Yes, I intentionally mispell ‘week’ as ‘weak’ for a reason. There’s nothing exciting going on! We still have a mortgage ‘meltdown’ according to CNN, there’s still a ‘foreclosure crisis’, and the DEALS ARE EVERYWHERE. Everyone and their mother has a ‘plan’ to fix our current economy. The United States as a whole can’t determine if we’re in a recession or not. Britney Spears is still messed up. It’s just the same ol, same old.  The question is, what are you doing about it?

I can’t even begin to tell you how many deals I’m finding out there right now. NOW is the time to be buying! Are you sitting on the sidelines watching it pass by? Or are you on the front lines taking a bite of the action? Right now is a defining moment for everyone- a moment when we’ll all look back and say either ‘I wish I would have" or "I’m soo glad I did!" Worried about cashflow in your investments?  Now’s the time to find some great deals, and pick up some cashflow in AZ! This coming week I’ll start posting more deals that I’m finding out there. The important thing is, what are you going to do with it?

Now THIS is a Real Estate Investment! I’ve been seeing these things popping up for the past year- looks like they’re actually selling! If you are a minimalist, and can’t stand HOAs- this just might be the property for you! At a base price of $30,000, you can’t go wrong. Read more here.

There’s soo many plans out there right now, I just don’t have the time to give them attention. Honestly, every day I read the news there’s a new plan being proposed to help ‘cure’ this mortgage crisis. There’s a new plan to help homeowners avoid foreclosure, and walk from the debts they owe, unharmed. It’s getting ridiculous. The media is eating it up. What it’s really doing is destroying any credibility of a REAL plan actually going through. At this point, until I see it about to be voted on, I won’t give it the time of day. Most of them are great ideas for selling advertising space and commercial air time, but will never fly in actuality.

For example- I just read 2 plans out today. One will allow State and Federal Judges to reduce the principle balance (as well as reorganize the terms in the Mortgage Note) in order to reduce the payments for homeowners. This is great for homeowners, as they can keep their home, reduce their payments, and wallk from what they owe (and spent!). My reaction? No way in hell will the lending institutions allow a State judge to dip into their lending portfolios and completely take money out of their pockets. It just won’t happen, politicians will be thrown out of office if it even got close to passing.

The other ‘plan’ would allow borrowers to reduce their principle balance on their loans, but give the lenders the ability to recapture that loss if the home is sold for a gain later. The example in the article was that if a homeowner owes $100k on their home, but the home is now only worth $80k, they can reorganize their payment (or refinance their loan all together) based off of the $80k amount. However, much like a Negative Amortization, if the homeowner ever sells the home for a profit (up to $100k), the lender would have the ability to reclaim that $20k they walked from earlier. Now let’s think about this… if I owe $350k on my home, but it’s only worth $300k now, I could walk from the $50k difference all together. I would just sell my home for $300k, and go buy a different home at rock bottom prices. The lender would never have the opportunity to recapture their $50k loss. I’m sure the lenders are lining up to support this one.

I could go on and on about the stupidity of these plans, but it’s pointless. Most of them require the lenders to take a huge loss, and would ENCOURAGE non-distressed homeowners to take advantage of it, instead of help to ease the ‘foreclosure crisis’ going on right now. The more plans I see, the more I think the plans are made up by the media in order to spur more attention. It’s just ridiculous. You hear about this huge plan, but then it slowly disappears under the wraps of another huge plan. This is why I won’t be reporting on these things- just a waste of time. Until I see something officially getting voted on, I won’t worry about it. I suggest you follow the same thought process. And no, I’m not going to post a link to the articles on the 2 plans mentioned above- it’s not worth the click.

Well, it’s been going on for a while, but it’s now getting more publicity in the press. Home Builders are using auctions as a way to shot gun sales of their existing inventory. The same way wholesalers use the word ‘foreclosure’ to mass market a property, home builders are hoping the general public thinks they’re getting a great deal if they buy at these events. The sad thing is, it’s typically a bunch of uneducated buyers who are getting caught up in the excitement of the bidding action. They’re purchasing on a whim, without representation from a REALTOR®, and no knowledge as to whether it’s a great deal or not. Just because the builder says the home retails for $500k (and the opening bid is $400k!), doesn’t mean that’s what it’s worth. You’ll find out quickly that your $400k home is going for $350k across the street.

