Networks help out real estate investors a lot by plugging them into good property deals.  It’s very easy to build your own network when you are just starting out as an investor.
When you first start out in the real estate investment business you’ll find that having a network of other investors and buyers is a valuable source indeed.  In fact, it can help you in all areas of your business from finding good properties to buy to finding the investors to buy those properties from you.  It’s fairly easy to build up a network as you begin buying properties, even if you don’t know anyone when you start.

Network your way to profits
Naturally, you won’t pick up every property that you look at in the real estate investment business.  However, just looking at properties brings you into contact with other property investors and helps you to build your network.

As you begin to make more and more deals in the business, say with REO agents that hold bank properties are in post-foreclosure, you are also networking.  You’ll find that you get a lot of repeat business with those investors with whom you make successful deals. 

It’s not uncommon to only make a deal on one out of every 15 to 20 properties you look at in real estate.  However, you’ll find that as you buy those properties you’ll make connections with the REO agents and investors you deal with and they’ll keep you in mind.  So after a while, you begin to find that you are being handed deals that fit your criteria because the agents and investors know what you are looking for.  Eventually, it’s possible to start picking up one out of every four or five properties you look at, simply because your network will be handing you the perfect properties to invest in.  See how easy it is?

Record the Information of those you Meet!
One real estate investor claims that up to 65% of his properties come from repeat clients.  Networking is easy when you choose to work with these repeat clients.  To make the most of those repeat clients and past investors you’ve worked with, try to remember to take down their names and numbers or keep their business cards and add them to your address book.  Be sure to add all pertinent information about each person you meet, such as whether they are looking to invest or sell properties.

Networking is an essential part of the real estate investment business.  However, you don’t need to feel intimidated if you are starting out with little to no network.  As you make deals and look through properties in the local area you’ll also gradually be developing your very own network.

Have you heard of a simultaneous close, but aren’t sure what it involves?  You’ll find that it’s a surprisingly simple procedure and a great way to buy property with using your own money.

There are many ways to close a deal in real estate investing.  As a foreclosure investor you’ve probably heard of the famed, simultaneous closing, when purchasing a property from the homeowner.  It’s a great way to make a profit on your time and effort without using your own money to purchase a property.

A simultaneous close is when you buy the property from the homeowner and then immediately turn around and sell that property to an investor.  You very often are only on the title of the property for a few minutes at a time.  Plus, you can often arrange the deal so that you end up buying that house with your investor’s money!

How the Simultaneous Close is Initiated
You initiate a simultaneous close on a property sale by asking your investor to wire their money into the title company that you are using for escrow.  You have already given the title company prepares the two closing documents; one is where you buy the house for $70,000 and the other is where you sell the house to your investor for say $90,000.  That means you get a profit of $20,000 after both closings are complete.

When the title company prepares both of these documents at once, they’ll notice that your buyer has already wired their money into the company’s escrow account.  The title company will see that when you sell this property to your buyer you’ll be getting $90,000 and that the buyer has already transferred his or her money into the title company. 

So, rather than asking you to wire your own money into the title company so they can initiate the first sale (from the homeowner to you) they’ll just use $70,000 of the $90,000 that’s been transferred into the title company by your buyer.  Then, they’ll turn around and complete the second sale (from you to the buyer) and leave you with $20,000 profit without even using your own money!

Basically you’ve just ‘flipped’ a house, which in proper terminology is referred to as ‘Wholesaling’ a house and all without using your own money!  As you can imagine there is a little more to the process of making a simultaneous close, but this is the gist of the procedure.  It’s an excellent way to get involved in real estate investment and get profits with very little starting cash.

There are all kinds of deals to be made in the real estate business.  Three deals in particular on the least desirable properties can bring you profits.

We love the ugly and awful.
~Andy Heller

There are all kinds in real estate investment.  All kinds of real estate investors, all kinds of deals and all kinds of property to make a deal on.  You’ll definitely find that having all kinds in this business makes for a great amount of variety and plenty of opportunity for earning profits.

