Here is an easy-to-follow web comic outlining subprime mortgages and how they have impacted the current economy. There is some coarse language, so if you're offended by that, you may want to look elsewhere to learn more.
The Sub-Prime Primer
Just click on the images to advance to the next frame. There are over 40 frames, but each one is pretty simple. Stick-figure simple, actually. Don't look for award-winning graphics here. :)
Enjoy!
Friday, December 12, 2008
Monday, October 27, 2008
FSBO - great profit potential in this rehab / rebuild
REHAB / HANDYMAN SPECIAL!
FIXER-UPPER OR TEARDOWN & REBUILD
Located minutes from Underground Atlanta, Marta, I-20, I-75/85, great location in a historic neighborhood. Views of downtown, capitol building. Lots of renovation going on in this area.
4/2 Brick 1-story single-family home Approx. 1,250 sq. ft. Lot 4,792 sq. ft.
765 HUMPHRIES ST SW ATLANTA, GA 30310
Near Metropolitan Parkway & Ralph David Abernathy off of I-20 Downtown
ONLY $34,900! ALL SERIOUS OFFERS CONSIDERED!
http://www.youtube.com/watch?v=yUNmgPM-7P4
Leave voice mail to arrange viewing 208-545-1241
Option 1: Rehab: Estimated Repairs: $55,000-$70,000 Zillow Zestimate $159,000 as 4/2 1-story --_ $39,000-59,000 equity after repair
Option 2: Teardown & build a 2-story: Estimated $120,000-$140,000 New construction house next door (763 Humphries) sold Sept 2007 for $380,000, another (768 Humphries) sold in Nov 07 for $380,000 --_ $200,000-240,000 equity after rebuild
Call now to arrange viewing or make offer today! All serious offers considered.
SELLER FINANCING AVAILABLE
CONSTRUCTION FINANCING AVAILABLE
*The information provided is deemed reliable, but is not guaranteed.
FIXER-UPPER OR TEARDOWN & REBUILD
Located minutes from Underground Atlanta, Marta, I-20, I-75/85, great location in a historic neighborhood. Views of downtown, capitol building. Lots of renovation going on in this area.
4/2 Brick 1-story single-family home Approx. 1,250 sq. ft. Lot 4,792 sq. ft.
765 HUMPHRIES ST SW ATLANTA, GA 30310
Near Metropolitan Parkway & Ralph David Abernathy off of I-20 Downtown
ONLY $34,900! ALL SERIOUS OFFERS CONSIDERED!
http://www.youtube.com/watch?v=yUNmgPM-7P4
Leave voice mail to arrange viewing 208-545-1241
Option 1: Rehab: Estimated Repairs: $55,000-$70,000 Zillow Zestimate $159,000 as 4/2 1-story --_ $39,000-59,000 equity after repair
Option 2: Teardown & build a 2-story: Estimated $120,000-$140,000 New construction house next door (763 Humphries) sold Sept 2007 for $380,000, another (768 Humphries) sold in Nov 07 for $380,000 --_ $200,000-240,000 equity after rebuild
Call now to arrange viewing or make offer today! All serious offers considered.
SELLER FINANCING AVAILABLE
CONSTRUCTION FINANCING AVAILABLE
*The information provided is deemed reliable, but is not guaranteed.
Tuesday, September 9, 2008
Zillow.com, newspaper publishers form advertising network
Here's some news about Zillow from DM News
"Real estate Web site Zillow.com and 11 major newspaper companies have formed an online real estate advertising network.
In total, 282 newspapers nationwide are represented in the deal through which sales teams for both Zillow and the newspaper companies will offer each other's premium advertising inventory to their respective client bases. The focuses will be on home buying, selling and home-related commerce.
Local newspaper advertisers will be able to reach Zillow's national audience of more than 5 million unique visitors each month. Advertisers can also target visits to specific ZIP codes, neighborhoods or individual homes. Meanwhile, Zillow's advertisers gain access to the local audiences visiting real estate sections of the newspapers' Web sites."
For the rest of the article, go here.
"Real estate Web site Zillow.com and 11 major newspaper companies have formed an online real estate advertising network.
In total, 282 newspapers nationwide are represented in the deal through which sales teams for both Zillow and the newspaper companies will offer each other's premium advertising inventory to their respective client bases. The focuses will be on home buying, selling and home-related commerce.
Local newspaper advertisers will be able to reach Zillow's national audience of more than 5 million unique visitors each month. Advertisers can also target visits to specific ZIP codes, neighborhoods or individual homes. Meanwhile, Zillow's advertisers gain access to the local audiences visiting real estate sections of the newspapers' Web sites."
For the rest of the article, go here.
