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How to profit safely and handsomely from the subprime mortgage mess through smart and timely investment moves.

What a mess the financial geniuses of this country have created through their ‘miracle loans’ to struggling families who dreamed of owning their own home. Through their corporate greed, many of the country’s mortgage loan companies and Wall Street banks have not only caused millions to lose their homes through foreclosure, but they have harmed the U.S. economy as well.

Isn’t satisfying to see these mortgage companies and banks – villains and perpetrators all – now themselves suffer from plummeting stock prices and even bankruptcies? They are now reaping what they have sown.

The root problem is that millions of home buyers used ‘too good to be true’ home loans to buy homes they really couldn’t afford. The mortgage companies and banks offered these loans, often with deceptive and tricky terms, to make millions off the loan fees. The loans were hard for buyers to resist because they had low or no interest charged for the first years. But now the loans are ‘exploding’ with dramatically higher interest rates and these home buyers find themselves unable to make the monthly payments.

For years all was well while home prices skyrocketed with the fuel of low interest rates and easy credit. But now the party has ended. Home prices first plateaued and then began falling, millions of buyers are defaulting, Wall Street is losing billions, and the nation teeters at the brink of a recession.

How can you profit from this? Of course you want a safe method. Want a sure fire method? What is it? read more…

A developer is planning to build a 100 unit condominium development in a very popular location. The developer has already worked out the numbers and thinks that the project will make a handsome profit. Since he doesn’t have the required amount of capital to complete a project of such magnitude, he approaches banks to request financing.

But before banks lend out millions of dollars to the developer, they want to know that the project has the potential to sell after completion. Since there is no way to know the future and banks like to reduce risk as much as possible, they require the developer to pre-sell a certain number of the units (usually 25%-50%) before they will lend money. In this example a bank agrees to finance the developer if 40% of the units are sold before construction begins.

There are very few home buyers who are going to commit to buying something without actually seeing it with their naked eyes. So the developer has no choice but to approach real estate investors who understand the risk and reward of such ventures. In order to reward these investors for their risk, the developer gives them a 10% discount off the appraised value (after construction value) of the condos if they sign a purchase agreement (contract).

This creates a win-win situation where the developer is able to secure financing and the investors are able to get built-in equity by getting the property below appraised value. The investors who buy these condos before the construction is completed are called pre-construction investors, and this investment strategy is called preconstruction investing. read more…

If you don’t have the time to invest working on fixers or if you’re tired of working on fixers to make money investing in real estate, try this method.

Many real estate investors make thousands of dollars on brand new homes with little work. To test this money-making system in your area, call new development home sales offices that have most homes sold. Ask about their price for a 3 bedroom, 2 bath. Ask how much this model has gone up since they were first available. If this increase is a substantial amount, then this real estate investing system most likely works in your area.

One caution: your real estate market and employment in the area should be stable.

How to do the “new home” or “pre-construction” investing system:

1. Look for a new development with only a sales office trailer and pre-construction site.

2. Pick out the model you like and the lot you want. Get a corner lot inside the tract away from noisy streets. Avoid lots that could back up to a major street someday.

3. Secure the purchase of the home with a deposit.

4. After completion of home and purchase, the home should read more…

Procrastination steals our dreams. Here’s how you get started right now. If you think “I can’t” then you MUST do it, whatever it is. There is nothing wrong with an attempt and a miss…in the grand scheme of things it is almost always better than not swinging the bat at all.

A good friend of mine went out and started a brand new website design business a couple of months ago. He was amped up and excited about the whole thing, talking nonstop when he got started.

At the time, I was excited for him and encouraged him to go for it, to reach for the life of his dreams.

Recently I called him up and I asked him how things were going, and he said “great”.

He proceeded to tell me with lavish enthusiasm about all the wonderful and profitable things he’s going to be doing. All the plans and ideas he has for his new company. All the things he is looking forward to being able to have and do when the big bucks started rolling in.