There are three basic ways to make a profitable deal in the real estate investment industry.

1. Pick up a Pre-Foreclosure
2. Pick up a Property at the Foreclosure Sale
3. Pick up a Post-Foreclosure

These are the three states of the defaulted property before it usually ends up back on the market as a classic home for sale with a real estate agent.  A pre-foreclosure involves finding homeowners who haven’t been keeping up with their payments and working with them to buy their home, while also getting them out of their defaulted mortgage.

The foreclosure sale is where you can go to pick up mortgages and properties that have already been foreclosed on by the bank.  A post-foreclosure is a property that didn’t sell at the foreclosure sale for whatever reason and has gone back to the bank.

These last properties are usually undesirable for many reasons.  They may look bad, need a lot of repairs, may have a very high mortgage to cover or even have an IRS lien placed on them.  The real estate investor must realize that banks are not in the business of real estate.  They are in the money business.  In fact those post-foreclosure properties in a bank’s portfolio are listed as non-performing assets.  The banks don’t want them!

Give Us your Poor, Your Tired, Your Huddled Masses…
In real estate investment you’ll come to love those properties that are in disrepair.  These properties are not attractive to the general public, or those people looking to buy a home to live in.  Once a home becomes ugly and awful, you’ll find that it’s pretty much only attractive to the post-foreclosure property investors. 

As a property grows more and more neglected, fewer and fewer investors will be interested in that property.  However, this ugly and awful property is also an excellent way to get a major discount from the bank or the homeowner.  You can ask for multiple discounts on the sale price of a property because of shabby appearance, neglected maintenance, problem placement of the home on a lot and more. 

Don’t turn down a property deal just because that home looks ugly and awful.  In a business with all kinds, the leftovers can really turn out to be diamonds in the rough.  If the safety inspection shows the home to be sound and termite free, then you can bet that a property that just looks bad is a great property investment.

The Simultaneous Close sounds like a perfect real estate investment deal.  However, there are a few drawbacks to this foreclosure investor’s dream deal.

It’s part of the dream, the possibility of being able to make thousands of dollars with out using any of your own cash as an initial investment.  Well, it has been done and can still be done with a variety of real estate sale practices.   One of these popular sales in real estate investment is the Simultaneous Closing, which basically involves you purchasing the property with your investor’s money and then selling that property to your investor all in a matter of moments.  It’s legal and requires paying close attention to the numbers on all sides of the deal.

One Minor Drawback with this Real Estate Sale
There is a small problem with using the simultaneous close in order to make a property sale.   A lot of title companies are hesitant to insure the title that’s been sold using this method.  In recent years there have been many problems with mortgage fraud and predatory lending.  Many of those fraud deals have involved a simultaneous close on a property title.  Plus, the business of foreclosure investing and real estate investing has a bad reputation.

So, to try and cut back on the incidents of mortgage fraud and predatory lending title companies have made a blanket rule stating that they just won’t insure a title in simultaneous close. 

This doesn’t sound like a big problem in wholesaling, but it basically means that the title company won’t perform a simultaneous close.  Hence, you can’t buy the property!  This is a bad deal for all the good real estate investors out there who are putting in their time and effort on wholesale deals, but who don’t have the money to invest on their own terms. 

Not all title companies have this rule, but it’s something to keep an eye out for.  This practice has just taken effect in certain areas.  So, it’s to your benefit to see if the title companies you will be working with are still performing simultaneous closings.  You’ll want to do this research before you make an offer on that next big real estate investment. Don’t cast aside the notion of a Simultaneous close entirely because this is still an excellent method for wholesaling property.

Picking out the perfect lease tenant for your lease property is a cinch if you know what to look for.  Someone who is turning a corner financially is always best.

You’ve had your open house for that available lease rental property and you’ve gotten 3 or 4 good applications from people interested in leasing that property.  Now, how do you choose the right tenant for your property?

