29. January 2012 by admin.

Real Estate Blitz

Investors have created a new real estate bubble of their own. Throughout the US investors are buying bulk REO (real estate Owned by the bank) in huge quantities. Large real estate investment and capital companies, medium companies and even smaller investors are buying bulk REO.

Last year individual REO purchases from assigned Realtors have been sold in great quantities. This year there’s a real estate blitz that has created it’s own real estate bubble in a unique niche: bulk REO.  Investors don’t want to buy property by property: more work, have to search for them, they are usually left overs from bulk purchases that no one wanted, and you don’t get the lowest price. So why do investors buy bulk distressed REO?

• For a minimum of $2.5M you get the properties available in one bundle as much as 25-30 properties depending on your price range.
• You own these properties at anywhere from .65 to .50 cents on a dollar: some lower if they are greatly distressed.
• You choose the location: local or where you have partners
• Investors are partnering across the country to take one bundle: shared by location
• You choose commercial multi-family or residential.
• Most are vacant and if not easy eviction as you own the property
• You can save on rehab money because you have contractors going from one house to the other and buying certain things: paint for example, in bulk
• Because of the low price, resale is easy, or what most investors are doing: turn it into a rental.
• You usually get first pick: it is not on the market, not advertised, little competition, better price. Once you’ve done your rehab: you are first on the market.
• Once you’ve made your return (usually up to 30% even in this market), y0u can buy more– do it again.
• Bulk multi-family: units up to 300 can be huge profits and easy rehab: all the apartments look the same: use the same appliances, etc. You save up to 30% on a normal development project.
• High profits, low costs: any questions?

What’s the downside?

• We sell bulk REO:  the demand is higher than the supply!  Really! We cannot keep up, the banks cannot keep up with the demand. Investors are having trouble finding more product. Foreclosures are not turning into REOs at a fast rate.
• Banks really cannot assess rehab. You ask for lite rehab: well what does a bank know. Often they only know what the appraisal says: which cannot see the structure of a house is in trouble. - Good reason to stick with commercial apartments over 4 units. But hidden problems are your problems.
• Smaller investors have to pool to come up with the $2.5M or they will have very undesirable REOs left over
• You get time to do due diligence on the property but often not an inspection. Sometimes yes, sometimes no.
• You have to prepare to takes some losses: some will sell, some you may have difficulty selling. Most will rent.
• You need a certain level of experience and you have to have a team ready: rehab team, Realtors, marketing, legal and administrative staffs. It would not be a good idea for beginners unless you have a more experienced partner on the team.

So, how do you get these real estate gems? Email us for more details. investors@strikerinvestments.com

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12. January 2012 by admin.

 By Erik Braunitzer, and courtesy of Douglas Elliman Real Estate Company, agents for NYC Rentals.

There are several reasons to invest in a financial planner. Whether it is to buy a new home, securing a child’s college savings, or saving for retirement, there are a number of valid reasons to invest in a financial planner. When looking around for the right individual to suit your needs, there are several things to keep in mind. Although there may be any number of qualified professionals, not everyone will suit your individual needs; that is perfectly acceptable. Be sure to interview and communicate with several different financial planners before making a final decision. There are several things to consider when choosing a planner. 

Disciplinary Record: First and foremost, it is important to make sure the financial planner is honest and above board. Ask the potential planner if there has ever been disciplinary action. Action could have occurred for two reasons. One reason that a disciplinary measure could have occurred would be anything that was done illegally. The other reason a disciplinary measure would have happened is if anything was done unethically. These actions are not necessarily against the law; they just are not necessarily the most honest course of action in any given situation.

Experience: Find out the experience of the financial planner. Does this planner have experience in only a couple aspects or an overall rounded expertise level? For example, if you plan to hire a financial planner to take care of the IRAs and 401(k), you want someone who has experience with these types of funds. A financial planner who only has experience with college funds may not be the best fit for your needs.

Qualifications: To ensure that the individual is not using the term “financial planner” too liberally, ask the individual what credentials they hold. Many financial businesses tend to use the term “financial planner” too casually. An uneducated consumer may sign up for a service they may not have wanted. A certified financial planner (CFP) is regulated by a set of rules and regulations. They have to be licensed every couple of years.

Services: Find out what services are offered. Some financial planners may not offer the particular service needed. This tends to run in with the experience aspect. A particular financial planner may only offer retirement services and not the best way to save for a home. 

Who You Will Be Working With: Some financial planners are in a business by themselves; however, other professionals may be in an office with other partners. It is important to find out who you will be working with. Will it be only the individual being interviews or others as well? One way is not necessarily better than the other; it is usually just a matter of personal preference. By having only one person working with you, they will generally be a little more familiar with you and your finances. By having two or more professionals working on the finances, more opinions are expressed. Many times with finances, there is not a right or wrong way to invest money. Multiple financial planners may each have a different idea. This allows you to pick the option that you feel is best. 

