Alekxey Sabido

CNN En Español rang us yesterday for comment about their story on the government’s plan to sell REOs to investors in bulk to become rental units. Our very own Alekxey Sabido appeared live on the network’s January 10, 2012 8 p.m.  newscast on behalf of DREIA.   We’re extremely grateful to Alekxey of Miami Property Solutions, LLC, local real estate investors and property managers.

Government-controlled mortgage guarantors Freddie Mac and Fannie Mae, along with FHA, collectively own over 220,000 foreclosed properties. The CNN producer told us that possibly the first concentration of sales would be in the ‘sand’ states. Questions abound as to whether investors will be able to earn enough return to manage 50, 100 or 150 properties.  But it seems there is money waiting in the wings, so to speak, for the opportunity to manage a portfolio of single family homes.

Time will tell if non-institutional investors really get a chance to invest and exactly how the “exit plan” will work.  In South Florida, many condos have been swept up by funds and institutional investors who rent them for modest returns in anticipation of future market upticks.  Some have already cashed out.  We’ll have to see the particulars of the plans to determine how investors can profit while operating the properties and down the road.  And, whether regular folks can gather money and participate.

Here are the two articles provided by CNN’s producer:   U.S. Government Seeks To Sell Foreclosed Properties and White House Wants to Convert Foreclosed Houses To Rentals

“If you’d like to make your New Year’s resolutions stick, try this: Have someone else—a significant other, your best friend, maybe even your mom—make them for you.

Sure, resolutions are supposed to be personal. People can’t change unless they’re ready to change. And having someone you love tell you how you could become a better person could be terrifying.   But Mark Twain pretty much got it right when he said that we make our annual resolutions on New Year’s Day and begin paving hell with them as usual the following week.”

Now you have the new and improved buddy method – what are you going to change this year?

As for me, I’m obsessed with one thing  - figuring  out how I plan on retiring.  Now, I should have determined this  sooner, but at my age, “there is nothing like a hanging in the morning to clear a man’s thoughts” (apologies to Samuel Johnson).    Seems that among my age group,  slightly north of fifty, I am not alone in my infatuation.  Indeed,  the older we are, the more specific these calculations need to be.

When in our  twenties and thirties, the key starting point is learning to live on less while increasing our tax advantaged savings – IRAs, 401(k)s etc…   A good move may be to move as much as possible to  post tax (Roth like) accounts, paying taxes now, but never again.

In your forties, we should pay much more attention to the specifics surrounding our investments – using the Warren Buffet approach – invest in only what we understand and has growth or income potential.

As we move into our fifties, we begin to realize that our work runway is mostly behind us, so we increase our savings contributions to the maximum capable.  Not only should we take an active interest in our retirement savings, we need to slip behind the wheel and start making the critical choices ourselves that will expand and preserve the income that we need later in life.

Likely, like any resolution, changing your financial future will take some accountability.  So why not take some time and identify a very close colleague – perhaps even a spouse, who will require of you to answer the question – how do you plan on retiring?

At NuView IRA, we encourage you to march to your own beat –  rather than to the cadence of the masses.  The self-directed IRA performance is dependent on you – your choices and your control.  If you have a passion to learn about real estate investing – why not let your IRA benefit from your knowledge.  If you run your own business, explore a self-directed 401(k), providing a huge upside for contributions, as well as a way to borrow your own retirement.  Need money for your ventures?  Borrow someone else’s self directed IRA.

Join us at NuView for a wealth of ideas and new seminars for 2012.   After all, our vision is a world where the dream of retirement is achievable.

Happy New Year,

Glen Mather,

President, NuView IRA

The top ten best investor real estate markets in 2012 offer a wide cross section of the Mid-West,  Northern region of the U.S. and South as the nation’s cities slowly move towards a recovery in housing.

The second home market has been anything but severely damaged by the crash in the housing market, but sales are wildly picking-up in parts of Florida.  Miami tops the list with the highest forecast housing inflation for the year, which makes the community a good bet for long term real estate investors.

