Bill O'Rafferty's daily info of importance

From the story in the Bible of the feeding of 5000 people from an unexplained multiplication of foods provided by a child, my wife says honest dealings and faithfulness to integrity brings money and assets beyond our understanding (loaves and fishes). Work hard, be up front and soon you will have money at the end of the month rather than month left at the end of the money. When you get to the point that you do not need to check your checkbook balance before writing checks out of it, you have the loaves and fishes thing going in your life - that is success to me.

I am asked regularly where to get funds to use to purchase and repair property to be flipped. Google or MNS "hard money lenders" and you will find pages of short term lenders. Then make a spreadsheet with the rates, fees, percetages and such and you will be able to pick the funding source that meets your investment interest/objective. Most lenders lend anywhere in the state and many go from state to state. If you contact 25 lenders and find 3 or 4 that might be able to finance your deal, you will have invested 4 or 5 hours and your purchase funds for the next year or two will be right in front of you.

I usually do many deals over the holidays because everyone assumes real estate slows down - eat their lunch over the holdiays. I have made 60% of my income in the past 2 years during the time of the year that "things just slow down." If you smoke out some deals over the holidays then you can be more selective the rest of the year. When I go into the office in the 2nd week of December, I will be the only one there until noon - they snooze and I have been doing the deals with investors that want a deal before the year is out - seek them out and you will be the only one doing so.

Bill

Thanks for taking the time to share all of this info, it's
great

Regards
Tom

I closed this month on 3 reo properties that had been on the market for 60+ days. I have done well the past few years by selling properties that are stale, and there is no time like the holdiays. Find an reo or short sale that has been actively listed for 60 days or more and offer 20% less than asking price and you will be amazed at home often the offer will be accepted. The banks will not lower the price but when faced with the chances of closing the deal before the first of the year, you have leverage. Jan and Feb are usually very slow so asset managers know if they do not take the deal now they will be holding the inventory a few more months. Grab a buyer who whats the "too good to be true" deal and put in some offers for them - I bet you get something accepted that would have been rejected immediately in July.

Once again, great tips!

Matt Larson typically puts in offers at 60% below asking price, in winter he drops to 50%!

While others take the week off between the holidays, Thanksgiving and Christmas, this is a prime time. Look particularly at properties that are distressed, have been on the market longer than 60 days, are probate or trust properties, are significantly overpriced, yes the overpriced ones sell for lowball offers around the holidays often as owners ponder what prices will be like in the new year. Don't let others eat your lunch - buy now and sell in February and expect prices will remain the same or tick up just a bit.

Another great tip!

On a scale of 1-10, how good a buyer or investor are you? Will you make your agent lots of money right away or it is a long shot? Don't get me wrong, money is money but you have to put your self in your agent's shoes and know if you are a long shot as an investor the amount of time he/she can commit is going to be limited or he/she will not be able to pay the lease payment on his/her BMW or Toyota Camry in my case. Do much of the work yourself if your score is lower and sit back and relax if you have a million to invest. There is room for everyone yet one needs to remember we are all in it for the betterment of our our lives too.

Often we are told that a property is for sale for cash only because the condition will prevent a loan as a possibility. Go into the home with someone that knows what appraisers will look for and get their opinion on what needs to be done such that a loan is possible. It ofen takes very little in terms of money - maybe one or two thousand dollars worth of work. Get it under contract, do the work over the weekend if it is not too extensive and move to purchase with a loan. If the property were for sale as a property for which financing is possible, it would bring a much higher price - turning it into one in the course of escrow makes some great equity on the fly - there is risk, but if you can pull off one or two of these per year you can increase your income 20K or more and that is worth some risk. This type property can now be assigned much more easily.

Based on economic predictions out today, I suggest a flip would be a great idea if your market has already fallen at least 35% like Ca and Fl, but not a good idea in the midwest like Illinois or Kansas - these markets are predicted to fall 10-15% in 2011 and if you are flipping in those markets, do it in 30 days or less. In any case, time is usually what kills the deal - let too much time pass and you could be in trouble both from lower prices and the cost of the money you are using.

For the information you give us.

Steve and Veronica.

One of the nation's largest banks announced this week they were holding off on eviction yet again. Perhaps others will follow? That means we will have healthy inventory in March and April when the eviction game is back on. We are over the hump and more than half of the properties that will be foreclosed upon have been, but nearly half of the inventory is remaining. This does mean prices will slowly rise in almost all markets and if you watch the slowing of reo listings in any market will bring accelerated prices. When pricing your flips in tightening markets, you can add 1/2 percent per month to appreciation. That might make the difference? It did for me this year. A decent flip when I purchased it turned into a great one with 8% appreciation over the year. IF you will hold the property for 4 or 5 months, the appreciation could be significant.

Anyone looking for a "subject to" deal or hostile takeover should look for fha loans - they are assumeable if you qualify for the mortgage and are totally unlikely to be called due if you just take them subject to. FHA loans are insured by the government and banks are not at risk of losing money on them so there is generally less oversight. Any action with an FHA (call due or whatever) takes many levels of approval - hence, less involvement and more hassle for lenders to take any action. Short sales with FHA loans are quite easy as well but take 6-7 months, about twice the usual time.

