Underwater Homeowners Only Have 12 Weeks to Complete Short Sales

Short sales continue to promise amazing discounts on great homes for real estate investors. Getting underwater homeowners to bite on your offers and cut a deal hasn’t always been easy though, even if it has been their best option. However, distressed property owners now only have a few weeks left to take advantage of many of the best short sale incentives. Know what they are and use them to motivate sellers into accepting your offers.

Taxmageddon is coming

The end of 2012 heralds what the news has dubbed ‘Taxmageddon’, when billions of dollars in tax cuts come to an end. One of the most important is the tax exclusion for homeowners completing short sales under the Mortgage Forgiveness Debt Act. This currently allows sellers to avoid taxes on up to the first $2 million in mortgage debt forgiven by lenders on their principal residences. Those who wait till next year could get whacked with enormous tax bills.

Cash Back Incentives Expiring

One of the biggest benefits of opting for a short sale for homeowners has been receiving relocation funds sometimes exceeding $20,000 from their lenders to get out. Bank of America’s cash incentives expire in August 2012, giving sellers only a few more weeks to commit.

Short Sales Speeding Up

One of the biggest draw backs in the past has been the incredibly lengthy periods of time it has taken lenders and loan services to approve short sales. Sellers have been wary about tying their homes up for months without any certainty a transaction will go through. Now, streamlined processing has been designed to expedite short sales requests in just a month or two.

Foreclosures on the Fast Track

Unfortunately many underwater homeowners have been lured into a false sense of security from sensational news stories and cases where delinquent borrowers have gotten away without paying their loans for years. Lenders and banks are now putting foreclosures on the fast track, catching many by surprise and ill prepared to move.

The Current Surge in Buyer Interest May Not Last

Sellers who think they are safe waiting it out and doing a short sale later need to keep in mind that rising mortgage interest rates and homes prices could eliminate many potential buyers who are in the market now as they may not be able to qualify for home loans or could give up, believing they have missed the boat on the biggest discounts.

Now is the Time to Make Your Offers

You may not have perfected your system or have finished reading through your latest real estate education course but now is the time to be out there making winning offers and locking in the best deals on short sales. You are doing these distressed homeowners a huge favor, make sure they understand that.

Where are the Buyers for Your Real Estate Investing Deals Hiding?

There is certainly no shortage of discounted real estate investing deals to be found out there today. However, these homes only become cash profits in your pocket when you resell them. So where are all the buyers hiding at?

Other Real Estate Investors

More and more individuals are jumping into real estate investing every day. They need properties like yours. The great part is you don’t have to sell them on the benefits of investing or buying a home right now. They are ready to buy; you just have to find them.

This isn’t even that hard either. Local real estate investing groups and meetings are regularly packed with investors looking for deals. Even simply logging onto the web you will find many individuals on Facebook hungry for real estate investing deals.

Foreign Buyers

Foreign buyers no make up a huge percentage if not the majority of home buyers in some areas. They are loaded with cash, excited about how ridiculously cheap U.S. property is right now and are often willing to pay premium prices. They want turnkey rental properties, vacation homes in resort areas and luxury condos to show off to their friends. With other countries currently seeing their own real estate bubbles swell to bursting point foreign governments are chasing these buyers and their capital away and to us.

Where will you find them? Real estate agents overseas can make great referral partners, online forums are packed with curious potential buyers and if you love to travel property events in other countries are often swarming with cash rich buyers looking for real estate investing deals.

Those Worried About Retirement

Your peers are likely increasingly worried about how they are going to be able to afford to retire and retire comfortably. Perhaps they need to catch up from stock market losses in the past, getting a late start on retirement planning and savings or their current retirement accounts and investments are just performing horribly.

They all need better returns and want a piece of the foreclosure profits pie, most just don’t know where to begin or don’t have the time. Luckily for them, you do.

Other Professionals

Attorneys, insurance agents, title company reps, mortgage brokers and even real estate agents already have masses of leads and contacts that are prime prospects for buying your real estate investing deals. In fact, without deals like yours these professionals can’t cash in on their leads and make their commissions. It’s a win-win.

Renters & Everyone Else

A recent survey revealed more than 70% of Americans believe this is a great time to buy a home. At the same time the homeownership rate is down to just 62%. The bottom line is that 7 out of 10 people you see every day from parents dropping their kids at school to gas station attendants and bank tellers all want to buy a home. The other 30% probably desperately need your help to avoid foreclosure buy their homes.

