The worst bet in real estate today: Construction loans - USATODAY.com

By Paul Wiseman, USA TODAY

The biggest bank killer around isn't some exotic derivative investment concocted byWall Street's financial alchemists. It's the plain old construction loan, Main Street banks' bread and butter for decades.

Deutsche Bank has called them "without doubt, the riskiest commercial real estate loan product." The Congressional Oversight Panel, a financial watchdog, has warned that construction loans have deteriorated faster and inflicted bigger losses on banks than any other real estate loans.

And the worst may be yet to come. Banks, adopting a desperation strategy known as "extend and pretend" or "delay and pray," have been reluctant to admit defeat, repossess half-completed housing developments and strip malls — and dump them on a depressed market at a big loss. "There probably are many loans out there that are in worse shape than reflected on lenders' books," says Chicago construction lawyer Joshua Glazov.

Even so, the numbers are already grim:

•Across the banking system, nearly 17% of construction loans were non-current — at least 90 days past due or otherwise in trouble — at the end of March, a record level and a stark contrast to less than 5.5% for all loans, according to the latest numbers available from the Federal Deposit Insurance Corp. For construction loans on one- to four-family residences, the percentage of bad loans is even worse: nearly 23%.

"Construction loans are experiencing the biggest problems with vacancy or cash-flow issues, have the highest likelihood of default, and have higher loss severity rates than other commercial real estate loans," the Congressional Oversight Panel, tasked with overseeing the federal bailout fund, reported earlier this year.

•The 10% of banks that had the highest concentration of construction loans at the end of 2007 account for more than half of the 274 banks that have failed between then and Aug. 6, according to an analysis for USA TODAY by SNL Financial in Charlottesville, Va.

•Even the banks that have survived despite holding high concentrations of construction loans remain vulnerable. Their average "Texas ratio" — which measures their bad loans as a percentage of their capital and reserves against loan losses — stood at 101% on June 30, up from 90% three months earlier, SNL found. Anything over 100% signals that a bank is in danger of failing. For construction-loan-heavy banks, the median Texas ratio — which weeds out the worst cases — was still high, at 62%.

"It's been a bloodbath out here," says bank consultant Tod Little of BNK Advisors in Las Vegas.

Developers typically take out short-term, adjustable-rate loans to buy and develop property. The bank releases money in increments — as the developer needs it — and puts some of the proceeds in a reserve from which the builder makes interest payments before the project starts generating revenue. After the project is completed — and tenants have moved in and started paying rent — the developer takes out a longer-term mortgage to pay off the construction loan.

'Cocaine' for banks

Many small and midsize banks, eager for growth, grew addicted to construction loans during the housing boom. "Construction lending is really the cocaine of the banking industry," says veteran banker Rollo Ingram. "They're easy to do. They're big-dollar loans that can bulk up a balance sheet. And there are always developers who want loans."

Construction loans — officially labeled "acquisition, development and construction" loans — surged more than 150% between the first quarters of 2003 and 2008, when they peaked at $631.8 billion. (Overall loans rose just 55% during the same period.) If a bank said no to a construction loan, "The developer could just go down the street," says Brandon, Fla., bank consultant Jon Campbell.

And some of the people getting loans during the real estate frenzy of the mid-2000s were amateurs, says Boston bank consultant David Brown: "They were contractors who got the bug and felt they could make a living at being a developer."

It did not end well. Construction loans started blowing up when the real estate market collapsed and the economy tumbled into recession. The 10 biggest banks, facing problems of their own with subprime mortgages, were largely immune to the deterioration in construction loans, which accounted for just 2% of their assets in 2007, according to the Federal Reserve. By contrast, construction loans accounted for more than 10% of assets at banks that didn't rank in the top 1,000. "What's causing the problem is Main Street America, the construction loan made by the bank down the street," says Bill Bartmann, who owns a debt advisory firm. "They built, and nobody came."

Making matters worse: Community banks never sold the construction loans to investors the way banks unload auto loans and residential mortgages. "Most construction loans are so unique, so different, so non-homogenous, that you can't securitize them," Bartmann says. "They were kept on the books of the banks that originated them." And there, many of them started to turn rotten.