However, doubts still surround the stability of the market, which was blasted by the real estate crash and undoubtedly will take years to fully recover from. Prices aren’t expected to reach where they peaked in much of Floridafor at least another 20 to 30 years.

Topeka, Kansas rounds out the third position, followed by Charleston, West Virginia, which is forecast to experience its best market in decades. Lower home prices coupled with record low mortgage rates are attracting retirees to the region.

Kansas City, Kansas places second on the list. After experiencing one of the hardest hit markets in the country in terms of  foreclosures, Kansas City is recovering from its downturn in housing more quickly than most other areas of the country. Record high prices being paid for corn and other crops are pushing home prices higher, and are projected to sustain through 2012.

Topeka, Kansas rounds out the third position, followed by Charleston, West Virginia, which is forecast to experience its best market in decades. Lower home prices coupled with record low mortgage rates are attracting retirees to the region.

Ed. note..the numbers are below.  Good to know we don’t have to endure the cold to enjoy the highest rate.  Enough about Kansas and corn fields already!

But as with any monster, you can sort of control them by working with smart people and anticipating a few things.  Though people often crack jokes about real estate agents (you won’t hear that from us, though) a dumb mortgage broker in the chain will screw up a deal faster than anything else.  In fact, in a recent deal, it was the real estate agents who saved the day….with experience and actual thought.

Many buyer’s agents are getting too cute with over-inspections.  On a recent deal a couple hired a property inspector, a roof inspector, an a/c inspector, a termite inspector and a general contractor.  Over $1,500 in inspections! ” But,” their agent cooed, “think of the reductions we can get from the seller!”  Of course, most of the items on the various reports were just plain wrong or easy to fix. But the agent and buyers insisted on credits in an addendum that the seller had to sign.  Both parties worked amicably toward what little needed to be resolved, as usually happens, and everyone was happy.  By the way, the borrowers were ‘golden’ and the appraisal was excellent with one exception.

The mortgage broker was a ‘friend’ of the buyer’s which is usually a problem.  He hadn’t read the lender’s website where it says, plainly, that if seller has owned less than a year, two appraisals are required.  Lenders can make their own rules and a smart mortgage broker knows and follows them.  So, two days before closing, the underwriter says “where’s the 2nd appraisal?”  Delay and chaos ensued as the buyer had scheduled movers.  Being the buyer’s friend, the dumb mortgage broker had to pay the cancel fee for the movers.  But the 2nd appraisal wasn’t a problem and usually isn’t if the seller has done his homework and the mortgage broker advises all in advance.

But here’s the real blunder the day before closing: the lender got hold of the addendum listing the perceived faults of the property justifying the small credit.  How did they get it? Well, the blame lay on the title agent.  But everyone else was at fault, too; especially the buyer’s agent because she nearly lost a deal.  Now we cannot criticize the lender for being curious and making some demands about the repairs being completed or escrowed.

But here’s where a lender (underwriter) can be, and often is, a jerk: not by asking for receipts, but asking an appraiser to take a photo of a switch.  A day later asking the appraiser to look at the roof (what the heck does an appraiser know about a roof? There was a roof inspection!) A day later asking the same appraiser to go back and take a picture of flooring.  Usually, this means the loan won’t close.  The mortgage broker repeatedly pleaded for mercy to get his file closed and the underwriter seemed to delight in more felonious delays.  But, again, the borrowers were golden with a large down payment and the house appraised fine.  It was then that a seasoned real estate broker in the transaction got the underwriter’s supervisor on the phone.

We’d love  to know what was said.  But within two hours of that call the lender wired funds to the title agent and the file closed.  Where was the mortgage broker?  Boarding a plane for vacation having given up.

Here are few the morals of this very recent retail tale:

1. Seller, don’t let a buyer’s agent get too cute with addenda.  Stay involved with the transaction and take care of things. Stay legal and get everyone happy before going forward.
2. Buyer’s agents, you can screw up your own transaction.  Be smart, look after the buyer AND the seller, and make a commission!
3. Try to avoid buyer’s using “friends” as mortgage brokers. Get someone on your team to refer a competent professional.   We heard on the news recently that many transactions are “blowing up” at the end.  Sloppy loan applications and incompetent mortgage brokers can bite you in the end. The details matter every time.
4. Lenders are people too (ha! ha!)  But given they’re in control, know their rules or work with those who know their rules.  Most underwriters don’t want to be jerks but tomfoolery brings it out in all of us, no?
5. If you know that the details matter and you know your market, rehabbing and retailing can be fun and very rewarding!

