realestatejunkie.com

MORE DEALS WITH SELLER FINANCING

admin — Mon, 12 Mar 2018 14:13:22 +0000

Are you tired of paying high interest on your real estate deals using hard money lenders? Well there are several different ways you can reduce your interest when talking with Sellers. Many Sellers would love to get cash for their house at their price. However, as an investor our cash offers are much lower than what price the Seller would like to receive for their house. Whenever I meet with a Seller I have done my research as to how much they owe on the home, what price they are asking for their home and what cash offer and terms offer I am willing to pay. This allows me to purchase more houses than the average investor. How do you find these Sellers? A partner of mine saw a U-Haul truck at the Seller’s house and asked him if he was interested in selling the house. I then went over there and looked at the house as he was moving out. I went back to the office and emailed him an offer. I hadn’t heard from him for a while so I followed up with a text and he said “I am glad you contacted me, I lost your number”. Remember 80% of our business is done through following up on our offers and leads. You never know when the Seller is motivated to sell the house.

How do you consider making a cash and/ora terms offer? I make both offers at the same time. First, you need to know your exit strategy for the home ie. buy to fix and flip, wholesale or buy to hold. When you are in a Seller’s market and the value is increasing on a regular basis, it is ok to pay more for a property if your intention is to buy and hold it. This home a 4 Bedroom, 3-bathroom, 2 car garage home with approximately 1900 square feet located in Florida. I went on www.rentometer.com to determine what the median rental rate is in that area for a home this size. It was $1,725.00 per month. I knew that I could rent the home quickly, if I wanted to buy and hold it. The inside of the home was in great shape. The interior paint of the home was average with small repairs to fix the minor holes in the wall, all 3 bathrooms had minor issues such as plumbing, toilets, and cabinets that needed to be completed. The tile in the house was old and ugly but if I kept it as a rental, I would not need to replace it. The remaining floor in the house was laminated wood in great shape. There was approximately $5,000 worth of work inside of the home, if I wanted to freshly paint it and fix all the items stated above. If I was just going to rent it, I could get away with only putting $2,000 into the repairs to get it in ready to rent. The outside of the house needed $10,000 to $15,000 worth of repairs to the siding, windows, air conditioner should I decide to retail the home. Or $5,000 just to repair the siding and two windows that were leaking. I made a cash offer on a house in the amount of $120,000 and $140,000 on terms. The After Repaired Value is $220,000 in today’s market. The terms the Seller and I settled on was $150,000 with $10,000.00 down, a 1 year term, 6% interest only at $700.00 per month. The Seller would hold a first mortgage on the property. Remember I made the terms offered so I submitted an offer based on what I wanted to put down on the home, how long I wanted to have them hold it on terms, and what interest rate I wanted to pay on the home.

Buying this home on terms has allowed me a couple of options: First, I could just fix it up and flip it with only putting out $30,000 for repairs and down payment. I would of course, have to pay the money payment to the Seller, pay for the insurance, taxes, and utilities during the time I am fixing it. Or, I can fix it up and then after 1 year of paying on it, apply for a mortgage to hold it for long time. Let’s use the example that I am going to fix it and then rent it. I put $10,000 down, $2,000 on the inside for repairs and $5,000 on the exterior (which is a preference) for a total of $15,000. It would take me 30 days to do all the repairs which could be done quicker and have it ready for rent which is another $700 due to the Seller. I now have a total of $15,700 in the home. Should I rent it at $1,725 per month for a total of 1 year it would bring in $20,700 in rent. I would still owe $8,400 to the Seller. $1,300 for insurance, $1,700 for taxes for a total of $11,400 minus the rent of $20,700 leaves $9,300 minus the down payment and repairs leaving $6,400 out of pocket expense after a year. Then after owning it for 1 year, I can apply for a mortgage based on the appraised value and not the purchase price. This will allow me to refinance the home in the amount of $176,250 with cash back in my pocket for repairs at 75% Loan to value ratio based on an appraised of $235,000 a year later or higher.

I hope this article helps educate you on making two offers at the same time opening the doors for more deals.

Happy House Hunting!!!

Kimberlee Frank

Crushing Code Violations and Liens

admin — Tue, 17 Oct 2017 14:06:22 +0000

When purchasing properties it is always best to order a Lien Search which costs about $125.00 to $150.00 as the search shows any open permits, liens for cutting grass, violations for exterior repairs, tax information on the property and water utility debts. The Lien Search is separate from the Title Search and open permits and/or code violations that are not a lien yet on the home do not show up on just a Title Search. You must have a Lien Search that will contact all parts of the City and have them advise if there are any code violations not yet filed as a lien.

I have been purchasing properties from individuals who have inherited a home from a family member, like a mother or a father. Individuals who inherit homes that have no debt on it and there is only one heir, usually take longer to file an estate, go through the house for belongings, repair what is needed and then either rent it or sell it. I have found if there are multiple heirs to the property, the probate to the estate, repairs to the home, are normally done within 6 to 9 months once they start the estate process. I believe this to be true because the heirs want their money now and don’t want to wait. However when there is one heir to the estate, it takes them years to grieve and settle the estate. During this time, they may not be able to keep up with the yard or exterior maintenance which then allows the City to have the lawn mowed and give them violations due to the condition of the property. Unfortunately, since there is never an estate done right away and/or a change on public record of the new owner or their physical address, all notices are sent to the home and/or attached to the door of the home. The mail is usually returned because the house has been tagged as vacant from the Mailman so the violation never gets to the heir unless they find it on the door. If they do not go over to the home for months, they don’t ever receive the notice.

