Short Sale Investing

Short Sale Investing

Across many parts of the United States short sale properties have become the norm. Banks agree to do short sales when the homeowner owes more then the current value of the property. Most times the homeowners can no longer afford the payments and the property will be lost in foreclosure if it’s not sold.

A year or two ago the banks were scrambling to try to figure out what to do with these offers and how to handle a short sale. Now they have huge departments in multiple states that do nothing but handle these all day long. And many banks are overwhelmed with the flood of offers they are being sent. The volume of paperwork alone sitting on the processors desks is enough to clear several forests!

Most banks have their own process for short sales. This process must be followed if you are to stand a chance on getting the deal closed. Even when you have completed everything they require, it can still take from 3 to 9 months to get a deal fully approved.

For those who are patient that can be a big payoff. On the other hand, with the market continuing to decline in some areas, it can end up being no better then buying a home at current market value. Due to the lengthy process a majority of the time it’s not the first offer that closes the deal. It’s actually more like the 3rd or sometimes even the 4th buyer that will end up with the house.

Part of the process can be helped along by using someone that has a lot of experience with getting short sales closed. The process is time consuming and can be frustrating for most people, which is why a very experienced short sale agent or negotiator is so important. It takes more then just sending in paperwork and waiting for an answer.

Most banks will let you know, usually after months of waiting, if your offer is in their guidelines. That information will come out after it has gone through most of the process. Some banks are now doing a mini evaluation of the offer early on if they have a current appraisal or broker price opinion on file. With the changing market an appraisal that is 4 or 5 months old probably doesn’t reflect the current market and a good negotiator, working for you,will know that.

Investors who are willing to tough it out usually end up with a good deal. Most will be buying with cash which is a big plus for the homeowner since mortgages are much tougher to get then a couple years ago. There aren’t all that many investors in the market for short sales.

Most investors can buy and sell several REO (bank owned) homes in the space of time it takes to get one home through the short sale process. Like any other deal they have to go in with the right offer to make it worth while.

So if you want to invest in a short sale deal go for it. Just remember you need to be willing to wait several months in most cases before you’ll know if it’s going to be accepted by the bank. The process always happens in the banks time frame not the buyers.

Investment Opportunities in the Red Meat Industry in New Zealand

Investment Opportunities in the Red Meat Industry in New Zealand

New Zealand has a long history of 125 years accompanied by a solid reputation of exporting high quality meat. There is strong demand for meat in domestic markets as well as international markets and New Zealand’s pastoral meat industry has so many investment options for foreign investors.

The New Zealand red meat industry is thriving on ever-growing product demand. New Zealand exported meat worth New Zealand$4.6 billion in year 2006 and the export figure has seen consistent increases over these years.

New Zealand’s meat industry has a reputation of providing safe, clean and reliable meat products and the country has a proud tradition of being a reliable supplier for major meat markets worldwide. The industry has considerably improved with time and has developed ways of providing high class meat products to international customers.

The growth in trade can be attributed to the fact that many meat producing nations have faced disease outbreaks while New Zealand has been able to maintain disease free environments. The absence of foot and mouth disease and BSE disease in New Zealand increases the prominence of the New Zealand brand and the meat products to be able to gain entry in the world’s most controlled and restricted meat markets. New Zealand animal husbandry is known to produce heavier and healthier livestock. Eighty to ninety percent of beef, sheep and lamb meat produced in country is exported to global markets.

The other factors that contribute to the high growth in this industry are New Zealand’s strong processing capacity in this sector which means their is less time required to transport animals from farm to production and processing units as many large companies have setup plants throughout the country. Moreover, the animals are fed on grass in natural surroundings and not on artificial feed in housing.

New Zealand has several industry bodies, research organizations and market participants which work with the government and meat industry to develop new cost effective processes and techniques that reduces overall cost and maximizes the value of meat products.

The New Zealand government has regulations in place which prevents animal maltreatment and bans any kind of non sustainable farming practices. This achieves significance as the global community has become more sensitive towards such issues.

