HAVE A PREQUALIFIED BUYER? DON’T GET TOO EXCITED!
As real estate investors we are constantly faced with dilemma’s. Where to find the deals, where to find the money, where to find the buyers. Well now it is getting even tougher with new laws constantly trying to be passed, limiting creative financing and now even laws limiting how much you can make. We all heard the new FHA guidelines on how you can only resell a home for 20% more than purchase price within 90 days. Well this is a story about a bank that just killed one of my deals and it was conventional financing.
I had been searching REO’s in the charlotte area for a while and kept running across these real junkers. Finally after repeatedly seeing this home being marked down I decided to take a look. It was not a foreclosure but a owner occupied home in beautiful condition. The woman selling the home was going into assisted living and just wanted out. She was ready to accept almost any offer.
Well my search was over I presented a cash offer with no contingencies and we had a deal within hours. I knew I had a great bargain and started my marketing to resell this property at a higher price. Things started out a little slow but it was winter, then at the end of March a retail buyer had come along and loved the home. After a little negotiating and haggling we had a deal
I couldn’t have been happier. He was pre approved and loved the home. I had marked the property up 35% and was still giving him a great deal. What could possibly go wrong? I figured this one was in the bag. I knew the property would appraise, I knew there was nothing wrong with the home, I had owned it for more than 90 days and it was a conventional loan. No FHA guidelines to contend with.
Well here’s where it goes sour. We as real estate investors may have to refuse offers because of who they are using for financing. He was pre approved with a national bank ( we will call them BOFA) so this property went under contract and the loan process was started. Everything was going great. The home inspection went great and so did the appraisal (it appraised for more than contract price) , title search was fine and we were ready to close.
NOT SO FAST!! During their research they had discovered what I had paid for the home and called up the buyer and told him the deal was off. They had notified him of what I had paid for the home and let him know it was unfair for me to mark up a home 35%. So they rejected the appraisal from their OWN appraiser and decided to do their own in house appraisal with homes from another neighborhood of much lesser quality that they had never even seen!! Needless to say they determined the house was only worth what I had paid for it, and they were not going to lend a penny more or get a second appraisal. They had determined it is impossible to get a good deal on a property, yet they sell them for pennies on the dollar every day.
I am pretty unhappy about what had happened but know I will resell this property. I think it is unfair and wanted to share this story to anyone trying to sell a home and the hurdles they may come across in this crazy real estate market. There is still plenty of money to be made in real estate, so don’t get discouraged. I just want everyone to be aware of who to accept offers from. Just because they are pre approved and have great jobs and credit, be aware of the bank they are using to fund the deal. I have seen this bank and others revert to crazy lending practices. Keep your head up and happy investing
Sunday, May 16, 2010
Tuesday, January 12, 2010
Getting Started
Now that you’ve decided to invest in real estate, you may be wondering where to start. Investing in real estate can be buying one home to live in or a multitude of homes, apartments, land, condos, hotels, strip malls, or any other commercial real estate. As you can see there are many different types of real estate to invest in and every investor you talk to will tell you their way is best.
If you do end up investing in real estate you will tend to find your own comfort zone. Most importantly the ultimate decision would be to get started. If you are just starting out you will most likely start small, but you do not need to. You will put just as much effort into purchasing a single family home as you would buying a 100 unit building. The only difference would be the amount of money and you would most likely be out of your comfort zone. So let’s start small and get going.
If you are renting now, then you need to consider purchasing your own home. There is no better time than now to get a super deal on a home. Bank foreclosures are at an all time high and REO’s are being sold at deep discounts. So why not take advantage of that and get a great deal on a home that may have some built in equity. I know everyone is saying not to buy now because we may not have seen the bottom yet. Well if we’re not there we’re pretty dam close. It doesn’t get much worse than this. Real estate prices are the lowest we’ve seen in some time, so why not take advantage of that.
Will it be tough to get the financing? Sure it will. It will probably be tough getting the down payment also. That is what‘s great about buying real estate. There’s more than 1 right answer to every problem out there. The days of going to bank with no money down and getting a no doc loan are over. So are we out of the game? No. It will be the people that can think outside of the box and figure out a way that will be the ones to thrive in a down market.
One thing I do know for sure though is if you need financing you will need great credit. That means finding out where you stand with your credit scores and fixing what needs to be fixed. Start improving your scores anyway you can and lowering your debt if at all possible. If you do have some issues with obtaining financing find out what they are and try to get them resolved as quickly as possible so you can take advantage of buying a home in this down market. Let’s also reiterate on what was just said. Think outside the box. Do what ever it takes. Partner’s, co signers, creative financing, 401K,IRA, credit cards. These are just to name a few. The possibilities are endless. Also be persistent if one bank or source says no, the next one you try may say yes!
Please feel free to comment on this blog and let me know what I can do or write about to help you out. In the mean time go to www.koeproperties.com and get free real estate solution videos. You will then also start getting my monthly newsletter.