Recently my partner, Kristen, and I entered into a purchase agreement to buy a home from an heir. Her mother had died in 2010 and she herself is 70 years old. We ordered title work and a lien search only to find out that there was a lien on the property due to the condition of the pool, (green and mucky), torn screens on the enclosed patio and that one of the enclosures did not have a permit. Many investors would take title to the home with the exception to this lien. The investors will buy the house and they will request the City to reduce the lien. Each City has their own way to handle reductions in Code Liens. Prior to purchasing the property I would highly recommend that you check into how you can have the Code Lien reduced and removed from the title to the home as closing with the lien may mean you accept the home and the total amount of the lien is due and payable. The City of Maitland informed me that if the home was sold to another person without first having the Seller apply for the reduction and receive it, that they would not negotiate with the new buyer/owner because they were well aware of the total amount due on the property and therefore no reduction would be granted. Other cities that I have been involved with are willing to take a discount on their code lien violation for hard costs paid by the City to cure the violation. The City of Sanford will allow a reduction; however, they do have a maximum amount that they have agreed to charge for a violation which is $2,500.00 no matter what the lien amount is owed.

The problem with Code Violations fines they will not stop accruing interest and fines until the problem has been resolved. Fixing the screens and tting the pool in shape is an easy one. However, the issue of a permit for an enclosure is another. Many homes that I have purchased the Sellers have either purchased the property in its present condition like enclosing a garage without a permit and/or adding an enclosure on the house without a permit years and years ago. So what do you do? You then make a decision to either remove the structure and/or obtain a permit to confirm that was built up to code. I just fought with the City of St. Petersburg on a pre-existing garage that was built prior to 2001 which they had an application allowing us to apply for a permit on a pre-existing structure. This is called a grandfather clause which allows us to obtain a permit and not have to bring it all the way up to 2017 code. The application for a pre-existing structure informed us of everything needed to show that the house already had this done prior to purchase and/or prior to the year they have on their application. This particular enclosure was put on prior to 1984 and prior to the Seller’s mother purchasing the property. We looked for a survey but couldn’t find one and since the title company is no longer in business, we were unable to find out who did the survey as the survey would had reflected the enclosure on the drawing. The City of Winter Springs does not have an application for a pre-existing structure. So … the enclosure was torn off the home allowing the City to come back out to the home and see that everything is up to code based on their violations and they now can stop accessing the fines of $500.00 a day on the home.

I am presently dealing with the City of Winter Springs wherein I am assisting the Seller on the Petition to Reduce the Violation. After weeks of waiting, I received a call from the City informing me that the lien of $176,500 for the above violations can be reduced to $17,650.00 which is 10% of the lien amount. In addition, they said that the Seller could not sell the home to an investor and she has to sell the home to a homeowner who will be homesteading the property. I was shocked to hear the amount that they agreed too and in addition, requiring technically a deed restriction on her new buyer. I informed them that they are being unfair to a Seller with a First Violation and being unreasonable requiring her to sell a home to a homeowner due to the condition of the home. Also based on the fact that she has already entered into a purchase agreement to sell the home and that the Buyer did all the repairs to the home prior to closing. I informed them that they are discriminating against investors who are fixing up homes and increasing their taxes. I requested a copy of their ordinances which informs you of their policy when it comes to negotiating liens. I looked at the ordinance and right there in front of me it mentions that should an investor purchase the property with this lien on it, they can obtain a reduction on the lien but it will be based on the purchase price of the home and potential profit that they would receive from the sale of the home. It also mentions in a paragraph about selling to a homeowner too which is what they are requiring. I then prepared additional facts regarding the argument as to why the City should reduce the lien for more than $17,650.00 and not put a deed restriction on the home to sell to a homeowner. I am now waiting to find out if my argument is acceptable. If it is not, then a hearing can be held before the City for consideration.

I really feel bad for Sellers who are going through a hard time grieving the loss of their parent and unable to even walk into the house. Cities should not take advantage of Sellers and make them pay an unreasonable fine amount. It is the Sellers’ responsibility to give clear title to a Buyer and the funds come out of the Sellers side not the Buyers. Yes, many of you would have said “ok” to the lien reduction only if they remove deed restrictions and close the transaction. However, I believe that the amount is too high and I will fight a little harder with the Seller’s help to reduce it to a reasonable number, remove the deed restrictions and then will close. All investors should do the same and help protect the sellers.

I hope this article helps educate you on how dealing with the City for code violations and/or liens is very important.

Happy House Hunting!!!

Kimberlee Frank

BIGGER PROFITS WHEN YOU BUY A SHORT SALE AND RETAIL THE HOME!

admin — Mon, 19 Jun 2017 14:30:23 +0000

When I am purchasing a property either for myself or with my student/partner, we determine which exit strategy is the best for both parties. Knowing whether you want to wholesale a property for a small profit or rehab/retail it for a big profit is important. Many investors start off with wholesaling the properties because they either don’t have a money lender or partner to help them rehab/retail the house and sell it for a bigger profit. If this is you, then I believe you really should find a partner or money lender so you have more than one exit strategy.

