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Upcoming seminars at the Long Beach Real Estate Resource Center:

First Time Home Buyers Seminar
August 26, Thursday
7:00pm to 9:00pm

Multi-Unit Investing Seminar
August 28, Saturday
9:00am to 12:00pm

Creative Investing Seminar
August 28, Saturday
1:00pm to 4:00pm

Reserve your seat today and get a FREE gift!

Investment: $39 each seminar

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6 Creative Ways to Afford a Home

There are still various options to consider when purchasing a home:

1. Investigate local, state, and national down payment assistance programs. These programs give qualified applicants loans or grants to cover all or part of your required down payment. National programs include the Nehemiah program, www.getdownpayment.com, and the American Dream Down Payment Fund from the Department of Housing and Urban Development, www.hud.gov.

2. Explore seller financing. In some cases, sellers may be willing to finance all or part of the purchase price of the home and let you repay them gradually, just as you would do with a mortgage.

3. Consider a shared-appreciation or shared-equity arrangement. Under this arrangement, your family, friends, or even a third-party may buy a portion of the home and share in any appreciation when the home is sold. The owner/occupant usually pays the mortgage, property taxes, and maintenance costs.

4. Ask your family for help. Perhaps a family member will loan you money for the down payment or act as a co-signer for the mortgage. Lenders often like to have a co-signer if you have little credit history.

5. Lease with the option to buy. Renting the home for a year or more will give you the chance to save more toward your down payment. And in many cases, owners will apply some of the rental amount toward the purchase price. You usually have to pay a small, nonrefundable option fee to the owner.

6. Consider a short-term second mortgage. If you can qualify for a short-term second mortgage, this would give you money to make a larger down payment. This may be possible if you’re in good financial standing, with a strong income and little other debt.

These creative strategies and more are covered in detail at our real estate seminars.  Find out your options and make sound financial decisions for you and your family.

Source: Realtor Magazine


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Homebuyers: Too Late for Tax Credit Extension, but still Find Market Ripe with Good Deals

The three-month homebuyer limited tax-credit extension has helped many people.  However, it is too late for other home seekers to take advantage of the tax credit.

But Lucien Salvant, National Association of Realtors spokesperson, says that shouldn’t discourage interested buyers because the market is ripe with other opportunity. “The good news for people who didn’t take advantage of the tax credit is that the inventory is still plentiful, although it’s reduced significantly from what it was a year ago, prices are affordable, and the interest rates are the lowest they’ve been since the 1950s.” The low interest rates are, of course, a magnet for attracting buyers. However, Salvant says that while this is a good time to buy, he notes that the lending market isn’t operating the way it did before the housing crisis. This, he says, should make people understand that buying a house is a good option if you plan to stay in it a while—not play the flipping gamble, hoping for a quick profit.

“The average is about seven years. Homeownership is an investment in the future, not for a quick turnaround, which a lot of people abused in the earlier part of this decade,” says Salvant.

Salvant notes that the housing market’s recovery is being hampered by uncertain unemployment conditions which are causing some potential buyers to wait, possibly for more breaks.

But Salvant says don’t count on more tax incentives. “We have asked Congress now for three different tax credits and we’ve gotten them. The purpose of the tax credit was to give a quick start to the housing economy which was coming apart and sinking fast. We think it really helped. Now, it’s time for the housing market to stand on its own two feet,” says Salvant.

What’s the future hold?

Salvant says, “It’s like a baby standing on its own two feet. It’s going to be wobbly, it’s going to take a while for things to settle in, but the housing market needs to function on its own.” The housing market recovery is being hampered by the joblessness, says Salvant. “[People] are worried about how many people are going to lose their jobs. … ‘If I buy a house, am I going to be able to make the payments?’ That worry is on a lot of people’s minds and it’s beyond the housing market to solve that problem,” says Salvant.

He says the magnets are there to attract homebuyers: low interest rates, good inventory, and affordable prices. “We’re hoping that free enterprise—private industry—and the government can work together to create incentives for a hiring to help the jobless situation in this country,” says Salvant.