A failure's postmortem

Rollo Ingram witnessed one spectacular flameout up close. He was chief financial officer at Atlanta's RockBridge Commercial Bank, which opened in 2006, backed by other members of the city's business elite.

RockBridge told banking regulators it planned to specialize in business lending. It didn't, plunging instead into real estate and construction loans. The bank told regulators in 2006 that construction loans would account for 5% of its portfolio. By the end of 2007, they accounted for 42%. Business loans, which were supposed to make up 50% of RockBridge's lending, came to just 28%, according to an after-the-fact autopsy by Federal Deposit Insurance Corp.'s inspector general.

Nor did RockBridge recruit veteran loan officers with enough experience to safely assemble its risky portfolio, the inspector general concluded. "They hired younger, less-experienced ones, and didn't hire enough of them," Ingram says. He says he was forced out in 2008 when he complained about the risky direction the bank was taking.

By the time RockBridge failed last December, more than 60% of its construction loans had gone sour.

Other banks on SNL Financial's list of failed construction-focused banks fared even worse: At Chicago's Ravenswood Bank, more than 69% of construction loans went bad before regulators pulled the plug Aug. 6. By the time Wheatland Bank in Naperville, Ill., failed in April, more than 80% of its construction loans had gone belly-up. Security Bank of Gwinnett County, Ga., failed a year ago with three-quarters of its construction loans underwater. Georgia saw more construction-focused bank failures (34) than any other state between the end of 2007 and August, according to SNL.

Brown of RMPI Consulting in Boston blames the banks themselves. He says many banks, trying to cut costs and boost profits, dropped training programs that would have taught loan officers how to assess risks on construction projects and other loans: "I could see it coming for five years," he says. "Banks got sloppy; banks got greedy; banks got lazy."

But Little says many construction loans were prudent when banks made them. Some banks demanded that developers make 50% down payments only to see the value of the projects drop 80%: "That's really killing the community banks."

He says regulators are unreasonably forcing banks to take losses on real estate loans and pushing them out of business when they would rebound if given enough time to work with borrowers and await a recovery in real estate. "They're bayoneting the wounded," he says.

Then again, a council of federal bank regulators issued a statement last October encouraging banks to work with commercial real estate borrowers struggling with empty office space and storefronts, evaporating rental income and collapsing property prices. "Prudent loan workouts are often in the best interest of both financial institutions and borrowers, particularly during difficult economic conditions," the council said, adding that regulators wouldn't force banks to write down otherwise good loans "solely because the value of the underlying collateral declined."

"The regulators have probably held back in places," lawyer Glazov says.

Troubled construction projects are a nightmare for banks. "If a bank forecloses on a house, it's a house. Everybody knows what to do with it," Bartmann says. "But if you're dealing with a half-constructed hotel or a half-constructed strip mall, not only does no one want it, you now have to maintain it" — trim the hedges, pay the property taxes, write checks to the power company. So, many bankers have chosen to wait it out, extending the terms of loans to troubled developers to keep from having to foreclose and take possession of a half-built headache. Which leaves bad loans and troubled property in limbo.

"The loans aren't coming to market," says Sam Chandan, president of Real Estate Econometrics in New York. "The distress is sitting on bank balance sheets."

Concludes Wayne Heicklen, co-chair of the real estate practice at the New York law firm Pryor Cashman: "They're hoping the existing borrowers or someone else will come along and put more money in the project and make it right."

Back to Basics on Buy and Hold

This past week was spent catching up with friends we haven’t seen in awhile. When these old friends ask what we’re up to, they aren’t surprised to find out it’s real estaterelated, given that we began investing in real estate in 2001. While most have heard the stories of ourcrack house adventures in the early days, they are startled to learn that my husband Dave and I are full time investors.

A few made comments about how “lucky” we were to begin investing 2001 because we rode a really rocking wave of value increases on those properties. And a few commented on how they wouldn’t be buying houses right now because they think the values are going to go down again.

I tried to explain to a few interested folks that appreciation is icing on the cake but it’s not actually the foundation of what we do. But most people seem pretty hung up on house values and what the values will do in the future … and I suspect there are still real estate investors out there that get caught up in these thoughts too so I thought it was time to remind everyone of the basics of buy and hold real estate investing.

There are three ways to make money as a buy and hold investor and one big bonus many forget to think about too!

