Did A Temporary Setback Cause You To Be In Pre-Foreclosure?

If you have missed several mortgage payments for temporary reasons (temporary job loss, short-term illness, death in the family, military obligation etc.) that have now been resolved, how do you get back on track?

REINSTATEMENT

You can ask your lender for a “reinstatement letter.”  The amount in the letter will include all missed payments, late fees and legal fees.  Typically you will have 30 days to pay the amount owed.  In this case, you will have to borrow the money from a relative or friend or get a salary advance from your employer.  In many cases this is not a viable option.

FORBEARANCE OR RE-PAYMENT PLAN

This is where the lender allows you (the homeowner) to pay the missed amount over a period of time, or the lender places the missed payment on the end of the loan.  The lender will require income documentation to prove that the reason you fell behind on payments was only temporary and that in your current situation you have the cash flow to make the adjusted payments now and going forward.

SHORT-REFI

This process involves the refinance of a home with a reduction in the principal balance and sometimes the interest rate as well.  Again, you (the homeowner) will have to show a hardship and proof that you can make the new payment now and going forward.

MORTGAGE MODIFICATION

This is similar to a low interest refinance.  The lender will lower the interest rate on the existing loan in order to reduce the payments.  The lender may also reduce the principal balance on the loan.  Again, proof of income and expenses is necessary to show the bank that you have the ability to pay going forward.

REFINANCE

A refinance will only work if you (the homeowner) has equity in the home and can come up with cash for closing costs to close the new loan.  Your payments will be lower if there is a significant reduction from the original loan amount (you’ve paid down the mortgage over many years) and a lower interest rate than what you are currently paying.

HOME AFFORDABLE MODIFICATION PROGRAM (HAMP)

This is a government foreclosure avoidance program.  Government Link

HAMP works by modifying qualified mortgages

  1. Reducing the interest rate
  2. Extending the loan term to 40 years
  3. Forbearing, if necessary, a portion of the principal until the loan is paid off and waiving interest on the deferred amount.

SERVICE MEMBERS CIVIL RELIEF ACT (SCRA)

This law provides certain protection to military personnel that are in foreclosure in specific situations.  Government Link

In brief, a service member may be able to receive a 6% cap on interest rates & temporary relief from paying their mortgage if going back to active duty caused a financial hardship.

Lauren B. Olson, Certified Distressed Property Expert

 

 

 

 

 

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Focus On Your Goal

The more successful you become, the more “haters” will come forward.  Stay focused.  Ignore them and run your own race.  Don’t waste time engaging in battles that don’t matter.  Some people will never celebrate you.  Be kind and considerate to everyone, but don’t waste time trying to win over the “haters.”  Some people will never like you or understand you.  Don’t waste time on revenge or defending yourself.  It will take you away from achieving your goal.  –Joel Osteen paraphrased.

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Lending Private Money to a Real Estate Investor (Short-term)

This is a property that Cash Home Buyers LLC (CHB) closed on at the end of August.  They are a small family owned company renovating a property that they purchased in a Short Sale.  Since CHB is a small company and only renovates a few properties a year, they will hire a General Contractor where it is necessary by code and they will share in the work to do the renovations.  CHB currently has all of their cash tied up in other properties, so, they are looking for private people to fund their projects.  This is where we come in.

My company, A-List Homes LLC, was set up to lend money to rehabbers (investors renovating properties).  We have the expertise to find and renovate properties but choose not to have that as part of our business plan at this time.  I set up Joint Venture agreements with the investors that I work with because I have expertise beyond that of a Private Money lender.  I bring more to the table.  As my part of the JV, we agree on the scope of work, renovations and profit sharing before the property is purchased.  Because I am a Realtor, I market the property when it is ready to be resold.

If you have money to invest but do not have any real estate, construction or marketing expertise, you can earn between 8% and 15% interest on your money (investment).  For the most part, the percentage is based on risk, length of time, dollar amount of investment and your relationship with the rehabbers.

The above mentioned property is currently pending sale.  If you would like to see the “after renovation” pictures and video, please visit http://www.7451LincolnSt.com

Feel free to contact me if you would like more information on private money lending.

 

 

 

 

 

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Invest in Real Estate Without Purchasing a Property

Where Do I Get the Money to Invest?

You can use money you have in savings or a retirement account (IRA or 401K) to invest in real estate.  The money in the retirement account would have to be transferred to a
Self-Directed IRA plan.  There are several companies that facilitate this of which Equity Trust and Entrust are very common.

