Although we have secrets on how to get bank owned homes at the same bulk discount price, I would doubt most that say they still get portfolios, aka, bank tapes.

According to a Fannie Mae representative when I asked when the next time I could get an opportunity on a 20-25 home package, his response was this:  “Why would we package homes and sell at 30-40% discounts from current market value when we can put them on the MLS and sell them for market value within 30 days?”

Hmmm..good point.  But that is what it is coming down to.  There is literally hyper-activity in Lee County with sales skyrocketing.  Since mid 2009, our median home price in the county has gone from $84,000 to over $100,000 today.  Show me another market in the country that went up 16% in almost one year.  Lee County is prime real estate right now and the window of opportunity will be gone in 12 months for those that want quick turnovers.  (That is my opinion, and I’m sticking to it!)

We acquire and sell dozens of homes per month and we have 2 programs for our real estate investors for Cape Coral and Lehigh Acres homes.

The first program is the FLIP concept.  That’s right.. Bet you never thought that phrase would be in the same sentence as “real estate” ever again.  I’ll give you a hint.  Have you seen the marginal difference in prices between cash based buyers and those that use FHA or USDA financing?  It’s over 20% difference.  Almost 40% difference in some areas.  You won’t find a GREAT deal if you are financing.  Won’t happen.  I am a seller and also a buyer.  As a seller, I am making way more money holding my property for 30-40 days longer selling to a buyer using financing.

Most realtors don’t know this.  Heck, most don’t know how to even look up lein / mortgage records.

The second program is the “End-User Investor Program”.  Get your pens ready and remember this.  This is known as your “buy and hold” strategy.  Put down your pen.  You didn’t need it.  It’s not science, just timing at this point.

We are one of the strongest in the local housing market at getting great deals for our clients.  We are a licensed real estate brokerage and investors ourselves.  We offer a turnkey solution to investing.  We purchase the homes with our money and do the rehab work with our money where we wholesale out.  It’s seemless and simple.  Contact us today if you are interested in being successful in Lee County Real Estate.

Some extra TidBits:

TRUTH:

• USDA and FHA do not have the same strict seasoning requirements as they used to.
• FHA appraisers require all mechanical systems to be working.  Be sure garage door is accessible.  They need to take a picture of it half-open.
• You can buy a house for $50k to $65k and sell it for $85k in 60 days.  We are doing it over and over again for our investors.  Proof upon request.
• Chinese Drywall is defective and kills your value.  Don’t touch it.  Some agents will convince investors to buy cheap and remediate the problem using a drywall company.  Try selling a house on the market where you have to disclose “House was treated for Chinese drywall”.. You have to disclose it and it will sit for sale FOREVER.

MYTHS:

• I should just call a retail agent and get a home listed in the $50k range.  Why should I use you?  Answer:  Banks recommend to their agents to set the price low to trigger a bidding war.  If you want to waste a lot of time, these are good to go after then.  On average, REO homes sell for much higher than what they are listed for.
• Short sales are not a way to go.  Our response:  Short sales are one of our favorites.  We assist in short sales with homeowners making an immediate cash offer and pairing them with a local real estate attorney.  Our process is quick and we get great prices.  Takes time, but more margins.
• I cannot finance an investment property.  Response:  Yes you can.  There are 75-80% LTV loans for investors with good credit and reasonable debt to income ratios.

We assist homeowners in getting immediate answers and solutions from the lender(s).  Our immediate actions quickly trigger the lender into negotiations that provide a far less confusing solution with far less repercussions to your personal financials and credit score.  Ourselves and our attorneys assist in this process WITH you, not necessarily FOR you, something we insist on to achieve comfort level with homeowners and the entire process.  While this process could be time consuming, we take the burden and stress off of you and work together with an attorney (of your choice or ours) to make sure all ends are covered.  Time constraints are far less in 2010 than they were in 2009, a good thing!

An “under-water” mortgage or delinquency can be stressful to you and/or your family.  Give us an opportunity to meet and discuss this seemless process.  There are no listing agreements involved, only quick solutions, favorable to your personal situations.  We have already achieved success with this program at a rate of over 90% in Florida and are now prepared to bring the success to NJ.

Why work with us regarding your Short Sale?