When you purchase a short sale, some of the lenders will put a hold time for the new buyer requiring them to hold the property for 30, 60 or 90 days before they can resell the property for a profit. In addition, they may tell you that you can only make a certain amount of money on the property if you sell it earlier than 90 days. Holding doesn’t bother my student/partners or myself because we normally choose to rehab the property and retail it for a higher profit.

Let me tell you about a home that a student/partner and I purchased. It was a short sale on a home in St. Petersburg, FL that was vacant for about 7 years. The area was an up and coming neighborhood and the two houses directly across the street from the home sold for $195,000 and $240,000 which both are smaller, only 2 bedrooms, one car garages and no pool. The area was known for termites. We replaced all rotten wood, treated the home and provided the buyer with a 1 year termite bond. So … after negotiating the deal for some time, we purchased the 3 Bedroom Home, 2 Bathroom, and Pool with approximately 1500 Square Feet for $69,900.00. The garage was already converted but needed repairs. This home was built in 1950 and needed everything from Roof, Electrical, Windows, Air Conditioning, and Pool repair. The repair budget when we started was about $65,000 and we ended up around $75,000. The short sale lender placed a 90 day hold period on the Deed so the Buyer could not sell it to a mortgage buyer for a period of 91 days. Since this was a huge rehab with a large profit we didn’t mind fixing up the home.

So what did we do to the home to get it move in ready? We were trying to keep the costs down and were going to keep the existing roof that had about 3 to 5 years left but decided to spend the additional $8,000 to replace the roof. We received multiple quotes from electricians ranging from $3,700 to $40,000 to upgrade the electrical box and replace all the switches and plugs. We ended up paying around $3,200 for the electrical. The air conditioning unit needed to be replaced so we contacted an a/c contractor associated with the REIAs and got a great deal of $5,100 which included 5 new runs, new box, new air handler and new compressor. If we didn’t have to add the additional runs and new box, we could have gotten it for only $3,500. We had to get hurricane glass windows which were almost double the amount of the windows of non-hurricane glass windows! We used Home Depot which was American Craftsman and the cost was 2 times cheaper than the quote we received from ABC Supply. We painted the vinyl siding of the house which painting any house gives a great curb appeal. We had to replace almost all the flooring in the house except we refinished about 600 square feet of wood flooring for $2,600 in the living room, dining room, hallway and 2 bedrooms. They were beautiful. It would have been cheaper if we didn’t want them to replace the bad wood in some of the rooms and two closet floors. We tiled the family room, 2 bathrooms, kitchen, 3^rd bedroom, hallway, utility room and office area. We needed all new doors, hinges, knobs, some baseboards, light fixtures, ceiling fans, kitchen cabinets, granite counter tops, bathroom cabinets, new shower tile, new tub and surround, all new faucets, toilets, mirrors and more.

The outside wasn’t in too bad of shape but needed some TLC. The wooden fence around the backyard needed minor repair, we only replaced the bad pieces and power washed the fence. The backyard we covered completely with red mulch because there was no grass. The front yard, we just raked and put red mulch and plants around the flower bed area. The pool was another story. We had it acid and power washed and it still looked yellowish in spots based on the white body color. We received quotes from $3,900 to $9,800 to just refinish the body. My partner/student’s son works for a company that purchases real estate owned properties in bulk and he told us that they were just painting the inside body of the pool. We checked into purchasing the correct paint for the pool and with material and labor it costs us $1,300 to refinish the pool. The paint life line for the pool was for 5 to 7 years.

When we first started rehabbing the property the best comparable we had was a house that sold for $220,000. After rehabbing the property for 2 months, the values of the properties increased and we are able to list the house for sale for $264,900.00. We could have spent more money on the property but as an investor, you must understand that you are not going to live in the home and this is a business. So safe something for the new homeowner to do! When we sell this property, the profit to be split will be between $70,000 and $90,000 depending on if we receive our list price and/or if we have to contribute to the buyer.

If we were going to wholesale this property we would have wholesaled it to a seasoned investor with a profit of $30,000.00. Any rehab over $30,000 is very hard for a new investor and we figured without the roof that rehab cost was above $65,000. So, I am asking you was it worth the hold time and extra $40,000 to $60,000 profit to buy, fix and resell?

Based on this article, I hope I have persuaded you to start going after pre-foreclosures and retailing for bigger profits. You can also find pictures of the house on my facebook account if you would like to see the finished product.

Happy House Hunting!!!

Kimberlee Frank

Less Competition With Short Sales

admin — Thu, 18 May 2017 13:22:25 +0000

Many Investors avoid working with Sellers in pre-foreclosure or making offers on short sales. They all say the same thing, it takes too long! I strongly disagree with this decision. I have been working on short sales for years now and even though it does take a few months, it has been the best deal spread in profit that I have ever received on any type of deal. Let me tell you why you should consider working with Sellers in pre-foreclosure and making offers on short sales.
The Pre-foreclosure market will continue to flourish due to the adjustable mortgages, loan modifications and reverse mortgages that they have provide to many Sellers. A lot of the Sellers in foreclosure will have second mortgages that can be discounted to pennies on the dollar. Sellers that are doing a HAFA short sale program requires the second lender to take a maximum of $8,500.00 on their second mortgage. The government bailed out the mortgages companies some time ago and also required them to assist Sellers who were in foreclosure. So, you would think that the lenders would contact Sellers who are attempting a loan modification and agree to reduce their principal to help them out so that their payment would be less. That is not the case. What they have been doing is forgiving the second mortgage on the property and getting paid full value or more on their loans. How does this help the Sellers? Well if the Sellers are the lucky individuals who were paying on time they were NOT the individuals picked to have their second mortgage paid off. The banks chose the Sellers who were in foreclosure. This way the second lender received full value or more for the loan versus nothing if the house went to foreclosure or pennies on the dollar if it was a short sale. Knowing this information as an investor will help you cash in big on your short sales.

