Real Estate Innovation

To Stop Foreclosure

The average foreclosure rate nationwide has now topped 30%, with many in the pessimistic camp of the trade predicting that it will continue to get worse before getting better. Behind this statistic is the fact that the majority of these foreclosures could have been averted. With the right mindset and guidance, affected homeowners actually have the upper hand in negotiating their way through their respective foreclosures.

It is nevertheless a daunting task to stop a foreclosure in the wake of the housing market instability and credit squeeze. That is why the whole exercise must start with a concerted evaluation of the entire financial situation of the threatened homeowner. It may even turn out to be more desirable to forgo the subject property. For or against foreclosure, it is critical that you come out of it in the best possible terms as it will have undeniable bearing on your financial standing thereon.

The decision to fight or let must be based on methodical and comprehensive evaluation of all options that are available at this point. Fortunately, help is found all around and extensive information on foreclosure rescue and mitigation programs is readily available: lender negotiation, relief program, alternative funding and refinancing, disaster benefits, scam artists and predatory lenders, financial advice and counseling, respite service and so forth.

As soon as it is decided on which direction to go, the homeowner must move swiftly especially if the choice is to confront and counter the foreclosure. A day of inaction in the fight to stop a foreclosure is a day lost into thin air but don?t overreact and jump the gun instead. The two basic approaches to avert foreclosure are DIY (do-it-yourself) or third-party specialists. DIY is enriching but testing while specialists is convenient but cost money.

It’s quite common for affected homeowners to adopt a mixture of both approaches. In any case, it should be fundamentally along the line of the following steps: -The homeowner occupies the central role and calls the shots. -Take precautions against scams and predatory lenders. -Explore all available options even if chances of eligibility appear remote. -Remain targeted and single-minded.

This is undoubtedly a mammoth task but the internet and other agencies are well-stocked with information resource. Numerous guides and handbooks on how to stop foreclosure have also mushroomed all over the shop.

While the overall situation remains grim, the horizon seems to have cleared up a little. Consumer confidence index (Conference Board, June 2008) actually improved, albeit marginally and in a symbolic twist, home prices in Atlanta, Boston, Charlotte, Dallas, Denver, Minneapolis and Portland increased month-on-month over April (S&P/Case-Shiller, May 2008). Meanwhile, the government is now even helping lenders to help their mortgagers with their latest bill (Housing and Economic Recovery Act 2008), on top of continually bringing more rescue channels to defaulting homeowners.

In’s and out’s of Bargin Property

Fixer’s and forclosure properties have always been the “jewels” that RE investors look for in order to make big profits. However if you dont do your home work before hand you may loose not only your investment but your profit as well.

A cautious and methodical approach is best in this decision making process. Keeping that in mind, here are some critical area’s that must be considered when looking at real estate bargains for investing purposes.

Nothing on this list is really more important than anything else. Its just here to get you to think about what exactly you need to look for. While you may have a investment that excels in one area…it cant be problem heavy in another.

Doc’s List:

HOW MUCH AND WHY

Price is the first thing an investors sees.

They search for properties they think are selling below market value. This makes sense?buy low and sell high right?? However think about the reasons behind the sales price? What is their motivation? Are they relocating or in financial duress? The 3 D’s come in to play here most of the time. (Death Divorce, Debt)

If not, there may be problems with the property that require major expense to correct. Structural problems such as a cracked foundation or outdated plumbing and electrical wiring. The last two are VERY common in older craftsman homes from the 30-50’s. CONSIDER HOLDING COSTS

My personal opinion is that the holding cost are the number one profit killer. YOU HAVE TO BUDGET THEM IN. Commissions to agents, mortgage, closing costs taxes, all repairs…and dont forget the gas and electric.

If your not up on the market your shopping in…your going to loose money.

Price other property inthe area. Come as close to the size/style/lot size you are looking at buying.

TAKE ADVANTAGE OF TERMS AND CONDITIONS

What areas can you leverage besides price and location. Financing?

In some cases a full price purchase can allow you to leverage the terms to mean a lower intrest rate or smaller down payment.

STUDY THE LOCAL MARKET

Learn everything you can about the market your shopping in. What are the schools like? How close is the local hospital? Is there a local police station or sub-station? Also look at the floor plans of surrounding homes. How many bed/baths? whats the average price in the area? What are the prices of the last homes sold in the area? Etc..etc.

As the man said…it is all about location.

If your shooting for a long term tenet or residence then location is the second most critical thing to look at…however if you have a chance to turn a good profit for a ugly house in a less then 4 star area…that profit might out shine a nice little bungalow on the beach.

