Recent Posts

• Mortgage Brokers are a Valuable Asset to Investors

  If you are in the market for a new home or are working on your 5th, you may have already started the financing process.  If your a bit green or have some crazy sense of LOYALTY, you may have went down to your local bank that you have been working with for 10 years or met with the bank that your mom has banked at before.  If your lucky, your getting a OK rate by doing this, but if your not, your basically taking the first offer and sticking with it.

  When you go to a specific bank, your getting the best rate that bank will offer you, but if you are working with a Mortgage Broker, they will help you get the best rate that hundreds of banks, finance institutions, credit unions will offer you.  Which is better?  Of course, its the rates that the mortgage broker is getting you.  Not only do they have access to a large network of lenders, but you are able to find a lender more likely to work with your terms for the loan. 

  A Mortgage Brokers commission is paid by the lender from your funding fees; this is usually from the fees that the lender charges the client in the form of points or a funding fee.  They usually will split this fee between the lender and the Broker.  Most lending institutions charge a funding fee and/or points, so if you happen to find one that doesn’t, they are probably offering a higher interest rate to offset this.  Also, there is the spread, which is the difference between what the lender offers the broker and the broker in turn offers you as the client.  This can be be anywhere from a tenth of a point to as high as 1 percent in some cases.  Ask your broker what his commission spread on your interest rate is going to be.

  There are some occasions when a Mortgage Broker may not be able to compete with a specific institution such as prefered lending by a bank or a incentive offering for using a specific institution, but this is not typical and sometimes hard to find.  I would suggest you try both using a Mortgage Broker and also scouring the internet for lenders that may offer you low rates and little or no point/funding fees such as www.lendingtree.com, www.ditech.com, www.eloan.com, www.quickenloans.com.

  The one thing I find important to mention is to try and find two Brokers to work with, if you can find them.  I say this because I have seen on occasion that I would lock in a interest rate and the rates would start to come down.  With the economy the way it is right now in early 2008, interest rates are low and seem to be going down almost monthly.  Make sure you have a Broker that will change your locked in interest rate if it goes down.  Some will say that they will not do this unless it is more than .5 percent or more — stay away from these Brokers.  They may be ok overall, but they are not looking out for your best interest, which is your interest rate.  :O)

  
  

• TAO of Flipping and Investing in Real Estate - Part 4.4 - Repairs

  I always have fun talking about this subject because it can be very subjective for the most part and takes years of experience to master.  Being able to assess the costs of repairing a residential property, office building, or really any permanent structure can be a daunting task.  Not only is it important to be as knowledgeable about the costs of the different repairs that may have to be made, it is essential in determining your purchase price.

  There are many ways to get accustomed to working with contractors and handymen, but the method I prefer to use is referrals.  If you have a close relationship with some handymen or contractors in your area, you may approach them for referring you to a plumber, painter, carpenter, electrician, and even other handymen, although they may be a bit reluctant for the handyman referral.  I have had great experience in the past by doing this, and you will too.

  You can also coordinate with your realtor to have 3 or 4 contractors look at a specific project and give you bids on them.  For example, if you have a nice little fixer that your looking to purchase and it has some foundation problems, you may work with your realtor to make the house available so you can have multiple foundation repairmen to come in and give you a bid.  You will not only learn about what the prices are for a certain repair, but you can deduct what your costs could be for other similar repairs on other houses you might be looking at.  This method can be applied for other types of repairs as well.

  Not all Realtors will be willing to work with you, I know — you may have to build a working relationship with a broker or realtor that is willing to take a chance on you.  Show them the money and they will show you the love seems to be the way it is.  If the house is not one that is listed with a realtor, you may be able to have the owner let you in the house to evaluate it for purchase and even if someone has a realtor for their house, you can still talk to the owner if you can find their contact information.  Most owners that are using a realtor are typically going to ask you to call the realtor, hate to say.

  If you have trouble being able to evaluate properties for repairs it is also common to hire a general contractor to oversee and handle all contracting on your repairs.  There are many ways to locate general contractors and foremen such as your local paper, hardware store classified ads and even through sites such as www.craigslist.com.   They are usually not used for small jobs, but if you have a significant repair with a lot of different contractors needed, this may be the way to go.

  Flip This House - Ok, some of you have seen this show and most that have think that by watching it you have been able to hone the skills needed to do a flip or learn the tools you need to buy investment property.  Watch Out!  These shows do not show you the real costs involved, nor do they divulge all the repairs that a house may be needing.  Being able to smooth-talk and handyman into a low bid does not make you a quality or successful flipper.  If you cannot evaluate a property yourself and figure a close value of the repairs and cost, you will most likely get screwed by any handyman or contractor no matter how honest you think they are.  Its the way it is, learn to negotiate like a champ, or learn how to evaluate repairs!

