Here’s the foreclosure process…

The foreclosure process begins when a homeowner begins to fall behind on their payments, lenders are required to follow an established process before the lender can file for foreclosure proceedings.

Here’s the foreclosure process…

If a home owner misses their first payment, the lender pays little attention. If the owner doesn’t make a payment by the 15th of the month, the lender will typically mail a notice saying their payment is past the due date and a late payment fee is added to the payment.
If the owners miss the next payment, the lender begins to get a bit nervous.
So far, the owner has missed two payments and is more than 30 days past the due date. When an owner misses two payments in a row, a Notice of Default, or NOD, is issued and delivered by certified mail to the owner.
The NOD is then recorded as a public document. The NOD will show the amounts needed to bring the loan current and is the beginning of the foreclosure process.
If the owners misses a third payment in a row, the lender can file for foreclosure.
The foreclosure process filing is also public record, and this is where investors find potential real estate investment opportunities.
Since this is a public record, you’re not the only one aware of the owner’s situation.
Soon, the owner can be bombarded with “let us buy your house” offers in the mail or even personal visits.
The owner is obviously going through a rough time and can be compounded by those who want to buy the house for cheap but also scam artists that prey on someone’s misfortune.
You can search public records on your own for NOD and foreclosure filings or you can buy this information from companies that glean such information for a fee.
Either way, just remember that when you approach homeowners with an offer, put yourself in their shoes for a moment.
Empathize with them and understand, the foreclosure process, and what they’re going through.
By presenting an offer in a respectable manner that can benefit you, your buyers and the owners, you’ll have much more success in the foreclosure market.
This way, everybody wins.

Rehabbing property to flip

You did your research, found the property and successfully closed on your purchase. Now it’s time to change hats and get to work rehabbing the property for sale.
Each part of this process is an expense in both materials and labor and will gradually eat away at your final profit and needs to be monitored constantly while repairs are made.

Not Too Big, Not Too Small
As you made your offer and analyzed your potential flip at the very beginning, you made your way through the property rehab figures and arrived at a number needed to get the house prepared to hit the real estate market.

But during your analysis and even after you bought the home, how do you decide what to fix and what to leave alone?
The minimum requirements are making sure the property is in good enough condition where a bank will make a permanent loan.
While you may have obtained short term financing to rehab the property, unless your buyers have thousands of dollars in their bank account all reserved to pay cash for your flip, they’ll be applying for a mortgage.
That said, unless you’re selling the property to another short term investor the minimum amount of rehab needed is getting the property qualified for financing.
The second consideration is making sure your property rehab conforms to others in the area.
A property that is the biggest and best in a neighborhood will be compared to other homes in the area by both the buyers as well as lenders.
If you buy a home that is a five bedroom, 5,000 square foot property when surrounding homes are typical three-bed, 3,000 foot properties, it will take longer to sell the home compared to having another three-bed, 3,000 foot house for sale.

The same notion applies when rehabbing the home.
It’s common knowledge that an upgraded kitchen is high on the list of home buyers but a kitchen can also be overbuilt, as with any other room in the house.
Do you want to install a Subzero refrigerator, Viking range and other high end appliances to go along with custom, granite counter-tops?
If other homes in the area have similar kitchens, then you should consider rehabbing your property to the standards set by surrounding homes. Otherwise, you’ll lose money on expensive upgrades, eating away at your profit.

Licensed to Work
If you’re handy around the house and know what a Sawzall is, you’re probably able to do much of the rehab work yourself. In fact, knowing how things break and how they can be fixed is a good trait for all real estate investors to have.
Easy rehab chores include things such as fresh paint and updating bath or kitchen hardware.
But when you get involved in anything that involves a professional trade, you need to employ the services of your contractor. Yes, you can save money by making certain repairs yourself but sometimes the do-it-yourself routine becomes more costly when a professional has to repair your own “repairs.” In fact, electrical repairs need to be performed by a licensed electrician.

The same is said for plumbing or HVAC work.
Not only will professionals perform the work efficiently and as required, professional trades also make sure their work is up to the current building codes in the area. And even though you know how to replace roof shingles, leave that to someone who does it every day.
Your property rehab should have a dynamic punch-list identifying which repairs are to be done, when, and to make sure the remodel is on budget.
And because you included an additional 10 percent in your rehab costs, you’re not surprised when an unforeseen repair needs to be made.
Your contractor is one of the key players on your team. Your contractor is someone you’ve established a relationship with who depends upon your real estate investments for a steady income. Having a trusted, reliable contractor to shepherd property remodels through the process is considered one of the most important pieces of the flip-fixing puzzle.
 
