Foreclosure News Blog

If you have been around hard money lending for any time at all, you probably know Leonard Rosen.  And if you have thought about getting into hard money lending for yourself, you have most likely considered going to Leonard’s private lending training seminar in Las Vegas.

In fact, that is exactly how Hard Money Bankers got started back in 2007.  Shortly after forming our company and closing a couple loans, we were on a plane to Vegas to meet up with the best private lenders in the country and to learn how they ran their businesses.

We are happy to say that was a very good decision.

We owe a lot to Pitbull Mortgage School and Leonard Rosen for teaching us at the beginning and for continuing to lead the industry today.

I gave Leonard a call not long ago to see if he would be interested in sharing some of his knowledge with our blog’s readers.  He happily agreed.

Please watch the video below to find out:

-How HMB first met the Pitbull

-Why hard money lending is such a great business model

-How HMB has fared in its first 3-4 years of business

-How did hard money lenders make out during the market crash…and why

-Leonard’s insights on the industry today and in the future

-The 3 ways you can get involved in hard money lending now

Watch the video here

And if you are considering diving in (like we did) check out Leonard’s conference below.  It’s happening on March 3^rd so time is running out!  Plus, aren’t you looking for a reason to go to Vegas?

Sign up here:

http://www.pitbullconference.com/

PS–  To get a FREE seat upgrade tell them Hard Money Bankers referred you!

Good luck with your investments!

Technorati Tags: hard money bankers, hard money lenders, real estate investing, rehab

I found a nice rehab in my area the other day listed at $289,000.00. I calculated the ARV at $425,000.00. It needs $70,000 +/- worth of rehab. I offered the bank $249,000.00. The agent told me they already had multiple offers and turned down a cash offer over $265,000.00.

Without getting into a bunch of calculations, I determined that I’d be risking almost 350K to make less than 50K. Not a good trade-off. I passed.

Speaking with several local real estate agents and rehabbers, I learned this is a common story right now. What happened? I thought banks were desperate to get rid of properties?

This is purely my opinion, but here’s what I think…

The government has put most of the bad banks out of business and has bolstered the balance sheets of the remaining banks through TARP funds, etc.. Additionally, by cutting lending, banks have sufficiently protected their remaining asset bases and understand the market is in recovery mode. What does this mean for you?

First, banks don’t seem to be in any rush to get rid of inventory. They are either quietly releasing properties bit-by-bit, or selling large blocks of them to REIT’s and hedge funds (meaning you don’t have access to them – you don’t have $200MM to spend).

Second, because we are more efficient and computerized than ever, and real estate data is easily obtained on the internet, investors are evaluating deals quickly. This, in turn, allows them to make tons of offers each week (I know some making 50+ offers/week).

Finally, banks have access to this same data and can easily evaluate inventory in local markets. They also see the multiple offers coming in on their properties. Thus, in active markets banks are holding out and demanding top dollar.

Are there good deals out there? Certainly. But banks right now are not “giving away” properties like we thought they would, and it seems all this activity is cutting margins and making it more difficult to find home-run deals.

Do you agree with me? I’d love to get your stories or comments to post. Are you killing it right now or having a hard time finding deals?
If residential investing has become overcrowded in your market, commercial investing may be a better play for you. And, as promised last week, here are 4 more FREE training videos from Peter Conti, a commercial mentor:

Click on each title to view the video

Finding Great Deals on Commercial Property

Contacting Brokers – How to Sound Like a Pro Even if You’re Just Getting Started

Commercial Offers That Get Accepted, But Allow You OUT if You Don’t Like the Deal

We also have a free webinar with Peter coming up on February 17th.

We’ll send some emails out ahead of time so you’ll have plenty of notice. Peter will cover:

- How to get your first apartment building in 90 days or less.
– How to use other people’s cash or credit to buy commercial properties.

Peter is the author of “Commercial Real Estate For Dummies.” He is a 20 year real estate veteran. He currently mentors a limited number of students throughout the Country.

Technorati Tags: hard money bankers, hard money lenders, real estate investing, tax advice

Well like all things tax code; not always.  In fact, many tax professionals get this one wrong too.  Further, the same mistake is pervasive on both personal residences and investment properties.

A thorough review of your real property tax bill will reveal the total is the combination of many different items and it is in those details that the answers are buried.  Let’s use a Sample Tax Record to take a closer look.  Our example property was randomly pulled from HUD foreclosure list.

