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Helpful websites for rehab property investors

by Carla Palmer 22. May 2011 06:19

Need some easy ways to determine property values, monitor foreclosures and short sales, and follow housing market trends? Here are several websites that we’ve found to be reliable and informative. (Some may require a subscription):

Zillow – www.zillow.com

  • Homes for sale, past sales, and estimated property values throughout the entire U.S.
  • Current mortgage rates and mortgage calculator
  • Information on loan options, refinancing, and equity lines of credit
  • Advice from professionals
  • List your own property for sale

Foreclosure Destination – www.foreclosuredestination.com

  • Details, photos, and videos of over 15,000 foreclosure and short sale properties across all cities in Southern California
  • Easy sorting by zip code, price, size, home age, and other criteria
  • Demographic and school district information included
  • General foreclosure and short sale information
  • Access to local real estate experts
  • Sponsored by First Team Real Estate

Foreclosure Radar – www.foreclosureradar.com

  • Targeted to the real estate professional
  • Tracks foreclosures and pre-foreclosures throughout the U.S.
  • Search by over 60 criteria
  • Reports and charts by state and area
  • Daily auction updates
  • Financial analysis software available
  • Title research services, among others
  • Learning center with blogs and forums

Loop Net – www.loopnet.com

  • Information on commercial properties listed and sold throughout the U.S.
  • Boasts over 800,000 active listings
  • Property records and comparables research available
  • Monitoring of housing market trends
  • Auction and distressed properties featured

Realtor – www.realtor.com

Over 100 million property listings, including 3.5 million homes actively for sale

  • Local mortgage rates and mortgage calculator
  • Free home value reports based on comps in the area
  • Monitoring of market conditions
  • Financing options presented
  • Find a realtor
  • Check your credit
  • Moving and storage services

- Carla Palmer

Better Times Ahead Predicted, But Patience is Still Required

by Carla Palmer 11. May 2011 17:08

Rehab property investments are always available, even when times are good, but with a housing rebound almost certain, the time might be ideal to buy a fixer-upper and sell for a profit when conditions improve.

Mark Zandi, chief economist at Moody’s Analytics, at the annual spring construction forecast conference of the National Association of Home Builders (NAHB), said “I’m optimistic and I’m confident that everything seems to be falling into place for a better economy and a better housing market.” He cautioned, however, that a real recovery won’t occur until this time next year, confirming NAHB’s own predictions.

Chief economist for NAHB, David Crowe, said “momentum will begin to build as we get into 2012” and is forecasting a 51% increase in single-family housing starts next year, compared to 2011. Apartment builders will see results sooner, with 140,000 units projected for 2011, up 23% from last year.

Zandi asserted that the market is ready to “pop”, but warned that the foreclosure crisis isn’t over, with most 90-day delinquent mortgages likely to end up as distressed sales, and account for 33-35% of all sales in 2011.

He also shared his assessment that most houses are now priced correctly, and Crowe noted that when distress sales are factored out, prices are holding steady.

“The really good news,” according to Zandi, is that demand will increase faster than supply because the building infrastructure has been “significantly impaired” by the inability of builders to get funding.

“Most states are underproducing,” to meet the estimated 2 million unformed households, called “shadow buyers” by Crowe, who are ready to move out of Mom’s basement. “The underlying demographics call for more production.

”Zandi backed that up, saying that there’s “a lot of juice” in store for the coming years, as home builders work to make up for the deficit between a strong demand and a lack of supply.

- Carla Palmer

Subprime Residential Mortgage Bonds Make a Comeback

by Carla Palmer 25. April 2011 19:10

In a sign that long-term investors are becoming less risk-adverseas the economy recovers, subprime* and other non-agency residential mortgagebonds are becoming popular again.

Prices in the subprime bond market have doubled from theirlowest point during the crisis, of 30 cents on the dollar, to roughly 60 centstoday.

This resurgence signals that investors are willing to takeon more risk, and is reflected in increased prices among a large segment ofriskier assets, including stocks, commodities and even junk bonds.

First quarter 2011 marked the stock market’s best since1999, and strong first quarters usually bode well for the entire year.

Helping to push investors back into the subprime market is thequest for higher yields, at a time when the Federal Reserve has set interestrates on safe investments at historically low levels.

This new trend helps ordinary borrowers, too, as banks makeavailable more non-traditional loans like jumbo mortgages, and reduce theirinterest rates.

Equally reassuring to investors is that the prices on riskierbonds have stabilized over the past few months, giving conservative investorsmore confidence.

Even the Federal Reserve is taking advantage of changes inthe market by announcing it will sell off billions of dollars worth of subprimemortgage bonds it took on as part of its bail-out of AIG in 2008.