As the economic job forecast remains uncertain, sellers dangle a golden carrot which promises a way for buyers to purchase a home that will save them money. Now, more than ever, sellers are highlighting features such as the home’s energy efficiency and close walking distance to jobs, stores, schools, and other vital locations.

Find out options available for you when purchasing a home.  Real knowledge, creative strategies….know the facts.  Check out our upcoming seminars in Long Beach, CA.

Source: Phoebe Chongchua (RealtyTimes): Chogchua is an award-winning journalist, an author, customer service trainer/speaker, and founder of Setting the Service Standard, a customer service training and consulting program offered by Live Fit Enterprises (LFE) based in San Diego, California.

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Help for Home Buyers

When it comes time to buy a home, you may need to strap on your thinking cap to come up with some creative ways to boost affordability. This can come in the form of assistance programs, special financing, leasing, and mortgage ideas.

Let’s take a moment to explore a few of these options:

Look Within Your Circle:

The first order of business could be to sit down with your family to see what assistance they’d be happy to offer. You may find that a father or grandmother would be more than happy to co-sign on a loan, or even offer you a loan at low, or zero, percent interest. You could also discuss a shared-appreciation or shared-equity arrangement. This is when a family member buys a portion of the prospective home, and then are able to share in its appreciative value when it is sold.

Research Buyer Assistance Programs:

The Department of Housing and Urban Development (HUD) has a link you can find on their website, which links to each state and their respective programs. You’ll find such things as programs to help fund rural housing, as well as information on Habitat for Humanity.

The Federal Housing Agency (FHA) offers many great options for potential buyers. Since 1934, the FHA has been helping buyers buy with low interest and little down. According to FHA, “your down payment can be as low as 3.5% of the purchase price, and most of your closing costs and fees can be included in the loan.” FHA even has financing options for manufactured and mobile homes.

While many downpayment assistance programs are unavailable currently due to a law that went into effect on October 1, 2008, you can still find other very helpful programs. How about the AmeriDream Building Affordable Homes Program – currently developing 106 affordable homes in Southeast Washington, DC. The Woodson Heights development is a $30 million project that is serving as a catalyst for change transforming a blighted neighborhood into a good place to call home and raise families.

As well, be sure to look into the Making Home Affordable program, which can offer you great options if you already own and are looking for ways to keep your home affordable. The Obama Administration’s Making Home Affordable Program includes opportunities to modify or refinance your mortgage to make your monthly payments more affordable. It also includes the Home Affordable Foreclosure Alternatives Program for homeowners who are interested in a short sale or deed-in-lieu of foreclosure.

Feel free to contact us for additional resources and to find out which option is right for your situation. You may contact Backyard Wealth’s resource center directly at (562) 598-9885.

Source: Carla L. Davis (RealtyTimes)


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Renting Out Your House – Is it worth the cost?

Renting can be a profitable choice, but it requires an investment of time, money, and organization to make it work.

Here’s how to determine whether renting out your house is worth the cost.

Calculate your monthly expenses
You want to charge at least enough to cover your monthly outlay. So the first step is to use HouseLogic’s free downloadable worksheet to calculate your costs. Start with regular expenses like mortgage, maintenance, and homeowners association dues. 

You may also need to upgrade your insurance coverage. Your agent can advise you about adding landlord insurance, a special type of policy that covers rental properties. As a rule, landlord insurance costs about 25% more than standard homeowners insurance.

If you’re renting the house furnished, make sure you’re covered for the personal possessions you leave behind.  Prepare a detailed inventory of household items. If you’re renting the house unfurnished, figure in the costs of moving and storing your items.

Check out prospective tenants
As a practical matter, you’ll have to formally check out your prospective renters. MrLandlord.com, an information and service site for landlords, suggests a variety of background checks: credit reports, eviction reports, and criminal background reports. None of these is expensive, but you must get your prospects’ permission. 

MrLandlord.com charges $8.95 for an eviction report. A combined credit and eviction report is $14.95. If you want to be especially careful, a countywide criminal report costs $29.95.