7 Sources of Funding for Real Estate Investment Deals Today

There are so many attract real estate investing deals out there today and no knowing how long they will keep flowing at the huge discounts being offered right now that if eve you have a significant amount of cash it is smart to seek out ways to gain leverage.

Conventional mortgages may not be viable for most real estate investing deals even if they were easier to qualify for but here are 7 alternative sources for funding rehabs, flips and wholesale acquisitions…

1. Rehab Loans

For those purely seeking out funding for deals on their own homes or a few real estate investing deals which require fixing up FHA 203 (k) loans and Fannie Mae’s HomePath financing can be viable options.

2. Self-Directed IRAs

Retirement accounts can be converted into self-directed IRAs and used to fund real estate investing deals for bigger returns. These can be your own accounts or leveraging those of others who want to profit from the foreclosure crisis and earn more on their money.

3. Private Money

Private money from other individuals doesn’t have to just come from retirement accounts either. There are trusts which need to earn more, real estate investment groups who pool funds, angel investors and venture capital firms and even the option to use crowdfunding.

4. Hard Money Lenders

Hard money lenders offer a more formalized variation of private lending. They already have money sources and loan programs established. They make loans based on the equity in a property. Unfortunately they have also become much tougher to get loans from in recent years and now operate more like the subprime lenders of the early 2000s, only without the luxury of incredibly high LTVs. Expect to have credit checked, income and assets documented and extremely conservative appraisals performed.

5. Transactional Funding

Transactional funding is the new hard money, only better. These lenders will loan up to 100% of your purchase price and closing costs with no appraisals or other verifications providing you already have a qualified end buyer lined up. Flipping real estate investing deals really doesn’t get any easier than this.

6. Flexible Credit Options

With lenders now easing up on other forms of lending due to the pressure of competition it is becoming easier for real estate investors to obtain credit cards, store cards, in-store financing, personal signature loans and lines of credit. All of these can be used for fixing up properties and with so many homes available for under $10,000 today can be used for paying cash for homes in a day. However, it is important to recognize the wisdom of not mixing your personal credit with business and your investments.

7. Business Loans

Forming a corporation or limited liability company is a smart move for real estate investors which can provide protection, privacy and even the ability to build a business which grows in value and can be sold in the future. This also means the availability of business loans and lines of credit which can be used to fund your acquisitions.

How to Accurately Determine Property Values

Figuring out the real value of a home today is far from being easy. Things are changing so fast in different directions at the same time and have done for so many years that evaluating real estate deals can be one of the most challenging tasks you will face as you get started in real estate investing.

How much of a discount does a property really offer in today’s market, how much can you flip it for as a wholesale deal and what will it be worth if you fix it up and retail it?

Forget Zillow

Credit has to be given to Zillow for an amazing marketing job of some of the worst tools on the web including its ‘’Zestimates” or home value estimates. If you are really lucky Zillow may be very up to date and not to wildly out of whack. Not quite that lucky? Maybe it will at least be predictably inaccurate by 25% or so. However, after extensive testing even the best online home value tool has been found only to be right 50% of the time and when giving a range of potential pricing.

If you find one of these tools you really like you can try using it to quickly confirm your own immediate gut instincts but do not rely on them exclusively if you expect to make profits.

Get to Know Your Area Intimately

The better you know your area or the areas you plan to focus on investing in the faster you can make confident offers and the more profitable your real estate investing efforts will be.

Make it your business to know what every home is asking for in your neighborhood and what they are sold for. Then you’ll be able to instantly spot an amazing deal as well as recognizing those who are promoting bogus, overpriced ‘deals’ and who to ignore in the future.

Utilize Real Estate Agents

While real estate agents aren’t always the most knowledgeable about exactly what defines appraised value they are certainly great sources of data. You can even utilize real estate agents to obtain free CMA reports showing recent comparable sales, pending sales for similar properties and more.

The Problem with Full Blown Appraisals

While a full blown appraisal is the most accurate and reliable way to go, they also mean full blown waiting times and prices. The odds are you can’t afford a full appraisal for every property you might be interested in or be able to wait that long. Plus, unless you are using conventional financing you don’t need one. However, you do need to understand what factors matter for accurately determining your resale potential.

The Fast, Affordable & Effective Alternatives

The 3 preferred options by most real estate investing veterans that offer speed, accuracy and are far more affordable are utilizing ‘pencil searches’ or Drive-By appraisals from licensed appraisers or AVMs.

Don’t forget about ‘subject-to’ appraisals for estimate of renovated values, getting multiple quotes for repairs and consulting appraisers for solid advice on which improvements will really add dollars to the appraised value of homes you are considering rehabbing.