Real Estate Buy Now

"Let the Buyer Beware"

noreply@blogger.com (Vince D'Acquisto) — Sun, 08 Mar 2009 18:21:00 +0000

Caveat emptor is Latin for "Let the buyer beware".

There a lot of "for sale" ads out there for lists that guarantee to put you with sellers that want to sell you their home on a rent to own payment plan. You will find them on free posting sites for Real Estate, Homes for sale, Rent to own and the like. They want your Credit Card information. They will charge you a one time fee, then you get access to all this information. They give you a 30-60-90 day trial, and if you change your mind they will refund your Money, so they say. In my experience, there is always some little catch (you know, "the fine print") for them to keep your money, relying on the idea that you will get tired of trying and just give up.

This kind of advertising may not be technically illegal, but it is not a great thing to do in this financially challenged world that we now live in. These opportunists, several years ago, used to post ads in "throw away" papers selling lists of homes for rent. Now, they post ads online on sites like "Craigslist". They go through the local paper or online and look at the homes for rent, or in this case, for sale. They tell the owner they will put the owner's property for sale, lease, or rent-to-own on their listing service for 30 days at no charge. The owner thinks,"Why not, it's free." Now the opportunists have a list of several homes with pictures and names and numbers that they can use for the bait in their ads. Then, after the 30 days, they say to the owner, if he wants to keep the ad there it will cost $100 (or whatever) for another 90 days. Many times the owner will bite, because these "free" ads have been getting responses.

The opportunists run ads that they have owners in several states, cities, whatever that will sell "nothing down", "rent to own", or "will sell on a kiss and promise". They sell you the lists for a fee. Another common list these opportunists will try to sell you is the "foreclosure list". Now, the opportunist is making money on both ends, with information the owner and the potential buyer could have found on their own to begin with.

It is human nature to try to do something the easiest way possible. These opportunists are banking on some people being lazy, trying to get something for nothing, and/or wanting to take the easiest route possible to the goal, whether it is selling or buying.

There is another way. You can do your own homework. To find lists of houses in foreclosures, go down to your local court house, to look for the following:

notices of default
pre-sales auctions
Sheriffs sales, ect.
employees at the Court House, and/or Hall of Records or records department that will just love to inform you of all the ins-and-outs on how to research the information you desire.

If you see a house in a neighborhood that looks unkempt and abandoned, chances are it is in foreclosure. Obtain the street address of this property, and go to your local Court House to look it up. You will find all the information you need if you just ask at the Court House what you want to know.

Another way to do your own homework to find homes for sale: put in a small ad stating you would like to do a lease-option (lease the property with an option to buy at a later date) for the right property. And check out whatever the seller tells you. Always let the papers do the talking. Trust the owner until you find out different. But by all means, find out before anything is signed and before any MONEY is exchanged. Do your homework, and protect yourself:

Go to a Title Company and have them do a Preliminary Title Report.
Ask to see a statement on the seller's payment history. If it is a straight deal, and the owner wants to sell or lease with an option, he will not have any issues making sure that you are assured that the property title is not in jeopardy.
The seller needs to be agreeable to informing the Lien Holder that he has entered into an agreement that has an option for you to purchase the property. That way, the Lien Holder is on notice that you are leasing the property and have an option.
The seller needs to find out if he has an "acceleration clause" in his mortgage if he leases the property. (This means the entire balance on the mortgage is due and payable because he has transferred the property by way of a lease with an option.) Depending on the wording of the mortgage, some banks will consider this transferring the property, a contract for sale, and therefore triggers the "acceleration clause."
Have an independent third party collection account, that will receive and disperse all funds. One of these companies is "Note World", out of California. This way you are assured the payments you are making actually go to paying for the property and don't "get lost" in someone's bank account. The owner and you will also have a record of what has been paid and to whom.
If you are sure you are getting a good deal, but you are not sure about the papers you are signing, pay an attorney to review the documents for you to make sure your interests are being protected.

Always remember this adage: "If it sounds too good to be true, it probably is...."(c-mon you know the rest of the saying).

2009: The Year Of Bargains

noreply@blogger.com (Vince D'Acquisto) — Thu, 05 Mar 2009 01:18:00 +0000

Well, here we are again. The time has come. Life goes full circle, and so does the Money.

It is time to start hunting, and gathering up the Bargains. The problem is that in our current Economic Situation there are so many. We need to devise a strategy to sort out the best Bargains.

"Back in the day" (as they say now) one used to pour over the newspaper's classified ads, going through each ad's words to pick out the "don't-wanters". Today it's much the same, except you're reading the ads on your computer screen. Finding the "Don't-wanters" is also much the same. You look for the people that are scared of what lies ahead in the Real Estate market; the people that have to liquidate because they need the cash, or just need it off their financial statement. Try to "read between the lines" to determine when the property has been for sale too long; or there is a divorce, bankruptsy or illness. Maybe a note is coming due soon and the property can not be re-financed. A seller needs to sell for many reasons. Once you get used to reading the ads, and start recognizing the same properties being listed with different words in the ads, you will soon be able to feel when someone is becoming more desperate. The ads will talk to you, saying "Buy Me, this is The One!"