Monday, August 25, 2008
Simple Formula for Fix & Flip Profits
One of the most common ways to make money in real estate as a real estate investor is to buy a rundown house, repair it, and profit. There are 2 basic strategies here: fix and flip properties, or rehab and rent them. While on the surface this seems pretty simple, many beginning investors make the mistake of buying retail and then hoping for a profit once they fix it up.
I was talking to some other investors over the weekend and one of them put it in a very simple way:
1) Buy a cheap property.
2) Finance through a hard money lender.
3) Rehab it.
4) Tenant it.
5) Refinance it.
So now for a little more detail:
1) Buy a cheap property - this could be a foreclosure, pre-foreclosure, auctioned property, REO (bank-owned) or FSBO. Remember that in real estate, you make your money when you buy, not when you sell, so buy as low as you reasonably can.
2) Finance the purchase through a hard money lender. This is going to be a higher interest rate than a traditional loan, but 2 key advantages are that 1) you can often get the funds in a matter of days, not weeks or a month, and 2) lending decisions are made more on the merits of the property deal than your personal credit score (although having good personal credit makes it much easier to refi out - more on that later). Arrange for no payments for 6 months if you can, to give you time to rehab the property and cover any holding costs while your property is on the market. You may pay more in interest this way, but will likely have fewer headaches caused by banks deciding not to approve the loan at the last minute because the property needs too much work, needs a roof, or any number of other reasons why they won't approve a loan on the property as is.
3) Fix up the property. One thing to consider is that you don't want to over-remodel for the neighborhood. There's no sense in being the only house in the neighborhood with Italian marble floors if all the others are linoleum or tile. Sure, it looks great, but you're likely not going to be able to charge enough of a premium rent to cover the additional rehab expense. Simple things that add nice touches and don't cost much extra are great to do, but going overboard won't do much good for your pocket.
4) Tenant it. I'm a firm believer in having a good property manager handle all this. It's important to buy low so that you've got enough room for profit after mortgage payments, maintenance, taxes, insurance, and property management. And property managers are in the business of doing this, so a good property manager will likely tenant and manage a property better than you would, with far less time & frustration on your part.
5) Refinance into a traditional loan. Now that the house is in great condition, and you've got a tenant in it, you're going to be more likely to get a more favorable loan.
Plus, during the months of rehabbing and finding a tenant, you've gotten some extra time to do those things to raise your credit score, so you can hopefully get a better interest rate on your new mortgage.
Or if you haven't, especially in the current climate, you will hopefully have had time to find a partner to qualify for you. Traditional loans are harder and harder to get these days, especially if you've got a score below the bank's requirements. And those requirements are often strict - if the bank says they need a 700 score to do a loan and you've got a 689, you're not going to get that loan from that bank. So keep that credit score high and shop around multiple banks - there is no global standard, so different banks will have different requirements.
Also try smaller banks too - some of them will be more 'hungry' for your business than the huge banks like Wachovia and Bank of America.
I was talking to some other investors over the weekend and one of them put it in a very simple way:
1) Buy a cheap property.
2) Finance through a hard money lender.
3) Rehab it.
4) Tenant it.
5) Refinance it.
So now for a little more detail:
1) Buy a cheap property - this could be a foreclosure, pre-foreclosure, auctioned property, REO (bank-owned) or FSBO. Remember that in real estate, you make your money when you buy, not when you sell, so buy as low as you reasonably can.
2) Finance the purchase through a hard money lender. This is going to be a higher interest rate than a traditional loan, but 2 key advantages are that 1) you can often get the funds in a matter of days, not weeks or a month, and 2) lending decisions are made more on the merits of the property deal than your personal credit score (although having good personal credit makes it much easier to refi out - more on that later). Arrange for no payments for 6 months if you can, to give you time to rehab the property and cover any holding costs while your property is on the market. You may pay more in interest this way, but will likely have fewer headaches caused by banks deciding not to approve the loan at the last minute because the property needs too much work, needs a roof, or any number of other reasons why they won't approve a loan on the property as is.
3) Fix up the property. One thing to consider is that you don't want to over-remodel for the neighborhood. There's no sense in being the only house in the neighborhood with Italian marble floors if all the others are linoleum or tile. Sure, it looks great, but you're likely not going to be able to charge enough of a premium rent to cover the additional rehab expense. Simple things that add nice touches and don't cost much extra are great to do, but going overboard won't do much good for your pocket.
4) Tenant it. I'm a firm believer in having a good property manager handle all this. It's important to buy low so that you've got enough room for profit after mortgage payments, maintenance, taxes, insurance, and property management. And property managers are in the business of doing this, so a good property manager will likely tenant and manage a property better than you would, with far less time & frustration on your part.
5) Refinance into a traditional loan. Now that the house is in great condition, and you've got a tenant in it, you're going to be more likely to get a more favorable loan.
