Pro: It goes up.
While other investments tend to fluctuate, real estate, especially in desirable areas, usually becomes more and more valuable. One thing that remains true of this country is that our population is steadily growing. Eventually, all of those millions of people are going to need places to live.

Con: It goes down.
Just as nothing is completely certain, whether your real estate will be as profitable as you’d like depends on a variety of factors. Find out what you can about the area you’re buying in-scout out local businesses and talk to your potential neighbors. What good things are happening in your area? Are there aspects that worry you? Make a list. Also consider how long you want to be there. While flipping is possible, most of the time you need to be patient before your home sells for the amount you’d like.

Pro: Your monthly payment is fixed.
Aside from taxes, which fluctuate every year, your monthly payment will usually be fixed. This means no landlords raising rent and no trying to calculate your changing home budget. In addition, your mortgage company will make all this painfully easy for you to pay on time, and most mortgage companies have convenient ways to pay online.

Con: Your taxes can go up.
If taxes in your neighborhood rise, that’s a good sign your property value is rising too. Sit tight and be patient-the taxes are usually going to schools and roads and funds that will profit the community. If you can afford to pay them, then by the time you sell your home, the value of it will be high and your neighborhood well worth living in (or moving from, as the case may be.)

Pro: Tax benefits.
There are many tax benefits you can gain from owning a home. You can deduct most repairs, mortgage interests, and taxes. Talk with your accountant about these options, and save all your receipts from anything having to do with your home.

Con: You can be foreclosed on.
In the event you can no longer afford your property, the government can seize your home. Foreclosures are rare, however, and can be avoided by proper budgeting and by paying attention to your mortgage statement. If there is anything you are confused about, most mortgage companies offer friendly and helpful advice. After all, they have an interest in your interest, too.

Pro: You can actually enjoy and use your real estate investment.
Unlike cars, which depreciate with wear, and stocks, which you can’t ever see or play with, your home can be a secure and enjoyable investment if you choose to live in it. You can tear down walls and paint the trim loud colors. You can open up ceilings and put a Jacuzzi in your master bath. You can sit on your new cedar deck in the mornings and watch the birds come flocking to your yard. You can make it messy or tidy it up. It’s yours.

Con: Owning a house is not always easy.
Owning a home can be difficult at times. You might need to rewire a switch or replace a door knob. You’ll need to keep up your yard and regularly maintain your appliances so they last longer. Keep a list of handymen handy, and every now and then check your roof, trees, and plumbing. Keep some money in the bank in case something does happen that insurance won’t completely cover. Monitor your property carefully, and it will be worth your while when (or if) it’s time to sell.

Traditional mortgages don’t always require large down payments. If you have a good income, stable job and good credit, you should easily be able to get a traditional mortgage, even without a down payment.

However, if your credit is bad, there are still plenty of options for getting into the real estate market. Despite the mortgage-due-on-sale clause, sometimes a buyer can take over payments on an existing mortgage. It is very unlikely a bank will demand the full mortgage, and risk ending up having to deal with a foreclosure, if monthly payments are being made on time. These sales, called “subject to” sales. In these cases, the seller will require a second mortgage to get their equity out of the home. If there is little or no equity in the home, a contract can be arranged wherein the buyer agrees to pay off the sellers mortgage in a set number of years when they in turn sell the home. Often, this deal is made with the promise of a percentage of the buyers profit going to the seller when the home is sold again.

These contracts allow a highly motivated seller to walk away from their mortgage and either easily get a second mortgage, or start fresh, but receive a check in an agreed upon number of years for a percentage of the homes re-sale. As a buyer, you can assume the mortgage, either live in the home or rent it out, then when it has gained equity, sell it and only then give the person you bought it from a small sum.

While subject-to sales sound complicated, they can really be a great deal for both buyers and sellers with little money.