Rates and Fees: It is important to know how much a financial planner is to be paid and how it will occur. There are several different ways a financial planner can be paid. An hourly fee could be charged, or a flat salary could be collected. Some planners are mostly commission based. This means any additional services that are sold to you are partially given to them. For example if a planner sells an additional service for $100.00, the planner may make $10.00 off of the sales. One innovative way to get paid is based on the total amount of assets that are invested. The more money is in the care of the financial planner, the higher the annual fee will be. Most commonly, a financial planner is paid from a combination of two or all three of these types of payments.

Any Other Beneficiaries: It is important to find out if any other person besides the financial planner has a special interest in sales or services offered to you. If there are special interests involved, there may be reason to question how ethical transactions may be. While special interests by no means question the honesty of the financial planner, there does leave large loopholes for an unethical transaction to occur. 

Get It on Paper: Any agreement struck up with a financial planner should be written down and signed by both parties. Keep this paper somewhere safe, such as a fireproof locked safe, for future reference. Should something go awry, it is necessary to have this paper for legal action. 

Personality: Each individual has a distinct personality. Even if the financial planner is highly acclaimed and has a spotless record, if they rub you the wrong way, keep looking. It is important to be able to like and trust your financial planner. 

Special Thanks to Erik for his article. If you would like to write a guest post, please email me at investors@strikerinvestors.com

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10. January 2012 by admin.

 Here’s a hint:  IT’S NOT INVESTING IN REAL ESTATE: That’s the smartest: Read the whole article.

Five Dumb Things Investors Do
The beginning of a new year is usually a good time to reflect on the past in order to make certain resolutions about the coming one. In investing, future success can have little to do with what has worked well in the past. Trying to predict short-term market movements is also generally an investment strategy that can lead you to financial ruin. Keeping these perspectives in mind, below are five of the dumbest things you can do with your money in 2012.
Trade Volatility

Lately, it has been en vogue to consider volatility its own asset class. Trading volatility has become possible through vehicles based off the Chicago Board Options Exchange Market Volatility Index, or VIX for short. A range of exchange-traded funds (ETFs) have been created so that investors can make bets on the extent to which the market bounces up and down. There are even ETFs that let investors gain twice the exposure to market volatility, which can be used to make bets on both advances and declines in the market.
The problem, as with most short-term strategies, is developing a compelling trading strategy capable of predicting market volatility. Trading VIX-related indexes may make sense for hedging near-term market fluctuations, but there is simply not going to be any way to predict market moves with any certainty. Major inflection points in the market are missed by the best investors and include the credit crisis, flash crash and latest concerns over sovereign debt levels in Europe. Without a crystal ball, speculating on future market volatility has to be one of the dumbest things investors can do with their money. (To learn more on volatility, read A Simplified Approach To Calculating Volatility.)

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9. January 2012 by admin.

 The FHA has been waiving this rule for the last few years and now extends it again:

Great for investors:  Let’s buy these REOs.  We have bulk REOs for sale, email us at investors@strikerinvestors.com  Minimum $2.5M direct from bank.

FHA Waives Anti-Flipping Rule Through Year-End to Speed REO Sales
The Federal Housing Administration (FHA) is extending the temporary waiver of its property anti-flipping rule through the end of 2012.

FHA rules typically prohibit insuring a mortgage on a home owned by the seller for less than 90 days. In 2010, however, the agency waived this regulation, and later extended the waiver through 2011.
The new extension announced late last week will permit buyers to continue to use FHA-insured financing to purchase HUD-owned and bank-owned properties, no matter how long the homeowner has held the title, through December 31, 2012.
FHA says the waiver will allow homes to resell as quickly as possible, helping to stabilize real estate prices and revitalize communities experiencing high foreclosure activity.
“This extension is intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight,” said Carol Galante, FHA’s Acting Commissioner. “FHA remains a critical source of mortgage financing and
stability and we must make every effort that to promote recovery in every responsible way we can.”
According to FHA, the waiver contains strict conditions and guidelines to prevent predatory property flipping in which properties are quickly resold at inflated prices to unsuspecting borrowers.
Among these conditions, all transactions must be arms-length, with no link between the buying and selling parties.
In addition, in cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will apply only if the lender meets specific conditions, and documents the justification for the increase in value.
FHA’s property-flipping waiver is limited to forward mortgages, and does not apply to the agency’s Home Equity Conversion Mortgage (HECM) for purchase program.
Since the original waiver went into effect on February 1, 2010, FHA has insured nearly 42,000 mortgages worth more than $7 billion on properties resold within 90 days of acquisition.
The agency says its own research has found that in today’s market, acquiring, rehabilitating, and reselling foreclosed properties to prospective homeowners often takes less than 90 days.
As a result, FHA says prohibiting the use of its mortgage insurance for a subsequent resale within 90 days would adversely impact the willingness of sellers to consider offers from potential FHA buyers, namely because they would be required to cover holding costs and the risk of vandalism that comes with allowing a property to sit vacant over a 90-day period of time.

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