New Zealand has well established export channels to EU, United States, Japan, Canada and Republic of Korea. Biosecurity and assurance procedures are fundamental foundations of New Zealand meat industry. Investors have huge opportunities in the refrigeration sector and technological assistance to increase the yield.

New Zealand farmers and processors have shown an inclination to work with research organizations and technology providers to innovate production techniques. Consistency in supply, quality of product and breakthroughs in the range of cuts will help New Zealand meat producers. New Zealand is known to conduct genetic screening of livestock for particular characteristics which leads to the high quality of meat products New Zealand finishing farms receive animals prior to processing.

These farms either fatten them or promote qualities in them that are desired in the end products. Running animals to these processing farms leads to higher quality meat which invariably leads to higher returns to processors and farmers. NZTE can help you identify the right opportunities of investment in this sector. It will provide not only the important information, but also the required assistance to set up Greenfield project.

Investment Property – 7 Critical Questions to Consider Before Building a Property Portfolio

Investment Property - 7 Critical Questions to Consider Before Building a Property Portfolio

To be a successful property investor, there are many things you need to consider. Ideally, these questions should be researched and answered before you start on your property-investing journey. As we have found, it can be expensive to later find out you should have bought a property in a different structure, or have committed to the wrong type of loan for your investment strategy.

1. Have you got an asset protection plan?

You have worked hard to build a property investment portfolio. You do not want to risk losing your assets due to litigation.

2. Do you have personal financial statements to monitor the performance of your investments against your goals?

Most businesses have a Balance Sheet and Cashflow Statement. Businesses know the importance of knowing both the current financial state and financial performance of a business. If financial statements are important to a business, they are also important for you personally. After all, you are a business. You have a primary aim; you have goals or targets. You need to know the current financial state and performance of yourself in relation to achieving your primary aim.

3. Is your primary investment purpose to create wealth or cash flow?

This is a very important question to ask very early in your property investment career. Typically, the type of property with the potential to generate wealth is different to the type of property with the potential to generate cashflow. Some properties will work for both strategies, however you must be clear whether your intention is to create wealth or cashflow and be able to identify the right type of property for your strategy.

4. Do you have the right finance model set up?

If you are a buy and hold investor aiming to hold a portfolio of a number of properties over the long-term, you need to ensure you have the right finance structure set up. Without the right finance structure, you may find lenders unwilling to lend you more money, and this will restrict your ability to purchase an additional property.

5. Do you have access to professional tax advice?

Getting the right advice can sometimes mean the difference between a property that may be costing you money, to one that generates you positive cash-flow. The right knowledge and advice will ensure you are maximising your tax deductions.

6. Do you have the ability to manage your personal cash-flow?

Good money management skills are critical to a successful long-term property investor. They are a foundation skill required to achieve financial independence. Your money management skills could mean the difference between the ability to hold your property portfolio or sell a property.

7. Have you selected a property investment strategy that is repeatable?

Find a strategy that works for you. One that works for you is one that you enjoy, have the time to commit to, have sufficient experience and knowledge and have contacts in the industry to assist, where necessary.

Property investing is a long-term strategy, so you need to select a strategy that you can commit to for the long-term. A repeatable long-term strategy is one that will reap you rewards due to your efficiency, focus, expertise, passion and discipline.

Hard Money Lending Runs on Logic

Hard Money Lending Runs on Logic

Just to be clear, logical lending doesn’t necessarily mean that it’s an easier or simpler process. Most borrowers, brokers and investors are well aware that getting deals funded is tougher today than it used to be. Private lending isn’t a “no questions asked” solution anymore.

If you’re in the industry, whether you’re a broker or an investor, it’s important that you spend your time focusing on the transactions that do make sense in this type of market, and the way to identify those comes down to some very basic logic. Utilizing some dumb-downed criteria can be a quick way to tell a good deal from a bad one:

Property Location

Hard Money Lenders only want to make loans on property that is still in demand. Property in the boondocks or even in some slumping cities just isn’t in demand, which means that discerning what its real market value is can be very difficult. Appraisals tend to vary widely and there’s no way to gain confidence that rural properties would even sell if they had to be foreclosed upon and auctioned. Focusing on properties that are in demand is a big step in identifying good deals that are still doable in today’s marketplace.