Review of the tax section reveals that the total tax bill is $6,114.  The $6,114 is the total of $3,068 State/County Tax, $2,515 City Tax, and $531 Special Tax.  There is also a space for Refuse if the local jurisdiction includes that as part of the total.

The requirements to be able to deduct a real estate tax are:

1. the taxpayer must own the real estate, and
2. the deductible taxes must be based on the assessed value of the property

In our example property the State/County Tax and City Tax clearly meet the requirements of being calculated based on the assessed value of the property.  However, the Special Tax charges are not taxes based on the assessed value of the property.  If there were a Refuse charge included that would not be calculated on the property’s value either.

If this were your property and you or your tax professional look at the 1098 provided by the mortgage company at the end of the year the $6,114 would likely be reported as the deductible property taxes.  This would be incorrect as the $531 Special Tax is included and we just determined that is not deductible.

So what is included in the Special Tax charges?  These are known as special assessments and occur when; for example, your city decides to install sidewalks on your block and divides the contractor’s bill between the properties that benefit from the improvement.  There is a tax benefit to be had; however, you will not receive this benefit until you sell the property as these payments over time add to your basis in the property.

Basis is a term we have not talked about thus far on the blog.  Basis is however, the foundation for the “what” of depreciation so we will continue to use our example property next week to bring us back to the continuation of our review of all things depreciation.

visit http://www.HMBCribs.com for more real estate investing information

Technorati Tags: hard money bankers, hard money lenders, real estate investing

Do you get upset when someone un-friends you on Facebook?

Maybe I’m too thin-skinned, but I actually feel dejected when someone “un-friends” me – even if I don’t know the person!

I happened to check our HMB Facebook “like” tab and noticed that we lost one person last week. Someone who liked us now doesn’t like us. He jumped ship.

What happened?

If you’re out there (and you know you are), did we not pay enough attention to your emotional needs? How did we drift apart like this?

Would you consider coming back?

Would you give us just one more chance?

We’ll change. I promise.

If you come back, we’ll even give you some more free real estate stuff…

I’ve recently been blogging about why people are afraid to get into commercial real estate and how one might overcome that fear.

I spoke with a friend of mine, Peter Conti, about this. He is a nationally recognized author on the subject of commercial real estate. He wrote the book, “Commercial Real Estate For Dummies,” and he is a mentor for investors trying to break into the commercial arena.

Because he is a friend, I got Peter to give me 7 free commercial real estate training videos for our readers. You can watch the first 3 videos here:

http://www.HMBCribs.com

I’ve got 4 more coming next week, so stay tuned for that.

Also, I got Peter to agree to do a webinar on commercial real estate and how to buy your first commercial deal in 90 days. That will happen on February 17^th, and we’ll get you some more info on that as it comes in. For now, just mark the date on your iPhone calendar.

If you’ve been tinkering with the idea of commercial investing, you may want to follow these posts, get up-to-speed, and jump in.

And please, please make sure you don’t de-friend us, or we’ll hunt you down as well.

Technorati Tags: hard money bankers, hard money lenders, real estate investing, rehab

There seems to be a natural progression for a real estate investor:

-          First, he gets some education, overcomes his fear, and nervously buys his first residential cheapest price norvasc investment property;

-          After gaining some confidence and doing a few deals, he moves up in volume, gets a web presence, and starts talking to his wife about leaving his day job;

-          Inevitably, he hits a few road bumps – trouble with financing or a deal that goes sour. But the true entrepreneur makes it through, continues to learn and hone his craft, and ultimately creates a profitable life as a residential investor.

Many investors accept this as the end of the road.  And, truthfully, it’s a good one.  Many a fortune’s been made in residential real estate.  But there is another extremely profitable road to travel, and only a few select entrepreneurs seem to follow it. Of course, I’m speaking of commercial investing – apartment buildings, self-storage, strip centers, hotels, etc.  Most of my truly wealthy business acquaintances play in the commercial arena.  I call them “Big Dogs,” and for good reason.  Through one acquisition, they can generate cash flow similar to an average person’s annual salary, or more.

I believe most investors never venture into commercial investing simply out of fear.  Fear of the size of the deal – it’s too big and their afraid of dealing with banks or getting financing.  Or fear of all the different lingo – cap rates, debt service coverage ratios.  Or fear of creating business plans and pro-forma financial statements for banks and investors.  Or fear of networking to find the money to do the deals or the deals themselves.  Or, worst of all, fear of success.  Many of us just don’t want to believe we can generate that kind of opportunity for ourselves, so we don’t let our brains even consider it.

