For many years most people financed a property with 20% down and 80% on loan. Some even put MORE down. But 20% was considered the minimum. And fortunately many things have changed over the years.

And while it’s great to use less cash for the same property, the downside isn’t limited to the higher rate on the second note. You’ll find that lenders almost always require PMI (private mortgage insurance) if the buyer doesn’t meet the standard 20% minimum. And the fees can be unattractive.

It’s “possible” to have the lender remove the PMI after a certain number of payments have been made. But it rarely happens. Here’s the theory…

Once the loan has been paid down so the LTV (loan-to-value ratio) is at the 80% mark, this is usually the combination of paying down the second mortgage and the property value appreciating, the lender will consider removing the PMI fee from your monthly payment.

But usually the loan is refinanced or the property is sold before that happens. So keep that in mind. You should know or have some idea about how long you intend to hold onto the property.

But you should know as an investor that there are other sources of financing.

If you’re looking at properties in a new development, the manufacturers sometimes finance home loans for early buyers. And the interest rates for these loans can be very low. Some are as low as 5% of the purchase price.

You can also invest by ‘buying’ and selling a property without ever owning it…well, at least not owning it for very long!

What you’ll do is buy a property and create a contract. Then you’ll simply sell that contract. You’ll sell it without ever taking possession or being on the title. Your profits will usually be smaller than other investing techniques, but you can make a quicker profit.

Another form of creative financing involves Sub2 deals…or subject to.

The usual sub2 involves having the seller deed you the property. The existing mortgage is left in place. You won’t legally assume the existing mortgage loan. You’ll simply start making payments on it. There are nuances and variations on sub2′s and they’re not recommended for the beginner investor.

You can form limited partnerships to finance your properties.

Again, there are many ways to structure limited partnerships. Sometimes each partner contributes a percentage and profits are paid according to the original percentage invested. Or, one partner invests capital and the other contributes time in the form of work or services.

You can finance a property with your credit card. But there are some downsides to doing this. Lenders consider all outstanding debt when deciding whether to give a loan on the remaining balance. Of course you’ll have to consider interest rates, as well.

These are just a few available options for the creative real estate investor. But they really are only the tip of the iceberg. I’ve shown thousands how to successfully invest in real estate properties of all kinds.

Peter Conti, http://www.MentorFinancialGroup.com, is America’s leading real estate investment expert. He has helped thousands of clients create financial independence using real estate through his many books, investing courses, boot camps, lectures, and personal mentoring. Peter still actively invests in single family homes and commercial real estate.

3 Big Considerations For Bad Credit Buyers

Consider these three things while you are looking for a loan when you have less than perfect credit.

1. Don’t make mistakes or exaggerations on your income, your credit history or any other information requested. Being up front and honest with lenders will allow them to find lending options that are available to you.

2. Sub-prime lenders are available to provide homeowners with debt consolidation loans, with refinances of their current mortgages or even additional loans. Yet, you will pay for it with higher interest rates. Because they are taking on more risk, the interest rates are higher to you.

3. Penalties and balloon payments may be placed into these loans to help to cover the risk levels. For example, a prepayment penalty means that if you attempt to repay the loan early, you could face fees for doing so.

Bad Credit Doesn’t Stop You

Because the value of a home allows for financing of loans at a lower rate and gives a bit more security to the lender, most individuals can rest assured that they will find some solutions for their needs even with bad credit.

Mortgage Lenders For Borrowers With Credit Problems – We maintain a list of recommended mortgage companies online and update the list regularly.

15 Mortgage Tips for People with Bad Credit- Read this article for more tips on getting a mortgage loan with bad credit.

Some of the benefits to having an 80/20 mortgage loan are:

1. No PMI – Private mortgage insurance is a monthly payment that every borrower needs to pay when they purchase a home with less than 20% down. PMI is insurance for the lender to protect the lender against losses should the borrower default on their loan. PMI does not insure the borrower in any way. When you split your mortgage into two loans, one loan is for 80% of the loan amount and the other is for 20% of the loan amount. So, PMI is not necessary for the first mortgage.

2. Qualify for 100% Financing on Your Mortgage – Many times a borrower might not be able to qualify for 100% financing on their mortgage loan unless they do the 80/20 setup with their loan.

3. Lower Interest Rate on 1st Mortgage – Let’s say you expect to be able to pay down a significant amount on your mortgage loan in the near future. It works in your best interest to get an 80/20 mortgage loan, because as you quickly pay off the second mortgage, your interest rate on your first mortgage will be much less than if you had financed all 100% of the loan through one company. Usually the interest rate on the second mortgage is much higher, but that is nullified if you pay the second mortgage off quickly.

There are many ways to use creative financing to finance a mortgage without any down payment. Try consulting with more than one broker to find out what all of your options are before you decide.

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Credit Problems? See Our List of Bad Credit Mortgage Companies