Property Type

Certain property types just aren’t worth the time anymore. A good example is land. Why bother working on land deals when there are plenty of opportunities to fund loans that are secured by property that’s actually in demand? More good examples are industrial properties, adult venues, or trailer parks.

It all comes down to the same question: Why bother? These property types pose a number of risks and issues, and a hard money lender simply isn’t going to take the time to get down to the nitty-gritty with these types of properties. Unless the loan carries an ultra-low loan-to-value, it’s time to skip it and move on.

Borrower’s Character

Sometimes borrowers can just give brokers, lenders or investors a bad vibe. Something about their situation doesn’t make sense, their motivation doesn’t seem to fit or they’re using some reasoning that’s doesn’t mesh with logical reasoning.

To a lender, this screams, “They’re hiding something,” or “I can’t trust this person.” In a market that’s proven to be rampant with fraud and misinformation, lenders are being much more careful about who they lend money to. A situation that has a smell to it is going to be put to the test, so make sure that you’re not wasting your time on deals that make your nose twitch.

Old-Fashioned Common Sense

Most Hard Money Lenders will admit that they can be more subjective than objective at times. In some cases, there are simply going to be pieces to a deal that don’t fit. A borrower may have sufficient collateral, but perhaps they’re on a slippery slope and racking up more debt than they’re going to be able to handle.

Or, maybe they’re making a significant down payment on a property that is in demand, but it’s vacant and will need to be leased up in order to create a cash flow. These can be situations that may or may not fly with a private lender. You’ll need to decide whether the good outweighs the bad and whether the borrower’s situation warrants a closer look or if it just doesn’t make sense to a take on the risk.

These are all things that any broker, borrower, lender or investor likely understands already, at least to some degree. What’s important to realize though, is that these “logical, common-sense factors” are becoming more important than the metrics and measurements that we’re so used to looking at from “the old way of lending” and current bank loans: LTV (based on appraisal), credit scores, DSCRs, DTIs, etc.

What to Know Before Buying a Foreclosed Home

What to Know Before Buying a Foreclosed Home

Foreclosures are advertised as hyper property bargains. This is why potential home buyers and especially property investors frequently consider them. On the other hand, some people shy away from it, because it represents a major part of people’s misfortunes. Nonetheless, if you should ever decide to look at buying a foreclosed home, here are some important details you need to establish.

Know if there are any liens and encumbrances on the property. Liens and encumbrances are legal claims to a home by virtue or any outstanding obligations like unpaid contracts, tax defaults and mortgages. Do a title search to know. To have the ownership transferred to you, you would need to settle all outstanding obligations on the property.

Know the extent of maintenance, repairs or restoration work that needs to be done and put that budget in as well. Foreclosure homes are sold “as is”. And for people who lose their homes to foreclosure, they most likely ran out of funds to maintain the upkeep of their house.

They also have the propensity to vent their ill feelings and vandalize the homes they are about to leave behind. Look at the plumbing, electrical, roofing, insulation, walls and other details. Look for leaks, drippings, and items that may need to be put in order before the homes become inhabitable.

Consider your estimate of the repairs to restore the house in addition to the cost of gaining ownership.
Know the equity built up into the property. The longer the previous owner actually lived in the property that higher the equity built into the property. The higher the equity built in, the lesser the amount that the current lender has to cover thereby driving the price of the property farther from the appraised value. Therefore, the better the bargain it becomes.

Know the applicable redemption rights of the original property owner. It varies according to state, you need to know because even if you have made initial payments, if the original owner exercises his redemption rights, you may end up losing. Do note that some states have redemption periods whereby the original homeowner can buy back the property by paying whatever money he or she still owed.

If you are an investor, in the pre-foreclosure proceedings, you can purchase the right of redemption from a homeowner directly, leaving you covered and in control. To give you an idea, here are some of the states and their periods of redemption. There is a one year period for Alabama, Alaska, Arkansas, California, Idaho, Kansas, Missouri, Wisconsin and Kentucky.

