Buying a Foreclosed Home

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In today’s economic times, the foreclosed home market is huge. If you are in the market to buy a home for yourself or to use as a rental unit, now is the time to buy. Buying a foreclosed home is a great investment for the real estate community.

To explain foreclosure, it is when a lending institution uses a legal process to terminate a property owner’s right due to their inability to pay their mortgage. It is a lengthy process but once a foreclosure has been delivered, the families leave immediately. This means all foreclosed homes are vacant and ready to be lived in upon purchase. That does not mean that all foreclosed homes have been cleaned prior to moving in.

 

Because the lending company wants to sell the house quickly, the starting price is normally lower than market value. The key to buying a foreclosed home is to buy it as far below it’s assessed value as possible. This will help secure a larger profit margin when you sell the property. If the property is being bought to ‘flip’, the lower the price paid – the better the chance of selling it and making a bigger profit.

 

Purchasing a foreclosed home is relatively easy. The hardest part is tracking or finding the foreclosures in your area. A good website to use is www.foreclosuredeals.com. Your local county courthouse is another good resource. The legal section in your local newspapers also prints the foreclosures and when the foreclosure auction will be held.

 

Before you buy your first foreclosed home, do some research. It is very important to understand your states foreclosure laws. This information can be found on your state website and possibly on your county’s website. Individuals at your local county courthouse will be able to advise you were to find the information.

 

If you are buying the piece of foreclosed property as an investment, there are a couple risks. If you pay too much for the property you may not be able to sell it in a timely manner and you may not make as much profit. So be careful and do your homework.

 

Besides the price on a foreclosed home, there are other benefits. The first benefit, knowing there are no liens against the property as the lending institution will have taken care of that. The second, knowing there are no delinquent taxes.

 

Once you have found a foreclosed home to purchase, supplied and secured financing, you are ready to place a bid on the home. Bids may be made at a foreclosure auction or by sealed bid. There are times that a local realtor may submit your bid for such a property. To optimize the foreclosure situation start out bidding low to maximize your investment.

Is Real Estate Still a Good Investment?

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Over the past 2 years real estate prices have dramatically declined all over the United States. The foreclosure rate is higher now as compared to the past few decades. Some banks are even going under due to what’s happening in the market. We are officially in a recession, and there is even talk that the economy is headed for a total collapse. While none of us can predict the future we can look at what has happened in the past to help us make our decisions now.

Some people are wondering if real estate is still a good investment. Yes, real estate is still a good investment because while prices may go down, they typically go back up again over time. Real estate is still one of the best investments because it tends to hold its value longer than other investments. If you currently own a home and you’ve wanted to sell, its best to hold on your house for the time being. You want to maximize your profit and sell when the market changes and yes it will change. Back in the 1980’s prices plummeted due to high interest rates and a poor economy, similar what’s happening now. In time things picked back up again and homes retained more value.

 

So if you do own a home it’s best to hold on to your house and simply watch the market. If you have money to invest now is a good time to buy more real estate. If you buy low now later on you may be able to cash in on your investment in the future. Currently there is a wide variety of choices right at your finger tips. Rather than worrying about the poor economy why not take advantage of the situation.

How to Find the Best Real Estate Investment Club for You

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A real estate investment club can offer excellent opportunities for real estate investors to further their education, network with other investors, find real estate service providers such as real estate agents, attorneys and general contractors, and to find investing partners for real estate projects. However, you do need to do your homework before you join and pay any dues to a real estate investment club. Some clubs are formed with the main intent to pitch courses and products to their members. Other investment clubs may focus on areas of interest that do not match up with yours. So it pays to do your research before joining.

To find a real estate investment club you can search the internet and also local real estate publications. Spend some time thinking about what you would like to get out of an investment club. Are you interested in specific types of real estate investment opportunities? If so, you will want to check to see if the real estate investment club covers this type of investing. Are you looking to further your education, looking to network with other investors and real estate professionals, looking to form investing partnerships for real estate projects? Once you know what you are looking for, it will make evaluating a real estate investment club much easier.

 

Before joining a real estate investment club and paying any membership dues, ask if you can attend a few meetings for free. Find out what the main purpose of the club is. Is it to further the investing education of its members and provide networking opportunities, or is its primary purpose to pitch products and courses? Look at the line up of speakers and the topics that are covered in the meetings. Are the topics on practical, real world techniques or risky, unproven strategies? Also check to see if the club is primarily made up of real estate service providers such as real estate agents, loan officers and attorneys, or is the core membership made up of serious, experienced real estate investors? Try to talk to members to get feedback on what the real estate investment club is like. If you do your research ahead of time, chances are you will be able to find a good real estate investment club which meets your specifications.