Appreciation is the way that captures an audience. Who doesn’t love hearing stories about home prices doubling and people making big bucks on a quick flip? It’s a great story.

But we never set out to make money through big property value appreciation. Because we do a lot of market research and carefully select the areas we buy in, we often see solid growth in the value of the properties we buy, but that is not our number one focus for making money. We’ve always focused on a more long term strategy which sees us making cash flow each month and building our wealth by other people (our renters) paying down our mortgages.

That’s it. Appreciation is obviously pretty nice but it’s not the foundation of what we do.

Let’s look at a basic example. Pretend you found a nice property for $100,000 two years ago, and you bought it for 25% down ($25,000). Today, here’s how your investment looks:

1) Depreciation: Bad news, your property went down in value by 5%. It’s now worth $95,000.

2) Cash flow: Rent each month is $1,000. Your mortgage, insurance, taxes and miscellaneous expenses are $800/month. Income minus expenses = $200/month. 24 months x $200 = $4,800 in income so far.

3) Other people’s money paying down your mortgage: Assuming you have a mortgage at a 5% fixed rate and 25 year amortization, at the end of the two years you will owe $71,805 on your $75,000 mortgage. You have now built an additional $3,195 equity into the property ($75,000 – $71,805 = $3,195) using the rent money you collected to pay down the mortgage.

Your property may be worth less than you bought it for, but you’ve still made $7,995 from it in two years (from the positive monthly cash flow and the principal your renters have paid down).

And – remember – you only actually realize a gain or a loss in property value when you sell the home so you really haven’t LOST the 5% the property went down. If you haven’t sold it and you’re still making money each  month don’t worry about it!

Focus instead on the fact that you’ve made a 32% return ($7,995 divided by $25,000 invested) on your money after 2 years. And if you hold onto it, and ride the market cycle back up, when you do go to sell you’ll likely enjoy a nice lift in value to add to the other two ways you’ve made money on it.

On some of our properties we’re paying down as much as $1,000 per month on the mortgage using the rent money we’re collecting plus we make $500 to $1,200 per month in positive cash flow! Even if the value on those properties never changes we are making money each and every month through the cash flow and growing our wealth by $12,000 a year.

Plus, the big beautiful bonus of buy and hold investing is that you’ll have been enjoying some nice tax deductions along the way that can help offset income you’re making with this property and with other sources too!

I tried explaining this to some of our friends but they kept coming back to the question “What do you think house values will do in the near future?” so I eventually gave up and said my crystal ball is broken but they will eventually go up in most areas. Then I quickly changed the subject over to their jobs, kids and travels. It was easier … but for my fellow real estate investors remember that appreciation is just one way to make money with buy and hold real estate.

Making Money Flipping Real Estate | Real Estate Investing Tips

Have you ever gone past a house and thought to yourself, “That place has potential! With a little work, it could really be worth some money.” Do you have a burning desire to fire your boss and be self-employed? Once you learn a few tricks of the trade, you too can make money investing in real estate with a minimum risk level.

If you’re sick of scheduling hours and hours of overtime just to find yourself breaking even at the end of every month, consider flipping real estate part-time. Before you jump in with both feet and start flipping estate for a living, weekend home investment is a great way to find out if real estate investing is right for you.

While it is true that the housing market in the United States is changing, that doesn’t mean that renovating real estate can’t still be a lucrative pursuit. While it is true that you might have to wait longer than you’d like to sell your property once it’s all fixed up and ready to go, rest assured that the right buyers will come your way eventually. Investing in real estate is always a good way to make money, if you know the right way to do it.

Housing is a fantastic investment, and properties are currently selling for less than they were even one year ago. Because sales are sluggish, real estate investors have added leverage. If you find a fantastic fixer-upper, you have more negotiation power now that you’ve had in years. Sellers are often eager to sell their properties for much less than the listed price, which means more profit flipping real estate for you.

In an uncertain market, there will always be home buyers. People will still be getting married, having kids or relocating for new job opportunities. The trick is to keep the needs of the market in mind when you intend to make money flipping real estate. Look for affordable starter homes for young families that you can buy at a bargain. Then, make modest and practical improvements, like attractive yet inexpensive kitchen improvements, fresh paint and vinyl siding.

