September 2009

Investment Exchange

An educational real estate newsletter

FUND THE DEAL

Several industry experts think a housing market turnaround is right around the corner.

It makes sense — there are so many great properties available for steals all over America. Banks, too, are still offering fantastic rates to encourage spending.

On top of the great properties and great mortgages, there's also the limited-time tax credit for first-time homebuyers that expires on Dec. 1, 2009. All you've got to do is purchase a home and hang onto it for three years and you'll be $8,000 richer.

How can buyers not be tempted to capitalize on these opportunities of a lifetime?

All these facts add up to one major point: for the right property, the numbers make good, solid "cents" right now. There has literally never been a better time to get into distressed property investment.

This month's edition of "Investment Exchange" is all about helping you figure out how to get your hands on the money you need to get started in distressed property investing without experiencing any of the headaches that can often deter first timers.

We'll touch on everything in this jam-packed newsletter, from funding options to tips for raising your credit score. Get ready to learn everything you need to know about financing your dream home at the best possible terms!

Whether it's a home for you and the kids or an investment purchase designed to make you rich, Foreclosure.com is here to make it happen.

Here's to a profitable autumn!

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Site feature spotlight

LOOK BEYOND THE BANK

One of the biggest questions we get asked at Foreclosure.com is, "How can I pay for my investment?"

It's true that there are upfront costs. You'll need a down payment plus cash for inspections, administrative fees and other closing-related issues.

The good news is that financing isn't an insurmountable obstacle — you just have to be prepared.

It's the reason Foreclosure.com has put together the must-have CD/DVD course called "Get Rich Buying Real Estate Foreclosures." This comprehensive real estate investment guide, which includes teaching you everything you need to know about financing, is chock-full of the ins and outs of making it big in any market.

In fact, "Get Rich Buying Real Estate Foreclosures" has a special section dedicated to non-traditional loan sources, including hard money lenders, angel investors and others.

Hard money lending basically means securing a loan — usually from a private firm or individual — based on the quick-sale value of the property in question. Hard money lenders usually want a fairly hefty down payment and will have higher interest rates.

However, securing financing through a hard money lender is much easier than going through a tradition bank, which is the reason this is a great option for a flip.

The shorter time you own the property, the less high interest rates will matter.

Angel investors have earned their unusual name — these are people or sometimes firms who have extra cash lying around and are willing to give it to you for an eventual return on their investment. In this case, rates can fluctuate a lot, but this can be the perfect option when other loan options just won't work for you.

These options are best when you're flipping a property and/or can't qualify for a bank loan. They're great because the loans are not based on your credit rating and have fewer restrictions. However, the rates can be quite a bit higher, which is why you will want to flip your investment as soon as possible.

Of course, the CD course also covers how to get the best credit to secure a bank loan, which is probably your best option if you can make it happen. The course will teach you to negotiate with banks like a pro to get those amazing deals and qualify for those great rates the banks are offering right now.

Get in on the action of "Get Rich Buying Real Estate Foreclosures" today! Click here to learn more.

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Web site search tips

LET'S CRUNCH THE NUMBERS

Found a property that's got you excited? Great!

Now you've got to figure out if the investment is financially worthwhile in the short- and long-term. Foreclosure.com has everything you need to do just that ... and most of the information is conveniently available on all our property listing pages.

That's right, every details page for each Foreclosure.com listing — more than 1.8 million of them — comes with a plethora of helpful tools that are designed to make the math behind your dream buy that much easier.

We've got handy calculators to estimate mortgage rates, home equity, home affordability and more. Use the down payment and fixed vs. variable interest rate calculators to get the nitty-gritty on what kind of mortgage option might be best for the property at hand.

Also on the details page is a handy box with an estimated mortgage payment and interest rate compliments of our partner, Loan.com. Our partnership with this industry leader has made it possible for you to get at-a-glance mortgage info about each and every property you lay eyes on.

Just click on "Get rates now!" in the Loan.com box to see what's available — it's that simple!

The details pages of Foreclosure.com listings also help you pursue options beyond the traditional mortgage situation, which can be especially useful if you're an investor and/or don't quite qualify for a bank loan.

Yes, less traditional ways to fund your investment are available. However, they come with their own risks (typically higher interest rates) and rewards (less restrictions/qualifications).