While sub-prime financing is not likely to be the same as itwas in the past, opening of the market may allow borrowers with less than 700credit scores to obtain financing in the near future.

*Subprime bonds are securities backed by hundreds orthousands of loans to homebuyers with spotty credit records.

- Carla Palmer 


Real Estate Market Trends

FHA Anti-Flipping Waiver Extended

by Carla Palmer 2. February 2011 19:40

The FHA announced on January 28, 2011, that it would extend its “Anti-Flipping Waiver” through December 31, 2011.

Under normal conditions, FHA regulations prohibit insuring mortgages on homes owned by the seller for less than 90 days. But in today’s foreclosure-ridden environment, with so many distressed properties on the market, the agency has found that many rehabs take less than 90 days, and the tightened credit market often leaves FHA-insured mortgage financing as the only means available for potential homebuyers to purchase these recently-renovated properties.

The extension of the waiver will also help move more foreclosed properties off the market and reduce the number of vacant homes in neighborhoods throughout the country.

In fact, the agency reports that, since the waiver first took effect in February of last year, they have insured over 21,000 mortgages, at a value of $3.6 billion, on properties resold within 90 days.

Read more from the article
FHA Extends ‘Anti-Flipping Waiver’ to Speed Sales of REO Homes 

- Carla Palmer

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FHA News

Should You Incorporate? – Part II (LLCs)

by Carla Palmer 26. January 2011 14:37

In my previous blog, I discussed the pros and cons of incorporating, including filing as an “S” Corporation. Now let’s look at LLCs, or Limited Liability Companies

A Limited Liability Company blends elements of partnership and corporate structures. Because LLCs provide the benefits of limited liability and create “pass through” taxation, without being subject to the many restrictions on “S” Corporations, forming an LLC is often seen as a better option.

Limited Liability Companies are are often mistakenly referred to as Limited Liability Corporations. These businesses are not incorporated. But they do have to file “Articles of Organization” with their applicable state agency.

Come tax time, an LLC can elect to be taxed as a sole proprietor, partnership, “S” corporation or “C” corporation (as long as they would otherwise qualify for such tax treatment), providing for a great deal of flexibility.

Owners of the LLC (called “members”) are protected from some or all liability for acts and debts of the LLC, depending on state shield laws.

The regulations regarding Limited Liability Companies continue to evolve. Some early statutes did not allow LLCs to have just one member; the structure was considered to be a form of partnership and needed at least two. All states now allow single-member LLCs, although differences can exist in the way they are treated versus LLCs with two or more members.

A more recent change is the introduction of Series LLCs, which allow companies to have various series or “cells”, and segregate the assets and liabilities of each series.

NOTE: Not all states view LLCs the same way when it comes to liability. Always research the laws for your particular state, and consult a tax attorney, before setting up any business structure.

- Carla Palmer



Should You Incorporate?

by Carla Palmer 22. December 2010 17:10

The decision to incorporate or not is one that faces owners of businesses large and small. Let’s examine a few pros and cons.

Owner protection from legal liability. Incorporating can limit owner liability for the corporation’s activities and debts.

  • The ability to purchase stock is attractive to many investors.
  • The corporate structuring of directors, officers and shareholders clearly defines the roles and responsibilities within the corporate organization.
  • Offering stock benefits and stock options to employees is an appealing benefit.
  • Cons

    1. The process of incorporating can be costly in both time and money.
    2. Corporations must follow established “formalities”, such as holding regular director meetings, recording all corporate activity, and maintaining the corporation’s ongoing financial independence.
    3. Profits from traditional corporations can sometimes be “double taxed”. The corporation itself is taxed for any profits earned, and individual stockholders who earned profits (by way of dividends) are also taxed. This may not be an issue for smaller corporations, whose owners often draw salaries instead of dividends; salaries are tax-deductible for the corporation. One solution to the “double tax” situation is choosing the “S” corporation tax status.

    “S” CorporationsIn general,”S” corporations do not pay federal income taxes. Instead, the corporation's income or losses are passed through to its shareholders, who must report the income or loss on their individual income tax returns. This concept is called single taxation.Thus, company losses can offset personal income made from other sources. In addition, “S” Corporation shareholders are not subject to self-employment taxes.But qualification as an “S” Corporation depends on meeting strict structure and reporting requirements. Also, “S” Corporations cannot deduct the cost of benefits for employees/shareholders who hold more than 2% ownership.
    NOTE: Always research the laws for your state, and consult a tax attorney, before establishing any business structure.

    In my next blog, I’ll discuss LLCs.

    - Carla Palmer



    REO Investing in Todays Market

    by Carla Palmer 23. November 2010 10:12

    Potential profit making REO purchases still exist, but be careful!!