Much has been in the press lately about Acting Federal Housing Administration Commissioner Carol Galante’s extension of the temporary waiver of FHA’s anti-flipping regulations through 2012.

Seems they’ve figured out that making an investor wait 90 days or more to re-sell (flip) a house increases costs and risk of vandalism if a property sits vacant too long.  They now recognize what we’ve known for a while: RECOVERY in struggling neighborhoods occurs when properties are occupied! Here’s what Ms. Galante said:

“This extension is intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight.  FHA remains a critical source of mortgage financing nd stability and we must make every effort to promote recovery in every responsible way we can.”

It’s not carte blanche because there are the “certain exceptions.”  But here’s the crux of it:  FHA justified the extension by recognizing that professional flipping often takes less than 90 days.  In other words, investors who flip properties are  a vital part of our housing market.  So don’t let lore and naysayers keep you from buying a property that you can resell quickly.

Here are some of the conditions (find the complete waiver published in The Federal Register.)

• Transactions must be arms-length with no identity interest between buyer and seller or any other parties in the transaction.
• If sales price is 20% or more above seller’s acquisition cost, the waiver applies only if the lender meets specific conditions and documents the justification of the value increase (Ed. note. Work with a competent mortgage broker who knows about this when you sell.  ASK them about the 90 day rule.  If they mumble, find someone else!  You can make this work well if you understand and anticipate the rules.  Ask us for a referral if you need one.)
• Waiver applies to new mortgages for purchase, not equity conversion mortgages.

In my last series of emails I discussed many ways to try and lower your mortgage payment. What happens, though, if you are unable to lower your mortgage payments? What happens if you can’t make your mortgage payments? In my next series of emails I will discuss strategies to get out of a property you are no longer willing or able to make payments on. Today, we will be discussing short sales.

A short sale is a transaction where a lender allows a property owner to sell the property and provide the bank with a “short” payoff. So, if your property is worth $100,000.00 but you have a mortgage of $150,00.00 the lender would have to agree to a payoff of less than $150,000.00 for a release of their mortgage. In fact, they would have to accept less than $100,000.00 in order to cover the closing costs involved with selling the property. Traditionally, the seller of the property in a short sale does not have to pay anything at closing in order to complete the transaction. In fact, there are many programs that now provide relocation assistance to the seller in the form of cash from closing.

While short sales provide many benefits to the seller, a short sale is not easy and they are not guaranteed. They are essentially a negotiated settlement between the lender and the property owner. As with any negotiation it is very important to understand what you are agreeing to. Contrary to popular belief a short sale does not automatically result in the lender waiving the difference between the proceeds from the sale and what they are owed. You must be sure such language is included in the short sale terms. Further, in order to complete a short sale, the seller or their agent must work very closely with the lender and keep the lines of communication open. These are very labor intensive sales. I recommend anyone considering a short sale contact an attorney in order to discuss such sales.

Our office represents individuals applying for short sales and we have a track record of success. So, if you or anyone you know would like to discuss the possibility of a short sale please give us a call at 305-226-4529 for a free consultation. Be sure to mention this newsletter, as we normally charge a $100 fee for such consultations.

Stacy Sherman

Did you know Land Trusts are used only in Florida and Illinois?  They are popular among Florida real estate investors for many reasons.  Stacy Sherman of Rock Title along with associates from Marshon Law Group, P.A. will discuss uses of Land Trusts from a title company and legal perspective at the December 14, 2011 DREIA lunch meeting.  Lunch meetings are part of the DREIA Getting Ahead series designed to provide additional information investors.   Getting Ahead events include a pre-meeting at the regular DREIA meetings.  For more information, join our mailing list by visiting www.DREIA.org.

