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My Most Unusual Prospecting for Property

 

AirplaneI have recently been asked about the most unusual prospecting for new properties I have done. Well you can probably guess I might have an unusual answer for that question. Especially, if you look at the picture on this page.
 
I’ve been flying for nearly 35 years and it is a unique way to prospect. I also like to combine my hobby and my business. It helps justification for using the equipment in the business.
 
In all honesty, I’m not sure it really saves any time, but it does allow you to pinpoint an area that you want to own property in. If you fly an amphibian, you can fly in and get a close look at the properties at eye level. You usually get a little more attention than driving the neighborhood in your SUV or pick-up.
 
I find most neighbors are anxious to talk with you and they rarely see a plane land in their lake. They usually want to see the inside of the plane and will spill the beans on all of the houses in the neighborhood.
 
We only get a few landing in my lake but, there are over a dozen that are hangered on Praire Lake next door.
 
I usually fly with “Sky-Jack”. It is much easier and safer than with a single pilot prospector.
 
Next month it is your time. Let me know an interesting Prospecting incident you experienced. If you don’t, you’ll have to read another one of mine.
Who knows what I’ll come up with if you don’t. 
 
W. Duane Williams, duaneaeg@embarqmail.com
Principal, American Equities Group, LLC
America’s Affordable Apartment Communities
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Florida Legislative Wrap Up 2012

 

The Florida legislature finished up their legislative session a little earlier this year. The legislature had to get congressional district maps ready for the November elections and thus began their Spring session about 2 months early. So what happened in 2012 ? This is a quick rundown of the legislative
highlights for Florida this year.
 

Septic Tanks. HB 1263.

In 2010 a mandatory septic tank inspection law was passed. This bill repeals the inspection requirement and creates an optional inspection instead. It also makes it so individual counties and cities cannot require an inspection done as a condition of a home sale. This is a big win for anyone that buys and sells homes with septic tanks. Florida has hundreds of thousands of homes with these tanks and most are not in rural areas - you would be surprised at the close in locations that are still on septic. ** This is still subject to the governor signing it into law. **
 

Business Tax Exemption. HB 7125.

This exempts real estate sales associates (non principals) from needing to obtain a “business tax receipt” (F/K/A an occupational license) to actively operate as a sales associate. Only the broker is still required to pay the fee. The governor already signed this one and it goes into effect October 1, 2012.
 

DBPR and Bulk Condo Buyers. HB 517.

This was a long bill backed by the Florida Department of Business & Professional Regulation (DBPR). It covers a lot of technical changes to various professions like appraisers, community association managers, architects, and more. It also extends the protections given to bulk condo buyers through July 1, 2015. The governor already signed this into law and it is effective July 1, 2012.
 

Property Insurance. HB 1127.

This is another technical law that affects Citizens Property Insurance (the state owned insured of last resort). It makes changes that hopefully will allow for more competition in the Florida homeowner’s insurance market. The governor already signed this into law and it is effective July 1, 2012.
 
Property Taxes. HJR 1003.
This would be a constitutional amendment on the November ballot. It would raise the current $25,000 exemption on personal property up to $50,000. It would mostly affect business owners and landlords. Florida voters would have to pass this by a 60% vote.
 
Fortunately the legislature was kind to us real estate agents and real estate investors this year and did not pass any onerous new laws to further burden our industry. So there you have the wrap up.
 
Rob Arnold, licensed real estate broker with Sand Dollar Realty Group, Inc. can be reached at 407-389-7318 or www.SDRhouses.com

Why Would You Give The Keys To Just Anyone?

 

Veteran real estate investors know you make money when you buy the property. The meaning, of course, is if you pay too much for the property, or your due diligence is sloppy, it’s going to cost you.
 
Successful landlords know you make money in the rental business when you select your tenant. If you fail to do your due diligence it can cost you thousands. So, why is it that most landlords -- I mean the vast majority -- do little or nothing to verify the information given to them by rental applicants?
 
Think of a former tenant who cost you plenty. Now, go back to the day of the rental interview. Knowing what you know now, would throwing $500.00 in a trash can be a better investment than renting to that person? If yes, then what is the lesson?
 
The most frequent excuse for skipping effective tenant screening is: “I’m a good judge of character.” Here is what I have learned: The worst tenants are the best liars.
 