A recent survey by the Office of Federal Housing Enterprise Oversight shown that there are some local markets that are faring well, despite average housing drops. This stability can be hidden by the national survey figures and ignored when discussions about the dropping real estate market are made.

So who hurts the most in a housing drop? Coastal regions seem to fare worst of all.

In a report done on 291 cities, there were widespread declines around the area. However, some of the worst drops were found in California. Here, homes dropped in price by 6.7 percent compared to their value the year before. Florida was also hit hard with 4.7 percent. Is the bubble bursting for these real estate markets and reducing the real estate value to a more appropriate level, or are coastal regions just more susceptible during housing drops? Can it be a combination of these factors?

Despite these dramatic numbers, the rest of the country is holding on better than here. Homes throughout the rest of the country lost less than 2 percent, while some areas stayed the same. Remarkably, there were even some areas that improved despite national losses. The middle of the country saw more stability since they were never affected by the same rushing price increases seen in Florida, California, Arizona and Nevada.

There were eight states that even saw house prices rise over the year, including:

Utah 9.3 percent

Wyoming 8.3 percent

North Dakota 7.8 percent

Montana 6.9 percent

Texas 6.2 percent

New Mexico 5.4 percent

Washington 5.4 percent

Oklahoma 5.1 percent

Of course, like any other market, there are a number of other economic developments that are still being watched to see how they will impact these housing numbers. Some of these factors include the number of unsold homes that are currently available in many markets. It seems the inventory for unsold houses is at a historic peak and continuing to grow. Interest rates and the overall health of the U.S. economy will directly impact these unsold homes and the comprehensive inventory rates for these homes.

What are some of the things to look out for when analyzing the housing market?

The number of existing unsold homes rose to 10.3 months until they are sold. In a balanced market, it should take five to six months to sell these homes, indicating that we are currently seeing a swollen number of unsold homes.

Default notices, auction sales and bank repossessions are continuing to grow.

Each year, a survey is done with construction professionals to gain their views on the existing market conditions. A number over 50 will show positive optimism for the year ahead. October and November of 2007 saw a historic low of 18.

5.59 percent of mortgages had late payments as of third quarter 2007. Its the highest delinquency rate since the report has been tracked in 22 years and an overall increase of .92 percent.

Dependence on the builder’s 1 or 2 year warranty is the most general reason, why buyers of new homes miss out on home inspections. In many cases, this has proved to be a pricey error. Buyers assume that all noteworthy defects will become perceptible during the warranty period. However, how many people crawl through the garret of their brand new home to verify the insulation, wiring, ductwork, framing, and plumbing are in proper condition?

Faulty foundations, moisture, faulty ductwork, and drainage are some of the most common issues inspectors find in new home construction today. Many times these defects show up months or even years, after the buyer has moved in.

Many home inspectors offer to inspect the home for faults to the buyer at the various faces of construction to ensure nothing is unnoticed. Once the drywall is installed it is very difficult to find issues within the walls such as wiring or insulation inadequacies.

Some builders hire home inspectors themselves to generate a better quality home. Home inspectors, while working directly with the builders or the promoters, provide an impartial, 3rd-party evaluation, verifying a builder’s quality of construction. Occasionally builders hire an inspector to only inspect certain areas of the home such as the attic, or they may hire the inspector to do a full home inspection at various phases of the construction. New home inspections can significantly reduce customer call backs and reinforce a builder’s reputation, ultimately helping consumers buy better homes.

Buyers habitually assume brand new homes are excused from any defects. But when making such a large deal, why not invest in a home inspection to discover defects that might otherwise become hidden or not easy to repair? A small investment of a few 100 dollars could potentially save tens of thousands of dollars in the long run. Houston Homes does exactly this for you. At Houston Home they inspectors will take care that your new house or the old one is inspected properly and evaluates it. This in turn will help the buyer in choosing the right kind of house for him.