Know What Kind of Tenants You are Attracting
One thing to understand with lease purchases in real estate investment is that you are dealing with potential lessees who can’t quite get into a home mortgage.  Many will have bad credit, lost jobs or even lost a house in the past.  So, you’ll want to look out for people who have just turned a corner financially.  They’ll have a good rental period for say the last 6 months.  They have a regular job and even though they may have bad credit, you’ll be able to see that they are taking care of the important things like student loan payments and car payments.

It’s okay if they’ve had problems making mortgage payments in the past as long as it’s far enough in the past that you can see the potential lessee is making an effort to improve their financial position. 

Are They Going to Buy?
You may also wish to inquire with each applicant to see how certain they feel about purchasing the property eventually.  In leasing property, you can just lease out the property until it falls apart if that’s what the tenant wants to do, but every lease agreement includes the option for the tenant to buy the property whenever they wish.  So, if you have a potential tenant who really wants to own the property they are leasing from you, you’ll have a higher chance of selling that property for a nice profit in a few years.

The Gut Check
Another thing to keep in mind is the simple gut feeling.  You may just have a good feeling about a certain candidate for the lease property.  This person may not have as good a looking application as the next potential lessee, but you feel fairly certain that he or she will work harder to make sure payments are consistent and on time with the property.  Ask yourself if you want to risk the time and effort involved in working with each applicant for the lease rental.  A good old-fashioned gut check works wonders when deciding between two equally good candidates.

Property investing sounds like a great idea because you can make large returns on your money.  However, you can make the same profits with less effort when you buy mortgage notes instead.

Everyone thinks that buying mortgages is some complicated process reserved for the professional property investors that have been in the business for some 30 odd years.  However, the process of buying a mortgage note is easy and a great way to make profits.  You have the chance to get a great return on your investment without involving yourself in a lot of maintenance and effort with the bank. 

The great thing with owning mortgage notes is that you have all of the security of the real estate because if the homeowner doesn’t pay you, you can still foreclose and take the house back.  So, you’ll just end up back in the real estate game with that particular piece of property, but at least you got some payments on the property over the years.  On the other hand, as long as the homeowner pays you as agreed you don’t lift a finger, you just take the money to the bank. 

This is because when you own the mortgage note, you essentially become the bank.  Do you think the bank cares whether the homeowner keeps up the property they’ve mortgaged?  No, all they worry about is getting their monthly payments. 

As a mortgage note investor you don’t have to deal with The Three T’s.

• Tenants
• Termites
• Trash

When you become the bank, you’ll have a lot more free time.  It’s much easier to be the bank, than to be the property manager or the property owner trying to sell. 

It Takes Forever to Get My Profits!
True, you are waiting for monthly payments on the property and this may be the clincher for some property investors.  Rather than a lump sum profit you must wait for your profits over the term of the mortgage, which can be decades. 

However, if you’ve got the money to invest in several mortgage notes you’ll be able to live well and still make those profits on the monthly income you receive.

Most people worry about getting a mortgage.  They never bother with the process of creating a mortgage or what’s in it for the banks.  When you buy your first mortgage note you’ll become the bank and see why it’s good to be a mortgage note investor.

You could approach the bank about a Short Sale on a defaulted property you’re interested in, but it does involve a lot of physical effort.  Another easier method is simply to buy the mortgage note from the bank on that same defaulted property.

You’ve been buying mortgage notes for a little while and are comfortable with the practice.  However, you’ve noticed that there are a lot of pre-foreclosure homes out there with mortgages on them too.  This is a large section of the mortgage note industry that remains untapped, but how can you get in on the profits with a defaulted property in the mix? 

It is possible to buy the mortgage note on a defaulted property.  When you use this method of real estate investment you still begin with the normal means of contacting the homeowner in pre-foreclosure through direct mail.

After you’ve spoken with the homeowner and they’ve agreed to sell to you, you’ll have the homeowner under contract to sell their home to you.  This is even though you are going to buy the note on their mortgage.  You’ll just have them sign the contract so they are locked in with you, and the homeowner doesn’t turn around to try and sell the house to someone else while you are working with the bank.  Once, you buy the note the contract becomes irrelevant.