FIXER UPPERS AND FORECLOSURES

In the case of a fix andflip and some times a foreclosure. It is the job of the investor to facotr in the repair costs. A keen eye can save you lots of money in a very short time. (Not to mention a good understanding of home repair work)

Fixer properties are a treasure trove to a savy investor. If you have a good eye for details and can spot maintance problems you can make a nice return on your investment. Things like a bad roof, poor plumbing or a bad foundation can be very costly to repair. Once you have a idea of what your looking at for repair cost, do your self a favor and add a little buffer say 5%…just to be safe.

Understand the ZONE

Make sure you research the zoning for the property BEFORE you buy it. If you are thiking of adding a second floor or a granny flat…is the zoning available? Make sure you know before you commit to doing anything that will add or change the SQ footage of the property.

These are often bargains because the price is based on current use. So the single unit residential is priced low while the double unit duplex could be sold higher or rented out. Harder to find as developers stay more aware of zoning allowances these days.

Garages converted with out permits, Granny flats that get added..etc..etc. These are common examples.

The Exchange Rate Secret To Making Money

The gloom and doom of global currency exchange rates is hardly missable, with news headlines and current rates being splashed about everywhere telling us that we’re in global crisis, that we’re experiencing a real crunch, that the dollar is weak and the Euro is running amuck. International businesses and traders have a real battle on their hands just trying to identify what the best deal, the best rate and the best conversion rate is, and at present it seems a perpetual challenge just to stay up to date with the fluctuating currencies.

Our global society now means that we no longer have to consider buying products locally, or even in our own currency. Buying online gives us the opportunity to not only shop around for the best deal, but also for the best currency. Many online traders don’t have their conversion rates from one exchange to another linked to an independent conversion tracker. In these cases, you can often find that by switching currencies, you can get a better deal. I saved fifty pounds by simply buying in the country’s local currency than by buying in my own from an online retailer - it’s not hard to save quite a significant sum.

If you’re in the property market, and in particular looking at investing overseas, this problem with sliding exchange rates becomes extremely challenging. One day the deal looks good, but within a couple of weeks you’re starting to look at the same deal and realise that, as a direct result of the exchange rate, you’ve just lost several hundred pounds, dollars or Euros, and possibly even more than this. Even investing in a fairly modest 100,000 property, a change in exchange rates between pound sterling and Euros of just a few pence can make several thousand Euros difference. If you’re quick, then this can be good news, but usually you have enough to worry about without pouring over all the bank rates and exchange rates and currency conversions.

However, every cloud has a silver lining as they say, and in this case, there are a few companies that are still able to offer consumers deals which fly in the face of such bad news. Imagine being able to find a company that can promise to lock in the exchange rate that we had three months ago? Incredibly, I have come across just such a company, and I’m sure there are others out there too. At the moment, using my favourite online currency convertor, the Euro is rated at 1.26 to the pound sterling. Yet, I have found a company offering investors the chance to buy Spanish property at a rate of 1.40 to the pound sterling! Do they even know what’s happening in the world out there? Do they care?

So what difference does this exchange rate really make? It may seem like a few pence, but let’s see how this would really affect you. Let’s imagine you’re looking at buying a nice 200,000 property over in Spain. Taking advantage of an 11% difference in rates would mean you could potentially be making a saving of over 22,000! That’s certainly not a saving to shrug off!

Normally when you are looking to invest in property overseas you will want to make sure that you research the exchange rate first of all, and once it has been identified, it is agreed by all parties and written into the contract. By doing this you safeguard yourself against any unforeseen global crisis in monetary exchange. Finding yourself a company willing to backdate the exchange rate to the early part of this year, before the crunch caused such a downturn in rates across the world is of enormous benefit, naturally, and is well worth further investigation. It’s finding companies like this that are either absurdly generous, or simply unwilling to accept the pessimism of the banks that makes the whole prospect of moving into the sun a whole lot sunnier!

Investing in property overseas shouldn’t be about gambling, but necessarily whenever purchasing property, you have to be aware that prices fluctuate, rates vary, and you could find that, whilst long term you’re bound to make a tidy profit, the short term is usually unpredictable. If you’re lucky enough to find a company like the one I have come across that’s offering an exchange rate drastically below that offered by banks or other financial institutions, then you immediately remove a large chunk of that risk - over 11% of that risk in this particular case. By saving yourself tens of thousands of Euros off the price, you could immediately sell the property on at the normal going rate of exchange and make yourself a quick 11% profit! Clearly that would be unlikely to attract many people, but what is attractive is the chance to create a safety net to help you get through the short term, and enjoy your long term investment.

For the first time investor, you may be surprised just how different buying overseas property is, and you may have set yourself an initial budget. Once you do a little further research, however, you may well discover that, as a result of varying international laws, traditions, methods and requirements, your budget is shrink wrapped a little too far, and you find the whole project becoming less feasible. By managing to save yourself at least 10,000 simply by using an inflated exchange rate like this, you’ll be able to get back on budget without lifting a finger! Well, perhaps a finger- after all, you’ll have to find the same company I discovered first!