14% increase creates record number of new bank owned properties

If you’d like to capitalize on one of the easiest ways to
make great cash flow with the current foreclosure epidemic,
read this article closely. You don’t need any experience in
real estate to start making a great part time income working
only a few hours a week.

Here are the facts:

Lenders repossessed 1,050,500 homes last year, according to
the 2010 end-of-year foreclosure report from RealtyTrac.

The annual figure marks a record-high number of new
bank-owned properties tracked by the company. The 2010 tally
is up 14 percent from the previous year, when banks seized
918,376 homes, according to RealtyTrac’s historical data.

Just to put things into perspective, in 2008 RealtyTrac
reports there were 861,664 new REOs. That year the figure
more than doubled from 2007, when there were 404,849 newly
repossessed homes. In 2006, RealtyTrac tracked 268,532 new
REOs.

While the number of homes taken back by lenders jumped by
more than 130,000 from 2009 to 2010, RealtyTrac’s data shows
the number of default filings declined by 20 percent over
the same period. The industry is still wading through a
severe backlog of unpaid mortgages, but with new defaults
apparently tapering off, it’s plausible that the size of
that backlog may begin contracting.

According to RealtyTrac’s 2010 report, a total of 3,825,637
foreclosure filings – including default notices, scheduled
auctions and bank repossessions – were reported on a record
2,871,891 U.S. properties during the year. The company says
2.23 percent of all U.S. housing units, or one in 45,
received at least one foreclosure filing last year.

Total filings are up nearly 2 percent from 2009 and 23
percent from 2008, despite a sharp drop-off in activity
during the latter part of 2010.

Foreclosure filings were reported on 257,747 properties
during the month of December, a decrease of nearly 2 percent
from the previous month and down 26 percent from December
2009.

It’s the biggest annual drop in foreclosure activity for any
one month since RealtyTrac began publishing its foreclosure
report in January 2005. December’s total filings are the
lowest monthly total recorded by the company since June
2008.

Fourth-quarter activity overall dropped considerably, with
filings during the October to December timeframe down 14
percent from the previous quarter and 8 percent lower than
the same period last year. The fourth quarter total was the
lowest quarterly total since Q4 2008.

“Total properties receiving foreclosure filings would have
easily exceeded 3 million in 2010 had it not been for the
fourth quarter drop in foreclosure activity, triggered
primarily by the continuing controversy surrounding
foreclosure documentation,” said James Saccacio,
RealtyTrac’s CEO.

“Even so, 2010 foreclosure activity still hit a record high
for our report, and many of the foreclosure proceedings that
were stopped in late 2010 — which we estimate may be as high
as a quarter million — will likely be re-started and add to
the numbers in early 2011,” Saccacio added.

All the usual suspects held their spots at the top of
RealtyTrac’s list of states with the highest foreclosure
rates for the 2010 calendar year. The company pointed out,
however, that foreclosure activity dropped 22 percent in
December in the judicial state of Florida, although bank
repossessions spiked more than 45 percent that month in
Nevada, Arizona, and California.

More than 9 percent of Nevada housing units (one in 11)
received at least one foreclosure filing in 2010, giving it
the nation’s highest state foreclosure rate for the fourth
consecutive year, despite a 5 percent decrease in
foreclosure activity from 2009.

Arizona registered the nation’s second highest state
foreclosure rate for the second year in a row, with 5.73
percent of its homes (one in 17) receiving at least one
foreclosure filing in 2010.

Florida claimed the nation’s third highest foreclosure rate,
with 5.51 percent of its housing units (one in 18) receiving
at least one foreclosure filing during the year.

Other states with 2010 foreclosure rates ranking among the
nation’s 10 highest were: California (4.08 percent), Utah
(3.44 percent), Georgia (3.25 percent), Michigan (3.00
percent), Idaho (2.98 percent), Illinois (2.87 percent), and
Colorado (2.51 percent).

RealtyTrac says five states accounted for 51 percent of the
nation’s total foreclosure activity in 2010: California,
Florida, Arizona, Illinois, and Michigan. Together these
five states documented nearly 1.5 million properties
receiving a foreclosure filing during the year despite
annual decreases in the three states with the most
foreclosure activity.

Lenders are foreclosing on homes more than ever and this
forces lenders to take more and more properties to auction
every day. Because more properties are going to auction and
the number of buyers are very low at the auctions, its one
of the best places to find properties right now.

One of the easiest ways to make quick cash is to bird dog
for properties at the auction for cash buyers. You’ll be
surprised at how much cash you can make quickly without any
of your own cash or credit even if you have no experienc’e in
real estate at all.

