Rapid Real Estate Investing Results

Guest article written By: Sean Carpenter

Are you finding deals are getting tougher to close with the new restrictions banks are pushing on applicants?

Is it taking longer to get a deal done? Have you stopped looking for new projects to acquire?

The last year has been a very difficult period in real estate history. Some markets have declined upwards of 50% in value with no light at the end of the tunnel. Not very good news if you started your “buy and hold” in 2007, but will certainly work better for you now in 2010 as you pick properties up for a fraction of their price two years ago.

Not to mention cap rates are heading into the two digits in larger metropolitan areas. For some, this is an area of the market they have never experienced.

So what can we do to get some of these declining assets?

The banks that were lending up to 125% a few years back have either left the market or cap an acquisition at 70% loan to value. The remaining 30% is up to the investor. But raising the 30% slows down transactions and your friends in Congress have attempted to help.

In July 2008, the President signed the Housing & Economic Recovery Act (HERA), which among other things, provided $4.5B to all 50 states, some territories like Puerto Rico and the Virgin Islands, and the District of Columbia, to combat neighborhood declination by foreclosure.

These funds, known as the Neighborhood Stabilization program, were supposed to help investors, both for and non-profits, buy and rehabilitate foreclosed buildings in order to prevent the stable households from losing too much value. In February 2009, Congress added an additional $4.5B to the program, now known as NSP II, to further carry out the NSP mission.

This is nothing new. The federal government has been investing in real estate for years, at least since HUD was conceived during the Johnson administration in 1965 as part of the Great Society initiative.

HUD allocates through the individual States and territories upwards of $20B per year to facilitate economic development and housing activities. Additionally, many states have programs of their own that can match federal funds in addition to over $5B in tax credit programs available to stimulate acquisition, rehabilitation and new construction of real estate projects.

Buying and holding certainly isn’t what it used to be, but now the government wants to help you out more than ever. You just have to know WHERE to find the money and HOW to get the funds.
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Sean Carpenter is the nation’s leading expert on Government Deal Funding for Real Estate Investors and Developers and has spent the last 12 years both consulting and getting funding for his own deals. I’ll be hosting a special interview with Sean coming up on Wednesday, February 24th, 9:00 PM EST. Find out more and pre-register for the call by entering your name and e-mail address below:

UPDATE: Since this webinar was a few weeks ago, if you register below, I will send you the encore webinar information as soon as you confirm your e-mail address.

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Disclosure: If you click on a link on this website, you may be using an affiliate link. This means I may be compensated if you purchase something from the company on the other end of the link.

Disclaimer: This is not legal advice or even financial advice. The opinions and information here are written to entertain and inform you of my experiences from Real Estate Investing. I can’t possibly know your financial situation or whether you will have the ability, motivation or determination to put forth the effort that is required to put a system or idea in motion to profit from it.

Before embarking on any business venture, you should consult with your financial advisor, accountant, lawyer and other professionals to help you determine if it is a worthwhile venture and to discuss the risks. I make no claims about how much money YOU will make with any of the information shared here on this site or any other website or e-mail that I may send you.

As in ANY business, your results will vary based on your own knowledge, determination, motivation and financial resources available to you.
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This is great news!
While I’m not an attorney, the legal speak in the pdf below tells me that FHA is now going to allow a buyer using FHA financing to purchase it even if the seller has not been on title for a minimum of 90 days.

http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf

The 90 day seasoning rule was instituted to try to keep “Illegal flips” from occuring. I have “illegal” in quotes because it is only illegal if someone is committing fraud by getting an appraiser to appraise the property for MUCH higher than the real value of the property.

This is totally illegal and I’m pretty sure you can be put in jail for that. Again, I’m not an attorney so don’t take my word for that.

However, the way most of these transactions are happening is this. An investor purchases a property either from a bank or from a homeowner in distress at a substantial discount because of the distressed situation.

Banks do NOT want to spend money to fix up foreclosed homes.

Homeowners that are having trouble making house payments do not want to make repairs either. They are struggling just to pay their bills.

Why would they continue to repair a home they are likely going to lose in foreclosure anyway?

So these properties NEED an investor buyer to step in and buy the home and rehab the home back to move-in ready condition.

Well, in these times of tight credit, it’s next to IMPOSSIBLE to get a decent rate on a long term loan for an investor. So, rather than holding the property as a rental, the investor fixes up the home using high interest loans.

The investor then turns around the property and finds an end buyer that wants to live there. Typically, the end buyer still gets a really good deal on now an updated home rather than a distressed property.

Well, when FHA decided to implement the 90 seasoning rule, that eliminated a TON of buyers, especially first time home buyers that typically rely on FHA programs to get in with low down payments.

They don’t typically have extra money to fix up a home.

So, I welcome this change for everyone involved. It is going to speed up the acquisition of these distressed properties because now the investor will have an easier time finding a buyer.

What do you think of this plan?
Leave some feedback below.

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Most everyone thinks that there is NO WAY to get a “No Money Down” loan.
Well, there are still a few programs out there that offer either low down payments or in the case of the USDA rural development program, no money down.

If you are an investor, you can’t use these loans to purchase investment property, however, if you have a property you need to sell, this is a great way to open it up to more buyers.

Check with your local lender to find out if the home qualifies. It must be located in a “Rural” area as defined by the USDA.

There are several requirements that a buyer needs to meet including income limits and total debt limits, but this is a great program to help more people afford a home.

http://www.rurdev.usda.gov/rd/pubs/pa1501.pdf

Check out the requirements at the link above. Be patient, it is a slow download because the PDF is filled with several pictures. You may be able to find out if your property is eligible by visiting the link below, but you should also verify with a local lender or your local USDA field office.

http://eligibility.sc.egov.usda.gov

http://www.rurdev.usda.gov/rd/pubs/pa1501.pdf

The loans are attractive to lenders because the government is guaranteeing them. In fact, the Freddie Mac website even has a description of the program to encourage lenders to offer the program. See their description below.

http://www.freddiemac.com/sell/expmkts/guarrur.html

Kick off 2010 with a bang by learning this program.

By the way, if you would like to learn more about ways to increase your real estate investing business in the new year, sign up for my "2010 Investor Webinar Series".

See the post below for more information or just enter your name and e-mail address below and I will immediately add you to the notification list.
http://rapidreiresults.com/wordpress/?p=382

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