You’ve been hunting for that perfect rehab deal like a Neanderthal stalking a mighty Mastodon. You’re sure you’ve found it. The after repair value and renovation costs will allow for a hefty profit. You should even be able to set a price that will result in a quick sale when the rehab is complete. There is only one teensy-weenie thing left to do – find the money to make the purchase of the property.

Back in the ancient, olden times (early 2007) it was fairly easy. You would seek out a hard-money rehab lender. Sure, the terms were steep, but the financing cost was built into the equation. As long as the numbers penciled out you could get funded. It was even pretty common to include the cost of purchase and repairs and have the interest financed right into the deal. If you did it right you didn’t need much, if any, of your own money.

Things Ain’t What They Used To Be

Here we are a short time later and the easy money is gone. Rehab loans can still be had, but things sure are different. A novice rehabber has little hope of obtaining financing at all. The experienced rehabber is facing a lending environment that has changed dramatically. No money down? Forget it. All costs rolled in? Fat chance. All repair costs included? In your dreams. These days the lenders want you to have significant skin in the game.

It’s hard to blame the lenders. They have been burned so often in the recent past that they had to change the rules. While it is easy to say that they had no one to blame but themselves, you can’t fault them for adjusting to the realities of a changing market. The rehabber has to adjust as well, unless he is going to pack up his tent and go home until things change.

What’s a Rehabber To Do?

It’s more important than ever to seek creative ways to fund a deal. If you have equity in your own home, try using a Home Equity Line of Credit, or HELOC. Lately many banks have been reducing the credit limits on existing HELOCs, so be careful there. The advantage of HELOCs are that you are a cash buyer, you can use the money as needed for the deal and repairs, and when you pay it back it is there to use again.

Can’t use a HELOC? Look for owners who are willing to hold a short-term note while you complete the rehab. A friend of mine made an offer on a house with no money down, the owner holding a note for two years and payments deferred for six months while he completed the rehab. The seller accepted the terms without a fight. It can be done.

Learn about “subject to” deals where the existing financing remains in place. This allows you to buy a property without have to obtain financing. If the seller still has equity in the property, ask him to defer taking his share until you complete the rehab and sell the property. When people are in desperate need of selling a property, they will agree to all sorts of crazy terms. Try it, you’ll like it.

Creativity Is Key

The point is to look for alternative ways of making deals happen. Instead of thinking, “it can’t be done”, ask yourself, “how can I do it?” In a nutshell, think outside the box. These are challenging times. Those who rise to the challenge will succeed.

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Tags: creative finacing, financing, hard money, heloc, home, lender, property, real estate, real estate investing, rehab, Rehabbing

As promised, I’m going to circle back and cover a few pre-contract concerns that have to do with due diligence and determining value. I also want to address the importance of not falling into the trap of what I will Anti-Real Estate Agentism - AREA for short. Not only do first time investors benefit from an extra mind that’s experienced, it’s a benefit to all investors except the ones who have mastered all aspects of investing. I’m not saying this because I’m an agent, but because it’s true. And if you absolutely insist on AREA, then rely on SOMEONE who has the necessary experience to be a guide, a mentor, a sounding board, an extra set of eyes and a mind trained to spot advantages and traps, someone who knows the process in and out. Unless you’re into saving nickels to lose dollars, get help.

When I first got involved with real estate investment, I had only a cursory understanding of how local, state and federal government affect the values of real estate, how it’s important to understand how their actions can determine your best course of action when investing.

Let’s say you’ve eyed a property in what seems an up and coming area in your town, a building that would be perfect for a restaurant. Renovation is happening in this area; you can see a building across the street that’s being rebuilt and you hear it’ll be a coffee shop and the building next to it will be an upscale antique shop. It’s on the periphery of downtown and it seems logical that growth is going that way. All this you can see and discern, so you estimate a price on the property you like and come to find out the owner is asking way more than you estimated, so you pass on it because your friend who has an uncle who invests gave you a formula to estimate fair market value. Perhaps your friend failed to mention something that when you are on the streets, so to speak, actually investing, is vitally important.