Profits from the sale of real estate will vary greatly depending on many factors. You have the type of property, the location of the property and the property market at the time of the sale to consider. Accurately tracking a value to lead to profit is next to impossible without endless resources at your disposal. This is why you have to be very careful when you are attempting to get involved with the real estate market.

There are some ways that you can increase your chances of real estate profits. The following tips will help you better understand this sometimes shaky market and show you the way to reduce the risk factors that are often in place. Knowledge is vital to success when investing in real estate. It is best to attain all the knowledge that you can before making any kind of financial transaction for property.

Value Versus Price

There is a big difference between value and price when it comes to real estate. This is very similar to the antiques market. Take for example an antique table, over two hundred years old. Now then, there may be only two of these tables known to exist and an appraisal puts the value of the table at one hundred thousand dollars. But when you go to sell it you can see that it sells for only seventy-five thousand. This is because there is a difference between the value and what a person is willing to pay. The same is true for real estate.

Interest Rates

Then you need to consider interest rates on property loans. The rates are always moving one way or another. The higher the rates go the less buyer confidence there is. People in the world are very sensitive to how much they will be paying in interest on a particular loan. So the higher the rates go the less that people want to buy because they fear losing the property to foreclosure. The exact opposite is true when the rates start to drop.

Demand

Finally there is the idea of supply and demand. Prices go up on products and services around the world based on demand. This means that the price of a home or property is going to rise when there is a limited amount available. This is the time to sell to absolutely maximize the profit potential of the property that you have. However, you have to be aware that this can turn with little notice and you could end up with a property that is not in demand.

When you flip properties, you actually buy the property and hold onto it for a short period of time before turning it over to another buyer or investor.  The best way to do this in this market is to buy rehab houses, although there are still wholesale houses that do not need any work that can be purchased below market value, if you know where to look.  The trouble is that most people do not know where to look.  Nor do they have the time to hunt down each lead.

Thinking of working with an agent? Chances are that by the time the property has gone to  an agent, it has already been scoped out by other investors who deemed it to be a poor bargain.  Plus you have the agent’s commission to think about.

Successful real estate investing means being there first and not last.  That is all there is to it.  Know your market, know the value of the homes in the area and subscribe to a list that will allow you to know when these homes become available.  Whether you want to buy rehab houses or just wholesale houses that are priced below market value because of pending foreclosures, you can do so if you subscribe to a wholesale properties list and know the market.  This is the best way for you to be come successful at real estate investing.

All I can say is that it’s about time.

Now don’t misinterpret that statement – I believe that loan modifications may be part of a viable solution in getting our country out of the current housing crisis, although it’s too soon to determine their actual long-term effectiveness.

I also have nothing against loan modification companies in general nor the people that work at them.  I’ve met or connected with many individuals that are intent on really helping people and do their best to do so.

 Lastly, many homeowners do need some type of assistance as lenders don’t have their best interests in mind when they do loan modifications and many lenders draw the process out seemingly forever.

On the other hand, I’ve personally heard many stories from homeowners victimized by loan modification companies, have heard the same stories from mortgage associates and have read many more on the internet.

From Subprime to Loan Mods

I predicted over a year ago that loan modification companies would become the new subprime “churn & burn” debacle.  This was triggered by my observations that many local subprime loan originators were flocking to do loan modifications.  I even heard several stories of these originators approaching the same clients they’d put in subprime loans, with offers to now do loan modifications for them.

There really is no barrier of entry to do loan modifications.  All you need is a phone and the ability to find clients.  Finding clients is easy with so many homeowners struggling with their mortgage payment.

This should all sound familiar as much of it applied to the mortgage industry in general until recently, when state governments started requiring individual licensing of loan originators and the federal government created a national registration system.

When Michigan enacted its Loan Officer Registration Act, April 1, 2009, the state expected 10,000 to register based on past data.  To date only 3141 have met the requirements of 24 hours of class time, passed a multiple choice test and background screening.  How many of the unregistered do you think are now using their limited mortgage knowledge to do loan modifications?

