FHA Waives Anti Flipping Rule Through 2012

FHA rules typically prohibit insuring a mortgage on a home owned by the seller for less than 90 days. In 2010, however, the agency waived this regulation, and later extended the waiver through 2011.

The new extension announced late last week will permit buyers to continue to use FHA-insured financing to purchase HUD-owned and bank-owned properties, no matter how long the homeowner has held the title, through December 31, 2012.

FHA says the waiver will allow homes to resell as quickly as possible, helping to stabilize real estate prices and revitalize communities experiencing high foreclosure activity.

“This extension is intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight,” said Carol Galante, FHA’s Acting Commissioner. “FHA remains a critical source of mortgage financing and stability and we must make every effort that to promote recovery in every responsible way we can.”

See the original post at www.dsnews.com.

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Turning Renters Into Home Buyers

According to a recent study by Trulia.com, of those renters who do plan to purchase someday, 68 percent said it would be more than two years before they do. This reluctance to buy could potentially drag out the real estate market’s recovery time line further than many have predicted.

However, in the same study we learned a few things renters said would make them buy sooner. So, if you have any renters on the fence, here are some signs that they may be ready to buy:

1. Save for the down payment: Almost half of the respondents said they would be ready to purchase sooner than later, if they could only come up with the cash for a down payment. Ideally they want to become a home buyer as soon as possible.
2. Get a new job: Almost 30% agreed that a new job could be enough of a push to buy a home and stop renting.
3. Other Factors: Several factors were cited by buyers as things that would push them off the fence to buy a home sooner than they had otherwise planned.

Also included in the study are easy to understand graphics that you can include in your listing or buyer presentations to share what is going on in the real estate market today. For example, the study also found that 91% Americans’ ideal home size is less than you'd expect.

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Real Estate Deal Structuring - 5 Tips For Closing "The Deal"

The days of financing properties for 70% to 80% ARV (after repair value) are long gone. And not everyone has 100% of the necessary funds to close a deal. Therefore the key to real estate success is linked to one's ability to be creative at structuring deals.

Two School's Of Thought For Creative Real Estate Deal Structuring:

• First, one must do their due diligence and know the MAO (maximum allowable offer) that they can pay for the investment. One must also know their "exit strategy" before ever closing on the deal. If one knows the (1) the "front end" cost and (2) the "back end" method for getting out of the deal, then they are well positioned to correctly structure their deal.

• Second, one must know exactly what the seller needs above and beyond "price." In other words, find out how to give the seller more of what they "need" (example: some money down today and a payoff later) as opposed to simply what they "want" (example: 100% CASH or 100% Financing up front).

Today one can finance investment property, both hard money and private money, for somewhere around 50% to 60% of the "as-is" value (plus additional fees). Most would agree that this is a bit too pricey for the cost of money. But what if there was another way to get less expensive financing? In fact, what if the real estate investor could get 0% interest financing?

In the following scenario a recently renovated home at 123 Parkside shows comparable values (ARV) of around $100,000. The current seller owns the house free and clear. Unfortunately Mr. Seller has recently lost his job of 10 years selling vehicles and wants to move in with his brother to start looking for work again. In this example, Mr. Seller agrees to sell the home for $67,000.

The problem is that like most investors, Mr. Real Estate Investor (REI) doesn't have CASH to buy the property. However Mr. REI does have a few options.

• Mr. REI can get hard money of up to $60,000, but he still needs $7,000 plus closing costs to close the deal. This is exactly what Mr. Seller "wants" which is just $67,000. However he only needs enough money (a few thousand dollars) to move in with his brother across the country to start looking for work again.
  

• Mr. REI comes up with the creative idea of offering Mr. Seller more of what he "needs" which is $3,000 today (to help him move). Mr. Seller will "deed" the house to Mr. REI, because Mr. REI structures the deal in such a way to pay Mr. Seller what he "wants" ($67,000 TOTAL). This method of creative deal structuring will give Mr. Seller his $64,000 in six months at 0% interest when Mr. REI sells the house to another buyer.

Tips that Mr. REI always uses to get Mr. Seller to sign the contract.

1. Explain to the seller their specific options (give them at least two to three options).
2. Remind the seller of how long it takes to sell a property in a particular area (either FSBO or with a Realtor).
3. Always put an offer in writing (sometimes us a figure like $67,367.59 to make it more "concrete").
4. Remind the seller that they will get both what they need ($3,000 today) and what they want ($64,000) if they will be a little flexible.
5. Always use the advice of a great attorney when structuring creative deal financing.
   

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How Investors Finance Their Real Estate Deals.

Most people think that you have to have money to make money in the real estate investing game. In order to be a successful real estate investor, you don't necessarily have to have money in the first place. It's nice to know that you have available funds in your account. However if you’re like most people then you don't have your own funds. Therefore it’s imperative that you MUST get access to other peoples money.

Beware of scams. You don't want to ruin your reputation. There are lenders that over promise and under deliver. Can you imagine having THE deal of a lifetime, but not being able to close on the property? This is the number one reason why people cannot get started in the real estate investing game. People simply do not have access to funds.

Funding from other people can come in many different forms. An investor can get their hands on money one of two ways. There is the traditional way and the non-traditional way. Here is a breakdown of the two types of funding.

Most people are familiar with the traditional way of real estate financing. A traditional way of financing real estate is through FHA, VA, Fannie Mae, and Freddie Mac loans. Buyers consider these as "main stream" loans. The majority of time these lenders will loan up to somewhere around 85 to 90% of the appraised value depending on other factors (such as credit score, appraisal & condition of the property). Most of the financing done by traditional lending is amortized over 15, 20 or 30 years.

In opposition to traditional financing there is more than one way to get a deal funded by non-traditional ways. For simplicity sake here are a few: (1) lines of credit, (2) hard money, and (3) private money. Real estate investors today have been know to use all three of the fore mentioned non-traditional ways to get a deal financed.

More specifically, a line of credit can be money that the investor usually has the quickest access to. For instance, credit cards are a form of credit that can be used to quick transactions. Now keep in mind that credit cards provide some of the worst terms; however, they are convenient and fast. Another example of a line of credit is a personal loan. Lending institutions can provide individuals with personal loans that can be used to purchase real estate. Often times a check (from the personal loan account) can be written to purchase a property. As with credit cards, personal loans provide some less than favorable terms; however, they to are convenient and fast.

A second method for financing real estate purchases is through the use of hard money. These lenders can lend money to purchase the property itself. Oftentimes if the investor buys the property at a favorable price then there will be enough money in the transaction to finance some if not all of the rehab project. You must be asking, “What’s the catch?” The catch is that these lenders have loans for a short amount of time with a relatively high price of borrowing.

The final source of money for funding real estate purchases is through private money. A private lender can be pretty much anyone that wants to loan the investor money. This can be: (1) another investor(s), (2) a friend(s) or (3) a family member(s). The terms can be stringent or whatever that is mutually agreed upon.

We at Roberts Investment Properties LLC want to see real estate investors succeed. It does matter if your business is in Portland, Maine or Knoxville, Tennessee, these techniques will work for you. Our goal is to help others learn from some of the pitfalls that even advanced investors still make to this day.

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