Take the case of landlord Tom. Not long ago, Tom interviewed a man named Elliott who wanted to rent one of his homes. The two hit it off right away. Elliott told Tom how he’d lost his job last year and his wife left him for another man soon after. Despite all of his troubles, today he has a good job and is back in church where he should have been all along.
 
Tom was so impressed with Elliott’s situation that he wanted to be a help. Elliott got the keys to the house the same day and Tom was delighted to have a tenant with strong morals and a good work ethic.
 
Tom knew he should verify Elliott’s background, just to be sure. The application indicated that Elliott had lived at only one other home in Florida during the past 5 years. The question: “have you ever been arrested”? was checked “No”. Tom asked that we do the usual background checks.
 
(Editors Note: At the time this article was written, criminal histories were only available on a state-by-state basis. Today, a National Criminal History includes every state.)
 
Most tenants don’t know that we can obtain their residential history. Elliott’s report indicated he’d been living in Georgia for some time. His Florida
criminal record was clean but I told Tom he should check Georgia. He swallowed hard and said OK.
 
The twelve pages of criminal history which followed included things like two separate 5 year prison terms, extortion, felony domestic battery and grand larceny.
 
The short version of a long and dangerous story is it took Tom two months to get Elliott out of the rental. Tom never received a penny from Elliott other than the first month’s rent and a small deposit. Worse, Elliott’s attitude changed from angel to demon as soon as Tom told him why he had to move. Tom was scared. Eventually, a Judge said he had to go and today Elliott is renting from another landlord who didn’t verify Elliott’s story (He probably thought he was a good judge of character.) I hope it isn’t you!
 
Obviously, Tom could have avoided this mess if he had verified Elliott’s application BEFORE giving him the keys. However, effective tenant screening begins long before the application and interview. No matter how you advertise your rental property the purpose of your advertising is to make the telephone ring and effective tenant screening begins with that phone call.
 
You should follow a well crafted script every time someone inquires about your rental (Click here to view sample). Tenants who have a bad rental history or a criminal history need a place to live just like everyone else. These characters know they can’t rent from large, well managed apartment communities because they always check references. So, who are they looking for? They are looking for a nice couple with a cute home to rent.
 
These guys know how to carefully listen during the phone call. Not only are they a good judge of character but they have nothing to loose. If you discover their past they just move on to the next guy.
 
There’s another reason to use a script. While landlords are afraid they will get stuck with a bad tenant, good tenants are afraid they will get stuck with a bad landlord. Good tenants listen carefully to you during the telephone conversation. They like to hear the voice of a strong manager who checks references. When the bad guy hears it he ends the conversation and calls the next landlord. When the good guy hears it he hopes he’s found a decent landlord.
 
Would you like to avoid bad tenants? The initial telephone conversation is your first line of defense. If the bad guys detected  that you are a good manager and they won’t bother to call you back. That’s because they are looking for a landlord who thinks he’s is a good judge of character.
 
Paul Howard is the President of The Florida Landlord Network. He may be reached via email at: Paul@FlaLandLord.Com This email address is being protected from spambots. You need JavaScript enabled to view it. Website: www.FlaLandLord.Com

 

Zillow report: Median Rent Prices on the Rise as Home Values Drop

 

By Esther Cho
Reprint from DSNews.com – 03/13/2012
 
While homes prices continue to be on the decline, rent prices are actually on the rise and showed a 3 percent increase from January 2011 to January 2012, as opposed to home values, which dropped 4.6 percent during that same period, according to the January Zillow Real Estate Market Reports released today. 
 
“While it seems that rents are rising at the expense of home values, the opposite is true. A thriving rental market will stimulate home sales as investors snap up low-priced inventory to convert to rentals,” said chief economist for Zillow Dr. Stan Humphries in a release.
 
To clear out the excess of unsold properties, the federal government announced an REO Initiative in August 2011 to sell homes owned by government agencies to investors with the purpose of converting them into rental units. The first block of 2,490 REOs went to sale in February.
 
When looking at rent prices on a monthover-month basis, January’s median rent prices actually declined slightly, falling 0.3 percent to $1,218, according to the Zillow Rent Index (ZRI). During the same period, home values fell 0.5 percent to $146,200, according to the Zillow Home Value Index (ZHVI).
 