Recently a partner and I started working with a Seller who needed the house probated and was in foreclosure. We paid for the attorneys to probate and for foreclosure defense during this time based on future rents. While my office was negotiating the short sale, we ordered title work and found out even though the second mortgage company was included in the foreclosure action, that their lien was paid off – discharged. After a couple of months of probating the property and transferring the ownership to our Seller as the rightful heir, instead of a short sale needed on this property, it was a full payoff. This has happened to me several times now wherein the second mortgage is discharged and there is enough equity in the home and profit for the investor to just payoff the loan.

During the time the house was probated, the Seller agreed to allow the property to be rented and use that money to pay towards the attorney fees of approximately $4,300.00 and repairs. The house wasn’t in bad shape but needed approximately $3,300.00 worth of work and materials to make it “rent ready”. Because we did not fix the house up completely, we asked for $300.00 less on rent making this property a very desirable rental to tenants. The lease that was signed was a month to month and they were informed that the house was in foreclosure, needed to be probated and once that was completed, they would have to move out as the house would be fixed up and sold. The tenants agreed to the terms and conditions and moved into the house and paid $900.00 a month for a total of $5,400.00 while this process was going on.

The property went through probate and the Seller was now the rightful heir and could sell the house once we settled the short sale. The first mortgage company was still pushing the foreclosure and a trial date was set for June. Like I said above, we found out that the second mortgage was paid off and that it would be a full payoff to the first. Because the trial was coming up, we decided to purchase the property as soon as possible to avoid additional attorney fees on the first mortgage. Now that we have it, we have two options. Sell it “as is” to a landlord with or without a tenant, remove the tenant, or rehab it and sell to an end buyer. Purchase price $130,000 with $30,000 in repairs with a value of $210,000. Either way, we shall profit a minimum of $30,000.00. The time frame on this property was 6 months due to the probate. A total of 40 hours invested of my time which equals $750.00 an hour. Are you thinking differently now???

Based on this article, I hope I have persuaded you to start going after pre-foreclosures with less competition and better profit on your deals.
Happy House Hunting!!!
Kimberlee Frank

Like me on www.facebook.com/sellfastr

Finding Deals without Flapping Your Lips?

admin — Tue, 18 Apr 2017 16:01:57 +0000

I have been mentoring for many years and have found that my best deals come from actually “speaking” directly to a Seller and working out a win-win situation. Since I first started investing back in 1998, I have not purchased a property directly from the Multiple Listing Service. However, some Investors would prefer not to talk to Sellers and would like to be fed deals from other Investors or from the Multiple Listing Service. We each have different personalities and based on your personality and your personal preferences, I may be talking to you. If this is your mind set, then I would recommend the following:

Find at least 2 Realtors that will be willing to set you up to receive listings that are emailed directly to you for your review, along with Expired Listings. You will want them to do a search for some of the following key words: TLC, Handyman Special, Must Sell, Seller Motivated, Short Sale, and REO.

Currently in Florida, it is a Sellers’ market, so when these listing are received by you, you must immediately make offers on the properties. In order to make offers, you will need to use a Formula called the Maximum Allowable Offer which is MAO. Your exit strategy will be important, because if your intention is to flip the house without fixing it, you will need to make sure that you leave enough money in the deal for another investor or a cash buyer. An FHA Mortgage Buyer will require you to own the home for at least 90 days prior to selling, called “seasoning,” and all repairs need to comply with their guidelines. Many Investors will use 70% of the After Repaired Value of the home, minus repairs to make an offer. Some Landlords will pay up to 80% of the After Repaired Value on the home to hold as a rental. Having your Formula, along with knowing average repair costs ready to use, will help you quickly make offers.

What you will also need to know is the After Repaired Value of homes in the area where you are making offers. Therefore, I would also recommend that you have sold comparables of no more than 6 months old and no more than .5 miles away from the property in which you are making an offer. You can have these sold comparables sent to you from your Realtors. This will allow you to get a good idea on the values in the neighborhood so you will be able to make an offer immediately. Be prepared to make lots of offers based on your Formula, in order to get one or two accepted. Please remember that a Realtor gets paid on commission and many do not know if the property is a good deal, it will be your responsibility to know the values.

Many new Investors are worried about making offers on houses sight unseen. However, if you are looking to get deals from the Multiple Listing Service in a Sellers’ market, it will be very important that you make an offer on the same day you receive the listing from your Realtor. Remember, you always have a clause that you will have 15-day inspection period. If your offer is accepted, you will be able to go and look at the house and see if this is truly a deal or not. If it is not a deal, then you can cancel your contract. You will need to have an earnest money deposit, up to $1,000, and submit the check within the 3-day time frame per the MLS. Another option is to place a paragraph in the contract that states that your earnest money deposit will be sent in after inspection. I would recommend that you have your Realtor already be prepared with a Standard Purchase Agreement already filled out with all of your information, terms and conditions so that all she/he has to do is fill in the Seller’s Information. You will also need a Proof of Funds letter at the time your Offer is submitted. Therefore you need to get pre-qualified with the Hard Money Lenders in your REIA group so that you will be able to provide a Proof of Funds letter with your offer. Even if you decided later that you are going to wholesale the deal, you will still need earnest money deposit and a Proof of Funds letter.