Plus, during the months of rehabbing and finding a tenant, you've gotten some extra time to do those things to raise your credit score, so you can hopefully get a better interest rate on your new mortgage.
Or if you haven't, especially in the current climate, you will hopefully have had time to find a partner to qualify for you. Traditional loans are harder and harder to get these days, especially if you've got a score below the bank's requirements. And those requirements are often strict - if the bank says they need a 700 score to do a loan and you've got a 689, you're not going to get that loan from that bank. So keep that credit score high and shop around multiple banks - there is no global standard, so different banks will have different requirements.
Also try smaller banks too - some of them will be more 'hungry' for your business than the huge banks like Wachovia and Bank of America.
New Tools Available on Trulia
A couple of months ago I wrote a post here about some of the various sites that allow anyone to come up with estimates of the value of a property.
Trulia has now added a few new things to their site to make it more useful, more interactive, and more convenient.
Here's an exceprt from an article on Inman News:
The latest batch of new features at real estate site Trulia.com includes a simplified blogging platform, mobile tools for property searches that use your phone as a divining rod for for-sale homes in the area, and information feeds that provides customized property listings and other area-specific information -- including blog posts and other user-generated site content -- within the locations that visitors are searching at the site.
Read the rest of the article here.
Trulia has now added a few new things to their site to make it more useful, more interactive, and more convenient.
Here's an exceprt from an article on Inman News:
The latest batch of new features at real estate site Trulia.com includes a simplified blogging platform, mobile tools for property searches that use your phone as a divining rod for for-sale homes in the area, and information feeds that provides customized property listings and other area-specific information -- including blog posts and other user-generated site content -- within the locations that visitors are searching at the site.
Read the rest of the article here.
Thursday, August 7, 2008
Play the Millionaire Maker Game
For those of you in Atlanta, there is a free game-playing event this Saturday evening.
From three-time, bestselling author and Millionaire Maker, Loral Langemeier, comes The Millionaire Maker Game. This game teaches people real world application wealth building skills as they live the life of an entrepreneur- where big deals are done daily.
If you have ever wanted to change your financial destiny - or even your own - here is your chance.
Ready to get into the game?
Join Live Out Loud and a Millionaire Game Facilitator as we help teach you how to become a millionaire in 3-5 years.
Come play The Millionaire Maker Board Game, on this Saturday evening, August 9th in downtown Atlanta. There is no cost for admission; this is a great wealth building and networking opportunity.
Visit www.liveoutloud.com/atlantagame to register, and enter "26625" (without quotes) in the "Referred by" field.
From three-time, bestselling author and Millionaire Maker, Loral Langemeier, comes The Millionaire Maker Game. This game teaches people real world application wealth building skills as they live the life of an entrepreneur- where big deals are done daily.
If you have ever wanted to change your financial destiny - or even your own - here is your chance.
Ready to get into the game?
Join Live Out Loud and a Millionaire Game Facilitator as we help teach you how to become a millionaire in 3-5 years.
Come play The Millionaire Maker Board Game, on this Saturday evening, August 9th in downtown Atlanta. There is no cost for admission; this is a great wealth building and networking opportunity.
Visit www.liveoutloud.com/atlantagame to register, and enter "26625" (without quotes) in the "Referred by" field.
Thursday, June 26, 2008
Inside the Solar-Hydrogen House: No More Power Bills--Ever
Interesting article from Scientific American about a New Jersey man who has converted his house (and his car) to be completely self-sufficient in terms of energy. No more gas (natural or gasoline) or electric bills for him.
It's not cost-effective (yet) but gives us a working example of what can be done with today's energy-efficient technology.
"Mike Strizki has not paid an electric, oil or gas bill—nor has he spent a nickel to fill up his Mercury Sable—in nearly two years. Instead, the 51-year-old civil engineer makes all the fuel he needs using a system he built in the capacious garage of his home, which employs photovoltaic (PV) panels to turn sunlight into electricity that is harnessed in turn to extract hydrogen from tap water.
Although the device cost $500,000 to construct, and it is unlikely it will ever pay off financially (even with today's skyrocketing oil and gas prices), the civil engineer says it is priceless in terms of what it does buy: freedom from ever paying another heating or electric bill, not to mention keeping a lid on pollution, because water is its only by-product."
For the rest of the article, go here
It's not cost-effective (yet) but gives us a working example of what can be done with today's energy-efficient technology.
"Mike Strizki has not paid an electric, oil or gas bill—nor has he spent a nickel to fill up his Mercury Sable—in nearly two years. Instead, the 51-year-old civil engineer makes all the fuel he needs using a system he built in the capacious garage of his home, which employs photovoltaic (PV) panels to turn sunlight into electricity that is harnessed in turn to extract hydrogen from tap water.