• Definition of SHORT SALE:  An agreed upon purchase price between homeowner and Lender less the amount of the current principal payoff amount.  Short sales have become the most EFFECTIVE and economical way to sell your home in today’s adjusted housing market.
• A short sale is far less damaging than a foreclosure.  Short sales could take as little as 1 year to rectify on your credit, where foreclosures can take as long as 7 years.
• If done correctly, a short sale allows you “Debt Forgiveness”. You may have heard of lenders issuing a 1099 of the difference between your sale amount and your actual payoff amount.  This is simple to take care of.  Primary Homeowners are protected by Debt Forgiveness today.
• Investor Property?  Ok, so you are not a primary homeowner.  You are subject to the 1099 from the bank.  The good thing about an “Investment Property”?  You have write-offs that primary borrowers do not have.  The 1099 could be tax deductable as a LOSS.
• We are licensed by the New Jersey and Florida Real Estate Commissions.  We know the laws and in combination with our legal experts, we make this a seemless process for you.
• We meet personally or have conference calls weekly on an individual basis to discuss progress or problems.

We offer this service in New Jersey and Florida only as those are the markets that we know better than anyone.  We cater more toward the entry level home prices.  Higher Priced homes will be in the near future.

Please contact Scott Allan at (877) 688-7582 for further details.

Over the last 4 weeks, we have looked at 3 complexes in Naples and Ft. Myers.  Two of the three are completely stabilized properties and cash flow very well, depending on the price you buy it at.  The coincidence is that 2 of these complexes are distressed sales.  Investors of this type of property most likely have other properties.  As some investors look to eliminate debt, they short sell or give up their other properties.  If the note on the complex we are looking at is close to loan maturity, we know we have a distressed property on our hands, because chances are, no matter what type of cash flow it throws you, the current owner will not be able to refinance the loan due to his other real estate in the crapper.

Since 1992, Mortgage Professionals, Inc, our in-house and preferred lender, has established long lasting reciprocal relationships with some of the largest lending institutions in the world.  Our expertise is offering construction financing and bridging it to your permanent loan.  Whether your intentions are to build a home, buy a pre-existing home, refinance, pull equity in the form of a HELOC, or any other real estate related loan, Mortgage Professionals, Inc is at the top of the industry with an exclusive portfolio of loan products.  Currently licensed to lend in Florida, North Carolina, Georgia, Virginia, Delaware, and Pennsylvania.

Mortgage Professionals, Inc predicates their business on construction financing.  If you are looking to purchase a home through construction, our Loan Officers would submit for an end-loan commitment based on your qualifying criteria.  Upon approval for the end loan (your typical 30 year amortized mortage), Mortgage Professionals, Inc would offer the construction funds based upon your upfront “end-loan” commitment and work directly with the builder to produce a time efficient product.  We work with credit challenged borrowers with FICO minimum of 620+.

Mortgage Professionals, Inc. offers construction to permanent loans for the following loan programs:  Maximum loan is $250,000

• USDA which stands for United States Department of Agriculture:  A USDA Home Loan is a guaranteed 100% Government insured purchase loan.  These loans are only offered in rural area’s and serviced by lenders that meet federal guidelines.  You would be surprised how many homeowners mistakenly assume their area does not qualify under RURAL location.  Click Here to find out if your address qualifies for USDA financing.  Under the terms of the program, an individual or family may borrow up to 100% of the appraised value of the home, which eliminates the need for a down payment.  Since a common barrier to owning a home for many low-income people is the lack of funds to make a down payment, the availability of the loan guarantees from the Housing and Community Facilities Program (HCFP) makes the reality of owning a home available to a much larger percentage of Americans.  USDA loans are also available to credit-challenged borrowers

• FHA which stands for Federal Housing Administration:  An FHA home loan is ran several ways and is designed to promote home ownership.  In most cases, FHA loans are mortgages obtained with the help of FHA.  With a small down payment, typically 3.5% of the purchase price, buyers can purchase a home.  FHA loans make it easier for people to qualify for a mortgage.  FHA loans are available to credit challenged borrowers.

• VA which stands for Veteran’s Assistance: A VA loan is guaranteed b the U.S. Department of Veterans Affairs.  The loan may be issued by qualified lenders.  The VA Loan was designed to offer long-term financing to American veterans of their surviving spouses (provided they do not remarry).  The basic intention of the VA home loan is to supply home financing to eligible veterans in areas where private financing is not generally available and to help veterans purchase properties with no down payment.  VA Loans allows veterans 100% financing without Private Mortgage Insurance or the necessity of any 20% second mortgage.