Yes, you CAN find some deals in these auctions, however, you’ve got to be VERY careful and know your values like the back of your hand. Yes, a homeowner might walk into $10,000 - $30,000 in equity, but that’s about it. Certainly not the best way to find a deal on an investment property. Before you get caught up in the excitement of it all, make sure you call me first to get an honest value of the homes before you go. Be prepared to be outbid and pay more than you should once the excitement of it all is said and done. For what it’s worth, here’s an article about it, but I’d take it like a grain of salt.

I found a great post from BiggerPockets.com today. It talks about the lending guidelines that Fannie Mae & Freddie Mac have on Investment Properties. Instead of rehashing the entire article- here’s the gist of it.

Full Documentation: Ideal for borrowers looking for conforming loan amounts who have good credit and assets:
1 unit: 90% LTV / 85% 1st Lien / 90% TLTV - $417,000
2 unit: 90% LTV / 85% 1st Lien / 90% TLTV - $533,850
3 unit: 75% LTV / 70% 1st Lien / 75% TLTV - $645,300
4 unit: 75% LTV / 70% 1st Lien / 75% TLTV - $801,950
Cash Out 1 unit: 85% LTV / 80% 1st Lien / 85% TLTV - $417,000
Cash Out 2 unit: 85% LTV / 80% 1st Lien / 85% TLTV - $533,850
Cash Out 3 unit: 70% LTV / 65% 1st Lien / 70% TLTV - $645,300
Cash Out 4 unit: 70% LTV / 65% 1st Lien / 70% TLTV - $801,950
Not available IO

Stated Income: Ideal for self-employed/salaries borrowers with excellent credit. No tax returns or other written verification of income. Assets are required to be verified.

1 unit: 90% / 90% - $417,000 - 720 75% / 90% - $417,000 - 680
2 unit: 90% / 90% - $533,850 - 720 75% / 90% - $533,850 - 680
3 unit: 80% / 80% - $645,300 - 720 75% / 80% - $645,300 - 700
4 unit: 80% / 80% - $801,950 - 720 75% / 80% - $801,950 - 700
Cash Out 1 unit: 75% / NA - $417,000 - 680
Cash Out 2 unit: 75% / NA - $533,850 - 680

A-minus; Ideal for borrower who don’t meet “A” paper credit standards. Allow borrowers to obtain a conventional product at a slightly higher rate.

1 unit: 90% LTV/85% w/sub. financing/90% TLTV - $417,000
2 unit: 90% LTV/85% w/sub. financing/90% TLTV - $533,850
1 unit:* 90% LTV/85% w/sub. financing/90% TLTV - $417,000
2 unit:* 90% LTV/85% w/sub. financing/90% TLTV - $533,850
3 unit:* 75% LTV/70% w/sub. financing/75% TLTV - $645,300
4 unit:* 75% LTV/70% w/sub. financing/75% TLTV - $801,950
Cash Out 1 unit:* 85% LTV/80% w/sub. financing/85% TLTV - $417,000
Cash Out 2 unit:* 85% LTV/80% w/sub. financing/85% TLTV - $533,850
*Borrowers may not own any other financed investment properties

With interest rates at a low point, and deals flowing from everywhere- this is some encouraging information! If you’re serious about picking up some investment properties, give me a call and we’ll find a great deal for you.

Here’s a funny story from BlogArizona.com. It thought it was humerous, and made me think of all the people in foreclosure right now. I’ve seen some people trash their houses, but man, this is subtle and very effective. Too funny.

She spent the first day packing her belongings into boxes, crates and suitcases.  On the second day, she had the movers come and collect her things.  On the third day, she sat down for the last time at their beautiful dining room table by candle-light, put on some soft background music, and feasted on a pound of shrimp, a jar of caviar, and a bottle of spring-water.

When she had finished, she went into each and every room and deposited a few half-eaten shrimp shells dipped in caviar into the hollow of the curtain rods.  She then cleaned up the kitchen and left.  When the husband returned with his new girlfriend, all was bliss for the first few days.

Then slowly, the house began to smell.  They tried everything; cleaning, mopping and airing the place out.  Vents were checked for dead rodents and carpets were steam cleaned.  Air fresheners were hung everywhere.  Exterminators were brought in to set off gas canisters, during which they had to move out for a few days and in the end they even paid to replace the expensive wool carpeting.

Nothing worked!!!  People stopped coming over to visit.  Repairmen refused to work in the house.  The maid quit.  Finally, they could not take the stench any longer and decided to move.