Also, you will need to research tax law when it comes to flipping properties. You may wish to hire an accountant to ensure that you don’t end up with the IRS chasing after you. Also remember to calculate taxes when you are figuring out your profit margin and figuring out the return on investment of your property.

Look into foreclosure properties if you want to find a really great bargain. Foreclosure properties make it easy to make money flipping real estate, since they are usually auctioned off for much less than they are actually worth. Be careful not to get caught up in the excitement of the auction, however. You may need to chase after several different foreclosure properties to find the one with the best potential for you.

If you are smart about it, you’ll make money investing in real estate in any kind of economy. You just need to know how to invest in potential and invest with patience when homes aren’t selling as fast as you would like them to.

C. David Roberts is a Mechanical Engineer, software developer and has 
extensive experience in residential development and construction. His combined 
experience has lead him to develop the Real Estate industry leading software to 
teach experts and neophytes the secrets of flipping houses. 

Evaluating your property investment | Reuters

By iTrust Financial Advisors (www.iTrust.in)

Investing requires discipline - one can’t blindly invest money without knowing what one is getting into. Investing into Real Estate is no different. Here is a checklist that you should use when evaluating your property investment.

1. Desirability of the location: This is the single most important criterion to value real estate.

2. Reputation of the builder and quality of construction: Properties by some developers are worth a lot more than others because of quality. Don’t always go for the lower price because there could be huge execution risk with less reputed builders

3. Payment terms: Time-linked or construction linked payment plan, and cash vs. cheque component. This will affect your cashflow in other aspects of your personal finances.

4. Project approvals and licenses: This might affect your ability to get a home loan if project approvals have not come through yet.

5. Contractual guarantees: For assured return schemes get a written guarantee from the builder and post-dated cheques in your name. Understand the delivery date of your project

6. Demand and supply: Over or under-supply will affect both the capital appreciation potential and the rental yield you might expect.

7. Floor space index and carpet area: Local rules on the built up area and the available square footage (carpet area) might reduce the usable area. Recognize that what you pay for might not be what you get

Tips on the process of Real Estate Investing

When it comes to the process of making a property investment and exiting from it, there are a few things that you must keep in mind.

1. Transaction costs: When you buy or sell property, there are many transaction costs associated with these activities. You might have to pay a brokerage fee to the intermediary. If you have made a gain on the sale, there will also likely be a resulting capital gains tax liability.

You will also face some expenses related to the stamp duty at the time of the transfer and registration costs of the property. All these costs can add a material amount to the purchase or sale price of your investment.

2. Liquidity: Unlike stocks that you can sell readily and convert into money in the hand within a couple of days, buying and selling property takes time. Your ability to convert your investment into cash in hand is quite restricted.

Its not uncommon for deals to take up to one year, and still fall through at the last minute. So if you feel that you can sell your property to pay for your child’s education abroad once he/she gets admission, you might be in for a shock. To have easy access to this money, you might be better off putting it into a financial asset that you can access at a short notice (e.g., fixed deposit, or liquid fund).

3. Cash: Property investments are not always the cleanest when it comes to cash versus cheque component of paying for deals. Unlike mutual funds where KYC norms require that the investment be made in cheque and the PAN card details be shared, real estate investments can have a huge cash component to them. This might not suit everyone.

Copyright 2010 iTrust Financial Advisors Private Limited. All rights reserved.

Making Real Estate Money-How Investors Can Benefit from a Real Estate License

If you could easily and cheaply acquire a tool to turbo blast your real estate investing career, wouldn't you do it? 

I started investing in real estate about 10 years ago. I found an agent who was willing to comb the MLS listings everyday, set up showings for me to view properties, and work for very little commissions from my low-ball offers. And I thought that worked out all right. 

But I soon came to realize that I was depending on someone else to be on the look out to scoop up the good deals as soon as they hit the market. Now my agent was good, but why was I depending on someone else in my quest for real estate wealth? 

Good question. And besides, a smart agent would probably keep the best deals to herself--I would! So, I decided to get a license myself. It is fairly easy, relatively cheap, and requires very little time. I did four weekends a month, while I was still working my full-time job, or "trading my precious hours for dollars" as I call it. 

Doctors need at least 10 or 12 years of education and training and usually start their practices owing hundreds of thousands in student loans. Lawyers must go to school at least 7 years. 