The message I want to get across today is, DON’T BE AFRAID.  When you first started residential investing, you were probably afraid.  I know I was nervous as hell on my first deal.  But you got educated, learned the lingo and the process, and started making money.  Commercial investing is the same.  And what makes commercial investing so appealing is that very few people step up to the plate to swing at the big deals, so there is much less competition.

Of course, this does not mean commercial investing is easy, or doesn’t have risk.  It may have a bigger reward but, to get that big reward, you will have to be smarter, work harder, and be willing to take bigger risks.

I have a lot of information upcoming in the next few weeks through hmbcribs.com about commercial investing.  I will discuss with industry experts:

-          How to get started in commercial real estate;

-          What are the biggest pitfalls of commercial real estate;

-          What’s the easiest way to buy your first commercial property;

-          How to get investors/financing for your commercial deals

I will even give you some tools so you can get started right away.

In my next blog, I will tell you the 5 fastest ways to lose all your money in a commercial deal.

Technorati Tags: hard money bankers, hard money lenders, real estate investing

This is another hotly debated topic in the world of hard money lending and a question we are asked 20 times per day.

I will give you our answer from a hard money lender’s perspective (based on risk and underwriting).  If you have questions about your State’s lending laws, please consult an Attorney.

Short answer:  We do not lend on primary residences and we don’t personally know any hard money lenders that do.

Longer Answer: In some states, mainly in the West, a hard money lender doing only commercial/investor loans will still have to have the same residential mortgage lending license as a normal “consumer-based” mortgage lender.  Doesn’t make much sense but that’s the case.  And since they have to have the license anyway, they might as well learn how to be RESPA and TILA compliant and do some loans for primary residence homeowners.  It’s another line of business (maybe not for every lender, but we’ll get to that soon) for them.  If you are in the West, chances are you can find a hard money lender doing primary residence, consumer-based loans.

In many Eastern states (such as DC/MD/VA, the states where we do most of our business) there is a distinction between primary residence, consumer-based loans and commercial/investment property loans used for business purposes.  Hard money lenders doing commercial/investment/business loans are not required to have the primary residence, consumer mortgage lending license.  It doesn’t apply to what we do.***

So there are some legal reasons, in many states, not to do primary residence loans.

But, more importantly, there are some underwriting and business reasons not to do them either.

Here is the most important reason:

It simply isn’t our target market.  We are in this business to lend to real estate professionals, people who make most or all of their income with their real estate investments.  People who are serious about their business and are experienced in real estate investing.  People who use our money to make more money, and are happy they did.  People cheap vigrx plus who come back for more loans each month.  True professionals.

We are not in this business to lend money to homeowners who aren’t able to get a bank loan and might have a troubled financial situation.  It’s not what we do.  If other lenders do, that’s their business.  It’s just not what HMB is about.

I hope that explanation clears up this issue for people.

If anyone is looking for a hard money loan for investment purposes, please apply here:

http://hardmoneybankers.com/loan-application

Thanks!  I hope 2011 is starting off strong for you.  Stay tuned for more.

-Chris

***There is an exception in some states near us where a person’s business could take a loan and collateralize a primary residence, but it’s rare and doesn’t come up often.

Technorati Tags: hard money bankers, hard money lenders, real estate investing, rehab

So you have an investment property that you have been renting and even at today’s value has a market value higher than your basis; how can you minimize some of that gain?  Prior to December 31, 2008 there was a significant ability to reduce those gains by just moving in for two years.  In fact, if you were married you could have exempted yourself from capital gains on a whopping $500,000 of equity build-up.  Just in time for the market melt-down Congress reduced the sweetener though.

Prior to passage of the Housing Assistance Tax Act of 2008 (H.R. 3221) you only needed to live in the property as your personal residence for any two of five years that you owned the property and you could exempt up the full amount of exclusion.  The two years could be any of the five years in any combination:  live in the property for two years and rent for three years, rent the property for three years and then move in for two, or even live there every other year of the five if you really cheap online plavix liked moving.

Under H.R. 3221 the period of time the property is not used as your personal residence is termed “non-qualifying use.”  The ratio of non-qualifying use compared to the 5-year time frame reduces the amount of gain that can be excluded.  For example, John who is married and files jointly lives in a property for 2 years of the 4 years he owns the property.  Fifty percent of the time is non-qualifying use so his gain of $100,000 would only be excludable up to $50,000 and he would owe capital gains on the balance.  If he had owned the property for five years; rather than four, his exclusion percentage would have increased to 60% leaving capital gains due on $60,000.