Merry Christmas and the Happiest of New Years!

Karen

If you are an investor, and I am, and you have 4 loans already, and I do, and you think you cannot get another conventional loan, which I did, then you can call Rich Waller at PHH Mortgage and he can get your A list investors up to 10 loans given good credit and some reserve funds. I will do 4 to 5 more deals this year given this info. See if you can also.

Been on vacation but back now.

Bill

That is a lot of great information. Please continue as and when you can. You are greatly appreciated.

Best Wishes!
-Dan Hilsman

The largest holder of mortgages has announced it is on a 24 month plan to foreclose on delinquent mortgages. In 2007 and 2008, banks let the chips fall where they may - in 09 and 10, banks held back foreclosures to help support prices. The plan now is a systematic repo and sale over 24 months to rid banks of excess inventory, clean up blighted areas with vacant properties, etc. Look for opportunities in the increase in inventory. Particularly look for hostile take overs, short sales that can be flipped and hard money purchasing opportunities. That is where my energy is going.

If you are trying to flip and there are few homes to make offers on, try a short sale. If assignments are not working, try a hard money flip. If you have not done bird dogging, every one wants a good deal. First find some buyers looking for a great deal - then look for great deals - you only need one every once in a while and your income stream will increase. Try something different.

Hey,Bill I just joined the family about two weeks ago. I have been reading some of your articles and you have a wealth of information. So I have a question for you. There is a home that is 4000 square feet in a nice subdivison that is selling for 150,000 short sale. My wife and I met the owner and saw the house. She does'nt want anything to do with the house because she has another home that's she is living in. She said that the bank has approved it for a short-sale. I tried to get her to lease it me but she did'nt want to do that. The homes on that block and area go from 300,000 and up. We can't afford to buy it now. What can I do to tie this property up. I can make some good money here. The house is beautiful inside and out! I think she got an agent because one couple tried to get it she told me and something happened where they could'nt get it and she called me back.

Bill you are a walking encyclopedia on REI, I sware. It amazes me how much you have to share with us. It's like a never ending supply of awesome advice.

I want to especially thank you for that idea you suggested about locking in a price on contract then building the equity immediately through repairs to raise the value to increase the amount you can borrow for purchase prior to close. That is something so brilliant yet simple enough that I think "Why the hell didn't I think of that?" I understand the risk that could be there. I was thinking that in a case where it could make the difference in getting a HM loan or getting a buyer to grab it from me on assignment it might be worth while. If I know I am going to get it myself I could also just get a head start on that turn-around time for a flip.

Thanks So Much for all you share.
Steve

Bill:

What is your advise on short sales? I have bid on a few and waited...waited...waited, in the mean time several other offers got accepted. Is there something I am missing? I know there are a lot out there, seems like a waiting game.

Bill a lot of great information, Thanks

Short sales are a waiting game. When there is plenty of inventory (reo and standard sales) offers on short sales slows and there are deals to be had if the bank wants to get the property off their inventory, avoid foreclosure, etc. When the inventory is slight (as in California and the north east) short sales are a reality, banks are arrogant about pricing and a 5 month escrow is common. If the listing agent does not know what they are doing, or will not make tough decisions with the listing clients, months of work lead to nothing. I screen out sellers and have never had a short sale rejected. Banks want the short sales to go through but sellers must be willing to play along and offer up all their fianacials to the bank - if sellers will not do this, agents should not take the listing. New or inexperienced agents will often take any listing just to get their name out there and the outcome is like peeing in the wind.

The property mentioned above in the short sale question involves a short sale at half market value and the investor wants to tie it up. Two reasons why you cannot tie it up and one way you can.

You cannot tie up the property at the 150K Price as the bank will require an appraisal and they cannot (legally the represent others and cannot give other's funds away) give you the home at a price lower than they would receive if they foreclosed and sold it - you got a story from seller here.

You cannot tie it up with a deed (transfer of ownership from them to you) as the current encumbrance would remain the same. Once properties change hands, banks will not do a short sale - the name on the note and deed of trust must match the owner at present to process a short sale.

You could tie up the property with hard money as a cash sale if they would take the 150K and then you could immediately sell at a profit - you think the banks will give away 150K in value on a short sale - they you should seek gold at the end of the rainbow as this is just a likely. Owners have not been upfront I suspect. When deals look too good to be true they usually are.

Banks are holding inventory. Fannie and Freddie are releasing inventory reo properties. If you like me are looking for flips, hand in there.

Are you going to be speaking at the Edge this year Bill.

I hope you will be there.

Steve.

I was not part of EDGE this year - send questions and I will check this site again - it has been a while - Bill

I will reply to your PM to see exactly what you are looking for

I have missed your posts!!! it has been a while; I hope you are doing well-enjoying that little grandbaby!

Cheers,

Valerie