May

14

Should You Borrow Money to Invest in Real Estate

Filed Under Real Estate Investing | Leave a Comment

The short answer is YES! You can, and should, borrow money to invest in real estate. However, let me clarify. Investing is where you have a realistic plan to make a strong return on your investment. The return is not based on appreciation of the property. It must provide a return on investment after allowing for costs, expenses, and an allowance for things that might go wrong.

When borrowing money to invest, here are 3 simple rules to follow:

  1. If you had the cash, would you loan someone else the money you’re asking to borrow against the same property? If the answer is, “No,” then you don’t have a great investment that you are confident in. Move on.
  2. Does the risk justify the reward? Are you making enough money to make it worth it, or are you getting involved because you want to be “in” real estate? The only reason for a business is profit. If there is not enough profit, move on to another deal.
  3. Is this a long term investment? If the answer is, “Yes,” then the next question becomes, “How much money are you making monthly?” If you’re not making money monthly, then you are speculating (hoping, not investing) for future profits.

Certainly there are exceptions to these rules depending on your financial position and your investing goals. However, many novice investors get sucked into buying properties. They believe, mistakenly, that real estate always goes up in value. They hope that history will repeat itself and they will become rich in the future from their property.

Smart and profitable real estate investors base investment decisions on instant profitability. You can’t go broke when you are making a profit from the beginning.

Author: Gerald Romine

May

9

How To Establish Credit After A Bankruptcy

Filed Under Real Estate Investing, foreclosure | Leave a Comment

Seal of the United States bankruptcy court. Church of Scientology attorney Steven Hayes bought rights to the Cult Awareness Network assets during its bankruptcy proceedings.

Today I had to be in the bankruptcy court because a seller wrongly included a property that was not longer theirs in a bankruptcy filing as a way to stay in the house payment free. A real sleazy thing to do.

So we show up to petition the court for a release and what a surprise, the seller doesn’t show up and the judge releases the stay per our request.

This is one example where the former owner was doing something very wrong… especially considering that they were hours from losing the home to foreclosure when they took out a private money loan in the first place.

That aside, there can be legitimate uses for bankruptcy and many real estate investors have decided that bankruptcy was the right tool for them to start over after having made some bad investment decisions.

How To Establish Credit After A Bankruptcy

  1. 1. Apply for a secured credit card. Forget the other advice because this will save you time and frustration.
  2. 2. Charge everything you can on the secured credit card without going over the limit. Pay the card off every month.
  3. 3. Open a savings account and set aside a certain amount into the account every month. Don’t touch this money… just let it grow.
  4. 4. Check out www.annualcreditreport.com. You’re able to get a free credit report but make sure you agree to see the report for 30 days or you may not be able to access the report later.
  5. 5. Find and dispute all negative reports online. State reasons and be sure to add personal statements whenever possible. Repeat every 20 days. Repeat challenges every 20 days!
  6. 6. Repeat steps 4 and 5 every 3 months until you have the desired results.
  7. 7. Simple as this sounds be sure to PAY your accounts on time.

Author: Gerald Romine

Apr

21

Getting Better Cash Flow With Real Estate Rentals

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When is the last time you looked at your real estate loans to see if they are in times with the market? Are you paying 8%? Do you have ARMS with low interest rates that could be adjusting up? Do you have 80/20 seconds on rentals or your own house that is at 10%? Many people do and NOW is the time to do something about it.

Interest rates can still be obtained below 6% and if you have higher rate loans now is the time to refinance into lower rate fixed loans!

Today’s Tip: Look at your current loans and refinance if you can turn and ARM into a low rate fixed or if you can significantly lower your fixed interest rate.

Looking For A New Real Estate Loan Loan?

Then now is the time to check out the Zillow Mortgage Marketplace. In a nutshell Zillow has turned the loan application process upside down and it is to your benefit. Simply go online and fill out a completely 100% anonymous SHORT application that does not require your name, SSN, or phone number and lenders compete for your business.

Talk about powerful. This means that our loan is being bid on by lenders and we have the power to choose the winning bid. As a consumer you have to love that and with these interest rates you may be able to increase your cash flow several hundred dollars per month just my restructuring your debt.

Author: Gerald Romine

Apr

12

What Is A Deficiency Judgment?

Filed Under Real Estate Investing, foreclosure | 1 Comment

judge's gavelA deficiency judgment is a judgment lien against a debtor, defendant or borrower whose foreclosure sale did not produce sufficient funds to pay the mortgage in full. This option may or may not be available to the lender, depending on whether they have made a recourse or non recourse loan.

The fuller, statutory definition as defined by New York is: “the whole residue, or so much thereof as the court may determine to be just and equitable, of the debt remaining unsatisfied, after a sale of the mortgaged property and the application of the proceeds, pursuant to the directions contained in such judgment, the amount thereof to be determined by the court as herein provided.

The plaintiff’s attorney (in other words, the bank’s lawyer) must make a motion to receive such a deficiency judgment. Otherwise, the amount gained from the sale shall be deemed the full amount owed, and the plaintiff has no right to collect the additional debt. However, if the parties (mortgagor and mortgagee) have already agreed in their mortgage or promissory note, then the debtor could be liable for the full amount.

A debtor who has a deficiency judgment should see an attorney for possible remedies, including bankruptcy, an exemption from creditors,an appeal, or a motion. As with all legal research sources on-line, Internet users should take caution before applying such advice to your own case, and perhaps should consult an attorney.

Example: Upon Default by the Mortgagor a lender Forecloses on the mortgage. The unpaid balance of the loan is $102,000. The property is sold at public Auction and brings $80,000. The lender then seeks a deficiency judgment against the mortgagor to recover the $22,000 shortage, plus foreclosure expenses.

Deficiency States

Legislation enacted during the Depression still restricts the availability of deficiency judgments in several states. In some jurisdictions, deficiency judgments are prescribed in certain situations, while in other states, they are limited to the amount by which the debt exceeds the fair market value of the property. Waiver, the intentional relinquishment of a known right, of the benefits conferred by anti deficiency legislation contravenes public policy and is ineffective.

In non-deficiency states like Arizona a lender is unable to pursue any type of a deficiency judgment. Concerning foreclosures non-deficiency states are advantageous to owners in foreclosure because the lender is unable to pursue the deficiency judgment. (If you live in Arizona and want to walk away from an upside down house visit www.overforeclosure.com.)

The good news is many lenders do not pursue deficiency judgments because someone that has lost a house to foreclosure is a poor candidate for collections on a deficiency judgment.

For more information on foreclosures and how to complete short sales visit www.kickassshortsales.com.

Author: Gerald Romine

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