Desperate People do Desperate Things

One would think that a homeowner, burned by a bad mortgage, would be a bit more cautious when considering a loan modification. 

The number of loan mod companies popping up however, prove otherwise.  It’s basic supply and demand – the numbers of these companies wouldn’t be expanding if there weren’t desperate homeowners to support them.

So, how do homeowners get burned by these companies?  In no particular order: 

Paying upfront fees for a modification never completed. Being told they’ll get a principal balance reduction, when in reality it rarely happens. Getting approved for a modification that raises their payment or insignificantly lowers it. Following advice to not contact their lenders during the loan mod process, only to get foreclosed on. Not being made fully aware of the possible credit damage, legal issues and tax consequences. 

It’s all boils down to these companies over-promising and under-delivering.

What Took the Government So Long to Act?

If I saw this problem coming over a year ago, you’d think the smart people in our government would’ve saw it coming also. 

In a recent informal poll of mortgage originators by “Think Big Work Small”, 81% responded that over 50% of those doing loan modifications are “rats”.

Unfortunately, just like with the mortgage meltdown and the banking crisis, the government only seems to act after the damage has already been done.  Here’s a list of the agencies currently chasing loan mod companies: 

Federal Trade Commission United States Attorney’s Office for the Central District of California Arizona Attorney General’s Office California Department of Justice California Department of Real Estate State Bar of California Colorado Attorney General’s Office Idaho Attorney General’s Office Illinois Attorney General’s Office Iowa Department of Justice Kansas Attorney General’s Office Maine Attorney General’s Office Maine Department of Professional and Financial Regulation, Bureau of Consumer Protection Maryland Department of Labor, Licensing, and Regulation, Office of the Commissioner of Financial Regulation Massachusetts Attorney General’s Office Michigan Attorney General’s Office Missouri Attorney General’s Office New Jersey Attorney General’s Office New Jersey Department of Banking and Insurance New Mexico Attorney General’s Office, Consumer Protection Division North Carolina Department of Justice Ohio Attorney General’s Office Oregon Department of Justice Texas Attorney General’s Office Washington Attorney General’s Office 

Charges are being filed because of deceptive and/or false advertising (Section 5 of the FTC Act), charging upfront for services before rendered, unlicensed activities, mail fraud, attorney misconduct and several others.

Solutions

The Obama administration really needs to step up and address this issue quickly.  The crooks and sharks need to be forced out of the industry to protect homeowners.  Honest professionals also need protection – from overzealous government agencies.  It’d be a real shame if those that were actually doing good things for homeowners were put out of business, fined or jailed. 

An easy to implement option would be to allow loan modifications to only be done by licensed mortgage companies and attorneys.  The mechanisms are already in place across the country to control this.

A better solution would be for the administration to create a national solution instead of letting all 50 states come up with their individual plans. 

For a list of the loan modification companies currently be investigated, click here and then click on “preview”.

There are several ways to create wealth from Real Estate:

Residential Real-Estate – Buy/Hold. Flip, Rehab, Notes, Buy-Lease, Buy-Owner-Finance and so on. Commercial Real-Estate – Build, Acquire and Manage strip-malls, office-buildings. Multi-family Real-Estate – Build, Acquire and Manage multi-family apartments, apartments homes, Mixed-use Real-Estate – Mix of multi-family, retail and some commercial

All have their merits and de-merits like any other investments. Multi-family becomes a great investment because those who cannot afford to purchase a house need to rent it. So there is always demand and it may vary based on where the property is located and what amenities are provided with the rental.

Another reason why Options 2, 3 and 4 are more attractive because these assets’ are valued based on not market-place and location but more importantly cash-flow. In other words, the cash-flow takes care of the location, amenities and proximity to other facilities such as retail shops, transport station and access to highways.