The states that saw the greatest yearover-year decline in home values were Nevada (-10.3), Illinois (-9.4), Georgia (-9.3), Washington (-7.8), and New Jersey (-7.2), according to the ZHVI.
 
Based on the ZRI, the states with the greatest increases in median rent over a year were New Jersey (+16.5), New York (+13.7), Kansas (+10.2), Indiana (+10), and Michigan (+10.0).
 
The ZRI also showed year-over-year gains for 69.2 percent of metropolitan areas covered by the index. For the ZHVI, only 7.3 percent of metro areas saw increases in home values.
 
For some metros, the increase in rent and drop in home prices were closely matched. In the Chicago metro, the ZRI went up 9.1 percent year-over-year, while home values fell 10.4 percent during the same period. In the Minneapolis-St. Paul metro, rents rose 11 percent as home values dropped 8.1 percent.
 
“The flourishing rental market is the silver lining to the nation’s housing downturn,” said Humphries. “We haven’t had a good way to quantify what is happening with rental rates until now, and the inaugural Zillow Rent Index shows us a healthy and growing rental market across the majority of the country, even as home values continue to fall.”
 
Nationwide, foreclosures decreased by 0.3 percent compared to the year before in January 2011, but went up 0.3 percent on a monthly basis compared to December, with 8.4 out of every 10,000 homes foreclosed upon in January 2012.
 
Foreclosure re-sales went up by 2 percent over a year ending in January 2012 and rose by 1.4 percent compared to the month before. Overall, foreclosure re-sales accounted for 19.46 percent of all home sales in January, and Nevada had the highest percentage of foreclosure re-sales at 49.65 percent. The state also saw a yearly increase of 12.6 percent for foreclosure re-sales.
 
KS - 8% increase on nice homes.

What to Do When a Former Tenant Owes You Money

 

Your tenant left your rental apartment trashed, damaged and owing you money! Your tenant lied and took advantage of you. He may have skipped or  you may have evicted him. In either case, he damaged your rental and cost you money! What do you do?
 
First, set your emotions aside and spend a few minutes getting your ducks lined up. Organize your ex-tenants file. Whether you own one unit or a thousand; whether you manage your rentals full time or part time, you are running a business. Any successful business keeps well organized,
complete records.
 
Keep copies of all receipts required to repair the unit, legal fees, unpaid rent, etc. Complete a move out inspection checklist, preferably with the tenant, if possible. Both of you sign it. The move out inspection will help you document the condition of your unit and the debt he owes you. If you are not completing move in inspection checklists now, begin doing so with you next move in. This important step is often left out “because I didn’t have time”. Take the time. There is no excuse for not having a complete move in inspection signed by you and the tenant.
 
An emotionally charged issue with some landlords is charging through the lease. He signed a twelve month lease and skipped or was evicted after only six months. Does he owe you for the remaining six months? The short answer is no, not yet. In many states, if you can not rerent the unit before the end of the lease he will owe you the lost rent. But, he does not owe you the rent until the rent is actually due. Only charge him now for lost rent, as of the date of the move out statement. If you wish, you may update the amount he owes each month until the unit is re-rented or
the lease expires. Discuss this issue with your attorney.
 
Your lease includes termination and or no notice fees? I often hear, “It is in my lease, he has to pay it.” The thinking here is that if it is in the
lease it is binding. This is not necessarily true. Termination and no notice fees may be legal in your state, and your tenant may be held responsible
for them. With various state laws and recent case law I highly recommend you have your lease periodically reviewed by an attorney to make sure you are complying with current law. If legal in your state, termination and no notice fees may be a great way to calculate all charges at the time of move out, without having to add future rent as it comes due. Again, talk with your attorney about this.
 
Take pictures. A digital camera is important to your business. Move in pictures are nice to have; move out pictures are a must have. The checklist and pictures not only help document the condition of the unit, they may be helpful later if the tenant gets creative with his description of the condition when he moved in and when he moved out.
 
Keep a log of all communications you have with your tenant, especially any communication regarding him moving or paying his rent. If you do not have a log, begin using one immediately for all your present and future tenants.
 