The Look
Perhaps the most cost-effective trick in getting the most out of your property rehab work is establishing an attractive curb appeal. The curb appeal is what people see as they drive by the property or walk up the sidewalk to inspect your home for the first time.
Curb appeal means a mowed lawn, some landscaping and a fresh coat of paint.
It’s a clean porch and sparkling windows and if the house doesn’t need a new paint job, an exterior power-wash will rid the property of accumulated dirt and anything hanging onto the property that doesn’t belong there.
The look also means a fresh interior that welcomes potential buyers into your flip that encourages their emotions to get the best of them and make a full price offer on the spot!
Your real estate agent is a professional “home stager” that can prepare the home’s façade for a pleasant curb appeal as well as arranging the interior of the home to make the property appear larger and more attractive to buyers.

Selling While You Work
Immediately upon closing on your flip, make sure your property is listed in the MLS as well as planting a For Sale sign prominently in the front yard.
People who drive by a home that is currently being remodeled will always slow down to take a closer look. Make sure your agent’s For Sale has a rider beneath that says, “Newly Remodeled” or similar catch-phrase indicating the home will soon be remodeled but are taking offers while the property is being upgraded.
A mistake is made when investors keep their property rehab project a secret until the project is complete.
Don’t do that; encourage offers while you’re rehabbing your flip. There’s nothing better than having your flip sold for the price you want before the repairs are even made.

Lenders, both large and small offer a range of real estate investor loan programs to purchase, remodel or build a home.
Buyers can choose the term of the loan as well as between a fixed rate and an adjustable rate loan.
Once the real estate investor loan is selected, the buyers then can decide whether or not to pay discount points to lower the interest rate. Yet when evaluating whether or not paying points is beneficial, the answer is almost always “No!”
Discount points, or simply “points” are represented as a percentage of your loan amount.
One point on a $100,000 loan is $1,000 and is a form of prepaid interest to the lender. Typically, one point will reduce an interest rate by one-quarter of one percent.
If a bank offers a 30 year fixed rate loan at 3.75 percent with no points, they will also offer a loan at 3.50 percent with one point.
Or even a rate in between at 3.625 percent with one-half of a point. So how do you decide if a point is a good investment? After all, when buying a flip, all expenses reduce your bottom line.
To determine if a point is right for your transaction, compare the difference in monthly payment between a rate with one point and a rate with no points.
For instance, using a $100,000 loan with a 30 year fixed rate of 3.75 percent, the principal and interest payment is $463.72 per month.
By paying one point, or $1,000, the interest rate is lowered to 3.50 percent resulting in a monthly payment of $449.04, or $14.68 lower.
Now divide the difference of $14.68 into the $1,000 in point paid, and the answer is 68.12, rounded down to 68. This is the number of months it will take to recover the $1,000 invested for the lower rate. This does not even consider the time value of money of what you could or would do with that $ 1000.00.
That’s nearly seven years. If you plan on keeping your investment property for seven years it might barely be worth it. Otherwise, keep the $1,000 and put it toward a new kitchen.
Paying points when looking for real estate investor loans might be an attractive option at first glance. But once you do the math, it doesn’t make sense for short term holds.
Talk soon,

Buying investment property and negotiating a real estate contract mean two different things, depending upon which side of the transaction you’re on.
If you’re buying an investment property, you want the lowest possible price. And if you’re the seller of the flip you want the highest price possible based upon local market conditions. Either way, negotiating a successful sales contract for a flip is a critical part of the process.
The Flip Inspection
When negotiating an offer, know ahead of time the condition of both the property as well as the buyer. Know the local market and understand what similar homes in the area have recently sold for. This information can be provided to you by your real estate agent who will research recent home sales.
The condition of the property can be discovered before or after your initial offer is made. Make an appointment to inspect the property before any offer is made to give you an idea of the overall condition of the home.
And don’t do the alone, when you can, have your contractor accompany you at your first visit.
Look for major problems first BEFORE you buy investment property.
Look at the foundation and look for telltale cracks in the walls indicating a possible problem.
How does the roof look, do you see any sagging or missing shingles or tiles, a worn out and/or broken HVAC system ? Any evidence of water problems in the basement or other major issues? If not, then take the next step.
How is the house overall, is it in good condition? Are there any signs of disrepair or specific cosmetic changes that could be fixed easily? If the home appears to be in good shape then the owner has likely kept up on any needed maintenance while owning the home.
While making your offer, provide a time frame for an inspection and an opt-out clause that you can exercise should you simply change your mind.
If you didn’t have your home inspector accompany you on your first walk-through, now is the time to have a complete inspection from basement to attic.
The inspector will check through a hundred or more items from checking light switches to ensuring the heating and air conditioning systems are in good working order.
Once the final inspection is complete, review the items that need repair and deduct the costs associated with the noted repairs from your initial offer along with a list of the things needing repair as prepared by your inspector.
In some cases an “opt-out “ clause will be considered a weak offer, especially if another buyer is willing to close cash with the house in an “as is” condition. What type of an offer you submit is dependent on your current opportunities, you capitol and the potential of this particular flip.
The Flip Seller
As the investment property buyer, an important part of negotiating a flip contract is knowing the condition of the buyer. Why is the owner selling?
While this may seem an obvious question there’s a big difference with someone who is retiring and seeking to downsize and someone who is facing foreclosure.
A seller who is desperate may not go into any details of their situation but there are ways you can independently determine the mindset of the seller.
If the owner is experiencing financial difficulties and their lender is threatening to foreclose, you can visit your local county recorder’s office, pull up the property address or owner’s name and see if a Notice of Default or Foreclosure notice has been filed.
Both such filings are a requirement for lenders as they begin a foreclosure process and are a public record. If there are such filings, you know that the seller is highly motivated.
You can also contact the attorney or title agent on your team to provide you with a preliminary title report. A title report will not only show the current legal owner but also any other liens that have been filed on the property.
Are there any back property taxes due the county? If so, there will be a lien filed. Any past due federal or state income taxes or any outstanding child support payments? Again, such filings will appear on the title report and indicates the seller might just entertain any offer you present.
Close Super-Fast
And the best negotiating tool? A cash purchase.
Buyers who need financing may or may not have applied for a mortgage before shopping for a home. Most sellers today will require that buyers present a loan approval letter from a lender showing they’re qualified to buy the home.
Yet even an approval letter isn’t bullet-proof. A complete loan approval from a bank can take up to 30 days or more as the lender evaluates tax returns, credit and bank statements provided by the buyer.
A loan application that is not properly prepared and documented can be declined weeks after an initial offer is made. This means the seller can accept an offer and find out three weeks later the deal is dead.
When you tell a seller that you buy investment property for cash and can close within a few days, your offer will carry greater weight compared to offers from other buyers.
Even if you don’t have cash in the bank, if you have access to the funds needed to buy the home with a line of credit or you have a private lender lined up, by closing quickly you can put yourself ahead of any other offer and help the seller get out of a potentially desperate situation.
The bottom line when buying investment property… Know your market, know the property and sometimes most importantly know the true reasons the owner is selling.