But you, a real estate investor, can get a real estate license in a little more than a month with about a $1,000 investment. Now you may not make what a doctor or lawyers makes. Then again, maybe you can. But the initial investment is a whole lot more enticing! 

With a real estate license, I was able to unearth some very goodcreative financing deals that netted me at least $500 per month in cash flow. I also got a property management contract from an investor in California. 

I had made an offer to lease option their apartment complex. They did not accept, but in the course of the conversation they expressed that they were very dissatisfied with their local property manager. Ding, ding, ding, I am a property manager. 

I had never managed anyone else's property, but I had managed my own, and that qualified me as a property manager. I told her, "Hey, I do that, too." So we got a lucrative contract managing their properties. 

We also made money rehabbing their properties, and we made more money (real estate commission) when I sold them another property, which of course, I will make more money at managing their new property. See how it all fits so beautifully together. But the license was the key, that started the whole thing. 

What does a real estate license do for you? Most importantly, it gives you access to the MLS. Not only can you find out what is currently available, you can find out information about properties listed in the past, the expireds, the withdrawns, and the solds. This gives you the permanent parcel number, important when you are doing research on potential deals. 

The active listings are really the easiest way to find investment deals and the most prolific. You may think that the MLS lists only the "nice" and "pretty" properties. Not so. The repos, fixer-uppers, estate sales, short sales, and the plain, old junkers are almost always listed on the MLS. 

And part of the property information contained in the MLS listing is the method of purchase, such as cash, conventional, FHA, and VA. 

However, now more than ever, due to the crisis in the housing industry, (always the best time to buy investments) many listings are being offered on land contract, lease option, or some other form of creative financing. Made to order for the serious investor. Is that you? 

OK, now you have access to the MLS. What else can a license do for you? Well how about legitimizing yourself? You have put yourself out there as an expert. The premise of Real Estate Investing 101 is the market value of a property--the "comps." Hey, you have access to the "comps." Kind of gives you an advantage doesn't it? 

As a real estate agent, you are out there moving around in the circles that will naturally spawn more opportunities for the smart investor. You are a "Player." 

You will be surprised at all the paths of opportunity that open up for you when you have that valuable tool, a real estate license. That license will take you places you never even thought of. It will change your future, it changed mine. Please email me atdianeleeprice@msn.com. I will be glad to answer any questions. 

Making Real Estate Money-Discounted Notes | No Money Down--Cash Back at Closing

This article will suggest the most creative way to buy real estate with discounted notes. It is a wonderfully intriguing method. Even if you cannot do this exactly, you will still have the very real possibility of trading notes you bought at a discount for full face value on a piece of property. These ideas come from such innovators as Joe Land, Pete Fortunato, and others.

The scenario 

First, consider that there is a $160,000 duplex for sale with a $40,000 first trust deed on it. The owner of the property, Sally Seller sells the duplex to Paul Payor. Paul puts down $40,000 cash, he assumes the $40,000 first mortgage, and Sally agrees to carry back an $80,000, 30-year second mortgage. She is happy with the extra income from the second mortgage, and the $40,000 cash down payment.

Second, consider the older, conservative home owner who owns his home free and clear, Harry Homeowner. He decides to sell the home. He does not need all the cash but would like to have a steady income for retirement. Their home is worth $100,000., so Harry and his wife advertise that they will sell their home with a 20% cash down payment, and they are willing to carry an $80,000 first mortgage.

Third, reconsider Sally Seller who has been receiving payments on her $80,000 note. She is offered a chance to buy a share in a restaurant with a friend. She is excited about the opportunity, but has spent all of her money including the down payment she received. She is not able to borrow the cash to invest.

The only asset she owns is the $80,000 note. She calls you, Ned Notebuyer (or Nancy Notebuyer). You offer Sally Seller $48,000 for her long-term $80,000 note, which she gladly accepts after you skillfully explain to her the discount she must take on this very long-term note.

Buy a $100,000 house for $68,000 

Think for a moment about this situation. You have Harry Homeowner who wants an $80,000 note and Sally Seller who wants to sell her $80,000 note. The only person missing from the picture is you, Ned (or Nancy) Notebuyer!