Once you have your records together, complete a move out statement. Most likely your management software will do this for you. The move out statement should include the names of everyone who signed the lease, the unit address, move in/move out dates and a break down of the charges. If a deposit was placed on the unit you will show the deposit subtracted from the total due. Florida law is explicit on this point. If you intend to impose a claim against the Security Deposit you must mail a special letter titled: “Notice of Intention to Impose Claim Against Security
Deposit” within 30 days of the tenant’s move out. (Click Here to Download the letter) It must be sent via Certified Mail to the tenant’s last known address, which very often is your rental. Failure to do this will give your debtor the upper hand, and you may be required to repay his deposit even though he actually owes you money! Keep your certified mail receipt with your records. You may need proof that you complied with the law. If
the letter is returned un-received, keep it in the file also.
 
A word of caution here: Some landlords are tempted to pile on, and exaggerate the charges. While emotionally tempting, it will do you no good in the end, and it is not legal. Being fair and reasonable in your charges will greatly increase your chances of recovering the debt. Now that you have your documents organized, and have mailed the move out statement, do not just put the file away somewhere and forget it. The money you
are owed is an asset. I can not tell you how many times I have heard the comment, ”That bum will never pay his bill!” If you have a crystal ball that tells you he won’t pay his bill, maybe you should have put it to use before he moved in. I can tell you with confidence that this way if thinking is costing landlords millions of dollars a year in lost profit.
 
With little effort on your part you may collect all or part of what you are owed.
 
Bill Gray is an independent consultant who has been assisting landlords and property management companies nationwide in addressing the issue of tenant debt since 1997.
 
Reprinted with permission by Paul Howard, Florida Landlord Network, flalandlord.com

I want to invest in real estate. Should I get a real estate license?

 

I have probably had at least a hundred people ask me whether or not they should get a real estate license in order to invest in real estate. There is
no quick and easy answer to this question. The answer really depends on what you plan to do in your investment career.
 
A real estate license is typically for someone who wants to work with other people to help them buy, sell, or lease their real estate. That is what a traditional real estate licensee (the legal term in Florida is “sales associate”) does. Most investors are not planning on working with others, but
I do know many sales associates who invest in real estate as a side business.
 
There are really three main reasons to get a real estate license outside of doing traditional Realtor® services.
 
Reason #1 is to obtain access to the local Multiple-Listing Service (MLS for short). The MLS is the database used by nearly all residential Realtors to advertise their listings to other Realtors and to get their listings posted onto major websites like Realtor.com, Homes.com, Trulia, Zillow, etc. The MLS has information on all listings past and present in the area including solds and expireds. It makes checking for comparable sales easy. MLS access can only be obtained by dues paying Realtors ®, assistants to dues paying Realtors®, and licensed real estate appraisers. A few people have asked me to let them be my assistant, but our local MLS has a limit of 2 assistants per Realtor® because they know that people try to get around their licensing rules. There is also a way to be what is known as a “Thompson Broker” and join the MLS without being a dues paying Realtor®. To be a Thompson Broker, you still need a real estate license and the annual fees are higher than those of Realtors®, so I do not see much benefit in going that route.
 
Reason #2 is to legally get paid commissions or referral fees without being a principal in the transaction. In Florida unless you are a principal in a transaction AND you have “substantial consideration” (meaning money to possibly forfeit) on the line to tie up the contract, you cannot bring buyers and sellers together and get paid a fee. You also need a real estate license to be a lease/ manage rental property for another person.
(Reference: Chapters 475.41, 475.42, and 475.43 Florida Statutes.)
 
Reason #3 is access to all the online contract forms. The FAR/BAR contract, comprehensive addendum (some 20+ pages long), Supreme Court approved lease, FAR listing agreements, and dozens of other Florida standardized forms. Most of the forms can be filled out either online or saved onto your computer’s hard drive for future use. And then edited and emailed to others in the transaction.
 

Here are a few of the other positives for obtaining a license.

 
#4 The educational benefits from courses offered and trade magazines and newsletters.
 
#5 Access to the legal hotline to answer all your real estate legal questions.
 
#6 The technology hotline. They will actually spend hours fixing computer software issues online at no charge.
 
#7 Ability to show properties to yourself without needing another sales associate to accompany you. A big obstacle if you are making lots of
offers on listed properties.
 
#8 Favorable income tax rules regarding active vs. passive income and tax write-offs. (Ask your CPA.)
 