Technorati Tags: hard money bankers, hard money lenders, real estate investing

By:  Jeff Shiller, Esq.

Or, the alternate title: How To Own a $240,000.00 Prime South Beach Condo For $4 Per Year.

Ever since the 1980’s, I’ve been trying to figure out ways to  buy a cheap retirement home in Florida so I could wear white clothes year-round and solve crimes in my Ferrari (hold on a sec.  I’m looking for a cheesy picture.  Okay.  Got it.  I’m back).

After much deliberation, I think I’ve finally figured it out, and I’m sharing my top 2011 investment strategy with you.

The collapse of the Miami/Palm Beach County real estate market is legendary.  And now, to add insult to injury, a large south Florida law firm caught up in the robo-signing mess had many of their FANNIE and FREDDIE foreclosure files pulled and re-assigned to new law firms.  The resulting confusion between lenders, trustees and the local courthouses led to many Palm Beach County homes being sold to investors at foreclosure auction this month for as little as $200.  Yes, that’s correct, 200 bucks.

Here’s the article:

http://www.sun-sentinel.com/business/fl-stern-foreclosure-sales-20101209,0,784272.story

According to the article, “56 percent of winning offers were from investors or individual buyers who in some cases spent no more than a month’s mortgage payment to get homes that sold for upwards of $240,000 during the real estate boom.”

It doesn’t take a rocket scientist to figure out that those investment numbers work.  So if you’re like me and have thought about buying that dream 2^nd home that could also generate rental income, get off your rocking chair and start thinking about purchasing some south Florida real estate!

Here’s the catch – you’ve got to get your location right and time your exit for maximum profit, so I’ll give you my formula for that.

According to Al Gore and the other global warming crackpots, sea levels will rise by as much as 0.7 meters by 2060.

So here’s the solution.  Go down to FLA when the next bulk auction is scheduled.  Buy your dream condo for $200.  Make sure you buy above the 5^th floor.  Hold it for 50 years.  Sell when the water hits the 2^nd floor.

Voila… a Florida condo for $4 per year.  And you get to sell for at least the insurance money.  What a deal!

In all seriousness, look for my upcoming posts regarding condo 500 mg levaquin investments.  I’m going to address the dos and don’ts and pros and cons of buying a condo as an investment, and even speak with a real, live south Florida condo expert on the state of the market.  Then we can get the bottom of this global warming problem.

Merry ChristmaKwanzaKa.

Til next time, Jeff

P.S.  One of our readers sent the following article to me about the SAFE Act.  It’s a good summary of my other SAFE Act articles.  Thanks Kevin!

Technorati Tags: hard money bankers, hard money lenders, real estate investing, rehab

I had it on my calendar yesterday to do my annual Game Planning Session and although the snow around DC delayed my start time, I was still able to get it done.  And by the way, I call it “Game Planning” instead of business planning because it includes personal goals such as exercise, diet, personal finance and family issues.  I prefer to have it all in one plan because the things I want to accomplish are so interrelated, not to mention time-sensitive.  I have to stay on a pretty tight schedule in order to fit everything in.

You may have noticed from my previous blog posts that I often like to organize my thoughts into a list.  I think that format will work well in this situation (of course I think that)…so here we go:

Chris’ tips to an Effective Business/Game Planning Session

1. Make it an appointment on your calendar, like any other, and don’t miss it.  Treat is as being very important because, well, it is.
2. Do it at a location other than your office or home.  In those places, where you spend almost all of your time, it is too likely you’ll be distracted by your usual routines.  For this planning session you want to be away from your normal activities so you are able to focus and think in a way that you don’t think when you’re in the everyday grind.  Pick a place where you are comfortable but can concentrate.  I went to Barnes and Noble and sat in a big chair in the corner of the upstairs.  It worked out pretty well.
3. Do it during business hours.  This is when your brain is functioning the best because you are used to thinking and concentrating during this time.  At night you are tired and your brain is slower.  On the weekends you are thinking about weekend stuff.  During the work day is the way to go.
4. Turn off your cell phone and close your email.  I know it sounds drastic but it’s important.  Your Crackberry or Iphone is the biggest distraction ever invented.  Email is a close second.  You can’t have that when you are planning your next 12 months.
5. Brain dump.  Open up MS Word and just let it flow.  You can re-write later.  Think, write and repeat.  You’ll be surprised at some of the things that come out.  They are probably things you had in your brain…you just weren’t completely conscious of them.  It’s pretty cool.
6. Don’t forget dates!  As they say, “A goal without a timeline is just a wish.”  Mark the exact date by which you will accomplish a certain task.
7. If the goal is big and/or complicated, include the steps to get there and the resources you’ll need to make it happen.   Don’t just throw out something big like “launch e-commerce website” without a step by step process to get there.
8. Concerning production numbers- set the bar high and shoot for it.  I used to work with some guys who would set their production goal way low and double it every year.  What is the point of that?
9. Take breaks!  You want to be fresh during all of this, not rushing to get it done.  If you need a break, take one and drink some coffee or something.
10. Re-read it the next day.  You’ll re-write, elaborate and clarify some things.  You’ll also enjoy what you were able to get on paper.

BONUS

This is a tip from Julius Park at 30 mg lexapro href=”http://88bjj.com/”>Crazy 88 BJJ & MMA- post your plan in a place where many people can see it.  It will do wonders for accountability.  It’s also very ballsy and I have to admit I am still too chicken to do this.  Haha.  Maybe next year!

I hope you enjoyed my list.  Best of luck with your 2011 game planning!

-Chris

http://www.hardmoneybankers.com/real-estate

Technorati Tags: hard money bankers, hard money lenders, real estate investing

So this week we begin to get into some meaty tax changes.  We’ve just wrapped our conversation about how to get caught up on your bookkeeping for 2010.  By the end of this post you’re going to realize that the days of procrastinating to the end are clearly over as of December 31, 2010.

Beginning with tax year 2011 landlords will be required to file 1099 information returns for anyone that provides greater than $600 of services to their rental “business.”  I hear you, “what business, I only have one rental property?”  In fact after doing some research today preparing for this post I found several posts from 2008 on a forum of tax professionals where they almost unanimously said the same thing.

So what changed?

Please welcome, 262 pages of The Small Business Jobs Act of 2010.  This is the first time that landlords have officially been codified as “engaged in a trade or business.”  There is a long history of both Congress and the IRS dancing around what is actually considered to be “engaged in a trade or business” despite the phrasing being used liberally throughout the Code.

Well here they went right for it and if you “are a person receiving rental income from real estate” you’re in the club.  So to what do you owe this great honor?  Estimates are that the Treasury will raise nearly $2.5 billion over the next ten years a result of this additional reporting.

There are some exceptions; though if you are reading this blog they likely aren’t going to apply to you.  The exceptions include:

• any individual, including members of the armed forces or an employee of the intelligence community, if substantially all rental income is derived from renting the principal residence on a temporary basis
• any individual who receives rental income of not more than the minimal amount, as determined under regulations prescribed by the Secretary
  • as of the date of this post the “minimal amount” has not been determined; but, I would not rely on it as a reason to put off preparing to comply with the new rules

Advising small business clients on what needs to be done throughout the year to prepare for filing 1099’s has been a part of my professional life for over 10-years.  So the advising part is easy… my experience has been that it’s the implementation on your part that will be painful.  More so than many other businesses because it won’t be an everyday occurrence as you go through the year; however, it has to become second nature to you.

Here is what I tell my clients:

• At the beginning of every year start the process over again even if you’ve been using the contractor, landscaper, handyman, etc. for years.
• The first check that you pay them beginning in January give them a W-9 form before you actually give them the check.
  • No form, no check end of story.
• Always write the check in the name that they filled in on the form whether it is their individual name or their business.
  • NO MORE checks made to “Cash.”
• Don’t second guess in January, February, or even November whether you will pay that particular service provider more than $600 by December 31.  Everyone fills out a W-9 or they don’t get paid.
  30 allegra mg
  • Officially, if they won’t fill out the W-9 then you should withhold 28% and submit directly to the Treasury on their behalf.  Don’t even bother…too many good contractors out there to make your life difficult so find a different one.

There are many more changes coming regarding who is required to begin issuing 1099’s.  We’ll be covering some of those in future posts.  Also, I’ll be introducing you in future posts to the 1099-K.

Bryan L. Wakefield, MS Acct.

http://www.HardMoneyBankers.com/real-estate

Technorati Tags: hard money bankers, hard money lenders, real estate investing, tax advice