For beginning investors using this strategy, the average
number of hours it takes to do a deal is 8 hrs and the
average profit is $3000 to $4000. That comes out to $375 to
$500 per hour.

Are you now interested in making $375 per hour working part
time to generate more income in your life?

How would that affect you?

Is that more than you’re making now?

At this stage of the game, the money is not the important
part. It’s the investment in yourself and the experience
that’s more important. In fact, it doesn’t matter if you
don’t make much money on your first few deals. The
experience and the practice is most important because you
are learning the strategy at this point.

Here’s why:

As you get more knowledge and experience, the profit per
deal goes up and the time it takes to do a deal goes down by
50%. That means after you do 2-3 deals, you should expect to
be making $7000-$12,000 on average per deal with 4 hours of
work. This is why it’s important to get your first 2-3 deals
done fast so you can start making the $1750.00 to $3000.00
per hour.

For more articles and updates in Real Estate
go here…>> http://investorsnetworking.com

FHA extends suspension of ‘anti-flipping’ rule for another year 
 
The rule was intended to prevent speculators from defrauding the government, but it also stifled the purchase and renovation of foreclosed homes by legitimate investors.
For years the federal government prohibited the use of Federal Housing Administration mortgage financing by buyers purchasing homes from sellers who had owned the property for less than 90 days. The idea was to prevent speculators from defrauding the government through quick flips of houses — often involving straw buyers and corrupt appraisers — at wildly inflated prices.
One side effect of that policy had been to stifle purchase-and-renovate projects by legitimate, small-scale investors who buy houses after foreclosure or loan defaults and then resell them in substantially improved condition. In many parts of the country, first-time and moderate-income buyers often sought to buy these fixed-up houses using FHA-insured mortgages with 3.5% down payments, but were prevented from doing so by the “anti-flipping” rule.
This left large numbers of foreclosed, vacant houses sitting unsold and deteriorating, with negative effects on the values of neighboring properties.
Last January, FHA Commissioner David H. Stevens announced a one-year suspension of that rule, permitting qualified buyers to obtain FHA mortgages on properties that were acquired by rehabbers less than 90 days before. The plan, set to expire at the end of this month, came with safeguards for purchasers, including inspections and multiple appraisals in some cases to document the amounts spent by investors on the improvements.
Vicki Bott, deputy assistant secretary for single-family housing at the FHA, confirmed in an interview that the agency expects to continue the policy for another year. Not only have first-time buyers responded overwhelmingly to the opportunity to buy “turnkey” renovated homes with low down payments, she said, but they have performed well on their mortgage obligations.
“Obviously we have concerns about flipping in general,” Bott said, but the FHA has seen none of the fraud problems, defaults and re-foreclosures that cost the agency millions in insurance payouts in earlier years.
Investor Paul Wylie, who with a group of partners and contractors specializes in acquiring, renovating and reselling foreclosed and distressed houses in the Los Angeles area, says the government’s policy “has been a very positive approach” because “it recognizes the role that [private investors] can play in helping the housing market get back on its feet.”
In the L.A. market, Wylie said, FHA financing accounts for 40% of all home purchases and 60% of purchases in predominantly Latino and African American communities.
Buying foreclosed houses “comes with a lot of risk factors,” Wylie said. “There’s no title insurance. We don’t have a good idea of the extent of the defects” inside properties that have been sitting vacant or vandalized for months. Some houses come with delinquent property taxes, which Wylie’s group typically must pay.
Then again, the profit opportunities can be significant as well. Most of the Wylie group’s houses sell for more than 20% higher prices than Wylie paid at acquisition — a quick turnaround gain that potentially works for buyers, sellers, neighborhoods and, yes, the FHA itself.
 
In the Moment, For the Moment

Christian Yepez, Syndicator
www.InvestorsNetworking.com

NEW: The LLC-IRA for Real Estate Investing

By now I am sure you’ve heard that it is legal, permissible, and profitable to invest in real estate using your self-directed IRA, SEP, or Roth IRA. If you’ve been using this technique, you know the drawbacks: delays in funding, fees from your custodian, potential lawsuits against your IRA.

Well, there’s a solution…the LLC-IRA.

Instead of investing directly from your IRA, you set up a single-member LLC that is owned by your IRA. Your IRA account is the MEMBER of the LLC. The LLC is a legal entity that has powers and protections that are not possessed by any individual or by any regular IRA.

The combination of the self-directed IRA custodian and the LLC produces great results. This is an entirely new type of LLC, not your run-of-the-mill LLC you may have done before. It generally requires an attorney to draft the operating agreement and provide an opinion letter to your IRA custodian. If the LLC operating agreement is improperly drafted, the entire LLC-IRA may be disqualified and taxed.