#9 You can offer to list properties that do not make sense to purchase as an investment. Many times we offer to buy the property first and then list the property second - depending on the deal of course.
 

Now, for the negatives for obtaining a license.

 
#1 Educational requirements - prelicensing, post-licensing, continuing education, and several tests are mandatory.
 
#2 The costs in both time and money for the license, the application, and annual dues with the State, the board of Realtors®, and the MLS. You only need to join the board of Realtors® if you want access to the MLS though; you can still legally get paid a commission without joining the board
of Realtors®.
 
#3 Having to abide by the State real estate laws and the board of Realtors® Code of Ethics. Just because you are unlicensed does not mean that you do not have to abide by the State laws. Plenty of investors have gotten Cease and Desist orders from the State for the “investment activities” that were really just unlicensed brokerage activities. Read Chapters 475.01 and 475.011, Florida Statutes for what constitutes brokerage activities and who is exempt.
 
#4 Disclosure of your real estate license to potential buyers and sellers. Some “gurus” say this is a negative. To me it is actually a positive. Why would a seller or buyer want to deal with some unlicensed investor (who might just be a scam artist) when they can deal with someone that is regulated by the State of Florida? I use this argument all the time when buying property and helps me clinch the deal.
 
#5 Courts may hold sales associates to a “higher standard” then they would a non-sales associate. Another “guru” negative for not getting a license. However if you are doing lots of deals and are advertising yourself as a professional investor, you are going to be held to a higher standard than a layperson anyway. If you go to court, you still lose time and money even if you prevail. Most of the people that I know who have been sued by a seller or buyer or partner in a bad real estate investment deal did not have a license. And often they got sued because they were ignorant of the various laws regarding real estate - laws that get taught in the prelicensing real estate 101 class.
 
So what is my advice on getting a license? If you do not plan on listing and showing properties, do not get a license at least in the beginning. Do a few deals and find out if real estate investing is really what you want to do. After a few deals, then you can decide if you want to take the step of getting a license. Having the license is not for everyone, and there are plenty of successful investors that do not have a license. I have found it is better to get a license if you are doing many transactions on a regular basis or if you have a large portfolio of properties that you are working with. The more volume you do, the more you probably need the license. It does not necessarily need to be you that obtains the license though. I know many investment teams where a spouse, parent, child, friend, or employee gets the license.
 
I hope this article has been enlightening to you. I do recommend that everyone take the real estate pre-licensing course. You can take it at many of the local community colleges or real estate schools or even online. Even if you never get a real estate license, the course goes over many of the basics of real estate, the contract, and Florida law. The course can be a real eye-opener to investors. I have talked to a few investors that took the course and then realized that they had been breaking the law for years and did not even know it.
 
Until next time... happy investing.

Fannie Mae Now Accepting Online Offers for REOs

Reprint DSNews Article – By Carrie Bay – 02/07/2012

 

Fannie Mae announced Tuesday that it has expanded its online system to accept purchase offers for all its REOs listed for sale.
 
Real estate agents will now submit offers online on behalf of clients, receive receipt confirmation, and track the status of submitted offers through the HomePath. com website. HomePath is the GSE’s REO disposition operation.
 
In November 2010, Fannie Mae launched the HomePath Online Offers pilot in Orlando, Florida; San Diego, California; and Detroit, Michigan. Active
Data Technologies, Inc., the developer of the offer platform, commented just five months after the launch that the technology was seeing positive results in these three test markets.
 
Now, the Online Offers feature is available for all Fannie Mae-owned properties across the nation through HomePath.com.
 
“Collecting offers online through HomePath.com will provide greater transparency for homebuyers and their agents,” said Jay Ryan, VP for REO at
Fannie Mae. “Our online platform will make it easier to sell properties to owner occupants, which is a major factor in helping to stabilize communities across the nation.”
 
George Philbeck, a real estate professional with Keller Williams Advantage II Realty in Orlando, has been using Online Offers since the pilot launched in 2010.
 
“As an agent, I believe Online Offers is efficient, informative and user-friendly,” Philbeck said. “With Online Offers, my clients’ offers are guaranteed to make it to the right person at Fannie Mae for review. It has worked very well for me and for my clients.”
 
Real estate professionals representing buyers are able to connect directly with Fannie Mae’s listing agents through the HomePath website. The buyer’s agent can also find information on the site regarding financing and incentive options offered through HomePath.
 