Account for maintenance and upgrades
Even with the most scrupulous checks, you can’t be completely sure renters will take good care of your home.  If you’re not within easy driving distance of your rental property, you’ll need to arrange for someone else to keep an eye on the place, even if it’s just to make sure the lawn is mowed. If the tenants are neglecting upkeep, you’ll want to know about it sooner rather than later, since it could be a warning sign of trouble down the line.

 Of course, even if the renters are conscientious, problems can crop up: boilers will fail; roofs may leak; washing machine hoses can burst. If household systems or appliances need repair or replacement, you’re better off spending the money up front, before the fix becomes an expensive emergency.

Don’t want the headaches? Hire a property manager
You can save yourself a lot of time and effort if you engage a management company to oversee the property and take care of the details. Some firms charge a percentage of the rental fee, others a flat monthly fee, based on the extent of services. Property management companies offer a variety of services including general maintenance, rent collection, and—if necessary—eviction.  

A management company can help you figure out how much to charge, find and vet tenants, and prepare a lease. It will also pay the real estate taxes on your behalf and present you with an annual 1099 form. Many management companies maintain 24-hour emergency lines and a roster of approved service people, so they can take care of plumbing or electrical problems and bill you later. A property manager will also see that driveways and sidewalks are shoveled, so you don’t find yourself with an unpleasant claim against your liability insurance.

 Expect to pay a management company 8% to 10% of the annual gross rent, on average, with a $50 to $85 monthly minimum.

Keep scrupulous records
Whether or not you use a management company, you’ll have to keep extensive business records.  Owners must save receipts for any expenses and to file them carefully. 

The IRS treats maintenance expenditures, like a new hot-water heater, differently from capital improvements, such as a new deck or patio, so you’ll want to consult a tax professional. Meanwhile, keep the two types of receipts separate to make tax prep easier. You’ll have to file Schedule E on Form 1040, which can also serve as a template for the kinds of records you’ll need. 

Finally, because of the complex tax and liability issues involved, many financial experts suggest forming a corporation when you become a landlord. An attorney can advise you about whether incorporating makes sense in your situation.

Source: Richard J. Koreto (HouseLogic.com) –  an editor of several professional financial magazines and is the author of “Run It Like a Business,” a practice management book for financial planners. He and his wife own a pre-Civil War house in Rockland County, New York.

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How to Partner with Sellers to Make More Money

One of the most exciting advantage of real estate investing is the number of creative ways to make a transaction or a “real estate deal” lucrative for you and, better yet, for all parties involved.

The important questions to ask yourself before jumping in:
1. How creative are you?
2. How bad do you need the deal?
3. How motivated are your Sellers to sell?

Your goal here is to partner with the seller, assume control of the property and quickly resell the home for a large profit.

Below are important criteria for partnering with sellers on real estate deals:

Home requirements:  The property can be a mobile home or traditional site built home.  The property should have considerable equity (pull comparables in the area).  This technique works best with more desirable homes.  Perhaps the seller has not even marketed the home to properly attract buyers.  The property may have cosmetic eye sores.  Avoid homes that will require costly repairs, extensive curb appealing improvements, code violations, or other money pits.  The property may or may not have a preexisting mortgage.  Look for homes that you believe are just a few inexpensive fixes away from a retail sale.

Seller requirements: The sellers are very motivated to sell, but know the value of their home and demand a fair price.  Sellers will not have the liquid cash to cover the repair costs needed for a fast sale.  Owners may be living out of state.  The preexisting mortgage(s) or late payments may be in default, this could be a reason for the fast sale.  The sellers may NOT continue living in the property once you agree to help.  Sellers must be willing to wait until you re-sell the property for their payday.

The Process: Once you have established that the seller and property are good candidates for partnering, you must have a meeting of the minds.  A specific contract should be created to explain which parties will be responsible for which costs, how profits will be divided and how you will be compensated for your time and experience.  Due diligence should be performed before adding yourself to ANY property deed. Align yourself with a good title company that can research title for you.

I advise using a Warranty Deed to place the home into Land Trust or Personal Property Trust prior to adding yourself as equitable owner.  Using a Trust will not cause seasoning issues later down the road when your buyer is attempting to locate conventional financing.  It is important that you, or your trustee, are named on the deed before you place any money into the home or start marketing the home for sale.