Although the device cost $500,000 to construct, and it is unlikely it will ever pay off financially (even with today's skyrocketing oil and gas prices), the civil engineer says it is priceless in terms of what it does buy: freedom from ever paying another heating or electric bill, not to mention keeping a lid on pollution, because water is its only by-product."
For the rest of the article, go here
Monday, June 23, 2008
Mortgage Insurance Changing for Investors
Courtesy of my friend Kim Pace at Sunshine Mortgage in Atlanta...
"Just to give you a heads up of what is coming July 14th with ONE of the larger Mortgage Insurance companies. This might be a sign that the rest will follow and I know how nobody likes to get caught with a major surprise.
Full Documentation Prime (A)
• Investment properties are no longer eligible for mortgage insurance.
This becomes effective July 14th. So if you have any investors that are looking at property you might to share this information with them.
This means borrowers (investors) will either have to put down 20% or arrange financing for 10%. This is not the only MI company but it is a big one."
Thanks, Kim!
"Just to give you a heads up of what is coming July 14th with ONE of the larger Mortgage Insurance companies. This might be a sign that the rest will follow and I know how nobody likes to get caught with a major surprise.
Full Documentation Prime (A)
• Investment properties are no longer eligible for mortgage insurance.
This becomes effective July 14th. So if you have any investors that are looking at property you might to share this information with them.
This means borrowers (investors) will either have to put down 20% or arrange financing for 10%. This is not the only MI company but it is a big one."
Thanks, Kim!
Thursday, June 19, 2008
Holding Property in an LLC Just Got Tougher
Tax Strategist, author, and real estate investor Diane Kennedy, has a new article about new changes from Freddie Mac that can have an impact on investors.
"Freddie Mac, one of the two largest underwriters of conforming loans on the secondary market, have changed their internal rules to state that they will no longer refinance a property that has been inside of a Limited Liability Company (LLC) for any time within the past 6 months."
You can read the full article here.
The good news is that there are other options. And as real estate investors, we either learn to get creative or our businesses suffer. Stay tuned for more developments....
"Freddie Mac, one of the two largest underwriters of conforming loans on the secondary market, have changed their internal rules to state that they will no longer refinance a property that has been inside of a Limited Liability Company (LLC) for any time within the past 6 months."
You can read the full article here.
The good news is that there are other options. And as real estate investors, we either learn to get creative or our businesses suffer. Stay tuned for more developments....
Wednesday, June 18, 2008
A Great Idea But It Still Needs Work...
I came across a "new" site today that is trying to compete with Zillow, Trulia, and other sites that allow anyone to estimate the value of a property.
This one has added text-messaging capability, so you can send a text message with a property address to their site and within seconds, you'll be able to get the information they have on the property.
Sounds great, right?
The drawback is their "extensive databases" (quoted because that's what they say in the "About Us" page on their site) aren't so extensive after all, at least not yet.
I tried searching for several addresses and here's what I came up with:
- NO Estimated Value
- NO Value Range
- "-" for their Confidence Level (meaning the confidence they have in the accuracy of their estimated value)
- Incorrect map / satellite info. For example, I searched for one of my properties and the satellite image pointed out the house next door.
- Some outdated property information from county tax records (for houses that had additions built on but tax records still indicate the previous size). This one isn't Housefront's fault, but it goes to show that you still need to do your own due diligence and sometimes there just aren't any shortcuts to actually seeing the property.
Still, they did better than Lending Tree's Domania, who couldn't even find my personal residence, saying "We're sorry...
Please make sure you have entered the correct Zip code." (I tried 6 times)
I'm sure these sites will continue to get better as they build their databases and improve whatever algorithms they use to calculate an estimated value. But for now, they should definitely be taken with a grain of salt.
This one has added text-messaging capability, so you can send a text message with a property address to their site and within seconds, you'll be able to get the information they have on the property.
Sounds great, right?
The drawback is their "extensive databases" (quoted because that's what they say in the "About Us" page on their site) aren't so extensive after all, at least not yet.
I tried searching for several addresses and here's what I came up with:
- NO Estimated Value
- NO Value Range
- "-" for their Confidence Level (meaning the confidence they have in the accuracy of their estimated value)
- Incorrect map / satellite info. For example, I searched for one of my properties and the satellite image pointed out the house next door.
- Some outdated property information from county tax records (for houses that had additions built on but tax records still indicate the previous size). This one isn't Housefront's fault, but it goes to show that you still need to do your own due diligence and sometimes there just aren't any shortcuts to actually seeing the property.
Still, they did better than Lending Tree's Domania, who couldn't even find my personal residence, saying "We're sorry...
Please make sure you have entered the correct Zip code." (I tried 6 times)
I'm sure these sites will continue to get better as they build their databases and improve whatever algorithms they use to calculate an estimated value. But for now, they should definitely be taken with a grain of salt.
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