If you do end up investing in real estate you will tend to find your own comfort zone. Most importantly the ultimate decision would be to get started. If you are just starting out you will most likely start small, but you do not need to. You will put just as much effort into purchasing a single family home as you would buying a 100 unit building. The only difference would be the amount of money and you would most likely be out of your comfort zone. So let’s start small and get going.
If you are renting now, then you need to consider purchasing your own home. There is no better time than now to get a super deal on a home. Bank foreclosures are at an all time high and REO’s are being sold at deep discounts. So why not take advantage of that and get a great deal on a home that may have some built in equity. I know everyone is saying not to buy now because we may not have seen the bottom yet. Well if we’re not there we’re pretty dam close. It doesn’t get much worse than this. Real estate prices are the lowest we’ve seen in some time, so why not take advantage of that.
Will it be tough to get the financing? Sure it will. It will probably be tough getting the down payment also. That is what‘s great about buying real estate. There’s more than 1 right answer to every problem out there. The days of going to bank with no money down and getting a no doc loan are over. So are we out of the game? No. It will be the people that can think outside of the box and figure out a way that will be the ones to thrive in a down market.
One thing I do know for sure though is if you need financing you will need great credit. That means finding out where you stand with your credit scores and fixing what needs to be fixed. Start improving your scores anyway you can and lowering your debt if at all possible. If you do have some issues with obtaining financing find out what they are and try to get them resolved as quickly as possible so you can take advantage of buying a home in this down market. Let’s also reiterate on what was just said. Think outside the box. Do what ever it takes. Partner’s, co signers, creative financing, 401K,IRA, credit cards. These are just to name a few. The possibilities are endless. Also be persistent if one bank or source says no, the next one you try may say yes!
Please feel free to comment on this blog and let me know what I can do or write about to help you out. In the mean time go to www.koeproperties.com and get free real estate solution videos. You will then also start getting my monthly newsletter.
Sunday, January 10, 2010
Why Real Estate
There have probably been more millionaires created in real estate than any other wealth building vehicle out there. Although most people and the media are not condoning investing in real estate right now, there is probably no better time in recent history than now.
I discovered the great benefits of investing years ago. I am a self employed remodeling contractor that used to work for a property owner, that later became my friend and mentor. I noticed the great benefits him and his family were achieving investing in real estate and decided this was to be my destiny. Also by being a contractor I was quite confident anything I purchased I would be able to maintain, and maintain I did. The first house my wife and I purchased was our primary residence. It was a bank foreclosure that was pretty well wrecked. Her father did everything he could to talk us out of it (to no avail) and I think my mother cried when she saw it.
We were young and determined though. My wife and I had fixed it up and were ready to make our first profit in real estate. From there we purchased another home to live in, which had the same effect on our parents. We did make a nice profit on that house also and used that money to get into the world of rentals, which is where this article is going.
I can’t think of any other wealth building tool where you can make such great returns on you’re investments. It is the only investment out there that you are expected to borrow the money for. Try going to the bank and tell them you want to take out a loan to invest in the stock market. In a lot of cases you can get into a property for none or very little of your own money down. Notice I said your own money. Especially today you are required to put money down if you are trying to acquire bank financing, but in a lot of cases it doesn’t have to be your own money. There are also ways to buy with no banks involved which will be a future article.
Anyways on with the show and the great benefits of real estate, we started investing in 1993. It was right after the savings and loan crash of the late 80’s and early 90’s. It was the last time this country was in a recession. Real estate values were way down and there were some great deals out there. They just didn’t seem like deals at the time (just like today). The only reason they don’t seem like deals is because people are scared and they don’t know where this market is going. Just like today, some of the stuff out there was priced at a super discount. Some of the homes I see out there now will have to go up in value.
The real estate market will most likely never appreciate like we saw during one of the greatest yet most catastrophic times in history. I sometimes wish I did not invest with the common sense approach that I would like to teach you to invest with. People were making crazy money by buying anything on the market and selling it months later for huge profits. Homes were appreciating at astronomical rates in no time (at least where I lived). I could have made a lot of money, but I was too scared, thinking this can not go on forever, and I was right. It did however go on a lot longer than I ever imagined.
My wife and I have purchased some great investment property and continue to do so. We purchase good solid properties to hold and rent. Everything we buy is done with a lot of research in the current market and produces positive cash flow. That is the best way to invest in real estate and you will receive great benefits if you do the same. Imagine putting none of your own money into a property and having a tenant pay the mortgage each month, while putting extra money in your pocket. You can see the advantages of buying rental property.
Real estate is a business and a long term wealth building tool. It is not a get rich quick scheme or a lottery ticket to riches. If done correctly it can definitely speed the process to wealth and you should be able to retire much earlier than you would if you rely on your current retirement plan. Although many people do hit the mother load and make astronomical amounts of money overnight in real estate. Most people will not get those results. So what you can do is make some common sense investments and achieve the American dream. If it was really as easy as the guru’s say they would do it and not sell $1000 courses to people.