As a Realtor, when I set up a search for listings to be emailed to Buyers/Investors, I am able to set them up with a website that allows them to save the favorites and delete the listings that they are not interested in. In addition, having the Sold Listings sent to you will also allow provide you with the values of other deals in the same area in which you are looking.

Have your email placed on all Wholesalers’ lists in your Local REIA Group or anyone else who would just want to wholesale directly to you. I would also ask if they have any references of individuals that they have sold to in the group, to see if that Investor ended up with a good deal.

When working with Wholesalers, it is important to know how they work. That is, are they doing an assignment of the contract or a double-closing? If they are doing an assignment of the contract, then it is important for you to know their terms and conditions on their contract, such as “how many days you will have to inspect the property”, and “is your earnest money deposit is refunded, if the house isn’t acceptable per the inspection?” Each Wholesaler works in a different way, so understanding how they work, will allow you to be able to get more deals.

Knowing the After Repaired Value and the Repair Cost on the home IS your job as these two numbers are just an opinion and could be drastically off, which could stop you from getting a good deal. Many Wholesalers will re-sell other wholesalers properties and that is why you will see the same house on their list of deals being sold for higher or they might even just split the wholesale profit between 2 or more wholesalers.

I hope this article will help you make offers on properties and still remember that negotiating is the top paying job in the United States. So … I still believe direct contact with a Seller will bring you in more money because you can negotiate directly with them and cut out the middle-man; however, it will take your personal time to market and find the deals. Happy House Hunting!!!

Kimberlee Frank

Maximizing Your Profit by Knowing Your Buyer’s Financing Options

admin — Fri, 31 Mar 2017 12:00:34 +0000

When making offers on properties as an Investor, you will need to have your exit strategies in place prior to purchasing the property. What I mean by that is, who is your buyer and what type of financing are you going allow the buyer to use when sell the property. Knowing this will allow you to maximum your profits.

When I look at properties to purchase I always analyze the value of the property and how long I will have to hold the property before I am able to sell the property for a profit. The comparables that I use are through Realtytrac.com and also the Multiple Listing Service. Realtytrac will give me the values in the area, however, the Multiple Listing Service MLS in addition to values will provide me with how the property was sold ie; Cash, Conventional mortgage, USDA mortgage, VA mortgage or FHA mortgage. You can normally assume houses under $200,000 that many of the buyers purchasing at this price point are FHA mortgage buyers. FHA mortgages are mainly used for first-time homebuyers. The Mortgage Lender requires 3.5% as a down payment which attracts many first-time homebuyers.

What I have found in the price point of homes that are selling for under $200,000 is that 85% to 90% of the buyers will use FHA mortgages. The FHA Lender will put a restriction on the Seller/Investor called seasoning. What that means is that the Investor who purchased the property was expecting to have a quick exit strategy versus having to hold the property for a period of 91 days before they could sell the property to a FHA buyer. The restriction is called seasoning of the property. What that means is that the FHA Lender will look at the date that the Seller/Investor has purchased the property to the date that the Buyer signed the Purchase Agreement as a timeline for seasoning of the property. Let me give you an example: Investor purchased the property on March 1^st and now we need to count 90 days from the purchase before the Seller/Investor can even enter into a Purchase Agreement with the Buyer. So the month of March has 31 days in it, the month of April 30 days, and the month of May has 31 days.
I would recommend that the earliest day that a Buyer can even present an offer to the Investor would be May 30^th as that would be a total of 91 days. FHA does not count the days from the date that the Seller/Investor signs the Purchase Agreement but instead goes from the date the Buyer presents the offer. This is very important to know as I had one FHA buyer that was denied for a loan because they submitted the offer 60 days into the 90 days but I as the Seller/Investor accepted 91 days into the 90 days. I argued with the Lender that it was not an acceptable offer until the Seller/Investor accepted it but, FHA has their own guidelines and denied the loan anyway. They wouldnt even use an addendum to correct the dates and said that they should not even started processing it until the 90 days was up.

Therefore, when you are selling a house using the exit strategy to sell the property to a buyer using a mortgage, you will need to know what the requirement is from the Lender as to how long the Seller must own the property seasoning and add that additional 3 months of holding costs plus another 30 days to close for a total of 4 months into your profit.
Conventional, USDA and VA Mortgages will allow the Seller to own the property for a minimum of 30 days. I have heard that they will allow no seasoning through the grape vine, however, I have never flipped the house that fast that needed some rehab to test that theory. Obviously if you as the Investor/Seller was selling the house to a Cash buyer, it can close the same day you buy it allowing for a simultaneous closing. There are some conventional mortgages that will say that are conventional and you will think that you dont have to worry about seasoning but I have called and have been informed that they are mirroring FHA guidelines even though it is a conventional mortgage. What that means then is again, you have to hold the property for 91 days prior to selling the property to your end buyer using FHA financing.