• Conventional Home Loan : A conventional home loan is a private sector loan, one that is not guaranteed or insured by the U.S Government.  Although a conventional loan is not insured or guaranteed by the government, it can still follow the guidelines of government sponsored enterprises such as Fannie Mae or Freddie Mac as both Fannie and Freddie are stockholder-owned corporations and are not part of the federal government.

Give us a call at 877.688.7582 or Contact Us through e-mail to discuss further details.

Sure, you might say “well if the home doesn’t appraise for what my contract price is, I am over-paying, therefore I don’t want it anymore.”  Easier said than understood.  The HVCC (Home Valuation Code of Conduct) has been instituted into the appraiser field and it prohibits appraisers to inflate values of homes for irrelevent reasons and factors.  The HVCC clearly states that any appraiser who violates the HVCC will be subject to penalties and fines, and will be reviewed by the board for possible suspension or revocation of their license.

That being said, there is an increasingly common complaint of Realtors- that lowball appraisals are killing their home sales.  NAR has asked the regulator that oversees Fannie and Freddie to suspend the rules for 18 months, clearly speaking about the HVCC.

Although existing home sales picked up in May, the 2.4% increase could have been substantially maximized if all pending home sales would have closed.  Taking into consideration that some homes do not close due to financing contingencies, the appraisal does count as contingencies in most contracts.  If 25% of the fallout of pending sales actually closed, the May increase of 2.4% would have been about another percentage point higher.  It is clear that many contracts fell through because of faulty evaluations.

Some lenders use appraisers who are unfamiliar with the neighborhood and do not know how to identify the difference between traditional homes and distressed homes.  If you cannot reason with distressed housing, you may need to sit on the sidelines for a few years.

An example of what is going on here:  We recently contracted an investor for a duplex at $83,000.  Actually this is at least 20% under market value to where liveable duplexes are going for at the moment.  Sure you can find them at $50,000, but you will need a ton of work on it, which will exceed your $83,000, not to mention you will likely need numerous permits from they city (have fun with that!).  It is our growing concern that appraisers hired by banks and unfamiliar with differentiating distressed homes and traditional homes will screw things up.  Most appraisers base their comparables off of what they find as closed sales on the Multiple Listing Service (MLS).  What they cannot see is the condition of the property.  Long story short, appraisers are not fairly adjusting the comparable sales prices to meet the standards of the subject property, a massive problem in SW Florida right now.  Despite our record sales this year, these faulty appraisals are holding back what could be extra and much needed market growth.

FINALLY, NAHB is calling for new guidelines for appraisals of properties in areas with large numbers of distressed properties, that would include giving appraisers the option of expanding the geographic area or time frame for eligible sales to get a more representative take on home sales in the area. 

To my dismay though, there is almost nothing we can do for distressed homes that appraisers cannot get into.  Because appraisers can’t inspect the interiors of many properties that are used as comps, they may not be aware of maintenance issues or damage that are common with distressed properties.  The failure to adjust comparable values of foreclosed homes often results in the undervaluation of newer homes.

Federal lawmakers are looking to adjust the guidelines.  So in a nutshell, appraisers are paid to do the work whatever value they come up with.  The threats by the HVCC and guidelines provide incentives for the appraiser to be overly conservative and deliver a lowball appraisal that NAR and NAHB are complaining about.  But lenders don’t make money if deals don’t happen.  Clearly, there needs to be a major adjustment.

In response to the expetency that the Fed Reserve was going to hold tight, the dollar weakened yesterday against the Euro to $1.4002, where it nearly remained post meeting edging up to just $1.3928. 

I’m a writer who likes to get on a layman level and some questions that have been asked is “how interest rates are determined for a mortgage.” 

Well…as short as I can be… The Federal funds rate is hte interest rate charged when banks lend money to one another.  This is a short term rate, or in other words, a rate that is two years or less in maturity.  When the Fed increases or lowers the fed funds rate, it affects mortgage rates that are tied to short-term interest rates, such as HELOC’s (Home Equity Line Of Credit) and those devilish adjustable rates.  When short term rates fall, borrowing and spending typically increases since the rate to borrow money is less, therefore, people have more money to spend.  This, however can cause inflation, something Ben Bernanke wants to keep in check.  (I have a different opinion on deflation and inflation).