For an example, take a look at the Ameraco Investment Network (accessible through all Foreclosure.com listing details pages) to link up with reputable private investors who can help you out with your distressed property investment.

To get started click on the "You Find It, We Fund It!" link in the "Resource Center" section of your details page.

Funding your investment purchase can seem like a big job... and it very well could be without the right tools. Take advantage of all the funding help Foreclosure.com facilitates absolutely free to its members by signing up for your no-cost, no-obligation trial membership right now.

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Hot off the press

PROVIDE A SOLUTION, WIN CASH FOR COLLEGE

Funding deals is not as easy as it was just a few years ago.

Predators and other reckless mortgage brokers are major contributors to the current foreclosure crisis that is sweeping the nation. First-time homebuyers en masse were issued bad loans and unfavorable terms just to make a quick buck.

Of course, potential homebuyers need to know their financial limits. However, the prices were right (at the time), and their dream homes were within reach, causing many of them to roll the dice with the hopes that it would all work out in the end.

But no one can truly prepare for a recession and/or unemployment, as well as interest-only adjustable-rate mortgages that can literally double overnight when the new interest rates kicks in.

So it's no surprise that many if not all of these predatory lenders are now out of business. It's also not nearly as easy to qualify for a loan today — banks and lenders were burned bad and don't want to potentially issue more loans that won't be paid back.

It's quite a predicament. But, funding is only on small slice of the much larger foreclosure crisis pie.

So what else can/should be done to solve the foreclosure crisis?

It's a good question. One that we're asking college students (and incoming freshmen) to answer in our recently-introduced Foreclosure.com Scholarship Program.

That's right, we're turning to the future leaders of America to provide their solutions to one of the most troubling issues facing our nation today. It's an essay contest (minimum 1,000 words, maximum 2,500) that rewards innovative and practical individuals with the most creative ideas in the form of scholarship money.

The submission deadline is Dec. 31, 2009.

In addition to the cash prizes (5) in the form of scholarships, the best five plans will be sent to Congress and to President Barack Obama himself. Winning submissions will also be published on Foreclosure.com.

For complete details and submission requirements/instructions for the Foreclosure.com Scholarship Program click here. We look forward to reading what you have to say! Please share the news with friends and family who have children in — or headed to — college before it's too late!

foreclosure.com
Scholarship Program

win cash for college!

essay topic: How to solve the foreclosure crisis

Read more

Foreclosure.com is looking for the most creative ideas on how to solve the current foreclosure crisis. And who better to call on than the most talented and innovative students in the nation.

We're currently experiencing a very challenging and volatile period in real estate because of a recession that has hit homeowners everywhere very hard. It's possible that it could still get worse before it gets better.

That's the reason we're asking for your help.

If you are a college student or incoming freshman and think you know "How to solve the foreclosure crisis" we want to hear from you. And we're willing to reward you for your efforts in the form of scholarship money.

Here's how the Foreclosure.com Scholarship Program works:

Submit an article (minimum 1,000 words, maximum 2,500) that describes your solution &mdash it must be original and not plagiarized. It's acceptable to cite sources and statistics; however, they must be referenced within the article. The best five plans will be sent to Congress and to President Barack Obama himself. The winners will also receive cash prizes in the form of scholarships, as well as see their submissions published on Foreclosure.com.

Got bright ideas? Good, we need them!
Apply here to win some cash for college!

Close

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Our success stories

PRACTICE WHAT YOU PREACH

How did Karim, 27, get a hold of his $260,000 dream home for just $100,000?

Foreclosure.com, of course!

Karim is one of the many Foreclosure.com employees who use the site to get their hands on unbelievable deals.

"It took me about a month of researching [on Foreclosure.com] to find this home," said Karim. "It was in the preforeclosure section when I was ready to purchase."

Preforeclosures are often the best time to get a great deal because the bank doesn't own the property yet and the distressed homeowner — anxious to avoid foreclosure — is open to solicitations of help.

That's exactly what happened with Karim's dream property.

The homeowner had purchased the house for $320,000 in 2006 and still owed $290,000 to the bank. Unable to make the payments, he saw Karim's offer of help as the perfect way out of a dire situation.

Finding the property and getting the homeowner on board was the first step. Next, Karim had to make the pitch to the lender.

"The short sale negotiation took about three months with some minor frustration," he admitted, "but it all worked out great in the end for everyone involved."