    REO Investing in Todays Market

    Even with the recent halting of a limited number of foreclosure proceedings by some of the biggest mortgage lenders in the nation, over fears of possible defects in their file documentation and foreclosure procedures, foreclosure action is heating up.

    Meeting rooms at convention centers are becoming the sites of distressed-property auctions, with buyers competing for properties sometimes only based on an exterior photo.

    Many first-time investors are jumping in, hoping to ride a wave of increasing home values.

    And there is some good news on that front. According to the Zillow Home Value Index (www.zillow.com), home values in California, overall, rose in August of 2010, by .2% for the month, .6% for the quarter, and by 2.8% compared to August of 2009.

    Some areas of California are showing modest-to-good growth compared to August 2009. Los Angeles Metro is up 3.3%, San Francisco, 2.7%, Santa Barbara Metro, 1.4%, San Jose and Ventura metros, 2.5%, and San Diego Metro, by a robust 5.3%.

    But there are some areas of real weakness, too. Bakersfield is down 2.5%, Fresno, down 5%, San Luis Obispo, 2.8%, Sacramento, 2.4%, and Visalia, down by 10.5% from August 2009.

    Riverside is holding steady, with 0% growth for the month, .1% for the quarter, and .1% compared to August of last year.

    With the foreclosure machine now gearing up for full operations, an ongoing glut of distressed properties will continue to have a dampening effect on sale prices for some time to come, especially in the areas that have been hardest hit.

    So what does all this mean for rehab property investors? Keep your expectations for home value growth at a moderate, realistic level. Research the heck out of market trends in the geographical areas you are looking to invest in. Be particular about the neighborhoods and properties in the immediate area. Lastly, realistically estimate potential net return after rehab, holding and resale.


    - Carla Palmer

    REO / Rehab Purchase Market is Getting Crowded

    by Carla Palmer 26. September 2010 14:28


    Fannie Mae’s “First Look” program and HUD’s “Neighborhood Stabilization Program (NSP)” give state and local governments the right to buy foreclosed properties before they go on the market.

    First Look restricts offers during the first 15 days to only those from owner-occupants, public entities or their designated partners. Offers from investors can be submitted, but won’t be considered until after the initial 15-day period.

    Buyers who qualify under First Look or NSP may also be entitled to a discount of up to 10% off the appraised market value.

    On top of that, many professional investors are now channeling their funds into California’s collapsed housing market, buying foreclosed homes at distressed prices and hoping to quickly refurbish and sell the homes for a profit.

    In the past, the typical “flipper” was an amateur using lines of credit or savings for an investment property. But professionals, primarily private equity funds and groups of wealthy individuals, have increasingly entered the field, driven by a lack of investment opportunities elsewhere.

    Public auctions of foreclosed properties are held daily on the steps of local courthouses, and are heavily attended by pros.

    This influx is driving auction prices higher and making profit margins tighter. The bidding process can be fierce, and oftentimes bids are made on homes that have not even been inspected in order to gauge repair costs. Many of these homes are also still occupied by the original owners.

    Despite these barriers, opportunities still do exist for the “little guy”. 

    - Carla Palmer


    Need to raise your FICO score fast?

    by Carla Palmer 26. September 2010 14:28

    For many of us, our credit scores are not at the, shall we say, “altitude” they once were. The economic meltdown of the last few years has taken its toll.

    Credit Scores

    The Fair Isaac Corp, creator of the FICO score system, reports that more than 25% of all consumers with active credit files now fall below a 599 on the FICO scale, making them unacceptable to traditional lenders and less attractive to hard money lenders. However, equity is often deemed more important than credit scores when qualifying for a hard money loan.

    If your credit score is limiting your opportunity to purchase or refinance property and you need to complete the transaction in less than 30 days, you might consider “rapid rescoring”. Most mortgage brokers can help you get started.

    “Rapid rescorings” are performed by independent credit reporting companies, which use procedures approved by the major credit bureaus to make direct changes to your credit file.

    Credit rescorers will link you, your creditors, and the national credit bureaus to correct errors and omissions that could be bringing down your score.

    Rescorers can also analyze your credit file and, in some cases, make suggestions on spending that will quickly give your credit score a boost.

    Most legitimate rescorings take about a week, and cost the borrower an average of $30 per account in your file. A complete rescoring runs $90 to $200 or more.

    Most importantly, be realistic about what credit rescoring can do for your FICO score. Rescorings can make a significant difference, but the average increase is 25 to 32 points.

    But that could be enough to allow you to qualify for a loan, if not from a traditional source, then from a hard money lender.

    And ignore the “credit repair” schemes and scams that are out there, promising to improve your FICO score overnight. They can’t, and in some cases their methods may not even be legal.

    - Carla Palmer


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