  Don’t rush to find a handyman, make sure you get multiple bids on a project and always pay close attention to what they say while looking through the house.  You may hear one handyman say there is a leak in the roof and another totally misses it, this is another reason its good to have a handyman or contractor walk through the house before you start tallying repair costs.  If all else fails and you cannot get someone in to look at the house, move on to the next deal and start keeping a log of the contractors you have called so you can build a team of people to help you get started.

  
  

• Bad credit? No Problem.. WHAT?

  Ya better start studying!

  Being an investor takes dedication, hard work, and most of all… patience!  When I first started investing, I spent over a year learning about market conditions, researching the different types of mortgages and finance tools and even read more than 30 real estate books.  If you want to be an investor, I hope you like to read — you might want to start with looking at books by “credible” gurus that actually know what they are talking about, such as John T. Reed for great information on getting started and Leigh Robinson if you THINK you are a landlord and already know it all.

  Repair you, then repair the houses!

  I seem to get a lot of emails from people that ask me about how to by houses without a lender.  I in turn usually write them back and get more specific on what it is they are trying to do and usually they have credit problems and want to try out real estate, thinking its a get rich quick deal.  Truth be told, if you can’t get a mortgage, you probably need to concentrate on fixing you credit before you try buying real estate.  That doesn’t mean you can’t still read about investing, it just means you should probably concentrate your time on repairing your credit first.

  
  

• Houses that SELL!

  Clearly, everyone wants to know what people like to buy — this tells us what to SELL!  Anytime there is a commodity or brand to sell, knowing what consumers are looking for will get your inventory sold faster.  This is true in most business and also in that of real estate.  Whether it be flipping houses or holding real estate to rent long term, if you know what consumers are buying, you have a better chance of making a profit.

  The largest market for home purchase according to Inman News is first-time home buyers.  This tells me that if I am going to be successful selling houses, I need to be buying the houses that the majority of the market is looking for, right?  So, if most consumers are buying homes as their first purchase, this would probably lead you to believe that they are younger families with modest incomes.  Just by having this information alone it can be easy to determine a range with which you should be concentrating your research.

  In my experience, any house can be a good investment if bought for the right price, but this is not the norm — being able to consistently locate and acquire properties that fit the majority of sales in that market is what you should be trying to do.  In 2005, the median home price in the U.S. was about 213,000; that means half of all the homes sold for under that price.  Also, the average home size was about 2200 square feet nationally.  Given this information, it is reasonable to believe that if half the population was buying homes under 213,000 then I should be buying them under that price too! 

  Don’t bite off more than you can chew — what I mean is, not to buy more house than you need.  This is the same mentality that the first-time home buyers are doing, so you need to do the same thing when buying the houses you will be selling to them!  The average size home that I like to buy are somewhere between 1500-2000 square feet and have at least 1 garage.  Most families have at least 1 car and prefer to be able to use a garage for vehicle cover or storage, this always seems to be the case.  Also, you should be looking for a 3 bedroom house due to the average family size in the U.S. being approximately 2.6 people per home average and always try to have 2 or more bathrooms. 

  There are many things that can be fixed on a investment, but having to add a bedroom or bathroom or even putting up a carport will hurt your bottom line and it is best to stick with what the market is looking for, unless of course the home is such a deal that you just have to buy it. 

  
  

• Battlefield 3 is Just Heroes in Disquise

  Had enough of Battlefield 2142 because you’ve learned all you can about ways to block off a corridor and maximize your kills on the Titan only to go back to Battlefield 2.  Ya, we all did the same thing, accept some of us forgot how to play Battlefield 2 once we re-loaded it!  I for one felt like a 5 year old playing with seasoned veterans, and I was not only in a clan and pwning guys like they were little mormans waiting for the Fed to grab em’ up — I was coming in the top three every round, oh ya! 

   OK, so maybe I wasn’t that good, but I sure did play enough to think I was.  OK, back on subject – about this new Battlefield Heroes game that everyone is anticipating and hoping will feed our thirst until the real Battlefield 3 comes out, well let me enlighten you about something.  It IS battlefield 3 and here is why I think this:  First off, why would anyone make a FPS that is totally free and not have a hidden agenda behind the creation.  We know DICE can hardly keep up with the updates on their current games, let alone be managing, monitoring and constantly updating a new game that isn’t even for profit? 

  Here is the down-low for all you gamerz out there, Battlefield Heroes is going to be a test bed for the Battlefield 3 game.  It only makes sense.  Create a game that embodies all the criteria, specs, and game play and even use the new Frostbite engine as the foundation for the game and give it a cartoony skin that everyone can enjoy while DICE sits back and makes their little tweaks, patches, updates, and whatever else they plan to do to Heroes before modding the player skin for a meaner, badder, and more realistic look when they feel that Heroes has been tested enough. 

  We all know that DICE has historically been horrible about putting out games that have a lot of bugs in them when they are released to the public.  EA- DICE will have the opportunity to develop a game that will come out the door running hard and be near flawless at the time it is unveiled.

  Scott Hurst - mysapro.com