Report Shows Real Estate Investors Buying Homes With Cash In Janurary

Investors snap up cheap homes, and new buyers miss out!

WASHINGTON -- Home sales are starting to tick up after the worst year in more than a decade. But the momentum is coming from cash-rich investors who are scooping up foreclosed properties at bargain prices, not first-time home-buyers who are critical for a housing recovery.

The number of first-time buyers fell last month to the lowest percentage in nearly two years, while all-cash deals have doubled and now account for one-third of sales.

A record number of foreclosures have forced home prices down in most markets. The median sales price for a home fell last month to its lowest level in nearly nine years, according to the National Association of Realtors.

Lower prices would normally be good for first-time home-buyers. But tighter lending standards have kept many from taking advantage of them. With fewer new buyers shopping, potential repeat buyers are hesitant to put their homes on the market and upgrade.

Cash-only investors are most interested in properties at risk of foreclosure. They can get those at bargain-basement prices.

"The cash-rich investors can come in and get foreclosed properties at incredibly favorable prices," said Paul Dales, senior U.S. economist for Capital Economics. "The average Joe can't take advantage because they simply cannot get the credit to buy."

Sales of previously occupied homes rose slightly in January to a seasonally adjusted annual rate of 5.36 million, the Realtors group said Wednesday. That's up 2.7 percent from 5.22 million in December.

Still, the pace remains far below the 6 million homes a year that economists say represents a healthy market. And the number of first-time home-buyers fell to 29 percent of the market - the lowest percentage of the market in nearly two years. A more healthy level of first-time home-buyers is about 40 percent, according to the trade group.

Foreclosures represented 37 percent of sales in January. All-cash transactions accounted for 32 percent of home sales - twice the rate from two years ago, when the trade group began tracking these deals on a monthly basis. In places like Las Vegas and Miami, cash deals represent about half of sales.

In the three states where foreclosures are highest, at-risk homes make up at least two-thirds of all sales. In Florida, 63 percent of sales in January involved homes that were at risk of foreclosure, according to a Campbell/Inside Mortgage Finance survey. And in Arizona and Nevada, a combined 72 percent of sales involved those homes at risk of foreclosure.

A major barrier for first-time home-buyers is tighter lending standards adopted since the housing bubble burst. These have made mortgage loans tougher to acquire. Banks are also requiring buyers put down a larger down payment. During the housing boom, buyers could purchase a home with little or no money down.

The median down payment rose to 22 percent last year in at least nine major U.S. cities, according to a survey by Zillow.com, a real estate data firm. That's up from 4 percent in late 2006 - as the housing bubble began to burst. The cities included some of the nation's hardest hit markets - Las Vegas, Phoenix and Tampa, Fla. - as well as areas that are rebounding, including San Diego and San Francisco.

That has prevented many from buying, even when the median price of a home fell in January to $158,800. That's a decline of 3.7 percent from a year ago and the lowest point since April 2002.

"If you can get the financing, it's a great time to buy a home with prices this low," said Patrick Newport, U.S. economist with IHS Global Insight.

Many potential buyers who could qualify for loans are hesitant to enter the market, worried that prices will fall further. High unemployment is also deterring buyers. Job growth, while expected to pick up this year, will not likely raise home sales to healthier levels.

With mortgage rates rising, mortgage applications have been volatile. They're now near their lowest levels in 15 years. Economists say it could take years for home sales to return to healthy levels.

"Home prices continue to languish," said Steven Wood, chief economist for Insight Economics. "Any recovery will be difficult to sustain given the still-large supplies of homes for sale and distressed properties."

Last year, home sales fell to 4.9 million, the lowest level in 13 years. And even that number, some say, was overstated.

CoreLogic, a real-estate data firm in Santa Ana, Calif., said it's found that 3.3 million homes were sold last year, far fewer than the National Association of Realtors' 4.9 million figure. CoreLogic has suggested that the Realtors figure is too high.

Since 1968, the Realtors group has produced the monthly report on the number of previously occupied homes sold. The group serves as chief advocate and lobbying arm for real estate agents. It says it's reviewing its 2010 yearly estimate.

One obstacle to a housing recovery is the glut of unsold homes on the market. Those numbers fell to 3.38 million units in January. It would take 7.6 months to clear them off the market at the January sales pace. Most analysts say a six-month supply represents a healthy supply of homes.