"Great" is a bit of an understatement.

Karim snagged his new three-bed/two-bath home in a beautiful, family-friendly Pompano Beach, Fla., neighborhood for just $100,000 — way more than half of its current market value.

Karim was a first-time buyer, meaning he was also able to cash in on the $8,000 tax credit. Still, the deal continued to get sweeter.

"I also took advantage of other rebates available from air conditioning and [electric utilities upgrade] installation," he notes enthusiastically. Not bad for a first-timer!

What's Karim doing with all that extra cash?

"Since I saved a lot of money on the purchase, I decided to update the floors, electric and kitchen because I do want the home ready for resale in a couple of years," said Karim, whose brother Joey is helping with the renovations.

"This is definitely an investment opportunity for me," he said.

Smart thinking! Imagine what his steal of a deal will be worth in a few years with all its upgrades in a rebounding market?

Check out Foreclosure.com today to see the deals in your area and get the expert help you need to have your own incredible success story one day soon. Click here.

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Real estate tips

WHAT'S YOUR SCORE?

Right now is a happy time for borrowers. With an $8,000 tax credit for new buyers and delectably low interest rates, funding your property investment could be easier than ever.

But is your credit standing in the way of you from financing that killer deal?

It may just be. It's important that, before you approach potential lenders, you make your credit as perfect as it can be.

Why?

It's simple: better credit means better financing terms, including lower rates.

Don't fall victim to inflated rates resulting from a tarnished credit record. Take corrective steps now so you're ready when that once-in-a-lifetime deal crosses your path.

Step one is finding out your credit score. Foreclosure.com makes this super easy. Just click on "Free Credit Report and Credit Score" on any property listing on our site. That's right – there is no charge to get the 411 on your credit from most major bureaus in the industry.

Step two is correcting any issues on your credit report. This can be as simple as calling the bureau to dispute negative credit. You'd be surprised how many blemished credit records have been repaired with just a phone call or two!

For more complicated situations, seek legal help. Foreclosure.com is happy to connect you with the best credit counseling available. Just click on the "Credit Repair Law Firm" link on the property listing you're interested in. You'll be linked with a legal expert to help sort through your credit troubles in no time flat.

You'll find both of these helpful links in the "Check Your Credit" section, found on every details page for every single listing on Foreclosure.com.

Remember, know your credit and get that score in tip-top shape before you approach a lender for financing. The money you'll save in the long run will make it more than worth the effort.

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Deals of the Month

HOT FORECLOSURE DEALS!

Houston, TX
$89,000
4 beds/2.5 baths
1,860 sq. ft.

Manassas, VA
$399,000
4 beds/3.5 baths
3,316 sq. ft.

Denver, CO
$151,900
4 beds/3 baths
2,499 sq. ft.

Linda's Learning Lane

It's all about OPM (other people's money)!

The smartest way to leverage your resources when funding the deal is to invest other people's money. It sounds worse than it really does in theory, but in reality, everyone typically makes a return on their investment.

Of course, you may have to use some of your money to get started, but the top financial planners teach the importance of maximizing your bottom line by focusing on your desired end result: Big profits.

Even if you are a first-time homebuyer, trying to figure out how to take advantage of falling home prices, there are multiple programs out there to help you achieve the American Dream.

For example, the Neighborhood Stabilization Program, $8,000 tax credit and — with only 3 percent down — FHA is always a viable option of which to take advantage. With FHA you can even have the 3 percent down loaned to you by a relative and be eligible.

Foreclosure.com recently featured a great Webinar training session with expert Cathy McDaniel (How to get an FHA loan), which is now available to watch and download from our On Demand library.

In short, investors have many options.

Angel investors and/or partners — those who have funds available to them then you provide the sweat labor — are also great resources. Many successful investors got their start this way. Whenever I attend a real estate investment meeting I always walk away with cards of people who are willing to put up their own capital if I can bring a great deal to the table.

Money is never typically a problem if you put yourself out there, network and make solid connections.

As it is with anything, having goals that address what you want to achieve is the way to be successful in the financing aspect, too. If your goal is to purchase an investment by December, then write that goal down and list out possible ways to make that happen.

By doing this one aspect the likelihood of making this goal a reality will increase by 100 percent. So get going and watch the opportunities fall at your feet!

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