September, 2008
A lot of information has been written about real estate investing, including some incredibly informative books on the subject. I would classify the basics of investing…
- Developing your business model (flip, rent, etc.)
- Finding properties that generally fit the model you define
- Leverage people and money
As real estate investing 101.
Refining your model, finding renters, refining your sales, mortgage, and contracting team, would possibly be classified as Investing 201.
In today’s market, understanding how to purchase a foreclosure property safely can present some challenges. Short sales are even more of a challenge, BUT they can present some serious opportunities as well. ESPECIALLY (I stop just short of saying ONLY) when it is a preforeclosure that is going to be a short sale AND is identified before the rest of the marketplace is aware of it. Learning this process, or better yet working with a Realtor who understands the process is the new game for investors… and even those who are looking steal buy for a primary home.
The strike through text with the word steal in it is a little tongue in cheek, but it is really what everyone wants to do in the Fredericksburg real estate market, right? We want a GREAT house, at an even GREATER price. They are out there, but slowly they are becoming a little more difficult to find. Buyers are grabbing them up quickly. SO, if you know someone who is close to foreclosing on their property (and most of us do,) and you are interested in purchasing the property, get in contact with your Realtor QUICKLY. Maybe you can buy it before the rest of the market even knows about it. The savings could be AWESOME!
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Today’s reverse mortgage is used primarily for refinances. Soon it will be also known for purchasing a home. There are a tremendous amount of preconceived ideas on how this product works. If it is something you are even somewhat interested in, get in contact with you mortgage planner today. It may take several meetings with your planner to fully understand how the product works, and if it is a good fit for you. Here is a success story that recently took place for a client in Warrenton, VA.
The client was in her 70’s living in a single family home. Her husband had recently passed away and she felt the need to down size, and eliminate her yard work. She had decided she wanted to be in a condo closer to her children, and did not want a house payment. She was pre-qualified to purchase a home for $250,000.00. Selling her home would allow her to pay cash for the condo. After talking to a planner that was recommended by a friend, she had a new game plan.
Her realtor was able to sell her home, getting her the cash that was needed for the condo. She then purchased a condo for $480,000.00 using $200,000.00 as the down payment. Then she did a reverse mortgage that paid her each month, and allowed her to keep 50,000.00 to invest somewhere else.
This is an example of just one of the many ways the reverse mortgage can work for a client. There are four things that you will NEVER have to do…
1-Never give up title
2-Never owe more than the home’s value
3-Never have to move*
4-Never make a payment*
*Until the last owner dies, moves or sells
How is that for controlling your retirement!
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As if there has not been enough changes happening in the real estate market place, we are heading in to unknown waters once again. As you may have heard over the weekend, the government has stepped in and taken over the mortgage giants Fannie Mae and Freddie Mac. You will hear people refer to them as the FHFA, which stands for the Federal Housing Finance Agency.
Here is what we do know.
FHFA has defined conservatorship as such, ”A conservatorship is a legal process in which a person or entity is appointed to establish control and oversight of a Company to put it in a sound a solvent condition. In a conservatorship, the powers of the Company’s directors, officers, and shareholders are transferred to the designated Conservator….In this instance, the Federal Housing Finance Agency has been appointed by its Director to be the Conservator of the Company [Fannie Mae & Freddie Mac]…to keep the Company in a safe and solvent financial condition.”
From the press release:
“The goal of these actions is to help restore confidence in Fannie Mae and Freddie Mac, enhance their capacity to fulfill their mission, and mitigate the systematic risk that has contributed directly to the instability in the current market. The lack of confidence has resulted in the continuing widening of their MBS [mortgage backed securities], which means that virtually none of the large drop in interest rates over the past year has been passed on to the mortgage markets. On top of that, Freddie Mac and Fannie Mae, in order to try to build capital, have continued to raise prices and tighten credit standards.”
You can go to their home page for the full article. What does this means for you and I in the Fredericksburg real estate market? Possibly lower interest rates. Time will tell…
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