Long term rates, or rates that have a 10+ year maturity, such as 30 year mortgages, are kind of influenced by short-term rates because they can increase when concerns about inflation increases.  To keep inflation under control, the Federal Reserve will start raising short term interest rates, like they did in 2004.  Due to the inflationary period on short term rates, many homeowners in adjustable rate loans refinanced into longer term fixed rate mortgages to negate a further rate increase. 

Those who are currently in decent long term fixed rate mortgages, should rest comfortably in knowing that your rate should stay consistent for a ways to come.  My opinion on inflation / deflation is that we will continue to see deflation until the end of next year, and maybe into 2011.  The U.S population could still use more incentives to go out and spend money.  Once the numbers stabilize, we will eventually get back to a long and consistent inflationary era.  Don’t bet on 1985 interest rates though!!!  Thank goodness!

Here’s some real estate news.  The majority of homeowners with this type of loan pay only the minimum payment, typically the reason why they applied for the loan in the first place.  It is easy to assume that most of their payments were the minimum.  When it exceeds a set level, or at a set date in the future (whichever comes first), the borrower must start paying the fully amortizing payment of the now much larger principal amount.  Monthly payment increases have been seen in the 50% range, which is dangerous to many people’s financial situation.

These mortgages are set for a huge catastrophe.  With U.S home prices an average of 23% less than what they were just a couple years ago, it will make it nearly impossible to refinance out of these loans due to having no or very little equity in their homes.  At the current time, the number of recasts for these loans is small, an estimated $1 billion per month.  This number is set to grow dramatically over the next couple of years, exceeding $8 billion per month in the 4th quarter of 2011. 

What do you think is going to happen when a mortgage payment goes from $2,500 to $3,500?  What if one or both members of the household have been laid off or have taken jobs paying less. 

The bank that will suffer the most will be particulary Wells Fargo.  The biggest originator for these terrible loans was Golden West.  Golden West was bought by Wachovia, one of their most devestating acquisitions.  Wachovia was absorbed by Wells Fargo.  Sub-prime mortgages were mainly sought by entry level homes.  The Option ARM’s and pick-a-payments were targeted by more upscale homeowners, or homes that did not qualify as being in conforming limits.  It is expected to be called the “Gated Community Catastrophe” .

With the real estate Obama housing relief plan, homeowners who are 5% underwater may still refinance, giving the homeowner a refi loan to value of 105%.  This does very little though as most homeowners are way more than 5% underwater, which will leave them what I call SOL or out of luck!

With the Options ARM’s, it is safe to say that a lot of these borrowers have already walked away from the homes.  Investors are refusing to pay when the crash started and feel that their home is now just a black hole, despite the payment concepts.

Expect to see this as a huge issue in the future which will have an impact on our recovery efforts.

For the purpose of this study, a “normal” 10 year period of time will be
analyzed. Based on historical data for the past 30 years, the stock market will normall return 10% annually and real estate will normally increase 7% annually, over a given 10 year period. The comparisons below will analyze a $50,000 stock market investment and a $250,000 investment condo purchase, assuming $50,000 down payment. We will analyze a cash on cash Return On Investment (ROI).  Complex investing scenarios such as short selling, margins, 1031 exchanges, and other advanced investment techniques will not be analyzed. Annual compounding of interest and appreciation will not be used:

It is interesting to note that all things being equal, leveraging allows a 2%
annual appreciation in real estate to equal a 10% annual rate of return in the
stock market. In my opinions nothing in these 2 industry giants are equal. 
There are far too many intangibles involved and tax benefits through real
estate.  For the life of me, I will continue to hedge 80% of my investment
money into real estate.

I can write a novel on the difference between renting and buying real estate but I will try to make this short yet helpful.  All things equal, owning a house far exceeds the benefit of renting a home.  The obvious factors are that by owning, you can build equity and write-off your interest payments on your mortgage.  This doesn’t mean that everyone in America should be a homeowner.  Real estate is local.  For instance, property values are still declining in California.  In Florida, prices are starting to level off.  In New Jersey I can point out 30 different markets where the market conditions are different.  If you live in Montclair, the market is different in Clifton, less than 2 miles away.

If real estate values are deteriorating in your neighborhood of choice and your interest rate is not favorable, it could be a good reason to stick with renting for now.  Deals don’t go away overnight. 