4 Ways to Invest If You Don’t Want to Manage Rentals (tenants)

Lend your money to a Hard Money Lender who will put you together with an investor/buyer and pay you a fixed amount of interest.  These loans are usually written with a 1 year balloon.  The investor/lender is in first position as a lien holder recorded in the county.  The Hard Money Lender earns his fee by charging the investor/buyer points.

You are lending your money to a real estate investor that is buying a property to rehab and flip it.  You become the bank and the Hard Money Lender is the matchmaker (broker).  He/she is responsible for providing:

  • Statistics on the Property (After Repair Value & Renovation cost)
  • Mortgage documents
  • Title Commitment from the Title Company
  • Proof of Insurance
  • Proof of Funds for the Investor’s down payment and rehab

Lend your money directly to an investor short-term.  The investor/buyer will pay you a fixed amount of interest for up to one year or whatever time period you negotiate.  The closing will take place at a Title Company and the investor will provide the same documentation as when you are lending to a Hard Money Lender.  You have a little more flexibility when you are investing directly because you have direct contact with the investor/buyer.

Lend your money directly to an investor long-term.  The term of the loan is usually one to two years.  The investor/buyer is buying a property for the purpose of renting it to someone who will have an option to buy the property in one year.

The renter/future homeowner is screened carefully.  We look for FHA minimum credit score, 3.5% in escrow plus $1000 option payment, 2 year job stability, rent payment history and 2 prior Landlord recommendations.  The renter pays a monthly rent that will cover the interest payment and a portion of the rent is held in escrow and credited to the buyer at closing.

The investor/buyer is purchasing the home and doing the necessary rehab so that the future buyer will be able to get an FHA loan.  Regardless of whether or not the renter makes the rent payment, the investor/lender is paid his or her interest payment on a
quarterly basis.  Again, the investor/lender is in first position as a lien holder recorded in the county.

Lend your money for 1 or 2 Days for Transactional Funding.  On Bank owned foreclosures and short sales, investor/buyers have to do two separate closings.  They have to buy from the bank and close and then sell to the end user (retail buyer) and close again.  Therefore, money has to be borrowed for a couple of hours or overnight depending on what time of day the closing is and how efficiently the banks operate in recording incoming wire transfers.  A flat fee is negotiated for this type of lending.

In this instance, you are not a lien holder, however, the money is in escrow at the Title Company and can only be released to the lender for the payoff and then returned to you in the second closing.

WORDS OF CAUTION:  You should always do your own due diligence.  Get some education about whatever you are investing in.  Do not rely on someone else’s opinion when making any type of investment.  At the very least, you should be able to verify any information given to you through public records.

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An Important Tip for Short Sale Buyers

"Short Sale"Assuming you have already selected your property and the Lender has approved the short sale, there is one important thing that you, the Buyer, should do to protect yourself.  I recommend that you always hire a Real Estate Attorney to shadow the deal.  Most Lenders require the Buyer to use a Title Company that they select.  That means, in general, that the Title Company is protecting the interest of the Lender because it is the Lender that is paying them the bulk of what they are earning on the transaction.  The Title Company may not be concerned that they are transferring marketable and insurable Title to you.  When you pay an attorney to shadow your short sale closing, he or she will review the transaction to protect your interest.   In other words, the attorney will do some or all of the due diligence that the Title Company is doing, except that they are looking at things with the mindset of how the Buyer will be protected in the Real Estate transaction.

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You Have To Learn To Be Good At Receiving

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Your Hard Work Will Be Rewarded

The path to a dream is paved with sacrifices
and lined with determination.
And though it has many stumbling blocks
along the way
and may go in more than one direction,
it is traveled by belief and courage
and conquered with a willingness
to face challenges and take chances.

–Barbara Cage

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How do I choose the right Real Estate Agent?

Serving South FL

The first thing to evaluate is the reason you need a real estate agent.  Are you selling, buying or investing?  It is possible that you may need more than one agent.  Although a real estate license generally allows an agent to do business all over the state, it is really impossible to do that unless the agent has a team.  Most professionals will specialize in 2 or 3 cities at the most and become experts in those areas.  If you are buying and selling retail in the same general area it is beneficial to use the same agent because you can negotiate the commission.  Agents that specialize in just a few areas can give you specific information that a generalist won’t know or have.