Negotiating Real Estate Deals: A Beginner’s Guide

Buying or selling a home for the very first time can be both really exciting and really stressful.
Generally, beginners in the real estate game are most nervous about the ins and outs of negotiating real estate deals, hoping to get the most out of the bargain for their cause.
However real estate negotiation is like anything else, there’s always a fair bit of compromise.
The following tips can be applied to both buyers and sellers in an effort to help them up their skills negotiating real estate.

Tip 1: Know the market
Knowing the market is the best way to ensure that your expectations are in check when it comes to property values, both real and assessed.
At any given point in time, the real estate market is considered to be in one of three positions: favoring buyers, favoring sellers, or favoring neither (an even balance of supply and demand).
Consider your position in relation to this market and realize that the best time to get a deal is when it favors you.
Tip 2: Consider leverage
Each real estate transaction is unique. Each property is different and each buyer and seller has their own set of circumstances which dictate their pace and need.
If you are selling a house because you are moving for work and need the money then you will be willing to take a lower offer than a seller who has no timetable for leaving.
Conversely, a buyer who is one of five bidding on a property will not be able to negotiate the way that a sole buyer will.
Tip 3: The devil is in the details
One mistake that both buyers and sellers make in negotiating real estate is relying too heavily on similar properties in an area as a base line.
Again, every real estate deal is unique and two homes of similar features (square footage, bedrooms, bathrooms, etc.) may sell for the same dollar amount, but that doesn’t tell the whole story.
What concessions did the buyer or seller make? Did the seller agree to share closing costs or fix the hot water heater?
Any of these details will not show up in your research and give an incomplete picture of the situation.
Tip 4: Financing needs to be paramount
Again, regardless of which side of the table you sit on, the financing situation is essential in negotiating real estate.
Buyers with pre-approval are far more competitive than those without it. This means that both buyers and sellers need to use financing as a basis for making decisions.
Learning the ins and outs of negotiating real estate can be tough.
That’s why it’s important to make sure that you are informed as well as why it’s important to make sure to use the services of a real estate professional who knows what he or she is doing.
Properly managed, the art of negotiating real estate will leave both parties feeling good about the transaction that they made and the new lives they are about to start.

A little bit about me......

Real estate entrepreneur Kevin Timochenko, Owner of the Metropolitan Management Group, learned the value of hard work at an early age. 

From the age of three, he watched his father hold down three jobs to support his family of four children after his wife walked out. While still in grade school, Kevin Timochenko began working as many jobs as he could find in order to keep his family going. His most dreaded job was a 10-hour newspaper delivery route that he ran with his father every Sunday morning beginning at 3 a.m. Other positions included stints as a short order cook, junior high school baseball umpire, janitor on his school campus, painter, driver for a local floral service, and laborer for a local roofing company. When he was not attending classes, Kevin Timochenko also made time to participate in extracurricular activities. He played varsity baseball, football, and basketball at North Penn High School and varsity basketball at Delaware Valley College.

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