 

A real estate investment club is an excellent way to network with other real estate investors and share experiences, tips, and resources based on real life experience. It is a great way to become familiar with real estate investment opportunities in your local area and to become familiar with who the major players are. If you do decide to partner with others on investment opportunities or hire service providers be sure to check references and credit history before making a final decision. Provided you do your research and investigate any clubs, potential investment partners, and service providers ahead of time, a real estate investment club can really enhance your real estate investing opportunities and help you become a well educated, successful real estate investor.

A Guide to Water Rights in Real Estate Transactions

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Water is one of the world’s most valuable resources, so it’s only natural that water rights should be considered when making real estate transactions. Water rights cover the use of ground water, as well as streams, rivers, and lakes. In addition, water rights are required to be able to construct a structure such as a boat ramp or dock ramp over the body of water itself.

Water Rights in Eastern States

 

Typically, all states east of Texas with the exception of Mississippi follow the riparian doctrine for water rights. This doctrine was developed during the Spanish colonial period and incorporates elements of English common law. Under riparian water rights principles, landownership is expressly tied to water rights. A property owner can not legally sever the water rights for land from the property rights.

 

Essentially, riparian water rights permit anyone who owns land which faces a body of water to use the water from it. Riparian water rights allow the property owner unlimited usage of the water surrounding the land as long as the flow of water is not altered and the water itself is not contaminated, although rights can not be used for long term storage such as the formation of a reservoir. In the case of a navigable stream or river, the property line is considered to end at the water’s edge. The state retains rights to the land under the body of water and the waterway itself is considered a public highway.

 

Water Rights in Western States

 

Western states typically follow the prior appropriation doctrine when determining who has the legal right to use water on a particular piece of property. Prior appropriation is based on the principle of “first in time, first in right” to settle disagreements over ownership of water.

 

Beneficial use is a key principle under the prior appropriation doctrine. Examples of beneficial use include growing vegetables, supporting wildlife, enhancing area recreation opportunities, or commercial uses such as growing fish in hatcheries. Water usage must be reasonable, without waste, and approved by the appropriate state controlling agency in order to qualify.

 

Selling Water Rights

 

Water rights encompass the right to use ground water, streams, rivers, and lakes for recreation, farming, or commercial purposes. Depending upon where you live, water rights to a particular piece of land can be worth several thousand dollars to prospective buyers.

 

Western states that use the prior appropriation doctrine to determine water rights allow these rights to be sold separate from the property itself. For landowners with a significant acreage, it is advisable to seek the assistance of a real estate property attorney before selling water rights. Farmers may be tempted sell water rights when it seems they can make more money from giving up their rights than by growing crops. Since water rights have a sizable impact on future property values, however, this is a decision that requires careful consideration.

 

Many people find themselves wondering how water rights and mineral rights are related to real estate transactions. In most cases, water rights and mineral rights are considered to be separate entities. Property owners are legally allowed to sell mineral rights to a piece of land without selling the water rights. However, many speculators and energy firms ask to purchase water rights when buying the mineral rights to property. Landowners who have previously sold mineral rights should review their contracts carefully to make sure they still own the water rights for the property.

 

Buying Water Rights

 

When buying real estate, it is important to make sure water rights are transferred with the sale of the property. Transfer of water rights should be conveyed in the same manner as a normal property deed. In most states, once a property owner has established beneficial use of the water, he is not required to give up water rights with the sale of the property. For this reason, you must keep in mind that appropriators are not necessarily landowners located near the source of the water in question.

 

If a particular piece of property does not have water rights, the owner may be able to buy water rights from another property and have them transferred. However, the transfer of water rights for a different purpose or at a different location requires permission of state authorities and public notice of the intended transfer. If no individual files a formal protest of the transfer, state authorities can then choose to either approve or deny the application.

How to Buy Las Vegas HUD Homes

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Las Vegas, Nevada, commonly known as Sin City, is well known for having many foreclosed properties for sale. HUD buys some of these foreclosures because they were backed by FHA before going into default. This a big financial loss, so HUD needs to resell these homes to members of the public to get back that money. Those trying to scout out cheap homes in Vegas can find Las Vegas HUD home listings online through a government website. These potential buyers can then find what they are looking for and place bids to buy HUD homes in Las Vegas through a Vegas real estate broker approved for HUD bidding.