Off-course, like any investment for it to be successful money-maker, the asset has to be acquired or built at ‘right’ price. One thing the recent recessionary market has taught our ‘loose-lenders’ is to evaluate the asset value very closely. This due-diligence by the lenders actually helps the investors because they know that the lenders, unlike in the past, will not bloat the market-value of the property.

Working with the right acquisition company and developers is the key. Many of the so called ‘gurus’ claim to be doing a great job of taking investment dollars and purchasing the assets at not so good prices, at least not a good price for the investors for sure. If the ‘gurus’ are so good at acquiring these properties, they did not have to go around spending millions in marketing to make multi-millions by charging students for their so called training classes. Well, not all the ‘gurus’ are same either.

It is also important how the loans are acquired and whether or not the investor and investors’ dollars are at risk. There are all kind of loans out there. The one who makes the most out of those is the lender itself and then makes it a ‘recourse-loan’. The right investment house is able to get great loan terms and ‘non-recourse’ hence protecting the Limited Partnership that may be acquiring the property as well as the investors.

If one does not have an experience in investing, it is a good idea to understand the terminology and pitfalls before investing. A well-managed Class-A multi-family asset can provide returns in mid to high teens easily. Off-course, it is not easy to make that claim across the board since there are lot of variables so be sure to do your own due-diligence before investing in an asset and in the market.

The key drivers that would drive the occupancy are: (1) Job Growth and (2) Infrastructure Growth. For example, there is a lot of infrastructure and employment growth in Texas triangle – Dallas, Austin and Houston. These are certainly hot places to focus for a multi-family investing since it buys more for your dollars.

Real Estate Appraisals – Agents around the country have reported issues with home appraisals in the past 12-24 months.  Many residential sales transactions have fallen apart due to low appraisal values that are below the contract sales price and often below the previous sales amount the current owner paid for the property.  This has created problems not only for the buyer and seller, but for the entire real estate industry and has led to a decrease in market value, sales, and confidence in the recent past.  Dallas Real Estate is now breaking through these barriers and home appraisals are showing signs of stabilization and growth.  Many agents have reported that homes in Dallas are appraising for or above the finalized contract price.  This is great news for local and national buyers, sellers, and Realtors.  The Fort Worth Real Estate market is also moving forward with positive statistics on homes sales indicating a move away from the recent recession.  

The road to recovery will not be without obstacles to overcome.  Unemployment continues to effect all areas of business and contribute toward the high foreclosure rates throughout local markets.    

Some basic steps to fix your credit to improve credit score are:

Get all your credit reports, from all three agencies, which are Trans Union, Experian, and Equifax Make sure all the information on the reports are correct Fix any and all information that is incorrect, misspelled, or wrong in any way Have any incorrect accounts or information removed immediately Contact the credit bureaus by filling out the appeal form they offer and by phone when necessary Contact all banks and credit card companies to see about negotiating terms to lower your interest rate, payment amount, and to remove all late fees and over limit fees Cancel almost all your credit cars, keep one or two for emergencies, but cancel the rest Close all loan accounts, even if they are not paid yet, close them now as you pay them off If the banks or credit card companies will not work with you, contact a credit repair agency to negotiate terms for you Make sure to make all payments on time from there on out Do not open any new accounts or apply for any additional loans, the extra hits on your credit will lower your score further, especially if you are denied

Credit report repair usually takes time.  It will not happen overnight.  It will take a lot of patience and due diligence to improve credit score.  Making payments on time every month and correcting your credit reports will make the biggest difference.  Also, again do not apply for more credit.  Every hit on your credit report lowers your credit score even further.  Remembering that it will take time and not to become frustrated or give up.  Following these simple steps to repair credit report will pay off over time.  After a year or two you will see definite improvements on your credit reports and probably in your business relations as well.  It is never a hopeless situation, no matter how bad your credit report looks, it can be repaired.  Information does fall off after a few years and you can get your credit back on track and in good standing again.