So to wrap this up and save some of my thoughts for future articles, I will be continuing to write many blogs. They will all be related to real estate and all I know about it. Hopefully you will be able to learn from what I know and write about. I will be publishing a series of articles that teach how you can purchase as little as six properties and you and your family will be set for generations to come. There will be work involved and you will become a landlord. I know everyone out there has heard the horror stories of unclogging toilets at 3 a.m. Well I’ve owned rental property for over 15 years now and have never done anything at my rental property in the middle of the night.
Well that’s it folks. Please subscribe to my blog and learn all I know about real estate, management, and maintenance. I will be publishing more and more articles, as that is my goal, to teach. I want to teach people to invest in America and realize the American dream, even if you buy no more than one house. I will be doing instructional videos on how to manage and maintain properties. All this will be free of charge to you. Just follow my blogs and tell everyone you know about them. You can see some of what we do at http://www.koeproperties.com/ and some of my instructional videos on maintenance on YouTube / alexkoe1
I discovered the great benefits of investing years ago. I am a self employed remodeling contractor that used to work for a property owner, that later became my friend and mentor. I noticed the great benefits him and his family were achieving investing in real estate and decided this was to be my destiny. Also by being a contractor I was quite confident anything I purchased I would be able to maintain, and maintain I did. The first house my wife and I purchased was our primary residence. It was a bank foreclosure that was pretty well wrecked. Her father did everything he could to talk us out of it (to no avail) and I think my mother cried when she saw it.
We were young and determined though. My wife and I had fixed it up and were ready to make our first profit in real estate. From there we purchased another home to live in, which had the same effect on our parents. We did make a nice profit on that house also and used that money to get into the world of rentals, which is where this article is going.
I can’t think of any other wealth building tool where you can make such great returns on you’re investments. It is the only investment out there that you are expected to borrow the money for. Try going to the bank and tell them you want to take out a loan to invest in the stock market. In a lot of cases you can get into a property for none or very little of your own money down. Notice I said your own money. Especially today you are required to put money down if you are trying to acquire bank financing, but in a lot of cases it doesn’t have to be your own money. There are also ways to buy with no banks involved which will be a future article.
Anyways on with the show and the great benefits of real estate, we started investing in 1993. It was right after the savings and loan crash of the late 80’s and early 90’s. It was the last time this country was in a recession. Real estate values were way down and there were some great deals out there. They just didn’t seem like deals at the time (just like today). The only reason they don’t seem like deals is because people are scared and they don’t know where this market is going. Just like today, some of the stuff out there was priced at a super discount. Some of the homes I see out there now will have to go up in value.
The real estate market will most likely never appreciate like we saw during one of the greatest yet most catastrophic times in history. I sometimes wish I did not invest with the common sense approach that I would like to teach you to invest with. People were making crazy money by buying anything on the market and selling it months later for huge profits. Homes were appreciating at astronomical rates in no time (at least where I lived). I could have made a lot of money, but I was too scared, thinking this can not go on forever, and I was right. It did however go on a lot longer than I ever imagined.
My wife and I have purchased some great investment property and continue to do so. We purchase good solid properties to hold and rent. Everything we buy is done with a lot of research in the current market and produces positive cash flow. That is the best way to invest in real estate and you will receive great benefits if you do the same. Imagine putting none of your own money into a property and having a tenant pay the mortgage each month, while putting extra money in your pocket. You can see the advantages of buying rental property.
Real estate is a business and a long term wealth building tool. It is not a get rich quick scheme or a lottery ticket to riches. If done correctly it can definitely speed the process to wealth and you should be able to retire much earlier than you would if you rely on your current retirement plan. Although many people do hit the mother load and make astronomical amounts of money overnight in real estate. Most people will not get those results. So what you can do is make some common sense investments and achieve the American dream. If it was really as easy as the guru’s say they would do it and not sell $1000 courses to people.
So to wrap this up and save some of my thoughts for future articles, I will be continuing to write many blogs. They will all be related to real estate and all I know about it. Hopefully you will be able to learn from what I know and write about. I will be publishing a series of articles that teach how you can purchase as little as six properties and you and your family will be set for generations to come. There will be work involved and you will become a landlord. I know everyone out there has heard the horror stories of unclogging toilets at 3 a.m. Well I’ve owned rental property for over 15 years now and have never done anything at my rental property in the middle of the night.
Well that’s it folks. Please subscribe to my blog and learn all I know about real estate, management, and maintenance. I will be publishing more and more articles, as that is my goal, to teach. I want to teach people to invest in America and realize the American dream, even if you buy no more than one house. I will be doing instructional videos on how to manage and maintain properties. All this will be free of charge to you. Just follow my blogs and tell everyone you know about them. You can see some of what we do at http://www.koeproperties.com/ and some of my instructional videos on maintenance on YouTube / alexkoe1
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