Let’s say you’ve done partial due diligence and are pretty sure you have a good idea of the property’s value, however you haven’t gone the extra mile and become involved with community planning, nor or you up on zoning in surrounding areas, and you don’t really have an understanding of transportation plans. The owner knew of land use changes in the neighboring area, therefore priced accordingly; however, the owner didn’t know about recent transportation plans to open a route to the new area because plans were in the works to build a mall. The new route and the upcoming development would put this property in a prime spot for future traffic. Actually the property is worth more than the owner is asking, speculatively speaking.

The point is to think large even if your investment strategy is to start small and focused. And the point is to know what’s going on with community planning, zoning and transportation in the surrounding areas. It’s one thing to calculate value with a formula working with limited information, it’s another to project value based on full context.

The investor, if all turned out as planned, and therein lies the risk of investing, could have bought the property, rented it out for one purpose for two years or so, basically breaking even, then could have sold once the development was complete at a much higher price, making a nice profit. He could have if he had had the information.

Information is valuable. Information is what it’s all about. Hmmm, information, that sounds like a good topic for next week. Later.

Oh, I forgot, AREA. A good, informed agent might have helped this beginner. Something to think about.

Tags: Lands use, property, property values, real estate, real estate investing, real estate investor, transportation, zoning

I just came upon a bunch of videos that takes the serious things in life and breaks them down for all of us to understand - THIS IS FUNNY! The one I’m going to share with you today is a look at buying a home with no money down. I hope you all enjoy!

BTW - There are more of these entertaining videos to come!

What do you think?

Tags: buying property, Economy, fun videos, funny, home, no money down, property, videojug, videos

CashflowandEquity.com is the website of Cornerstone Investment Group, a company that has gained recognition for its specialty–offering turn-key properties to real estate investors. Simply put, this investment company promises to ease the “headaches of being a landlord.” No simple task, but the company says it can do this by providing properties that are “renovated,rented and with available property management.”

Vertically Integrated Lending Arm

To make turn-key type investments virtual no-brainers, Cornerstone offers a financing arm for properties bought through its website. The “Preferred Lender Program” -the company promises, will take any potential sting out of qualifying, which anyone who has ever purchased any property can tell you can be a consumer nightmare. But, Cornerstone says it offers fast closings and low down payments. This doesn’t mean, of course, that just anyone can benefit from the lending program:

**The potential buyer MUST have a minimum credit score of 620
**Must be 18+ years of age
**And, have a buyer debt-to-income ration not exceeding 50%

Focus on Foreign, In addition to Domestic Investors

So far, so good. These folks seem to have given much thought and have apparently covered all possible angles. For example, this is the first company I have seen that also caters to the foreign investor looking to buy property in the U.S….it does this through it website http://www.usacashflowproperties.com

Strategically Locates Properties in Affordable Western New York State

Of course, Cornerstone has a strategy: to locate properties in Western New York State. I personally believe this is a good plan since properties in this part of the country are extremely affordable at this time. But, even white clouds can have a darker lining. There is plenty of evidence that the area is not exactly on the upspring. The City of Rochester’s own estimate is that nearly 66% of the structures in the city are rental properties. And, over in ever snow-bound Buffalo, nearly 59% of the city’s structures are rental. The obvious down side to this is there is also plenty of evidence that areas with a greater concentration of home ownership,for example,tend to have residents sharing a far more attractive socio-economic profile. And, while The Economist just published a story concluding that Rustbelt cities such as Buffalo have a real chance to stage a dramatic comeback, it cautions at the same time that this is not likely to occur overnight. In part, this is due to the economies of Buffalo and Rochester which are not ,what one might call,booming. And, there has been talk and unfulfilled promises before by civic leaders that both cities would have a major turnaround. So, only time will tell.

But, one doesn’t need time to tell that all this translates into cheap properties, yes, but also properties not likely to see much appreciation in the short term.While the properties offered by Cornerstone all come complete with built in equity, investors should be made aware that it is of vital importance to closely examine and consider cash-flow.