At this point you should have only spent a minor amount of money adding yourself to the chain of title.  The sellers should be moved out of the home by now.  Bring the past due mortgage(s) current to insure the home does not slide into foreclosure while you are trying to sell it (try to split this cost with the sellers).  Remove, replace, and repair any cosmetic damages that may detour a potential buyer to pass on this property.  Spend a few hundred dollars increasing curb appeal, hire a Realtor, and start marketing the property for sale by yourself.

One important thing to remember is, by adding yourself as part owner you are not mistaking yourself as a Real Estate Agent and practicing without a license.  When writing up a partnering agreement always remember to clearly state that; YOU will be reimbursed for ALL expenses you made to property, etc. This total expense will be paid to you from the NET profit of the sale.  Only after you have been repaid all monies you have spent on the property, will this new total NET profit amount be split with your seller in any percentage you have previously negotiated.

Even good properties can make you money .  If you can risk only a few dollars to make thousands, how many many of these deals would you do?  Partnering with sellers allows you to control more properties without spending a large amount of cash to do so.

Source:  John Fedro (specializes in investing in mobile and manufactured homes)

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10 Big Mistakes to Avoid When Investing in Real Estate

Once the real-estate market starts to rebound, investing in property will become a more appealing idea — either as a career or a great side job. Like any other endeavor, though, there’s a right way and a wrong way to go about it.

Bankrate spoke with established, full-time real-estate investors and with professionals, such as bankers, to identify the 10 types of traps into which real-estate investors most often fall.

1. Planning as you go

Andy Heller, an Atlanta investor and a co-author of “Buy Even Lower: The Regular People’s Guide to Real Estate Riches,” says lack of a plan is the biggest mistake he sees new investors make. They buy a house because they think they got a good deal and then try to figure out what to do with it. That’s working backward, Heller says.

“First, you find the plan,” he says. “Then you find the house to fit the plan. Pick your investment model, and then go find property to match that. Don’t find the strategy after you find the home.”

“People fall in love with a property,” says Crowe, the managing director of Springboard Academy, the nation’s only real-estate academy for investors. “I say, ‘Who cares about the property?’ I fall in love with a motivated seller.”

2. Thinking you’ll get rich quick

That kind of wrongheaded thinking is fueled by “these self-appointed gurus who have infomercials and make it sound so easy to get rich in real estate,” says Eric Tyson, a co-author of “Real Estate Investing for Dummies.”

Real estate isn’t easy. It’s a good long-term investment, but so is putting your money in a mutual fund, which is a lot easier. “These gurus don’t talk about all that hard work. You have to be smart, you have to be willing to work, and you have to understand your risk tolerance.”

3. Playing Lone Ranger

A key to success is building the right team of professionals. At the very least, you need good relationships with at least one real-estate agent, an appraiser, a home inspector, a closing attorney and a lender, both for your own deals and to assist with financing for prospective buyers.

In the remodeling and maintenance segment of the business, the team includes a plumber, an electrician, a roofer, a painter, a heating and air-conditioning contractor, a flooring installer, a lawn maintenance service, a cleaning service and an all-around handyman.

You can’t build a business as an investor if you’re spending all your time fixing leaky faucets and putting up ceiling fans.

4. Paying too much

Heller says the biggest reason investors don’t make money is simple: They pay too much for properties.

“The profit is locked in immediately once the investor buys the property,” he says. “Due to mistakes in the analysis, the investor pays too much and then is surprised later when he doesn’t make any money.”

5. Skipping homework

You wouldn’t think you’re qualified to perform open-heart surgery without years of education and training. Yet many wanna-be real-estate investors don’t think twice about taking their financial lives in their hands without even cracking a book.

Educate yourself before you put your family’s financial security on the line. Read articles, check out books from a library, join investor clubs and attend workshops and seminars.

6. Ducking due diligence

Investors often have to move quickly on their deals. That doesn’t mean they sign a contract and write a check without plenty of research, though.