Another requirement that FHA mortgage buyers lender require is that you will need to have two appraisals on the property to confirm the value. Should either one of the appraisals value come back less than the offer amount then that is the value that FHA will lend to the buyer. Once a FHA appraisal number is given to your property, that value on the home will stick to your property, NOT THE BUYER, for a period of 4 to 6 months stopping you from selling the property to another FHA buyer unless you accept the lower value.

Make sure you know what type of financing buyers will use on your house that you are flipping so that you are able to maximize your profit. Always fully disclose to your buyers lender that this is a flip house and find out their requirements BEFORE you enter into a Purchase Agreement.

Please keep sending me your questions and topics that you would like to hear about, so I can be sure to keep feeding you with the information that you need in order to move through 2017 with high success and help you bring your Real Estate Dreams to Life this year!

Kimberlee Frank
www.ForeclosuresGoneWild.com
www.RealEstateJunkie.com
www.ShortSaleNegotiating.com
www.SellFastRealty.com
Like me on www.facebook.com/foreclosuresgonewild
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Mentors are for Millionaire Minds

admin — Wed, 15 Mar 2017 15:22:06 +0000

When I first started in real estate, I spent over $250,000 flying all around the world attending boot camp after boot camp, learning all the different ways I could get involved in creatively buying, selling and holding real estate. It seemed like it was always the same group of people flying around the world with me and taking the same training. The only difference I noticed was that many of the people who had attended these trainings had never even made an offer on a property. They never used the knowledge that they received and just kept on going to more and more seminars. And as we all do, we exchanged business cards with individuals we met at these meetings. At that time it was my husband, step-son and I attending all of these trainings. When I got home from many of the meetings, I would get telephone calls from individuals who still didn’t understand the process of the training they received.

What I learned from all of telephone calls and working with a husband and step-son, was that everyone learned a different way. Some people could pick up a book or listen to a CD and just do it, and let the chips fall where they may. Other individuals were visual learners and if they didn’t go to the boot camps and physically see the teacher teach, they were just frozen. A 3^rd group of individuals had to totally understand everything from the beginning to the very end, before they would even take action. Of course, there are also the social butterflies in the group that would do anything, but without having a teacher telling them to do it, they just froze up. Bottom line, everyone has a different personality and you can always take the DISC test to find out what type of person you are, which is especially helpful when you are working with a spouse, family member or other business partner.

My personality is a “D”….determined, demanding at times, risk taker and able to pick up a book or listen to a CD and immediately take action. Now my husband and step-son were a “C” personality that needed to know how everything worked from the very beginning all the way to the end. I was working as a legal secretary for 18 years doing 1,000’s of closings which included all the paperwork, so I already knew much of the documentation. However, when my husband and I started, it was his idea that we do this together and he was working at Ford Motor Company and we had a two small children and my step-son who was 18 years old. The first course was Carlton Sheets. When we both tried to sit down and listen to the cassettes and read the book, there was always, and I mean always, a disruption or simply not enough time. So, the Course just sat after we tried to work on it together as a team. I was so mad that we spent the money on this “get rich” book and it was his idea and he just wouldn’t take the time to participate. One day, I got a call from Carlton Sheets’ staff who asked me how we were coming along with the Book and Tapes and said that they were offering a Mentor Program that would help us work together and change our lives. So … I decided without the consent of my husband, that I would pay for this service because I thought if I had someone else telling him to read the book and listen to the tapes, then for sure we would start doing real estate. The cost was thousands and what I thought was going to get my husband going, instead got me going. Buckle up! It was then that I learned about the different personalities. It didn’t make a difference to my husband if we had a Mentor that we talked to once a week or not, he still wasn’t going to read the book or listen to the tapes because he was a VISUAL learner and he needed to be taught in a boot camp atmosphere.

Honestly, I can say some very valuable information I got from the Mentor was just that I needed to take the time to read, listen and then TAKE ACTION, no matter what. I learned from the Mentor that a Purchase Agreement had many “out” clauses so if I offered too much, I could always back out. Now the next problem came along, where do I get the money to buy the houses? We became members of six Local Real Estate Investment Clubs that really helped to keep us motivated. We would listen to the people who were doing the deals and my husband would say “they don’t look as bright as us, why can’t we do it?” Well, I recognized why we couldn’t work well together because 1) he was scared, 2) he would never talk to sellers unless we were one on one and 3) he could talk the talk but not really walk the walk. I truly believed that he had what it took, but he refused to learn the paperwork, which if he would have, he would have been great at it.

Our next problem was where do you find the money??? We started buying, fixing, retailing and holding. I heard many of the speakers say “just flap your lips and the money would come.” Well, believe it or not, I couldn’t find the money until I went to the Real Estate Investment Clubs and met Private/Hard Money Lenders. Having great credit, I thought why don’t I just use my credit to get started even though many of the speakers said that you need to be creative. This is one tip that will hit your credit score but got me $75,000 to help us to get going. I started collecting all those credit card applications that said I was approved for $5,000, $10,000 etc. and then I pulled out my telephone book. I called every bank and credit union in the phone book and called on every credit card application. I did all of this specifically within a 24 hour period. Whatever money or interest rate they said they would give me, I took it. By the end of the day I had obtained $75,000 which was about our annual income at that time. They asked me what was my income for that year and since we were starting real estate I knew we would make at least double what our income was at that time, so that was my income. Now you might think I was crazy, at least my husband did, but it allowed us to buy houses cash, fix them up, sell them and immediately pay off the credit cards or lines of credit and profit and by the end of the year, my income was higher than I thought! I ended up with 40 rentals and lots of rehab houses.

