Adapting to the Real Estate Market: Flipping and Renting

August 27, 2009

Okay, the real estate market has gone down and a quick rebound is not likely, or possible. Homeowners are finding viable options to continue to make money in the real estate market despite the recent changes.

By adapting to the environment, savvy real estate investors are still flipping home properties with a twist. They are purchasing lower cost single family houses in areas of great potential and updating them. However, rather than putting them on the market for sale right away, these flippers are becoming landlords, renting the property to keep building equity and pay the mortgages.

How long are these new landlords renting their flipped houses for? On average, the versatile businesses are renting as long as five years or as short as only two until they can find a home buyer. They are keeping the cash from the rented properties in the short term, but are banking on the idea that an improved real estate market in the future will help them get the profits they are aiming for years down the road. Of course, this type of stalled profitability attracts a limited number of former flippers, but it is an increasing option for real estate investors.

One of the keys to success with the flip and rent strategy is to avoiding subdivisions. Typically, the targeted houses are no more than $80,000 to $90,000 and will be victims of a crashing real estate market whose values were vastly higher even a year ago. These homes need upgrades and improvements that many future homeowners shy away from. By improving these houses and then renting them, these flipping real estate investors are actually playing a role in improving the market by rescuing and improving homes whose needed changes might have been outside the scope of many property owners. Neighborhoods might have suffered with these eyesores in the past, but they are now able to enjoy an improved property in their surroundings, thanks to the flippers.

Many of the houses that are chosen for these investment and rental properties are selected if they fit a particular set of requirements. For example, many of these homes are victim of the boom and bust cycle of the recent real estate market. Their overestimated home value has wrecked havoc on the market and neighborhood in general, so this financial investment can be a great choice for both the individual investor and neighborhood alike. Also, there are specific location, price and physical criteria that many investing business will choose before they will purchase the soon to be rental property.

To find many of the houses these real estate investors purchase they use companies who privide real estate leads. The real estate leads consist of contact information from how owners who want or need to sell their house. Many of the home owners who ask to be contacted by a real estate professional are motivated to sell their home quickly.

This smart investment plan can be a great way to improve neighborhoods and allow individual real estate investors to gain capital and long term equity in a stalled and shaky real estate market. Although typically known as risk takers, these particular flipping companies are making long term, calculated investments that should pay off in the future.

If you are a home owner and are in a financial situation and thinking how can I sell my house fast, a good place to receive an offer on your house is your local home buyer or investor. There are real estate investors in every major real estate market who purchase homes quickly from home owners who need to sell. Many of the homes are in foreclosure, the owners are transferring out of the area, or the owners just need to move quickly.

Advertisements

Banks are Freezing Home Equity Lines Of Credit – Do You Need Yours To Sell Your House?

July 4, 2008

What would you do if your bank called to tell you that your home equity line of credit had been frozen or even cancelled? For most homeowners, shock would be the first emotion followed quickly by confusion.

Why would banks be pulling the line of credit from homeowners who have had no trouble paying off the loan. Banks have recently been pulling home equity lines of credit from all applicants, even those homeowners who never tapped the line of financial credit.

The number of homeowners who have been affected have been in the tens of thousands, as more and more banks are trying to stem mortgage losses. As banks are dealing with heavy losses from their subprime mortgages and additional high risk loans, the viable home equity loans are also taking a hit as the bank pulls the money before this equity credit line also becomes a problem.

Essentially, banks are trying to save their money from being lost to homes that fall into foreclosure. There are many home owners who took out lines of credit on their house when the real estate market was high. Now these some home owners are needing to sell their house but are having obvious problems finding home buyers. The first thing home owners look to for money when they can no longer afford their mortgage is the equity in their house.

In late third period of 2007, the delinquencies on HELOC mortgages increased 47 percent from the previous year. Analysts have predicted higher numbers for 2008. For this reason, banks have been responded by pulling their Home Equity Lines of Credit, most of which were in high foreclosure cites like, Las Vegas Nevada, Stockton California, Boise Idaho, Miami Florida, Houston Texas, New Jersey, and Orlando Florida.