That’s where a lot of newbies trip up, says Houston real-estate agent Laolu Davies-Yemitan. They don’t do their due diligence about the deal, the costs or the market conditions, and they wind up draining their personal savings because the house needs extensive repairs or they can’t sell it.

“Sometimes, new investors are buying property just based on the idea that the property is going to appreciate,” he says. “Usually, they don’t have any information to substantiate that.”

7. Misjudging cash flow

If your strategy is to buy, hold and rent out properties, you need sufficient cash flow to cover maintenance.

“People think they can get a property manager,” Tyson says. But many have never interviewed a property manager and have little idea about how they work. Most managers, for example, are reluctant to take on one single-family home or a duplex, he says, preferring larger complexes. And fees of 7% to 10% of the monthly rent are common.

“It’s a huge expense,” Tyson says. “I can put my money in a mutual fund and it costs a half-percent a year.”

Davies-Yemitan agrees. It’s not uncommon for a property to sit on the Houston market for 90 to 120 days before it’s leased, he says. Meanwhile the owner has to pay the mortgage, the taxes, the insurance, the cost of advertising and any homeowner or condo association dues, he says. If the owner hasn’t budgeted for that, an asset can quickly become a liability.

8. Lowering the volume

If you’re working on one deal at a time, Crowe says, you’re doing transactions, not running a business.

You need a steady pipeline of prospective deals; sufficient volume will weed out the marginal deals and let the good ones rise to the top.

9. Painting yourself into a corner

Many people buy a property and get stuck with it because they have only one exit strategy. They’re going to sell it or rent it out. What if it doesn’t sell? What if the rental market stalls?

Always have two, if not three, ways to get out of any deal. For example, if plan A is to rehab the house, put it on the market and resell it, then plan B could be to offer a lease-purchase to a buyer. Plan C might be to hold the house and rent it out. And as a plan D, there is the wholesale option, which would involve selling to another investor at a below-market price. Hopefully, you’ll still make a profit, but at the very least, you’ll cut the losses you’re taking every month in carrying costs.

10. Miscalculating estimates

Crowe tells his new rehabbers that after they’ve done their homework, they should double the amount of time and money they think it will take. If they can still make money then and they might be able to rent it out, it’s a good deal.

Source:  Pat Curry for Bankrate.com


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The Basics of Buying a Foreclosed House

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Purchasing a foreclosure home can be a great savings to a home buyer vs. a traditional resale transaction.

However, foreclosure sales will often come with their own set of rules, regulations and red tape. Knowing how to navigate the waters for a foreclosure sale is of great benefit to home buyers.

Finding Foreclosure
Find properties that interest you. This can be done most easily by hiring a real estate agent to utilize the multiple listing service (MLS) to narrow foreclosure properties in the areas and neighborhoods most desirable to you. You will be able to preview these properties online and decide which property might be of interest.

HUD Homes
HUD homes are foreclosed properties where the previous borrower defaulted on an FHA loan. With HUD homes, buyers can expect rock bottom prices but need to be prepared to bid over the asking price. The best benefit about HUD homes is that many of them will come with a $100 down program, making them the most affordable deal on the block.

VA Foreclosures
VA foreclosures are homes that have been repossessed by the Department of Veterans Affairs from a veteran with a default on their home mortgage payments. In these scenarios veterans can sometimes receive incentives to purchase the home under a new VA loan. However, a consumer does not need to be a veteran to purchase a VA foreclosure.

Considerations
Many foreclosures have undergone damage, poor care and maintenance, and will require some work. It is very rare for anyone to find a “ready for move in” foreclosure home. Be prepared to do some major work with any foreclosure purchase.

Avoid Financing Pitfalls
Depending on the amount of damage done to a foreclosure home, all methods of financing might not be available to consumers. In some cases, homes are so badly damaged that the only way to complete a purchase is using cash.

Contract
The contract to purchase a foreclosure is identical to any other residential real estate purchase. The difference will be visible, however, in the bank required addendums that will be in addition to the purchase contract. For many foreclosures these addendums can be 10 or more pages in length.