The moral of this story is that having my Mentor was key! I can give them credit for my success. I was so stubborn and refused to do the real estate on my own, as this was initially my ex-husband’s idea and he said we were going to do it “together” as a team! But he was frozen in place and not doing any of the work. My mentor encouraged me and showed me how to keep moving forward on my own to create a successful real estate empire, which I have done. I have found that my Mentors have always given me back a thousand times worth my investment. If you are struggling on anything in real estate, I highly recommend a Mentor, and in order to have a successful relationship with your Mentor, you must take action in your business and not be afraid. The cost of a Mentor is pennies compared to the results of either succeeding or failing in real estate and/or in your relationship with your spouse/business partner. Learn from others’ mistakes, it’s a small price for you to pay, considering the huge price they have paid to forge through the learning curves that you won’t have to experience. You do not have to recreate the wheel!

I hope you enjoyed this article and for many husband and wife teams out there, I recommend preparing a “duties” chart and each person pick what they want to do in real estate and just accept it and not get mad. Women can change and Men can change, but only if they choose to and choose to for their own reasons, not because their spouse wants them to change. I recommend that you accept each other with each of your own unique qualities and then maximize the benefits accordingly.

Kimberlee Frank

Becoming a Successful Real Estate Investor

admin — Thu, 26 Jan 2017 17:28:02 +0000

I am writing this article because I mentor so many people who desire to become successful in real estate; however, their life gets in the way of educating themselves. Making offers on the Multiple Listing Service (MLS) is a great way to find Sellers, yet, when you submit an offer to the Seller, the Realtor really doesn’t know the answers to the following questions. Is there a mortgage on the property? Are the Sellers in foreclosure (unless it is a short sale)? Is it a probate matter and how many heirs are in the estate? What permits have been pulled for the property and what dates were items like the roof or A/C installed (this information is sometimes provided in a Sellers Disclosure)?

After talking with a Seller and/or finding a Vacant Home, the research you do is a vital part of your business success. I provide students with over 43 ways to find motivated sellers without using the MLS. Knowing in-depth information about the Seller’s situation, ownership and mortgage balance allows me to negotiate and close more deals than just listening to what a Seller has told me. In fact, Sellers normally tell you what they want and not what they NEED. In order to make a deal work for all parties, we need to find out what they NEED, not what they want, then see how/if we can create a win-win situation.

There are many moving parts to the puzzle. I am recommending saving the following websites as favorites in your computer to be successful in your county, city and state. This allows you easy access to public records that may or may not be free, but are a necessity in order to negotiate and close transactions. Once you find your county, city and state websites, you need to spend at least 1 hour exploring it. Click on all links and call the helpline for each website to understand step by step how to research property. If you don’t understand over the telephone how they are telling you to search, they all have computers in their office that are free to the public. Go down to the county, city or state office and ask them to show you step by step and see if they have handwritten instructions. If not, then make sure you write it down step by step so you have it for future reference.

City/County Treasurer along with Property Appraiser Website – I work in multiple states and have found that each State, County and City are different. What you really need to find out is the following: Information on the taxes, square footage on the house, and permits pulled on the property. Let’s start with the Treasurer’s Office. Google search the name of your City or County Treasurer and look for Tax Information. Enter the Seller’s address and what I am looking for here is to see if the mailing address for the tax bill is different than the home address, if the property is being claimed as a homestead or is it a rental, and if the taxes are paid and the amounts. Some Treasurer’s sites will provide you information about the property and land which includes square footage, permits, purchase amount, dates and comparables.

County Website For Recording Deeds – Google search the name of your county register of deeds and look for official record search. This site is where they record all of the deeds, mortgages, and probate documents. Some websites are known by register of deeds and others are known as county clerk’s office. This allows you to search by the Seller’s name. What I have learned from many of these websites is that the less information you enter in the better. For instance, if your Seller is Jane L. Doe, I would only search by Jane Doe and I would read the instructions as some use last name first and some require commas in between last and first name. This also allows you to pull up other documents that may have been recorded against the property but did not include the Seller’s middle initial. I would sort everything chronologically by clicking on the ‘date’ column header and see if it will sort with the most current year at the top. You will also need to know your legal description of the property in question as this is how the county files official documents based on legal descriptions and not addresses. This information is provided to you by two different websites: Your County/City Treasurer or your Property Appraiser Website.

County Website For Civil and Probate –Google search the name of your county civil court or your county probate court and look for official record search. Let’s start first with the Civil Court. This site is where they record all of the civil actions against the seller such as a foreclosure action, any legal actions (divorce, credit card debts, etc.) The Probate Court may allow you to see that there is a Probate action filed and may name the personal representative; however, since this information is private, you would have to personally go to the court to view the records as to how many heirs and what assets and debts are included in the probate. Both sites allow you to search by the Seller’s name. Again, less is best when searching for a Seller (read above instructions). Sort by date, if possible, and work your way through the information. Civil actions may say ‘closed,’ but you should still open them to view the outcome of each record.