The public is always hearing national statistics on the news that are almost meaningless for their purposes.  Real Estate is a very local market.  In a suberb that has two high schools, one high school may be more desirable and therefore a home in a certain part of the city may sell faster and for more money than a comparable home on the other side of the street.  We all know that in larger cities, you have to look at area statistics and not city statistics.

So, if you are selling a home, my advice would be to interview the top 3 listing agents that have sold the most homes.  Look at the record of how many days each home was on the market (DOM).  In addition, you want to see what the starting list price was and the last list price and compare that to the price the home was sold for.  Homes that are priced correctly in the first 3 weeks will sell much faster.  It is not in the consumer’s best interest for an agent to placate the home owner with the price they want and then talk them into lowering the price (to reality) later on.  Ask for the names of the last 3 to 5 customers as references and call them.  By interviewing the top 3 agents, you know they have experience in marketing, so, calling the references will give you a good idea of the customer service you will receive.  Your final decision should be based on personality.  People do business with people they know, like and trust given an equal playing field.

Finding a good Buyer’s agent is more tricky.  The agent you choose has to be experienced in writing a good contract.  In Real Estate, everything is negotiable.  It doesn’t matter what is customary.  The agent must absolutely have good organizational and follow-up skills.  Many things need to be done between writing the offer and closing the sale.  Just one item overlooked can cause a delay in closing on time.  The choice of a Buyer’s agent is more critical if the Buyer is from out of town or the home is the Buyer’s first purchase because the agent will have to educate the buyer on the area or the process.  It is critical that the Buyer’s agent be a local or specialize in a particular city because they will know what is going on there behind the scenes that may not be apparent to an outsider.  I’m talking about things that may affect property value.

If an individual is looking for an investment property, it is imperative to find an agent who has personal experience in investing or who has worked with other investors on a regular basis.  The best advice I could give to a person wanting to be a property investor is to attend a local Real Estate Investor Association (REIA) meeting and get some education.  It is not as easy as it looks and you cannot rely on an agent’s opinion that a property is a good investment.  You must do your own due diligence.  Agents who specialize in investment properties can be helpful in choosing a Title Company and finding a lender.  In addition, they may know of listings (pocket listings) that are not available to the public on the Multiple Listing Service (MLS).

I moved to 9 cities in my first 20 years after graduating from the University of Arizona with a Business Degree in Finance and Real Estate.  In that time, I was a renter, homeowner and landlord.  I am an Investor / Realtor in South Florida and provide a F.R.E.E. referral service to help consumers find the best Realtor for their specific need in any area of Broward, Miami-Dade and Palm Beach counties.

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Be What You Are…

Be what you are,
and become
what you are capable
of becoming.

–Robert Louis Stevenson

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Your Relationships Are Your Key To Success!

 

"DISC personality model"Life and happiness are about relationships with other people.  Typically you will find that the people that are the happiest in life have good relationships with their significant other, children, friends, employers or employees and coworkers.  There are two books on my “Top Ten” book list that have personally helped me have better relationships.  The “Go-Giver” by Bob Burg and John David Mann and Who Do You Think You Are…anyway? by Robert A. Rohm, Ph.D.

The “Go-Giver” speaks more to making an attitude adjustment using the basic laws of life while “Who Do You Think You Are…anyway?” teaches you how to speak to people in the way they need to hear so that they are listening to what you say.  I learned about this method in training to be a real estate agent several years ago.  The method is called the “DISC model.”  It was devised by Dr. William Marston, a Harvard graduate, over 80 years ago.  Dr. Marston is also known as the “Father of the Polygraph” and he was the comic book writer that created Wonder Woman.  The DISC model has been tried and tested by researchers for a very long time and continues to be validated.

The theory or model states that people are driven by an outgoing or reserved approach to life and that our direction is steered toward tasks or people. Everyone has a dominant trait but their style is really a blend of all of the traits. The “D” type = dominant, determined, doer.  The “I” type = inspirational, impressive, influencer.  The “S” type = steady, stable, supporter.  The “C” type = cautious, competent, calculator.

Would you like help in learning how to:  communicate with people, build relationships, raise your kids, network at business meetings and/or build teams?  Visit Dr. Rohm’s website http://www.personalityinsights.com.  Scroll all the way to the bottom of the page and click on the free offer icon that says, “Take the 4-part online course for better relationships.”

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