Funny enough, can you guess the one thing he DIDN’T tell me?

That’s right…

Anything that he’s actually DONE.

You see, I could quickly discern this by listening between the lines. As a matter of fact, this situation resonates with me. I recognize this tendency in others more and more as the weeks pass as a constantly-striving-for-that-next-level entrepreneur myself.

Why?

Simply this: I’ve been there.

Many, many times in fact.

You see, this friend of mine is a dreamer. He’s a planner. A real big thinker.

But…the one thing he’s not? read more…

Many people are going outside of their own market to purchase quality real estate investments at a fraction of the price. Did you know that for example a $400,000-$500,000 home in California is similar to an $80,000 home in Dallas, Little Rock, or Memphis? Did you know that the rent on a home that price can be as high as $1000 per month or more?

Your peers are buying properties in these other markets, getting a lot of cash flow for their money and are racking up a diverse portfolio of assets quickly. Are they geniuses? Are they better real estate investors? The answer is no. Many of these people stepped outside their comfort zone, took very little risk, and now are reaping the rewards. How are they doing this? Let’s take a look.

1. Taking advantage of Markets – First, real estate investors in markets that had a large run up in prices in many cases are hurting now that the appreciation is gone. The savvy investors from these markets are looking outside and they are looking for positive cash flow. Many markets in the interior of the US, especially the South, are not only growing markets but have had depressed prices for quite some time. This is a better angle to look at then for example a rust belt city in the Midwest with a declining population and factories closing up. Look where the economic growth is and the prices have been low. Example: Memphis, Dallas, Little Rock, Atlanta, Birmingham, Montgomery, and others. read more…

You would have to be living in a cave or tucked away on a deserted island somewhere in the middle of the Pacific Ocean not to know that the American real estate market has effectively fallen apart. Real estate investing techniques and strategies that have worked so well and for so long are no longer effective. If you want to continue making money in real estate today, you’ll have to adjust your strategies accordingly, or risk being left behind in today’s post-bubble market.

One such strategy is the short sale.

A short sale is nothing more than convincing the lender to accept an amount less than the current loan payoff amount as full payment for a property. Because real estate as we know it has changed so dramatically so quickly, banks are more motivated than ever to quickly unload these properties and get them off their books as soon as possible. The reason for this is really quite simple: Most banks are required to maintain cash reserves of up to six times the retail value of each real estate owned (“REO”) on hand. Because an REO is actually a liability and not an asset – and there are so many of them – you have an unprecedented opportunity to simultaneously help a friendly banker as well as yourself.

Here’s how it works.

Once you’ve read more…

As if declining property values haven’t been enough of a hit to anyone that purchasd a preconstruction property now they may have to worry about obtaining financing on it. A preconstruction property, for those of you that have been in a time capsule for the last 5 years, is a property that you purchase before it is constructed. You sign a contract to purchase it and then close on the property once construction is complete. When properties were appreciating at double digit speed a lot of people got into the preconstruction craze. Regular joes, and by that I mean people that had no experience in real estate investing, were purchasing properties and reselling them at unbelieveable profits. Most of the time they never even had to close on the property.

I purchased a preconstruction property myself but didn’t close on it because the property never did get approval on their plans with the City of Miami so the project was never built. By this time real estate sales were slowing to a halt in South Florida so lucky for me I was able to get all of my deposit back. I was so happy the day I got the letter from the attorney stateing that I could get my money back now, if I so desired.

There are going to be many others that are not going to be lucky enough to get their deposits back if they don’t close on the preconstruction property. With mortgage banks and lenders tightening up on their programs there are going to be alot of purchasers that cannot close on the loan. If they need a stated income/stated asset (SISA) mortgage for a wage earner (W-2′d employee) there is only one lender that will still do this type of mortgage and it’s going to be at a high interest rate too. All lenders have also raised the limits on how low a credit score can be. read more…

If you are planning to invest in Real Estate, consider investing in a pre-construction property. Pre-construction properties refer to land assets that are either yet to be developed or are in an under-developed stage. Investing in such pre-construction properties makes a lot of sense, as it entails significant savings in terms of costs.