Your obvious solution to helping the two parties is, perhaps, shortsighted. You are saying, "Great, I will buy the note from Sally Seller for $48,000 and trade it to Harry Homeowner for the full $80,000. If I give Harry Homeowner $20,000 cash down, and he agrees to accept Sally's note, I will have bought a $100,000 house for $68,000." ($20,000 down plus $48,000 for Sally's note.)

"Terrific," you say, "but this costs a lot of money". You would need $68,000 in cash. Can you think of a way to consummate this transaction with no cash??

Make a great deal even better 

First, you must convince Harry Homeowner to take back a note on a property other than his own. He was expecting to have a mortgage on his own home. But you can point out to him that by taking the second mortgage on the duplex he has more equity protection and a seasoned note.

He has no idea how you, the new buyer, will perform on the loan. But Sally Seller's loan is several years old and is well seasoned with a good payor. After seeing Paul Payor's credit report and his payment record, Harry agrees to accept Sally's note from you. If Harry is willing to sell you his house and accept Sally's note, then his house if free and clear.

If you are buying Harry's house, and it is free and clear, you can get new financing! You go to the bank, and the bank says they will loan you $80,000 if you will make a $20,000 payment. You say okay, and perhaps show the note as your down payment.

I'll take the leftovers, please 

All parties agree to the deal, and you go to escrow to close the purchase of Sally's note, and the purchase of Harry Homeowner's house. The bank has given the escrow officer a check for $80,000 secured by the house you are purchasing from Harry. The escrow officer writes a check for $48,000 to Sally Seller for her note.

The escrow officer then writes out a check for $20,000 to Harry Homeowner and gives him Sally's note. She transfers the house to you with the $80,000 mortgage on it. She writes out a check for $4,000 in closing costs to the bank. She then says to you: "Wait a minute, I still have $8,000 left! What should I do with that?" You raise your hand and say, "I'll take it!"

You have picked a home with $20,000 equity, you have $8,000 in cash, and you have spent none of your own money! The lesson is that real estate notes bought at discount can trade at full face value in the real estate market. Great profits can be made if you learn this lesson.

About the author...

Jon Richards was the founder of NoteWorthy Newsletter, the major newsletter for buyers and brokers of cash flows on the secondary market. It has been published monthly since October 1989 and is the largest paid subscription newsletter in the industry. Jon was the publisher of the NoteWorthy Newsletteruntil his death in 2003.

Jon was a licensed real estate broker, long time real estate investor, and an expert in finding, appraising, buying, and brokering discounted notes and mortgages. He was the professor and tenured instructor of Real Estate at the College of Alameda in California.

Making Real Estate Money-No Money Down

Why You MUST Learn to Buy with No Money Down by David Finkel

It surprises many beginning real estate investors when I recommend  they get started investing without using their own money. They  find it hard to believe that sometimes having money can be  detrimental to learning to be the best real estate investor you can  be. It's just that I've seen money used as a crutch to make marginal  deals go through. I know I've been guilty of getting lazy and  throwing money into a deal where a little more imagination and  prudent negotiation would have served me better. With an open  mind and the right education, no money can be a force to push  you to be a faster, more creative, and more skilled investor. You'd be surprised how fast you can pour your liquid cash reserves  into real estate. I've watched traditional investors pour over  $1 million into several deals in a matter of months, then have  to wait until those properties sold before they could free up  enough of their money to go out and buy more properties. You'll never regret learning to buy with no money. It will make  you a much more savvy investor for those times you do decide  to use your own money or conventional financing. Money is never the issue when buying a property Many investors think that money (or lack of money) is what stops them from closing a deal. This MYTH is one of the most  limiting things that holds some investors back. Understand that money is NEVER an issue—IF the deal is right. Say the following words to yourself over and over: "If the deal is right, I will find the money!" If there is a deal there you can and will find the funding. The key is that the deal MUST be right. That means for a cash deal  (usually the kind where investors think they haven't got the  cash to do the deal) that you need the right price. This means a price at MOST 70% of the conservative "as is" value  LESS any needed repairs. This means you have to go in at 29.95% to leave yourself room to negotiate if you need to. This kills many  deals. That's okay. The ones you want will work out. And you will find a way to fund them. How do I get the money to fund the deals? Okay, so you've got yourself a signed contract on a great cash deal.  Now you need to find the funding. Again, the key is that the deal is  conservatively very profitable and will make you money even if you  made a few mistakes. Here are several sources you can use to make that deal a go: Use the seller's existing financing for part of the purchase price. Buying "subject to" you only have to fund the money for the  seller's equity! Get a cash buyer at 90% of value and do a simultaneous close  or flip your deal to the buyer for a cash assignment fee Sell your contract to another investor, again for a cash assign- ment fee. Borrow the money from a private party lender at an interest rate  3% to 5% higher than a bank CD and secured by a first mortgage Borrow the money from a hard money lender Tap into a home equity or other line of credit Refinance another property to get your down payment and borrow  the balance from a lender Bring in money partners to fund the deal. (They get depreciation and you control deal. They secure themselves with a first mortgage for the amount they have in, or if they finance it, they can lock in a second mortgage to protect themselves. You agree they get their entire principal back PLUS 15% before you split any profits from the resale of the property. You split profit 25% to 50% to them, the rest you.) I think you get the idea here… The key is that if the deal is right, you WILL find the money. Never lose sight of that. The only two reasons why this wouldn't be the case are fear and ignorance. About the author... David Finkel is an ex-Olympic level athlete turned real estate millionaire and one of the leading investing experts in the nation. He is a Wall Street Journal and Business Week best-selling author of over 40 business and investing books and courses, including the wildly successful, Real Estate Fast-Track and The Maui Millionaires. His website,  www.MauiMillionaires.com, is a popular site for investors and entrepreneurs on the web and has dozens of free wealth tools and ebooks.