Bottom Line
Foreclosures are a great value. The purchase process of a foreclosed home does not differ much from a typical real estate transaction other than financing concerns and additional paperwork.

Source: Shauna Zamarippa (ehow Contributor)

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How to Buy a Foreclosed Property – 9 Steps

If you’re looking for real estate bargains, consider buying foreclosed property.  A foreclosure takes place when a homeowner or property owner cannot pay the mortgage fees on the property and is forced to give up the land to pay back what is owed.

Here’s an overview of what you’ll need to do if you want to buy a foreclosed property:

Step 1:  Locate properties scheduled for foreclosure sales by checking classified newspaper ads for listings under Foreclosure Notices, Auction Sales or Sheriff’s Sales.

Step 2:  Notify local real estate agents and attorneys that you’re interested in purchasing foreclosed properties.

Step 3:  Check with local lending institutions and government agencies – such as the Federal Housing Administration, Veterans Administration or Department of Housing and Urban Development – about foreclosed properties in your area.

Step 4:  Investigate foreclosure proceedings in your state.

Step 5:  Inspect the foreclosed property to determine its condition and market value; obtain sales prices of comparable properties in the area from a local real estate agent.

Step 6:  Determine ownership, identify potential problems and research any existing liens by conducting a title search on the foreclosed property.

Step 7:  Contact the trustee of the foreclosure sale to inquire about the minimum bid the lender will accept.

Step 8:  Determine how you’ll finance the foreclosed property or find out if the current loan is assumable.

Step 9:  Make an offer on the foreclosed property by bidding at the foreclosure auction or submitting a sealed bid to a lender after the foreclosure sale.



Warnings:

• Foreclosure proceedings can be complicated, so be aware of your state’s legal procedures for acquiring foreclosed properties.
• Since properties are usually offered “as is” at foreclosure auctions, inspect the property before you make a foreclosure bid to avoid a costly mistake.
• Depending on the reason for the foreclosure sale, there may be a redemption period in which the previous owners can make payment in full and get their property back. Check with the trustee to protect your rights.

Source: eHow Contributing Writer


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Should an Investor Get a Real Estate License?

So many people have repeatedly asked if they should get a real estate license as investors.

First, there is no “right” answer to this question.  Below is a list of Pros and Cons  gathered from a combination from our experiences and other opinions from real estate professionals.  Based on your experience and business model as a real estate investor, it may benefit a particular group of people more than others.

Benefits:

• Learning the pieces and parts of real estate.
• Ability to understand techniques faster because you have a solid foundation of education.
• As a buying tool, you’ll have access to MLS, the database of all properties listed for sale by real estate agents. It’s also a powerful tool to quickly learn market values.
• You control your own deals. Being your own agent for your purchases and sales allows you full control over your deals. You can submit offers to and negotiate directly with listing agents.
• You may receive commissions on properties you purchase depending on the arrangement with your broker.
• As a selling tool, you may list your own properties on the MLS.
• Most communities require continuing education courses if you’re licensed. Although many may say this is a pain, it’s still education.
• What you learn in this school will stay with you your whole investing career. You’ll be able to grasp new creative investing ideas faster because you already have a solid foundation to build upon.
• Keep in mind, as an investor, you’ll be labeled a “professional” with or without a license. You are the one who decided to become an investor. If you are ever in any kind of lawsuit, including eviction court, you will be almost automatically tattooed a real estate expert simply because you are trying to act like one.

The Drawbacks

• Annual fees and licensing.
• You must disclose to your sellers you’re licensed and buying for investment and/or you intend to make a profit from the purchase of their property. (This is the one a lot of anti-get-your- license folks complain about. What’s wrong with it? It simply covers your butt.)
• The Paperwork. For the most part, only if you are representing a buyer or seller is the paperwork cumbersome. It’s cumbersome because you are their agent representing their interests. The forms to fill out are designed to protect both you and the consumer.

If you’re just getting started or you want to really begin cranking your investments, getting your license won’t hurt you. I’m encouraging you to get the education not the license. But, how can getting your license hurt you?

Sources: Article by Mike Butler; Article by J. Scott (Bigger Pockets)

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