A month later, even though they had cut their price in half, they could not find a buyer for their stinky house.  Word got out and eventually even the local real estate agents refused to return their calls.

Finally, they had to borrow a huge sum of money from the bank to purchase a new place. The ex-wife called the man and asked how things were going.  He told her the saga of the rotting house. She listened politely and said that she missed her old home terribly and would be willing to reduce her divorce settlement in exchange for getting the house back.

Knowing his ex-wife had no idea how bad the smell was, he agreed on a price that was about 1/10th of what the house had been worth, but only if she were to sign the papers that very day.  She agreed and within the hour his lawyers delivered the paperwork.

A week later the man and his girlfriend stood smiling as they watched the moving company pack everything to take to their new home….

And to spite the ex-wife, they even took the curtain rods!!

 

Well, you just have to watch this video, completely insane. It’s called Portabello, and features 8 bedrooms, 15 bathrooms, 16 car garage with auto lifts (climate controlled as well), a bowling alley, diner- it’s insane. You’d need a large staff of people to maintain the property. I’m sure the utility bill is larger than my mortgage payment each month. Check out the website.

Portabello - Luxury Real Estate Tour - video powered by Metacafe

Hat tip to Jay, the Phoenix Real Estate Guy for this one.

MSNBC had an article a few days ago about the effect of foreclosures on housing prices. There’s not too much new information here, other than reiterating why it’s an excellent time to buy investment property. Check it if you’d like, or here’s a clip.

 

While foreclosure sales are bad news for homeowners in neighborhoods with high foreclosure rates, they are a boon for well-financed buyers looking for properties at bargain prices. And in broad terms, economists view them as part of getting back to more realistic prices after years of excess.

Alejandro Diaz-Bazan, who sells foreclosed properties in Miami, said banks seeking to unload foreclosed properties are looking for buyers that can close deals quickly, and therefore need to have a hefty down payment. This month, Diaz-Bazan said a European client bought two foreclosed condominiums as an investment.

“The bank really is out to move them, to liquidate them,” Diaz-Bazan said. Despite the downward pressure on prices, he said, “property prices in Miami have not dropped enough” for the market to rebound.

Yup- the smart ones are buying right now. I think it’s been obvious for a while, I’ve certainly been preaching it for a while. It’ll be interesting to see the mass media spreading the message now tho- and how many investors will finally dive back into the market once their news anchors start talking about it. Too bad the REALLY good deals will have been snagged up by then… or will they?

Hey guys-

Sorry I haven’t posted in quite a few days. I’ve got this crap that is going around- been sick as a dog, to say the least. I was fighting fevers from 102 degrees to as high as 104.7 degrees the past week or so. Today is the first day without a fever and horrible cough. I still can’t think too straight, and feel I’m at about 65%, but getting better. Trust me guys, YOU DO NOT WANT THIS STUFF! If you are exposed to it, or, feel yourself catching something- go dose up on Airborne, Vitamins, etc- whatever you can and try to head this off. It’s just nasty stuff. I’m sure I’ll be back full speed by the end of the week…

ok- I’m going to throw together some quick numbers for you guys on this new deal in the West Valley. These are rough estimates, but, if you’ve done deals in the past, you’ll see it’s fairly accurate.

Let’s say this Investor flips the deal to you at $130,000 (remember, it appraises for $210,000 or more). Here’s how I see the numbers playing out.

You’ll list it on MLS for $190,000. Yes, it’s worth $210,000, but in this market, you want to list it cheap to get them to sell fast!  This is NOT the market to get greedy in! Here’s some figures…

    $190,000  - Sales price on the back side
    - $11,400 - Realtor’s Fees (assuming you pay a full 6%)
   - $2,500 - Title/Closing Fees (again, over estimating)
   - $10,000 - Rehab/repair costs (paint, carpet, etc)
   - $12,000 - Holding Costs (using Hard Money, credit cards, utilities, etc)
 
Sub-Total = $154,100.  Take out the $130,000 you paid for the property (maybe another $2k in closing costs on the purchase) and you get…

$24,100 NET PROFIT

Now, doesn’t that sound decent? Not too shabby for one slam dunk deal. Or, you can hold it as a long term rental for easy cashflows. There’s soo many ways to work deals, it’s not even funny. Contact me if you want to pick up some deals yourself.