It is six month period for Minnesota and Oregon. It is a 30-day period or more for Michigan, Mississippi, New Mexico, South Dakota and Wyoming. Tennessee has a period of two years, unless waived at the sale of the property. The redemption periods in Connecticut are based on court decrees. Iowa has a 20-day redemption period. Illinois and Maine have 3 month periods. It is in your best interest to verify whether these are still in effect.

Investors who flip properties normally look at foreclosure as very good bargains. If you are looking at foreclosures, it is best to get professional advice so that you know exactly what your options are, and what the actual economic costs are. Do not be afraid to ask your real estate agent and make sure they clearly explain their answers enough for you to understand.

Exterior Stucco – Look Rich, Get Rich

Exterior Stucco - Look Rich, Get Rich

Stucco homes are associated with million dollar mansions. There is something simply luxurious about the look of exterior stucco itself, then combined with the decorating options of stucco moldings, homes can truly stand out as gems in a neighborhood. But surely rich people have other motivations, and differences in taste, than to all do their homes the same?

The truth is that rich people are wealthy because they understand money. Not only how to earn it, but how to make it work for them. When building or renovating a home, their intention is to construct something functional as well as something that suits their taste, not to show off their wealth (contrary to popular conception).

After all, building an extravagant home simply to flaunt their wealth is like having a doormat that says “rob me”. In examining the function of a home, ongoing costs such as maintenance and heating are taken into consideration. It is here that stucco truly shines.

Renovating or replacing your home’s current siding with EIFS (synthetic / exterior stucco) has been shown to reduce heating and cooling bills anywhere from 25-40%. For the average home in the North American climate that comes to a savings of roughly $800 per year. So is it worth it to spend $15,000 up front to save $800 per year? The answer is a resounding – yes.

What the majority of home owners who choose to finance the project entirely by re-mortgaging find is that the increased payments on their mortgages are canceled out by the savings in their energy bill. It’s a profound concept that gets rich people very excited. But maybe you’re thinking… if it’s a wash, and I’m not see any increase in cashflow by doing this, why would I even bother going through the process of renovating?

While any wealthy person reading this article will already understand the underlying implications here, I will fill you in on a little secret.The increased payments on their mortgages are canceled out by the savings in their energy bill.

You see, what you have done is reduced an expense (money you will never see again), and instead redirected that money into your assets (your walls). You have taken $70 per month that you were previously throwing away, and put it into your nest egg. Over the course of mortgage, the renovation will pay itself off. THAT is having your money work for you.

As the great Billy Mays would have said – But wait! There’s more! Not only has this renovation cost you NOTHING and increased your net worth over $15,000 over the years, but it will countinue to generate income once it has paid itself off.

That’s right, the reduced heating bills don’t simply return to normal once you reach break-even, they countinue to save you 25-40% on your heating bills. Now let me ask you a question – do you think that gas and energy bills will be the same, 20 years from now?

Remodeling Magazine’s “Cost vs. Value Report” puts upscale siding renovations at the highest R.O.I. of any home renovations – 86.7%. That means that on a $15,000 stucco renovation, the value of your home goes up immediately by just over $13,000! This is further equity being put into your home.

And finally, the icing on the cake. The Governments of Canada and the United States have both passed massive stimulus packages, with a portion of those packages geared towards home owners making their home more energy efficient.

In Canada, home owners renovating with EIFS are eligible for a $3,750 rebate, as well as $1,350 in tax credits, for a total of over $5,000. The United States Government has similar programs in place. That’s over $5,000 the Government is putting into your home equity! These Government checks and tax credits are just one of the many reasons millionaires are in the position they are today.

So what’s the final score? Your exterior stucco renovation costs $15,000. Of that $15,000, $13,000 is immediately returned to you in increased home value, and while this is not immediately tangible, you will recoup that amount when you do finally sell your home.

On top of that, you will receive $5,000 within  a year in the form of tax credits and government incentive checks. In total, you took on $15,000 of debt, and got back $18,000 in equity. This debt costs you nothing out of your pocket because you take the funds that would be otherwise wasted on heating and cooling your home, and using them to pay your increased mortgage. Over the course of your mortgage, the renovation will pay itself off, returning to you the $15,000 you took on in debt, for a grand total of $33,000.