Established Property Management

As for its much advertised property management, Cornerstone has established relationships with various companies making it possible to offer management services at 10% of collected rents. Just some of these services from management include:

• Rent Collection
• Dealing with various Rental Public Assistance Agencies (i.e., Section8 )
• Tenant Issues
• Repairs and Maintenance
• Inspections
• Tenant Placement
• Lawn and snow removal services (when needed)
• Monthly statements with Expense records

You should be as comfortable with your property manager as you are with the management company you have hired. With that in mind, we’ve assembled a few important points to consider and have gathered them here

Large Availability of Properties for Rehabbers and Landlords

This company works not only with landlords but also with other types of investors. And, since it can secure properties at wholesale prices, it can sell these properties directly to rehabbers–and, still turn a small profit. So, if you happen to be a rehabber with a yen for Western New York State, all you need to do is fill out a form and you are now in the loop to learn about upcoming deals.

Finally, the properties themselves. As of today, Cornerstone has 177 properties listed on its site. After browsing for just a minute or so, you can see there are many potential opportunities for investors large and not so large.

So, if you are in the market to pick up some affordable, cash-flow properties, I’d certainly take a serious look at Cornerstone Investment Group via its website, cashflowandequity.com. It is a company that seems to have its act together, offering deals that should make it easier for newbie and hand’s off investors alike.

NOTE: This was a paid review. If you are interested in having your site reviewed, please visit our advertising page

Tags: cashflow, equity, landlord, property, real estate investing, rehabber, turn-key, wholesaler

Sorry about the lack of posts lately. I’ve been extremely busy with some projects here and haven’t been able to focus on the blog. I’ll be sure to keep it up despite my busy life! Here’s today’s dispatch:

• The 25 Best Affordable Suburbs in the U.S.
• 10 Questions to Ask the Condo Board
• Distressed Real-Estate: Priced to Sell

Tags: affordable, board, condo, dispatch, distressed, estate, property, questions, real, suburbs, yahoo

Adverse posession is a method of acquiring the title to someone else’s property by occupying the property against the rightful owner’s rights. NOTE: Adverse posession cannot occur on publicly owned (government) land.

According to Wikipedia, “Adverse possession requires the actual, visible, hostile, notorious, exclusive, and continuous possession of the property, and some jurisdictions further require the possession to be made under a claim of title or a claim of right.”

Basically, this is essentially squatting, except in the end, one can actually gain title through adverse posession. There are various requirements for gaining title, and they do vary across states. These requirements include: a) the person (adverse posessor) must pay taxes on the property for consecutive years, b) the person must use the property for an uninterrupted, continuous period of time (varies by state), c) the person must be in posession of the property openly (not hiding or secretly posessing it), d) the person must have some kind of claim for the title.

Given that the proper conditions are met for the state that the property resides in, a person can actually squat on another’s property and gain it through adverse posession.

Adverse posession has raised somewhat of a debate on owners rights, similar to eminent-domain, as both entail property owners losing out to others who wish to posess their property.

- Discuss Eminent Domain
- Discuss Averse Posession

Tags: adverse, domain, eminent, estate, owner, ownership, posession, property, real, rights, state

Starting today, Zillow is allowing its users to get their say in what homes are worth by allowing them to enter their own price estimates alongside the site’s proprietary Zestimates. Apparently the move was in response to feedback from the users of the site.

I’ve heard much debate about the accuracy of the Zestimates, both online and off, and I believe that this is a good move for the company. The addition of a new set of “Owner Tools” allows property owners to confirm ownership, edit their home facts, and lastly, create a price estimate and make it public. As public records aren’t always accurate or up-to-date, allowing owners to share information about remodeling work or simply correcting inaccuracies will help to improve the usefulness of the site — something we were hoping for back in April - see post: Top 7 Coolest Real Estate Web 2.0 Sites.

As many of you know already, we partnered with Zillow a few months back to provide their Zestimates right here on BiggerPockets!

Tags: comparables, comps, home, homevalue, house, prices, property, Real Estate Websites, value, zestimate