Lawsuit protection of your IRA account

A single-member LLC (Limited Liability Company) is a business entity that gives the liability protection of a corporation but is “disregarded” (ignored) for federal income tax purposes. It is a separate legal entity under state law, so creditors of your LLC (as in the case of a tenant injured on the property) cannot go after the member (your IRA account) or you (the Manager).

“Checkbook” control

As manager of your LLC-IRA, you can write checks as you need to for purchasing property, paying property expenses, or loaning money. If you want to do a deal in a hurry, you can run down to your bank and get a wire or certified funds the SAME DAY, as in the case of a foreclosure auction.

Keep in mind that any transaction you can’t do in your IRA account, you are also prohibited from doing in your LLC-IRA. You should not attempt any transaction in your LLC-IRA without competent tax and legal advice.

Steps to form your LLC-IRA

First, you need to transfer your existing IRA to a custodian that allows complete self-direction of your account. Big firms like Fidelity and Schwab generally don’t allow you to direct your account into real estate investments.

Second, you need to hire a professional to create the LLC. Third, you “fund” the LLC by directing the money from your IRA custodian to the LLC’s bank account. Fourth, you start investing in your LLC-IRA.

Custodial fees are much lower because the IRA only has one asset, the LLC.

Is this all legal?

The legality of an IRA owning an LLC is based on the case Swanson vs. The Commissioner in 1996. In Swanson, the court ruled in favor of the taxpayer using a corporation owned by his IRA, where he was the president. The LLC, by implication should be the same.

Should you have any questions about the legality of your LLC-IRA, speak with a qualified attorney to advise you through the process.

Dont Forget, I got deals and great articles for you here on my site
www.InvestorsNetworking.com

December 2010 Real-Time Housing Report

• The Altos 10-City Composite is now at $456,454, off 0.45% from last month.
• 23 of the 26 major markets tracked by Altos showed price decreases, with the steepest declines seen in Washington, DC (down 3.41%), San Diego (down 3.07%), and Salt Lake City (down 2.63%), respectively.
• The December housing market begins with a continuation of the seasonal price and inventory declines, with asking prices down by 0.45% this month and active inventory down by 3.16%.
• Watch the third week of January before the first inklings of seasonal demand up-tick become visible.

Download a copy of this month’s report here.  (Yep – it’s free. Registration required.)

Top 5 Mistakes of Beginning Commercial Real Estate Investors

Agree or disagree? Leave a comment below!

(and look out for a cool CRE giveaway in a few days…)

We’ve all done it. Anyone who invests in real estate is bound to make a clunker deal sooner or later. I’ve been in this business for over 25 years and have made plenty of mistakes, and I am always reminded that experience is what you get right after you needed it.

The popularity of commercial real estate has exploded in the last few years, and the media is full of war stories from new investors who find themselves in deals with problems.

In almost every case the cause is traceable to a lack of knowledge about a few simple precepts that form the ground rules of successful commercial investments. These are the basic practices that when used correctly will eliminate the most common causes of a bad deal.

My top 5 list of rookie mistakes:

1. Ignoring local market conditions

There are two levels of due diligence required to evaluate a real estate investment–the market and the property. And of the two, local market conditions trump everything else.

A great property in a bad market can be a big loser. A poor property in a great market can be a gold mine. How do you know the difference?

Every market is different, and a deal technique or property type that is profitable in one market it does not mean the same holds true anywhere else.

Analyzing the demographic trends of population growth, income, and employment in the local market will tell you where opportunity lies, or not. It will also show which property types are in demand, or oversupply. Those conditions will make or break your investment.

Investing in an area with declining demographic trends is destined for trouble. So learn your market. Then listen as it tells you how, when, and where to invest.

2. Inadequate property due diligence

The second level of due diligence is the property condition, including physical items such as building systems, environmental matters and structural components. Just as important are the intangible items, such as title, survey, and zoning and land-use regulations.

Knowledge of contract law, insurance, finance, accounting, and tax law is also critical to doing things right at the beginning to insure success at the end.

If you’ve never done it before, this is not a DIY project. The money you think you’ll save by doing it yourself can cost twice as much to fix, and may jeopardize the entire investment.

Red Adair, the famous oil and gas field firefighter, said, “If you think it’s expensive to hire a professional to do the job, wait until you hire an amateur.”

Admit what you don’t know. Approach the property like an open book test. If you don’t know the answer to a question, find an expert who does know to give it to you.