One of the most helpful sites that I like to use is www.RealtyTrac.com which has a program, costing less than $200/year, where I am able to look up hundreds of properties. I can see if they are in foreclosure, how many mortgages are on the property, date of purchase and amount, name and address of owner, comparables and lots more. I do have to say that some of their information is not always current, so you will have to look closely at dates, as with most other programs out there. If you are just looking for foreclosures, I would recommend finding a local list provider for pre-foreclosures, as RealtyTrac is more national. Remember, judicial and non-judicial foreclosure actions are listed differently.

I would recommend that even if you don’t have a property to research, use your own address or your neighbor’s address to explore and learn these websites. Print and keep this article near your computer for future reference. Remember, your success is in your hands, as I have provided you with the tools…now take action and follow through with my instructions!

Please keep sending me your questions and topics that you would like to hear about, so I can be sure to keep feeding you with the information that you need in order to kick off 2017 with high success and help you bring your Real Estate Dreams to Life!

Kimberlee Frank

Knowing the After Repaired Value on Your Flip House

admin — Tue, 20 Dec 2016 14:57:17 +0000

As an Investor, having a Realtor to work with is important in your business if you are buying or selling houses on the Multiple Listing Services. Many new Investors rely on their Realtor to send them “good deals” to buy, hold, fix and/or flip. However, a Realtor does not know what good deal means to an Investor. A good deal for us could be the cash flow that you receive on a rental property or it could be the profit that you would receive from reselling the home. As Investors, you are taught a MAO “Maximum Allowable Offer” Formula in which you use to make offers on homes for buying, fixing and reselling. The formula varies based on your own situation. The average formula used for Investors who have to get hard money to purchase the home would be: ARV (After repaired Value) x 65% – Repairs = MAO. Let me give you an example: $100,000 (ARV) x 65% = $65,000 – $10,000 Repairs = $55,000 Maximum Allowable Offer. This formula would then leave you with $35,000 for holding costs, cost of money, closing costs of purchase and resale, and then profit. Your MAO formula would be different if you are purchasing the home as a Landlord and/or you have your own money to fund the deal. You may be willing to pay between 70-75% of the After Repaired Value for the home – Repairs = Your MAO.

Determining the After Repaired Value on a property is very important and you should use comparables no more than .5 miles away and no more than 6 months old. I like to stay in the subdivision where your property is, as each subdivision has its own amenities such as gates, pools, and homeowner associations which will make a difference on your comparables. When making an offer on a home, you should always drive AT LEAST 2 streets in front of the house and 2 streets behind the house. Always pay attention if the subdivisions change drastically in the price and the subdivision amenities. I also like to ask for active, active with contracts and pending properties in that area so you will know what comparables are going to close that you are able to use for comparables. Obviously, you can’t use active houses or pending houses until they sell, but knowing that the same square footage house as yours in the same neighborhood is selling for $20,000 more is very important.

Many Realtors are able to set you up with a website for your comparables so that you can take the time to look at each and every one of them. Key factors to look for are the date they sold, what type of sale it was, and all the updates that were completed. I have found that often Investors will either go too high or too low on determining their After Repaired Value. When I first started out as an Investor, I hired an Appraiser to come out and appraise the house in its present condition and also in an after-repaired condition, too. I learned so much from the Appraiser as to what would increase the value on the property and what would not; but this was done after the home passed my home inspection and I had used sold comparables to determine what I thought would be a fair after repaired value. You could also ask your Realtor to provide you with a comparative market analysis (CMA) by either providing them the address and pictures of the house, or taking them to the house and providing them with a list of upgrades. Also, ask them what they what price they would list the house. However, what I did find was that, if you were using the same Realtor to buy the house and then to re-list to sell, sometimes their values would be higher than what you could truly get.

I would suggest that you have a minimum of 6 solid comparables that you can use to determine the after repaired value on your property. The comparables should have almost the same amenities such as: garage, carport, pool, basement, Florida room, same number of bedrooms/bathrooms, no more than 100 square feet difference than your house, and should be all one story or all two stories, if possible. Why six comparables? That is because if you are selling your home to an FHA Buyer, you will need two appraisals when selling after 90 days from your purchase date, as they require that the Seller (You/Investor) has owned the home for a period of 90 days. In addition, the Purchase Agreement cannot be signed between the Seller (You) and your new Buyer until the 91^st day that the Seller/Investor has owned the property which is called “seasoning.” You can sell to a cash, conventional or VA buyer; however, before signing a contract with any Buyer, always call the mortgage company and ask if there is a “seasoning” requirement for the Seller as you are selling a flip house. I also like to have sold comparables that are no more than 6 months old so that is why I will look at the active, active with contract and pending properties, too.

Remember, you will need to purchase the property, rehab it, and if you can’t sell it to cash, conventional or VA Buyer, then you will need to wait 91 days to sell to an FHA Buyer. This would mean that if you are counting on your comparables which are already 6 months old from the date of purchase, they are now 9 months old and the appraiser may not use them due to the fact that our market is always changing. Remember though, an appraisal is just an opinion and if you have provide the appraiser with comparables close to all the amenities of your house and a list of all the updates, you should have no problems with the house appraising especially in a Sellers’ market.

I suggest you learn your market and stick to investing in a few select neighborhoods that you really know the market value of houses. I am not saying don’t make offers out of your area, but finding your niche neighborhoods will make you tons of money.

Kimberlee Frank