Making Real Estate Money-Hud Real Estate Foreclosure

Investing in HUD real estate foreclosure can be a lucrative business, but you need to know how to take advantage of this program, to make a profit. There are substantial profits to be made on repossessed houses. However you need to be knowledgeable and time your buying and selling right to take advantage of these properties.

Initially you will not be able to buy these types of properties for monetary gain. This is because these programs are specifically designed to help needy families afford to buy a home and investors are barred from buying these repossessed houses. Only when they have not been sold for a certain length of time can investors and agents buy these properties.

How to find HUD real estate foreclosure properties:
You can find these by using special lists of repossessed properties. You can find them through real estate agents, registered with this agency, or online at websites that are registered with this agency. With the advent of the Internet it has become much easier to find these properties and take advantage of the huge savings you will be able to get. However it does take a little time to find these properties on your own, so it is often a good idea to find an agent who can handle this for you.

Investing in HUD foreclosure real estate:
Initially these repossessed properties are not available to real estate agents and investors. However after a certain length of time, if they are not sold, the houses will be available to investors. You need to keep up to date lists to catch the properties as soon as they come on the market. You can then resell the houses for a substantial profit.

As you can see there are obvious gains to be made from these HUD real estate foreclosures. However you have to be quick as there is a lot of competition. One of the best ways to get fully updated lists is to subscribe to a newsletter that supplies daily ones. Some sites will update their site daily; these are usually membership sites but are worth it. Explore all avenues to get ahead of your competition in this competitive field.

How to make a profit with HUD real estate foreclosure properties:
The real way to make a substantial profit with these types of houses is to buy those properties that are in need of repair. Understand the actual market value of the property before you buy. All you need to do is to calculate what you paid for the house, plus any repair costs and subtract it from the market value. This will be your profit. You can start with properties that need minor repairs at first and when you have saved up some money go on to the ones that need more repair and investment. This is because you will be investing in the house plus repairs before selling and making your money back.

Plan carefully and do your math, by this means you will be able to make a good profit investing in foreclosed HUD real estate.

Sal Vannutini is the author of ” The 8 Power Profit Secrets To Making More Money With Less Risk In Real Estate, ” a free strategy report for investors. Get your complimentary

copy at www.FastFixerUpperProfits.com today.

Making Real Estate Money-Land Investments

Mаkе Money Fаѕt – Wіtһ Tһіѕ Investment & Even Better Iѕ…

It’s easy tο understand bу anyone аחԁ mаkіחɡ a success οf mаkіחɡ money fаѕt іח tһіѕ investment іѕ common sense.

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Sο wһаt іѕ іt?

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Tһіחk аbουt іt

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WEALTH BUILDING REPORT

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