The HomePath site offers a wide selection of properties, including single-family homes, condominiums, and town houses.
 
Brad Geisen, president and CEO of Active Data Technologies, called HomePath Online Offers a “step in the right direction” by automating the transaction process to move inventory quicker and get the housing market on the road to recovery faster.
 

Boom-Era Property Speculators to Get Foreclosure Aid: Mortgages

By Prashant Gopal
Reprinted from Bloomberg News

 

The Obama administration will extend mortgage assistance for the first time to investors who bought multiple homes before the market imploded, helping some speculators who drove up prices and inflated the housing bubble.
 
Landlords can qualify for up to four federally- subsidized loan workouts starting around May, as long as they rent out each house or have plans to fill them, under the revamped Home Affordable Modification Program, also known as HAMP, according to Timothy Massad, the Treasury’s assistant secretary for financial stability. The program pays banks to reduce monthly payments by cutting interest rates, stretching terms, and forgiving principal.
 

Home Sales

 
The government’s need to protect neighborhoods from blight and renters from eviction by keeping the current owners in place is outweighing concern that taxpayers will end up bailing out real-estate investors. The program is being enlarged after less than 1 million borrowers modified loans through HAMP, compared with the administration’s stated goal in 2009 of helping 3 million to 4 million homeowners.
 
“When we started the program we focused on owner-occupied houses because the need was so great and we wanted to target the efforts to that group,” said Massad. “Given where we are today, more and more people recognize that vacant properties are a problem no matter how they became vacant.”
 

Homeownership Rate

 
Investors are central to the federal government’s strategy for reviving real estate with home prices down 34 percent since July 2006 and as foreclosures deplete the pool of buyers who can qualify for a mortgage. Federal Reserve Chairman Ben S. Bernanketold homebuilders in Orlando, Florida last month that the U.S. economic recovery has been “frustratingly slow,” in part because weak housing markets are holding back consumer spending.
 
The homeownership rate, which peaked at 69.2 percent in June 2004, fell to 66 percent in the fourth quarter of 2011, according to the U.S. Census Bureau. A new Fannie Mae program designed to reduce the overhang of foreclosed homes is encouraging potential buyers, including private-equity firms, to purchase properties in bulk and convert them to rentals. Almost one in four home purchases in January was made by an investor, according to the National Association of Realtors. And investment and vacation properties made up 21 percent of houses in the foreclosure
process in January, according to Irvine, California-based RealtyTrac Inc.
 

‘Huge Change’

 
The Obama administration announced last month that it would triple incentives to owners of mortgages that reduce home-loan debt and expand eligibility to borrowers struggling under the weight of other liabilities, such as medical bills. The extension will apply to all loans, including those held by Fannie Mae and Freddie Mac, the governmentsponsored mortgage financiers. About 700,000 landlords will be eligible under the revisions to HAMP, which has been plagued by consumer complaints about lost paperwork, servicer delays and restrictive eligibility requirements.
 
“This is a huge change,” said Dan Immergluck, a housing policy professor at Georgia Institute of Technology. “The excessive concern to make sure nobody who played any role in creating the problem gets any benefit has paralyzed the response.”
 
The danger of blight to communities from foreclosed, vacant properties is still pervasive six years into the slump. Empty houses push down a neighborhood’s property values, according to a 2009 report by the Center for Responsible Lending, which said foreclosures will affect 91.5 million nearby homes through 2012. That will reduce property values by $20,300 for each household, according to the group, which seeks to protect homeownership and family wealth.
 

Buy-And-Flip Investors

 
By widening the program, the plan will inevitably offer aid to buy-and-flip investors who pushed prices higher during the boom by taking out mortgages with little or no down payment. Speculators accelerated the crash because they were quick to default when prices fell, according to a September report from Andrew Haughwout, Donghoon Lee, Joseph Tracy, and Wilbert van der Klaauw of the Federal Reserve Bank of New York.

 

At the peak of the boom in 2006, more than a third of home purchase loans were made to borrowers who already owned at least one house, according to the study. In California, Florida, Nevada, and Arizona, which had the most pronounced bubbles, investors accounted for 45 percent of the mortgages.
 