Step 1:

 

You can easily find these HUD foreclosures in Las Vegas by going to hudhomestore.com/HudHome/Index.aspx, which is a HUD-owned government website that lists HUD’s properties for every state. In this case, select Nevada and then Las Vegas to find the HUD Las Vegas homes in this area.

 

There is a wide range of houses for sale in this area, so you may also choose to narrow your search for Vegas properties by several other factors, including cost of the homes, size by number of rooms and other characteristics. You can choose those options with the search tools at the top of the Las Vegas HUD homes search results.

 

Step 2:

 

Only a Nevada real estate broker will be able to place HUD bids for the properties you seek to purchase. Thus, you need to go back to the same website’s home page and click on “Find a Broker” to get to the broker/agent listings. Select Las Vegas to find a broker in Sin City that can help you bid on HUD homes in Las Vegas.

 

Step 3:

 

Most HUD Las Vegas property buyers do not have the actual cash to buy a home. If you fall into this group, then you need to speak to Las Vegas mortgage brokers to get a home loan.

 

Step 4:

 

Once your finances are in order, ask your Las Vegas broker to go ahead and start sending in bids to HUD Las Vegas. You might be limited to one bid at a time, so have patience when trying to buy Las Vegas HUD properties.

 

Step 5:

 

When the agency approves your bid, it will send work to your broker. You will then have to submit a deposit and start preparations for paying for the home at the closing. This “closing” will be conducted by a Las Vegas closing agent approved by HUD for home closings.

 

Step 6:

 

The last major step in a real estate deal is to complete the proper local deed filing. In all areas (not just Las Vegas), you should obtain a deed from the seller and file it in the county of the property that you bought. In this case, take your deed from HUD and file it in the recording office of Clark County unless you buy a Las Vegas-area HUD home outside of that county.

 

Sources:

 

HUD Home Listings

How to Buy Atlanta HUD Homes

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Atlanta is a very popular place for seeking out cheap real estate. This area tends to have many foreclosed properties throughout the year, and the Department of Housing and Urban Development (HUD) buys many of these houses at the local foreclosure auctions. HUD then sells them to average members of the Georgia public through a HUD bidding process. Buyers can use online resources to search for suitable Atlanta HUD homes. The buyers then hook up with an Atlanta real estate broker approved to submit bids to HUD on Georgia HUD properties.

Step 1:

 

HUD operates a website that lists data and even pictures of the HUD homes in Atlanta. You can access this home-listings government website at hudhomestore.com/HudHome/Index.aspx. Of course, you should look for the map and then select “Georgia” to get all listings for the state. You then pinpoint local homes by selecting “Atlanta” as the city.

 

Now, some HUD home buyers are owner occupants looking for a family home. Others are investors looking to make bucks off of flipping houses. Both buyer types may bid on HUD Atlanta homes, but investors are sometimes excluded from bidding on certain properties. To find the Atlanta properties open to investors, use the “buyer type” search option.

 

Step 2:

 

Atlanta has a slew of real estate brokers and agents. But you need one specifically approved by HUD to place bids on your behalf for HUD Atlanta properties. Select “Find a Broker” on HUD’s site (from the main page). Then, select Georgia or just Atlanta as the city to find local HUD brokers or agents.

 

Step 3:

 

If you need financing for a HUD Atlanta property, you will then need to speak to Atlanta banks or mortgage lenders about getting a loan. This is an important component of your HUD bid.

 

Step 4:

 

Get your Atlanta broker to go ahead and submit bids on the properties that you want. You might be limited to one bid at a time, so it could take a while to purchase an Atlanta HUD home.

 

Step 5:

 

Now, wait for HUD Atlanta officials to accept your bid. Once accepted, then a Georgia closing agent will be assigned to wrap up the sale. However, in the meantime, be aware that you will have to quickly pay a deposit and get ready to buy the house in full at the closing.

 

Step 6:

 

It is very important to protect your property interests in HUD homes in Atlanta once you have completed the sale. The way this is done is by getting a deed from HUD and then filing it in the county recorder’s office where the property is located. So if your property is in Fulton County, you would file there. Otherwise, you would file in DeKalb County or whichever other county your Atlanta-area home is located.

 

Sources:

 

HUD Home Listings

Selling Your Own Home to Save Real Estate Fee can be Risky

The following is a guest post from Nigerian real estate developer Michael Chudi Ejekam.