Make wise investment
When a builder or a construction company acquires a land and plans a residential or complex on it, it invites investors to book flats or commercials galas for themselves. The builder does this to raise funds to incur his operating expenditure i.e. cost of constructing or initiating the project work. Costs per square foot, at this stage are low, hence it benefits an investor. Even if the investor plans to invest by taking a loan, it is easier for him to repay, as he is supposed to pay in phases. As the cost appreciates, in accordance with the market, the property cost also escalates. Thus, if you plan to sell the property after it is complete or even at its under-construction stage, you are bound to reap profits, as its costs are likely to have increased manifold.

However, any investment decision needs to be taken thoughtfully, and will guarantee profit only if it is well-researched. Therefore, an investor must always first decide the investment criteria before making Real Estate investments.

Things to consider
First, you decide your pre-construction investment limit and set a target area. Then get in touch with a reputed broker to understand the investment potential of that particular area and check out the available options. Together with the broker evaluate the property’s prospects post construction and determine the likely returns on the investment. Study the risks and rewards of pre-construction investment. Formulate a strategy which will involve all the possible questions you want to ask right from whether the construction is legal with all the necessary permissions to confirming if basic amenities like water supply and sewage are in place. read more…

With pre-construction investing, you can make a large profit, and there are even ways to limit your risk. This strategy generally won’t work well in slow markets, but then markets go up and down. If the time isn’t right now, try it when prices are rising.

The first time I remember hearing about this was in the late seventies. As condominiums became more popular, the prices rose consistently (remember that this was a time of high inflation too). Smart investors took advantage of this before the condos were even built.

First you need to understand how these projects were financed. A developer would determine that there was enough demand for a condo complex, get an option on some land, and have a plan drawn up. The banks didn’t want to loan money on an unproven plan, however. How did the developer prove that the units could be sold?

By selling them! If you want to be the proud owner of one of the beautiful new units in the Blue Spruce Condominiums, you had better buy now! That was essentially the pitch, but of course people wouldn’t (and couldn’t) pay for something not yet built. They could sign the contract to close on the unit once they were done, however, and put down a $500 deposit.

If the units were expected to sell for $55,000 when done, the developer might sell the first dozen for $50,000, just to get things moving. Once he had enough contracts in hand, the bank would put up the money so construction could begin. Six months later, as the condos neared completion, the last ones might be selling for $65,000. Things already there to look at tend to sell for more. (And inflation was at double digits during some of these years.)

Investors who bought a unit at first had a contract to buy at $50,000. read more…

When it comes to financing a home, the options are surprisingly large. In this article, we take a look at whether you should consider going with seller financing.

Seller financing is one of the more unique methods for financing a home purchase. As the name suggests, the seller of the home offers to give you a loan to make the purchase on the home. The loan is usually represented as part of the purchase price. If the seller offers to finance thirty percent of the purchase price, you need only get a 70 percent loan from a traditional lender. The seller’s loan is usually recorded as secondary to the primary lender loan.

Seller financing may sound like a slam dunk option to take advantage of, but is it? The answer depends on whether certain factors are present. Let’s take a closer look.

A seller offering financing may be a sign of a problem with the home. Almost all homes have small problems, but those with big, expensive problems should be avoided like the plague. A seller offering a lot of financing on good terms may be indicative of a big problem with the home since most lenders will refuse to provide financing on such a home. Make sure you get a thorough home inspection before biting on such an offer.

Seller financing often comes with a hidden cost that you is right in front of your face, but you might not realize it. The cost is in the increased sales price of the home. The seller may have over-improved the home and can’t sell it at fair market value. They will try to hide this fact by offering financing. More than a few buyers will consider this a good deal and forget to evaluate whether the overall price of the home is reasonable. read more…