If you have cash saved, some tenants prefer renting so that they can play the stock market which historically return 8-10% per year with a good broker.  Real estate values typically follow the rate of inflation over the long term.  That being said, home ownership has the best tax incentive.  Married couples can earn up to $500,000 in gains on their homes TAX FREE, where singles can earn up to $250,000 in gains TAX FREE.  If you played the stock market, those gains would be hit by nearly 50% by Uncle Sam.

First and foremost, you need to find a neighborhood that you absolutely love.  If you have kids, it is important to look in their best interest FIRST before yours.  Second, look at property values.  If prices are declining and homes are sitting on the market for over 180 days, it may be better off to hold off and rent, analyze for the next year, and buy something possibly in foreclosure when you are ready.  How do you find out about Days On Market (DOM)?  Call a local agent and ask for homes for sale in your preferred neighborhood.  DOM is normally listed.

If you do buy, it is best to put down 20%.  Avoiding Private Mortgage Insurance is huge today.  PMI companies are going broke or already did, and the ones left standing are charging an arm and 2 legs for coverage.  Not to mention your closing costs are about 3% higher.  Although an FHA loan sounds great with 97% Loan To Value loans, it is quite expensive when you roll things out.  Be sure that you understand the pros and cons of FHA versus Conventional financing.  I will offer friendly advice to those who ask.

Some pros and cons about renting and buying…Well if you rent, you have the flexibility to move.  Leases run month to month, 6 months, and 1 year.  Home ownership limits you to the market whether it is a buyer or sellers market.  The resale of your home is based off of competetive sales and overall demand, not a lease.  Renting allows you to blame everything on the landlord.  If you don’t like dealing with broken water heaters, leaky roof, and running toilets, then maybe you are a lifelong renter.  OWNING a home allows you a huge tax advantage, potential tax-free capital gains, and emotional satisfaction.  With that however, comes property taxes and upkeep. 

If you purchase or contract a home by the end of 2009, you are eligible for the $8,000 tax credit from the IRS and can spread this out over 2 years, something Congress passed to stimulate home ownership.  All things aside, this is truely a very good time to start shopping for a home.  Historically low prices, low interest rates, and real estate provides an amazing tax shelter.  Read my article about the tax credit HERE

So a couple paragraphs to conclude, real estate is a very tough and mean industry.  If you are not careful, it will eat you up 10 times over.  Most people get only one chance and you are done for a long time.  Most decisions in life are based off emotion, and in real estate, if you let emotion control your decisions, you are in for a potentially catastrophic ride.  Most importantly, let a professional help you with a plan.  You can either agree or disagree with their input.  But a guy like me can share a wealth of information for those who don’t even know what a home inspection is.  Don’t try to tackle buying a home by yourself.

On a side note, most of you that know me know that I have more stories about real estate and business that will even draw a surprised look from Ben Stein.  I have learned from the best in the industry though and at 30, I feel I have a great amount of experience in real estate acquisition, construction, and finance.  I have shared my stories with investment groups across the country and now speak at forums about risk mitigation.  One thing that is so important to understand and I’ll say it again, is that real estate is the biggest catapult to financial wealth, freedom, and stability.  Most of our parents made a lot of our upbringing possible by home ownership and equity. 

If you are not ready now, don’t panic or feel that you are missing the boat.  The nice thing about real estate is that it is tangible.  It will always be there no matter what, different than stocks.  Think things through, talk to people, and make a smart decision.  Once you make a smart decision, your emotions will take over. 

Aside from my beautiful family, real estate is the most important thing in my life.  I strive to make more good decisions than bad, and if you understand the way I just said that, the industry will force you to make both types of decisions.  The key is to not jump the gun.  Understand EVERYTHING.  Then…one day…everyone will have an opportunity to lead a more secure life no matter whether it is just buying 1 house or 20 houses. 

Thanks for reading my babbling article.  I thought I would share with the requests that have been coming through from friends online and through Facebook.  If you are reading this article through Facebook, feel free to check my blog at  for information regarding the real estate industry as a whole, news, and market condition updates.  Whether you know me, kind of know me, or don’t know me at all, I would be happy to share any information or advice that you have time for.  My business is based out of Hoboken, NJ and Fort Myers, Florida.  If you are in either area, drop by to see me.RealtySource.comwww.My

It’s 5:00 somewhere and my pool and empty glass are calling my name…Scott Allan from Ft. Myers….OUT!