While survivors of the property bust are now long-term investors, some of them may have started out as flippers, Haughwout said.
 

Taxpayer Dollars

 
While speculators are “no one’s first priority for receiving taxpayer dollars,” providing assistance to a large class of multiple property owners and “blanket modifications offered regardless of occupancy” would be more efficient than restrictive programs, the Fed said in the September report.
 
Chandrajit Bhattacharya, an analyst at Credit Suisse Group AG in New York, said that the HAMP changes will result in about 200,000 modifications for investors. While it won’t keep bondholders “up at night,” it will probably slow the process of liquidating foreclosed homes.
 
Bhattacharya said he doesn’t understand why the government should be subsidizing workouts for property investors who are in the business of making money on their purchases. Vacancies are unlikely to increase if the houses go into foreclosure and are purchased by owner-occupants or new investors who fill them with tenants, he said.
 

‘Ridiculous’ Policy

 
John Burns, an Irvine, California-based real estate consultant, said it’s “ridiculous” for taxpayers to come to the aid of individuals who made bad bets.
 
“What kind of precedent are you going to set?,” Burns said. “Are you going to refund people who lost money on the stock market too?”
 
Government help to homeowners comes after President George W. Bush’s administration rescued banks with the Troubled Asset Relief Program
in 2008, when the housing crash sparked the worst financial crisis since the Great Depression. Wall Streetbenefited from Federal Reserve
emergency programs to keep credit flowing, while Bush and President Barack Obama directed federal money to save companies including General
Motors Co. (GM) and Chrysler Group LLC. The Obama administration then pursued a series of programs meant to reduce foreclosures.
 
John Russell, 61, of Northville, Michigan, said he was never a speculator seeking to flip houses. He bought four rental properties in neighborhoods in the state more than 10 years ago and said he planned to keep them for decades more. Now the houses are worth far less than he owes, his rents have tumbled, and he has to spend about $20,000 a year to keep them operating.
 

Chrysler Bankruptcy

 
Russell, a retired Chrysler executive whose pension was cut during the automaker’s 2009 bankruptcy, said two houses are in foreclosure and he can’t afford to keep them without the federal government’s help.
 
Banks have repeatedly rejected him for a modification because they aren’t primary residences, he said. Russell said he simply wants his mortgage bills to be brought in line with the rents.
 
“I guess what you’re always asking yourself is the market going to come back?,” Russell said. “As an investor you want to think that some day the house will be worth more than it is today.”
 
Moose Scheib, chief executive officer of LoanMod.com, a Dearborn, Michiganbased (MBASMI) firm that advises homeowners facing foreclosure, said
many of the investors who hung on through housing bust are “mom and pop” property owners who bought real estate as a source of retirement income. Russell is one of his clients.
 
“Our economy is in trouble, housing is in trouble,”Scheib said. “Whether you’re fixing it on behalf of investors or homeowners, it benefits everybody to do that.”
 

101 Ways to Find Real Estate Deals...Part 2

 

This is a continuation of last month’s blog of ways to find real estate deals and motivated sellers. You can either target a specific type of property or a specific type of seller. Both can be great strategies for finding your next property.
 
51. Ads at venues – bowling alleys, movie theaters, sports stadiums, baseball fields.
 
52. Ads on taxi cabs, buses, and other vehicles – mobile billboards.
 
53. Clothing – T-shirts, baseball hats, and book bags with your ad on them.
 
54. Accessories to hand out - magnetic calendars, ball point pens, drink holders with your ad on them.
 
55. Sponsor a sports team and advertise on their uniforms.
 
56. Canvassing a neighborhood, talk to neighbors, door hangers/fliers
 
57. Radio ads and paid programming shows.
 
58. Television ads.
 
59. Direct mail and postcards – expired listings, pre-foreclosure, probate, delinquent taxes, liens, absentee owners.
 
60. Private money lenders or people holding seller financing that might consider selling their mortgage at a discount in lieu of avoiding foreclosure.
 
61. People who have done a mortgage modification or had a foreclosure dismissed within the recent past - odds are they are still struggling.
 
62. Property owners in bankruptcy.
 
63. Property owners with tax liens, judgments, or construction liens recorded against them.
 
64. Contact the person that owns the judgment or construction lien that might sell at a discount instead of trying to foreclose.
 