Contract

Sellers have to remember that a written contract for the sale of a property is binding. The clauses contained therein can have serious implications. Awareness and knowledge are critical. There are buyers who like to target For Sale by Owners (FSBO) in order to get the best deal possible. These buyers are often more experienced than the seller and can skew the contract to their benefit.

Selling Price

Unless the seller has access to current market information, pricing may be off the mark. If it is too low, there will be a loss and if it is too high there may not be a sale. Nevertheless, the seller selects what he perceives to be a market value price and hopes to make a gain because he doesn’t have to pay out a real estate fee.

Sounds like a good plan. Then a buyer comes along and makes an offer that is lower than the asking price BECAUSE the sale will not incur a real estate fee!

Both parties are trying to save the real estate fee. Often the seller gets short changed.

Advertising

When selling a home, exposure is a must. Advertising is required. This generally consists of a lawn sign, some newspaper ads and, especially, internet exposure. More and more buyers do their initial searches on the internet. Marketing skills and ad writing abilities are a plus. Photos will also be required. All these items have costs attached.

Showings

Availability for calls and appointments are a priority. If employed, showings will be limited to after hours and weekends. People could also knock on the front door without an appointment. This may create a problem if school children get home before the parents.

Pre-Screening & Follow Ups

Pre-screening calls and asking questions about mortgage eligibility is helpful. This could eliminate those who are qualified to buy from those who are not. Similarly, it is ideal if contact information can be obtained for follow-up. This is sometimes difficult for the seller to acquire. Any feedback that is obtained could also be somewhat biased so as not to offend the seller.

Risks

Without pre-screening of any kind, there can be risks in inviting potential buyers to view the home. They are total strangers! Are they serious about buying? Do they have other reasons for wanting to see the home? Should they go through the home without being escorted? If so, are valuables removed for security reasons? Is the medication in a safe place? Or, should the potential buyers be accompanied on their walk through the home? Will they be reluctant to ask questions or make comments because the home is being shown by the owner? Showings are often a dilemma for the seller.

Solution

Hire a real estate agent! In the long run, such a professional can often net the seller the same amount of dollars- and sometimes even more. They know their markets and they have the skills- especially negotiating skills. Peace of mind results from knowing that the real estate agent has the expertise and is looking after the interests of the seller.

Interview two or three experienced agents and select one that is a good fit and in whom there is sufficient confidence.

Why is Renters Property Insurance so Essential?: Renters Contents Insurance is Not the Landlord’s Responsibility

The following is an article by Natural Resources Management president Tracy Suttles, a figurehead in the Houston, Texas real estate development scene.

Renters property insurance is like any other form of coverage, it only seems important when it becomes necessary to make a claim. Whilst paying for a policy cannot be considered an enjoyable activity, it is a lot better than facing the consequences of liability for injury or replacing all personal possessions in the event of theft. For those on a fixed budget, the cost of home renters insurance can be reduced by increasing the deductible so that only the most troublesome financial problems are covered.

Protect Items of Value with Renters Property Insurance

There is a high probability that something bad will eventually happen to someone’s personal property. Renters home insurance typically offers two alternatives: the ‘replacement cost coverage’ or ‘actual cash value’ (ACV). A policy offering the ‘actual cash value’ will only provide a payment equivalent to its current replacement cost. However, ‘replacement cost coverage’ will pay the insured a sum of money that will cover the full cost of it being replaced. Although more expensive, the latter option is more comprehensive.

Renters Home Insurance Provides Liability Protection

If an individual were to sustain any sort of injury whilst in the insured’s apartment, the policy (subject to any limit in-place) would provide a payment equivalent to the cost of damages and medical expenses. Court costs (if applicable) would also be covered. Without this protection in place, a tenant could find himself owing tens of thousands of dollars. It could even bankrupt them. However, insurance for renters can help to manage this risk and provide genuine peace-of-mind for the tenant and his/her guests.

Renters Insurance Coverage and Unlivable Premises

A renters property insurance policy provides assistance when a property can no longer be lived in due to damage, a rebuild or relocation. This means that if the insured has no choice but to move out because it is unlivable, the policy will cover the cost of living in a comparably priced house, condo or apartment. The limit is typically limited to 30-40% the policy value. Thus, someone insured for $150,000 would have an additional living expenses limit of between $45,000 and $60,000. Other providers allow the insured to claim for a maximum of up to 12 months or for a “reasonable length of time.” Each policy document should be checked for the specifics.