Where are you most vulnerable to have a frozen HELOC? If you live in a housing area where prices have fallen by 10 percent or more, your property might be the prime target for a HELOC freeze. There are new lending standards which means that your HELOC will be in danger of disappearing if you bought your home with little money down, especially if you purchased your new home within the last few years.

These factors will combine to see a higher rate of foreclosures and might make your financial institution feel that they need to pull the plug on the HELOC before real money troubles begin. Whereas lenders were able to borrow as much as 100 percent of the home value in previous years, most homeowners cannot see more than 90 percent or even as high as 60 percent in some areas that have been severely hit by declines in the housing market.

If you established your HELOC a few years ago, you might be in for a surprise. Current lenders are applying the same revised standards retroactively to current HELOC owners. In order to verify your loan cap, you should contact your bank to see if your loan is at risk. If you miss a payment or have a change in your credit score, your HELOC might also be flagged for a potential freeze.

What should you do? If you are using your HELOC to finish a renovation, you can potentially pull out a lump sum in order to finish the project. You will want to only take what you need so that you do not get into harder financial troubles.

If your HELOC has already been put on hold, you can fight the decision with your financial institution. Look to see why the line was suspended and what you can do to appeal the decision. As many banks automate the process to freezing the loans, you can appeal to a person for a reverse in the decision.

If you are thinking of using your home equity line of credit to pay your mortgage while you sell your house, you might want to pull money out quick. The banks are implementing this new freeze standard nation wide so save the money they have. Your best option to sell your house fast is to get an offer from a local home buyer. These professionals are in every major city in the nation and make their living from helping people sell their house fast.


Why Home Sellers Accept Low Price Offers

June 23, 2008

Some realtors will tell you it is a buyers market. Other times, realtors will rejoice that it is a sellers market. No matter what the season for real estate holds, one thing remains true, every buyer wants a lower price and every seller wants the highest price possible. It is possible to learn how to offer a low price on a home for the highest benefit for the buyer.

Currently, wise home sellers are not instantly rejecting offers that are coming in well below their asking price. With the number of homes on the market in their neighborhood combined with personal motivating factors to sell the home, many more offers are being entertained than in the past.

However, whenever you offer a lowball offer that is interpreted as insulting to a homeowner, you always risk offending the seller and utterly losing the transaction. How can you negotiate a low price without hurting the sellers feelings and still get a great deal? Information is key.

In order to make an aggressive offer, a smart home buyer will do his or her research. If you do your homework, you can make a savvy, lower offer that will make sense to both the buyer and the seller. In a market where the seller has the upper hand, a sellers personal motivating factors for selling, such as relocation for a job, divorce, foreclosure, combined with smart comparable data about the neighborhood can create the ideal situation for a buyer to make an offer on a home much lower than the asking price.

What are some of the risks for offering a sale price much too low without doing your research? After all, the worst they can say is no. However, if the buyer is serious about owning the property, a sale offer that is too aggressive can cause the seller to reject your offer and not deal with you. In addition, the seller might assume that the buyer is not serious about making a deal. However, with outside, unbiased data at your fingertips, the smart home buyer can make a strong argument for the price and see a higher rate of success.

Even if you believe the sale price is appropriate, there are other ways to lower the amount you put towards a home. Look for sellers who are strongly motivated to sell. For instance, job relocation or sellers who have already purchased and closed on another home. These home sellers will be more likely to entertain the idea of paying for closing costs or changing the close date for a lower price. Of course, if the home has been on the market for an extended period of time, the assumption is that the seller will be highly motivated to sell at a more flexible price. By negotiating these factors, you can see thousands drop from the bottom line of home buying.

Overall real estate conditions will be a large factor in the price you can get from your home purchase. However, it’s important to remember there are a number of other factors in addition to the market to help the home buyer to lower the price of their future home.

Many areas of the nation like Orlando Florda, Las Vegas Nevada, Boise Idaho, Austin Texas, Central New Jersey and others, are experiencing homes that stay on the market for long periods of time. If you are a home seller in this area and would like to sell your house fast, contact you local home buyer at ExpertHomeOffers.com. They buy houses fast so you can move on with your life.