65. Property owners with HOA or condo liens recorded against them.
 
66. Drive neighborhoods looking for vacant and abandoned homes.
 
67. Properties with title problems. 
 
68. Properties on state/county government lands available for sale list.
 
69. Properties that can be combined with others to make the whole parcel more valuable.
 
70. Properties that can have the zoning or land use changed to make the parcel more valuable.
 
71. Builders with excess inventory of homes for sale.
 
72. Government agencies - FDIC, SBA, USDA, VA, RICO, U.S. Customs, other federal, state, county, and city - all have surplus, foreclosed, and seized properties.
 
73. Properties with environmental contamination or brownfields.
 
74. Condominium conversions with multitudes of unsold units.
 
75. Developers with unsold empty lots and other inventory.
 
76. IRS Auctions.
 
77. Appraisers and Realtors® doing price opinions (BPOs) on foreclosures.
 
78. Houses with overgrown yards and high grass.
 
79. Houses with blue tarps on the roof.
 
80. Houses with boarded up doors and windows.
 
81. Contact community banks and credit unions regarding their REO inventory.
 
82. Contact finance companies regarding their delinquent loans and REO inventory.
 
83. Contact bail bondsman regarding their delinquent loans and REO inventory.
 
84. Network with credit repair companies to assist their customers that must sell.
 
85. Farm specific neighborhoods and become the resident expert.
 
86. Funeral homes and obituaries.
 
87. Network with real estate servicers – title companies, insurance agents, mortgage brokers and lenders – everybody knows someone in distress.
 
88. Old people in big houses – empty nesters.
 
89. Mobile home parks that allow rental units – get to know the park manager.
 
90. Network with home inspectors.
 
91. Network with termite (WDO) and pest control companies.
 
92. Network with moving companies.
 
93. Local housing authority with a list of Section 8 landlords.
 
94. Door hanger flyers.
 
95. Pizza boxes.
 
96. Mail carrier and other delivery people. They know the empty houses in the area.
 
97. Free & clear houses. They might sell with seller financing.
 
98. Move-up buyers. People that need to sell and get a bigger house but feel stuck.
 
99. Military transferees.
 
100. Properties that can be subdivided or re-developed.
 
101. Keep brainstorming for new ideas ...be creative.

Realtor.com Lists Top 10 Turnaround Towns

By Esther Cho – 02/17/2012

 

Realtor.com released its list of the top 10 turnaround towns for the 2011 fourth quarter. While the 10 towns listed – eight of which are in Florida – suffered from high foreclosure rates, they are now rebounding. The current list was developed based on market rankings on year-over-year median
price appreciation, reduction in yearover- year median age of inventory, and inventory reduction levels from Realtor. com, as well as unemployment rates on a year-over-year basis, according to a release from Move.com
 
1. Miami, Florida, at number one, had sales of existing single-family homes shoot up 51 percent in the third quarter compared to a year ago, according to the Miami Association of Realtors. The median age of inventory is down 30 percent from a year ago.
 
2. Phoenix, Arizona is returning to stability, with median list prices up 15.38 percent compared to a year ago.
 
3. Orlando, Florida saw its median age of inventory go down to 73 days, a 36 percent drop from a year ago and inventory also declined 44
percent compared to a year ago.
 
4. Fort Myers-Cape Coral, Florida saw its sale price increase 20 percent over the past year, more than any other Florida market, though sales are down 13 percent.
 
5. Sarasota-Bradenton, Florida saw an increase in sales by 17 percent over last year. Median list prices were also up 2 percent.
 
6. Boise City, Idaho experienced a reduction in foreclosures, helping the town also see a 40 percent year-over-year decline in inventory. This reduction in inventory also led to a 23.42 drop in the median age of inventory.
 
7. Naples, Florida had a 13.38 percent year-over-year increase in median list prices, and a 35.94 percent reduction for sale inventory.
 
8. Fort Lauderdale, Florida reduced its inventory by 41.63 percent since last year, and sales were up 18 percent year-over-year.
 
9. Lakeland-Winter Haven, Florida increased by 9.09 percent in median list prices compared to a year ago. Inventory declined 35.28 percent
since last year.
 
10. Punta Gorda, Florida made the 10th spot with median price appreciation up 17.79 percent compared to a year ago.
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by Dr. Radut.