You need to call on all the ads you are interested in, or that you sense may have underlying desperation. When you call (or now respond via email) you need to question the seller about the property and his situation to determine the real reason the property is up for sale. Ask lots of questions, do not be rude, but don't be bashful. If you approach the seller the right way and he knows you are sincere, he will do everything in his power to help you acquire the property. After all, he does want to sell. And if you have read your ad right, he wants to sell desperately.

Certainly, don't be bashful about calling on an ad. Even if you think there is no way it could work. Talk to the seller, always leave your number. Let it cook. I've had sellers call me a year or two after I initially contacted them. You never mention price, terms or any details during the initial conversations, anyway. Always remember, "first liar loses". In other words, most sellers always inflate the price of the property (a lie), and most buyers deflate the amount of money they are willing to pay (another lie). Do not let the seller get into your head, while you are trying to get into his.

You need to know everything about the property and as much as possible in regards to the seller's situation. Once you know what the seller intends to do with the money that he is going to receive, you will be able to carve out a way for him to sell his property to you.

For example, maybe the seller is just tired and wants to move to Mexico and retire. Could you find a property that he would like to trade for his equity in the property he is trying to sell. One site that I like is Baja Mexico Vacation Rentals & Sales. There are several others.

Another example: What if the seller is getting divorced and his soon-to-be-ex is forcing the sale. Ask the seller if they would be interested in taking on a partner and cashing out his soon-to-be "ex". Maybe the "ex" will take payments just to get the divorce moving along. You will never know until you ask.

Always ask questions to find out where the real deals are. You have friends, relatives, neighbors. All of these people have information for you to use. Put out small ads "Looking to buy real estate. Are you looking to Sell?" Every body knows somebody that has something for sale. For example, your brother-in-law (who owes you money), has a buddy that can not sell his Bass Boat, and you know a guy that can not sell his lot, and you know a contractor who's business is slow. Buy the boat at a discount; trade it for the lot; then make a deal with the contractor. You will provide the land if he provides the materials and builds the house. When the house sells, both of you will split the profit. Just have an open mind and "think outside of the box."

Other good sources for finding Bargains are newspapers (still), estate sales, foreclosure auctions, multiple listing books, public records at the County Courthouse, tax sales, vacant properties, church, school, shopping center bulletin boards, small weekly "bird cage" papers. And last, but certainly not least, The Internet.

Information is precious. Acquire it, and use it wisely.

Time is of the Essence!

noreply@blogger.com (Vince D'Acquisto) — Fri, 27 Feb 2009 15:48:00 +0000

We are in a very "Opportunistic Cycle" in the Real Estate Market right now. Just think about it. There are hundreds of thousands of properties that are for sale. What is worse is they are non-occupied. The financial institutions are responsible for these properties and they are rapidly becoming overwhelmed. With maintenance issues, not to mention problems with break-ins, squatters, and local communities enacting ordinances that penalize the financial institutions for owning non-occupied properties because these properties are not being kept up. All of this is causing the Financial institutions to become "don't-wanters".

The financial institutions are starting to listen to all sorts of ideas in order to get these problem properties off their books. They are carrying back a lot of the financing, if not all of it, to dispose of the properties. Why, this can be a wind fall for those who take the chance! Just take a safe chance; do not let the banks pin you down to terms that you can not fulfill.

Keep in mind that you should be wary of acquiring commercial property until you have more experience. People will always need a home to live in. They don't need to have a business or rent a commercial property. Most people will work for someone else and pay rent for the family home.

If you think that you can rent out a home for a certain amount, that is fine. However it is only a matter of time before that home will be empty and you get to make the payment.

I try to keep the rent down to 75-80% of what the market will bear. That way I do not have to put a revolving door on the house. I will keep tenants a lot longer. If I can keep a tenant in the rental for 16-20 months I will have less costs. No need to advertise, re-rent, re-paint, etc. The ideal situation is to have your long-term tenants buy the home they're in after 24 months for you to profit. They will then be what the banks call "seasoned" or "proven".

If your tenants made your payment and expenses + $100.00 a month for you, you will do fine. If you sell to the tenant that knows you, and you know them, you have history. Carry back the note on the property and get interest on your margin or profit. The benefits:

You will be getting interest on your "blue sky".
They will have a home that they can afford.
They will recommend you as a land lord.
You will make that $100 dollar a month, if you continue renting out the home.
You will make the interest on your margin, once you sell to them.

Here's an example: You will be making money ($2000.00/month) on "air and good faith":

if you had 20 small family homes that the tenants can afford,
the tenants know that if they keep the home up you will not raise the rent,
they may even be able to buy the home in the future if they prove themselves.

Like my Dad used to say: "One hand washes the other and both hands wash the face".

All of that being said, time is of the essence. The time is now to acquire properties that are currently held by "don't wanter" financial institutions before things change again. Once people start jumping on these deals, it will be too late for you.

Just a thought.