Get accurate estimates from professionals of what it will cost to fix what is wrong. The time spent inspecting the components is minimal and can save thousands of dollars in unexpected repairs.

3. Botching the math

This is not rocket science, but real estate is a numbers game. Value is dependent on net operating income: gross revenue minus operating expenses.

That’s why it is so important to get the real operating numbers, not a projection of potential gross income and estimated expenses.

Confirm and verify every element of income and expense. Value the property based only on present income, not projected income you have to produce.

Your profit is dependent on net income. Net income is the net operating income minus debt service. If you’ve overestimated revenue, underestimated expense, or have too much debt service, your profit will suffer or turn into a loss.

Understand that risk increases with every assumption made. Do not assume you can save expenses by cutting corners or that you can raise rents the day after you take possession.

Anyone who has ever prepared a projection of operations has realized that by tweaking the assumptions, the bottom line can be manipulated into whatever will make the deal work.

The problem comes when it’s time to make the numbers happen. It’s real cash [...] and when the rents don’t go up or the expenses don’t come down as much as the projection called for, you take the hit.

You might tweak the numbers to make it work on paper, but paper won’t pay the bills, and hope is not a plan.

4. Over-leverage

Borrowing too much money in this business is fatal. Highly leveraged deals do happen, but unless it’s backed up by a solid plan with sufficient capital, it can be disastrous.

Using 100% financing for entry level deals is like believing gravity doesn’t exist as you jump off a building. You can argue all you want, but you’re going to hit the ground, the only question is how hard.

The proper use of leverage is a function of deal structure and investment strategy. Every investment property should be evaluated in light of the break-even ratio.

The break-even ratio is equal to the Operating Expenses plus the Debt Service, divided by the Gross Potential Income. [(OpEx + DS)/ GPI = BE]. When break-even exceeds 80%, the structure depends on perfection, and that’s dangerous territory.

5. Failure to have multiple exit strategies

An investment plan incorporates all of the due diligence findings and outlines all the possible outcomes of the investment, best case to worst case.

Ask yourself why you think you can do a better job running this property than the seller did. If you can’t answer that with specifics, you won’t do better, and probably not as well.

Your plan should answer the questions of how the property will be managed; what improvements are needed and their cost; how much money might be made (or lost); how long it will take; how to get out if things go wrong; and how to access the profits when it goes right.

The answers will reveal a realistic plan to maximize value in the shortest possible time with the least possible downside. I rarely have less than three exit strategies, and usually a half dozen or more. I’ve learned that if I don’t have a plan to get my money out of a deal, I will soon be out of money.

Learn from those who have paid the price

I just read an article on Wall Street Journal Online about a young Colorado investor who made almost every mistake mentioned above. In 2005 he paid $269,000 for a four-plex, used 100% financing in a market dependent on the presence of military personnel in the middle of a war with extended deployments.

He had no management experience and didn’t screen new tenants, who turned into evictions. He planned (hoped?) to hold the property for cash flow, but over-leverage and inexperience produced average cash flow of only $100 per month.

Now he wants to move to another city and put the property on the market for $285,000. With no takers he’s reduced the price to $265,000, offering a 3% commission, but not using a listing broker because he thinks he can’t afford it. This is not an isolated case. The dangers of these errors are real and painful.

Roy Williams, the Wizard of Ads® from Buda, Texas said, “Are you smart or are you wise? A smart person makes a mistake, learns from it, and never makes that mistake again. A wise person finds a smart person, learns from his mistakes and never makes them in the first place.”

This article first appeared here.

For commercial deals or Apartments information, dont forget to keep coming to my site.. www.investorsnetworking.com

Christian Yepez, Syndicator, Investor

According to current data published by Federal Reserve Bank of New York, 2.7% of mortgage balances got converted to delinquency during the 3rd quarter of this year. This was 0.1% more than the 2nd quarter. Though the increase has been termed slight by Federal Reserve Bank officials, the trend is an indication of decrease in new delinquencies.

New York Federal Reserve Bank stated that though in 2009 a similar pattern was observed in the 3rd quarter, a close monitoring is being done this year in view of the tight economic situation. According to New York Fed Bank reports, nearly 457,000 people received foreclosure notice in the 3rd quarter of this year. As compared to the previous quarter this is a decrease of 5.5%, and 6.4% as compared to corresponding period of previous year.

This steady decline is caused by consumers trimming their debts continually for the last seven quarters. The declining phase which reached its lowest point in 2008 third quarter has recovered slightly with almost US $1 trillion being scraped from consumer debts. From Fed Bank reports it is evident that non-mortgage debts since 2008 have fallen for the first time during this years 3rd quarter.