The Value of Renters Property Insurance

Life can be very unpredictable, but renters home insurance provides a way of underwriting that risk. Although it isn’t a legal requirement, it is important to appreciate that the landlord is not responsible for a tenant’s possessions or what happens to visitors at that property. Insurance for renters not only covers home contents, it also provides protection should something happen to a visitor. It is essential for anyone who lacks sufficient financial resources to cover such costs or liabilities.

Tracy Suttles can be reached on Twitter at @tracydsuttles.

Agent Representation in the Home Selling Game

Agent Representation One important item that needs to be understood is the manner in which an offer is being made. Is it verbally? In writing? From a seller’s agent? From a buyer’s agent? What’s the difference, anyway? You have done all the work, shown the property to the customer, then all of a sudden an agent, whom you made no prior commission agreement with, shows up at your doorstep, claiming to represent you, with an offer and a commission agreement. The buyer sought out their service (or was suckered in to it) yet they claim to represent you. Further more, they want you to pay for their services. An even more frightening scenario is when this unknown agent show up representing the buyer and still wanting you to pay for their services. Don’t laugh, this happens all the time and creates a huge dilemma.

Probably what happened was that this buyer ran in to the agent at an open house, or visiting a house that this agent had listed. The unsuspecting buyer may have mentioned to the agent that he was going to make an offer on a FSBO (probably in an effort to ditch the pushy agent). The agent, in turn, offers to “protect” him and get him the “best deal”. “Not to worry” says the agent, “you won’t have to pay me a thing…my service is free to you”. Hook, line and sinker, this buyer just got reeled in to letting this agent benefit by stepping into the sale, late in the game, and basically getting a commission for work done by the buyer and seller. this happens all the time.

If a real estate agent, that has not made a prior agreement with you, shows up at your door claiming to represent you yet solicited by the buyer, question their true motivation. I seriously doubt that an interested buyer went to this agent and said “I want to buy a FSBO, but I want you to help the seller get the best possible deal from me. Please represent the seller’s best interest, not mine.” Ask the agent if the buyer was promised he would not have to pay for the services. The agent will probably respond by telling you that the seller always pays the commission. The fact of the matter is that the seller only is required to pay a commission or fee when an agreement is made with a broker. In a case such as this you would be well within your rights to question who this agent is really representing. I would be reluctant to rush and pay their fees. On the contrary, you might do well to suggest that the buyer pay the fees, as they appear to be the actual client. When the agent realizes he may well be out of the loop he will probably get out of the picture. It is an awkward situation to be in, and all too common, unfortunately.

Rent vs. Buy Analysis: Real Estate Investment Analysis View

Many investors don’t think about the rent vs. buy analysis that a consumer should be focusing on before they consider buying a home. This analysis varies across neighborhoods. In places like New York City, it could cost a consumer 1.5x or even 2.0x as much to buy a home on a monthly basis as it would cost to rent that same home. Conversely, in a city like Detroit, it might be it might cost 2.0x or even 3.0x to rent a home on a monthly basis in comparison to purchasing that same home. So what does that have to do with an investor?

Real Estate Trends

It’s simple: investors need to watch the trends. Regardless of the absolute number, as it gets cheaper to rent a home or buy a home, consumers will move, one way or the other. While most consumers will not sit down and do the actual analysis, media, real estate advertising and other sources of information serve to shape the consumers’ opinion of value. Investors can use this leading indicator to better understand where the price of their investment property will trend.

Consider the real estate market in 2007. In 2007 many housing markets reached historical high prices, while rents grew modestly over that same time period. The gap between rents and mortgage payments grew to an all-time high in many markets. Smart investors watching this gap could only expect reversion of either home prices or rents. If economic growth and prosperity were driving the increase in housing prices, investors would have expected rents to increase as well. If low interest rates and irrational consumption were driving the growth in the housing market, investors could expect housing prices to decline at some point.

Real Estate Prices

Savvy investors were using this data as a warning sign to sell their single family home investments. Assuming low interest rates and irrational consumption would lead to a decline in housing prices, investors should not have assumed that rental rates would increase. To the contrary, the housing market growth drove consumption and the sudden halt put the economy on very shaky footing.

Smart investors should have sold and simply waited. Real estate is one of the few investment classes that simply allow an investor ample time to get in and out of the market. Market movements take months or even years, so investors could have seen the warning signs in 2005, 2006 and 2007. Real estate is cyclical, so investors will get another chance to make the right choice. Watch out for home prices declining to the point where they are on par with their historical relationship to rents. That will be the time to buy.