Analysts said the situation is much worse when the "shadow inventory" of homes is taken into account. These are homes that are in the early stages of the foreclosure process but have not been put on the market yet for resale.

For January, sales were up in three of the four regions of the country led by an 7.9 percent rise in the West. Sales rose 3.6 percent in the South, 1.8 percent in the Midwest and down 4.6 percent in the Northeast.

The January increase was driven by a 2.4 percent rise in sales of single-family homes. It pushed activity in this area to an annual rate of 4.69 million units. Sales of condominiums rose 4.7 percent to a rate of 670,000 units. See the original post at www.MiamiHerald.com.

For additional information to ideas like the one above, simply enter your name and email address below for timely real estate investing tips, information and cutting-edge marketing strategies to help you become a better investor. You'll receive your FREE real estate investing newsletter. Learn two dozen investor mistakes to avoid. Most importantly, we'll notify you about the up and coming Knoxville investment club meeting.

Short Sale & Foreclosure Investors Transactional Funding

Many of you today want to know exactly what is a "Short Sale?"

It is simply a sale of real estate in which the sale price of a property is less than the balance owed on the property's loan.

Exactly how does it happen?

Often times this occurs when a borrower fails to pay the mortgage loan on the property. At this point the lender decides that selling the property for a loss is better than trying to collect delinquent payments from the borrower.



Who decides the process?

In a short sale both parties consent, because it allows both the borrower and the lender to avoid foreclosure. This can save the lender additional fees that most likely will not get paid by the borrower. In addition to helping out the lender, the borrower may be able to avoid damages to his/her personal credit.



So what does this mean for Short Sale and Foreclosure Investors?

This means that for all short sale and REO investors who flip their deals, you're going to have to come up with your own funds. Unfortunately many investors don't have their own funds to close the A to B transaction. There are lenders out there today that are prepared to offer the transactional funding needed (also called flash cash) so that you can complete your double closes. They can provide 100% of the funds needed to close your A to B transaction so that your B to C transaction can close and you can collect your profits from the difference.



Most title companies these days no longer allow the funds from your B to C transaction to be used to close the A to B transaction (also called dry funds) and therefore require that you supply (wet funds) to close your A to B transaction. That is where transactional funding comes into play. While there are a few companies out there that offer this service, most ONLY can offer the same day close funds and several transactions require more time. If you're interested in "Transactional Funding" and other resources like these to help your real estate business, then simply fill out the form below.



In addition, Bank of America has been adding some stipulations inside the short sale approval letter which states that you as the investor may not re-sell the property for 30 days. Unless you have your own cash to take down the deal and hold for 30 days, that will kill your deal and most times, they are refusing to lift that restriction. Find out that there is an alternative so you don't lose the deal or your profits.

Knoxville Real Estate Auction Companies

Have you found one of Knoxville's hidden gems for real estate? We're talking about Knoxville's local auction companies. Whether you're a buyer or a seller of real estate, we recommend that you take a closer look. There maybe something that you're overlooking in your investing strategy.

By doing a quick internet search, you'll find many of the auction companies here in the greater Knoxville area. The following are a few of the companies that you should consider networking with.

www.furrow.com
www.powellauction.com
www.slymanauction.com
www.alleyauction.com
www.jacksonjackson.com

Real estate investors typically think of auction companies as brokers/sellers of real estate (sometimes at bargain prices). But these same investors often overlook the possibility of finding buyers at their local auction. What a great way to see who is bidding and who is not bidding. Best of all, you can see first hand exactly what their bidding price is. That way you can get an idea of their buying price range without ever having to ask them.

What a no brainer. But you would not believe us if we told you that no one is using this strategy here in Knoxville RIGHT NOW! Well it is their loss, but your gain. You can use this little strategy to build your buyers list.

For additional information, simply enter your name and email address below for timely real estate investing tips, information and cutting-edge marketing strategies to help you become a better investor. You'll receive your FREE real estate investing newsletter. Learn two dozen investor mistakes to avoid. Most importantly, we'll notify you about the up and coming Knoxville investment club meeting.

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.

Get your FREE real estate investing newsletter. Learn two dozen investor mistakes to avoid. Simply enter your name and email address below for timely real estate investing tips, information and cutting-edge marketing strategies to help you become a better investor.