In the coming weeks I will discuss a number of strategies that may allow you to lower the monthly mortgage payment you pay for your home. Today’s installment discusses your ability to dispute your tax bill and lower your monthly escrow payment.

Every year the Miami-Dade Property Appraiser sends out a notice of proposed property tax. Most people, when asked, remember receiving the notice in the mail. What many people don’t know is that they can dispute the assessed value of their property. This is very important because the assessed value is what property taxes are based on. A lower assessed value means a lower property tax bill. A lower tax bill means a lower monthly escrow payment and therefore a lower mortgage payment.

The laws providing your right to dispute your property tax bill require you to act fast. A property owner has only 25 days from the date the proposed property tax bill is mailed to file their petition for review. After the petition is filed the property owner must wait for the Value Adjustment Board to hear their petition. It is during this hearing that the property owner or their representative must convince the board that the assessed value is incorrect and should be lower. If the property owner is able to convince the board their tax bill will be lower.

This year, the time to act is upon us. The deadline for the Property Appraiser to mail out the proposed tax bill was August 24th, 2011. When you check your mail in the coming days you will likely find your proposed tax bill. This means you have roughly 3 weeks to file your petition. When you receive the proposed tax bill keep in mind that our office represents homeowners in their dispute of the assessed value. If you would like to discuss your tax bill and the possibility of disputing it contact our office as soon as possible. You only have about 3 weeks.

I hope you enjoyed this brief discussion regarding how to lower your mortgage payment by disputing your taxes. Look for our next newsletter where we will discuss how to lower your mortgage payment by lowering your insurance premium.

Enrique J Fernandez, Esq.
The Law Offices of Enrique J. Fernandez, P.A.
8925 SW 148 ST, Ste. 200
Miami, Florida 33176
Phone:  (305)226-4529
Fax:      (305) 222-0529
Email:  Enrique@EJFPA.com

• Learn how to take advantage of this buyers market while it lasts
• How to wholesale your way into owning  in this market
• How to find the world’s best buyers today
• Which properties to purchase and why
• How to find the right property management for your growing portfolio
• Why South Florida is the perfect place to become wealthy

If you’ve never bought before and don’t do it now, you never will and will always regret it.  Don’t let any stupid excuse stand in your way.  Right now WE are in the PERFECT STORM for real estate investors.  Whether you buy just 1 or 100, you can Retire Rich with Rentals if you know how.  Missing this meeting will add years to your retirement plan.

Visit www.DREIA.org to register for this meeting on September 21st.

Lunch Meeting

OK, it’s doubtful that folks attend the DREIA lunches for the bountiful buffet.  But DREIA attendees didn’t let the hateful heat of summer keep them from upgrading their skills and networking with other investors.

Attorney Andre Gibson of North Miami Beach spoke to a standing-room only crowd in July.  You see, real estate investors need to know about more than just land trusts.  Asset protection and estate planning can be accomplished with trusts.  Mr. Gibson answered several questions related to creditors and trusts.  The discussions were lively, to say the least.  Though we didn’t have time to discuss it at lunch, Mr. Gibson’s practice also focuses on tax planning.  Visit his website at www.GibsonTaxLaw.com

The August lunch meeting, again standing room only, featured attorney Barry Cohen with update on what’s happening in foreclosure court.  We call him Barry “you’ve got defenses” Cohen because monitors trends in court actions related to arguments posed by attorneys on both sides.  Meet Barry at DREIA or email him at info@barrycohenlawfirm.com.

DREIA Adding South Lunch

Yes, thanks to Ramon Rivas, REIFax and attorney Enrique Fernandez, DREIA’s October 12, 2011 lunch meeting will be in Pinecrest, just south of The Falls.  Attorney Fernandez will fill us in on buying at courthouse auction.  His experience representing courthouse buyers allows him to impart more than just legal knowledge about due diligence and bidding.  Foreclosure auctions in South Florida counties are now on-line so this is a great time to learn what happens and how to prepare to bid.  Watch your email and www.DREIA.org for registration information.