Effects of charge-offs and defaults have been excluded form this calculation. Net mortgage debt payments that started in 2008 and ended in 2009 have amounted to US $140 billion. From the figures it could be said that consumers have made conscious efforts in reducing their liabilities.

Research and Statistics Group senior economist, Donghoon Lee has remarked that consumer debts have declined and only a small part is accountable for charge-offs and defaults. Individuals have paid off their liabilities and borrowed less than before. This behavioral change could be either because of changing saving habits or stringent credit offerings or both.

As it is, this seems a healthy way of reducing debt burden, though analysts are skeptical about it. According to them shrinking debt balance is an indication of low consumer spending, which has a deterrent impact on the economy.

As per current data debt repayments by consumers have reduced consumption expenditure by US $150 billion till the end of 2009.

________________

Now, regarding you.. What are you doing now in Real Estate?

reply or comment..

Christian Yepez, Syndicator and Investor

www.investorsnetworking.com

Have you been reading the news?  The apartment sector is outperforming the economy. This should not surprise you. With a record number of folks losing their homes to foreclosure, there is increased demand on rental living. The Apartment market is getting better and better every day. 

“U.S. West Apartment Rents Increase as Foreclosures Boost Demand”

(Bloomberg) Apartment rents rose across the U.S. West and South for the third straight quarter as record foreclosures boosted demand for rental housing, RealFacts said. Apartment rents rose fastest in the Denver area, with rates increasing 2.4 percent from the second quarter to $883 a month, followed by the Austin, Texas, region, with a 2.3 gain to $837 a month, RealFacts said. In the Atlanta area, rents rose 2.2 percent to $834, and in the San Jose, California, region they increased 1.9 percent to $1,587.

“We’re getting to be much more of a culture that puts a premium on rental housing,” Sarah Bridge, owner of RealFacts, said in an interview. “People are disillusioned with the housing market. They don’t want to spend their money that way if they’re going to be foreclosed on.”

“Apartment Market, Rents Rebound”

(Wall Street Journal) The nation’s apartment market strengthened in the third quarter, with national vacancies seeing one of the sharpest declines on record, according to new data released Wednesday by Reis Inc. Robust demand allowed landlords to modestly increase rents for the third quarter in a row. That is a reversal from the freebies and discounts desperate owners coughed up during the downturn to retain and attract tenants.

“Recovery in the apartment rental sector appears to be firmly rooted,” said Victor Calanog, director of research for Reis, a New York-based research firm. “Despite lackluster economic growth and continuing uncertainty in the labor markets, households appear to be returning in droves to the rental market and signing leases.”

Do you seek bigger profits than single family foreclosures and a quicker plan to reach your financial independence goals? As America downsizes, have you looked for ways to capitalize on the increased demand of apartment living? Have you tried to tap into the foreclosure apartment investing business but did not know where to start?

Remember, I am always looking for Apartments or Commercial opportunities. I syndicate deals,  once I find something, I will let you know fast. Okay?

In the Moment, For the Moment,

Christian Yepez, Investor/Syndicator

www.investorsnetworking.com

141 Units, Dallas

HIGHLIGHTS:

Strong Cash-Flow From Day-One with Significant Up-Side Individual HVAC’s Attractive Mix of Large Units Attractive New Financing Available 10.7 Percent Existing, 25 Percent Pro Forma Cash-on-Cash Returns Long Term Existing Ownership Strong Rental Market Well Maintained Property

Before releasing this info and financials, Please sign  a Confidentiality Agreement (NCND).. Confidential Agreement Here (PDF) DONT FORGET TO WRITE in the last page your email and contact info PLEASE….My fax number is there.. questions, email me.. christian@investorsnetworking.com

APARTMENTS AND COMMERCIAL DEALS ARE HERE. Check this one I got for you.
80 UNITS APARTMENT..THIS IS A REO asset located in Dallas, Texas.  PRICE : $650,000 PLUS MY FINDERS FEE.
The property is located just minutes from downtown Dallas.  This location offers access to major interstates and public transportation.  Property was contrusted in 1972 on slab foundations with pitched roofs.
This Apartments offers an investor an opportunity to realize significant upside by bringing the property up to market occupancy.
 
To schedule a conference call with the Authorized Person to sell this deal, my contact, please call me: 562-304-7787

Before releasing this info and financials, Please sign  a Confidentiality Agreement (NCND).. Confidential Agreement Here (PDF)  DONT FORGET TO WRITE in the last page your email and contact info PLEASE….My fax number is there..