Even in a local real estate market, there are vast differences between what houses are doing in different market sectors within the same market. Where I live, sales of houses that cost more than $300,000 have slowed considerably; and houses that cost more than $450,000 have stopped dead. I know because we got caught with an upscale fixer-upper and after 6 months of trying to sell it, accepted an offer $45,000 below appraised value. Why? Because we got all of our money back and could buy something else.

Continue reading “Opportunities Abound in Every Market”

For most of the last eight years, when interest rates were higher, I was able to buy houses subject to the mortgage or with seller financing all day long.  There were weeks when I would do 2, 3, 4 deals a week or more.  Life was good.

Continue reading “Time To Change Your Course Again – Where The Opportunities Are”

Over the past few months lenders have been conducting heavily advertised auctions of hundreds of foreclosed houses where opening bids have been about a third to a half of the value prior to the recent down-draft. Not everybody who has spent the time and money to obtain lists of these houses and to do due diligence has made out very well. Some of the properties were over-valued. Some were in poor condition, having been vacant for a long time. Some were in declining areas. Some were of poor quality. That’s not the worst of it:

Continue reading “Beware of Buying Too Soon in this Market”

 There are a number of situations in which it might be better to control a property as a lender rather than as a title holder. When? Anytime you want to avoid liability associated with real estate ownership. Or when a lien might attach to the property held in your name. Or when a lender threatens foreclosure in the event a property were to be titled in the name of another party. Let's look at these one at a time.

Continue reading “Convertable, Demand, Wrap-Around note”

 The seller of a property under contract can sell the contract on another installment contract which wraps around the original contract. The 'wrap around' contract can embody completely different terms and conditions of sale, thus enabling a contract buyer/seller to build in additional profits and 'spreads'.

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If you'd like to really explode interest rate yields, let me explain a technique called a 'split wrap' loan. It is the quintessential technique for multiplying yield.

Once upon a time I happened to hit it lucky and found an entire neighborhood eager to sell their homes because a major employer was rumored to be shutting down. If we recast the deal in current terms, a typical one of these houses would have been worth $100,000 with an assumable 8% loan in the amount of $60,000. It could be bought for $80,000 with $20,000 down. A private mortgage lender offered to lend the down payment under the following circumstances:

Continue reading “Split “Wrap” Financing”

 All of the above strategies are fine when the economy is inflating, but what about when interest rates and equities are deflating? Over the past several years or so, we've seen falling market interest rates, leaving many would-be sellers with existing high interest rate loans stranded high and dry with no buyers willing to take over their payments.

Continue reading “Under-Wrapping the Interest Rate”

 Suppose in a 10% interest rate market, you buy with no interest. Can you see that this is an excellent way to transfer equity from a seller to a buyer. Wouldn't a Single Payment Note be even better? The trick is to get the lender to accept zero interest and/or zero payments. Some times all you have to do is ask - especially when there's any form of distress. On the other hand, more often, on occasion, you've got to learn to be a little more subtle by setting up a structure that can provide zero interest.

Continue reading “Buying With Discounted Paper”

 Single family houses offer three primary investment benefits: They can be bought and financed to provide net rental income without regard to appreciation potential and still make a lot of sense. I know a Californian who has bought a dozen or so houses in a small town in Iowa. There is very little appreciation because the population isn’t growing, but there is a strong rental market because of a local college. The houses he paid $15,000 for a few years ago are still worth about the same, but they stay rented for $500 per month. Even allowing for 40% shrinkage due to operating costs, that boils down $3600 per year net return, or more than 20% yield on his cash investment. He’ll have recovered his entire investment in less than 5 years and from then on, it will all be gravy whether or not the houses ever appreciate, or even sell for that matter.

Continue reading “What Should Single Family House Investors Do Now?”

Opportunity is a funny thing. It almost always resides in the mind in the form of a number of possibilities that can be wrung out of any situation. In order to be recognized and acted upon, it must first be formed and shaped by the attitude of the individual. That's where the "power of positive thinking" comes into play.

Continue reading “Recognizing Opportunity In Uncertain Times”