How to Approach the Bank
Go into the bank and ask them if they would consider a Short Sale to you.  A short sale involves buying the actual real estate property at a reduced price and the bank writes off the remainder of the mortgage.  Usually they’ll say yes and begin to give you all kinds of information to turn in for final approval on a short sale.  Then, you can come up with, ‘Hey, wouldn’t it just be easier if I bought the note from you?”
 
If the bank knows how to do a note sale on a defaulted mortgage, then they’ll usually jump on your suggestion because it is so much easier to sell the note than get the process of a short sale through their system.

Once You Buy the Mortgage Note
After some negotiation the bank agrees to give you a note purchase on this property and they accept your offer of say, $70,000 for their mortgage of $115,000. 

By purchasing the note to the property you basically become the bank.  You buy the right to collect the remaining $115,000 left on the defaulted mortgage.  That’s crazy, right?  Nope.

Once you have the mortgage note you have a few options to move forward.  You as the mortgage note owner could continue on with the foreclosure and kick the homeowners out of their home, not very nice since you did approach them first.   Or you could get a “Deed in Lieu of Forclosure”. 

The Deed in Lieu of Foreclosure basically means that the property owner gives you the deed to the property when they can’t make payments on the mortgage.  When you first approach the homeowners about helping them out of their property, you’ll want to let them know that you aren’t going to save their mortgage you’re just trying to give them a clean escape from having that defaulted mortgage on their credit. 

This means that you aren’t going through with the foreclosure and the homeowner gets out without having a foreclosure mark on their record because they are just giving you the deed to the property.

The process of buying the mortgage note on a defaulted mortgage adds one more step to the basic process involved in a short sale.  However, it’s usually quicker, easier and lets you get your piece of real estate investment property

You may come across properties with multiple mortgages in your real estate investing.  These property deals can be a real hassle, but it is possible to negotiate with the multiple mortgage holders.

Sometimes you’ll come across properties in your real estate investing that have multiple mortgages.  In order to get your discounted sale on this property you’ll often need to negotiate with each mortgage holder separately.  This can get difficult.

Negotiating with the First Mortgage Holder
Usually it becomes a real hassle when you negotiate a short sale deal with the first mortgage holder, which is often the bank.  The bank may say, okay we’ll let you purchase this property for $60,000 and we’ll take a $45,000 write off on the mortgage.  However, since we’re taking such a big write off, we’ll only let the second mortgage holder take a $1,000 for their claim to the property. 

Remember, when it comes to property sales, its first come, and first serve.  The first mortgage or lien holder on that property gets control of that property, that mortgage and gets to say what everyone else behind him gets for their claim.  This may be all of the cash or it may be none. 

As you can imagine the second mortgage holder won’t take too kindly to this deal.  They’ll probably hold up the short sale by telling you that they won’t sell unless they get $5,000 for their claim, instead of the $1,000 that the bank wants them to take.  Many real estate investors stay well clear of properties with multiple mortgages, but it’s possible to make the deal work.

How to Get around this Conflict
You could spend your time as a go between for the different mortgage holders, trying to get everyone to get along.  Or you can just make a note purchase! 

Rather than making a note purchase for the first mortgage you buy the note on the second mortgage!  That’s right, go ahead and pay the second mortgage holder the desired $5,000 for their position as second mortgage holder.  You become the bank again and willingly accept $1,000 for the short sale.  Thus, the deal can close and you don’t have to waste valuable time being the bank’s gopher.

Any time you run into an obstacle in a deal, you should ask yourself, ‘what would happen if I bought the note?’   Can’t get the second mortgage holder to accept the bank’s offer?  Buy their note!  The bank won’t let you give the default property holder a little cash for their trouble?  Buy the note!  It’s an amazingly easy way to think outside the box and still make your money.

A Seller Carry-Back Mortgage isn’t as scary as it sounds.  It’s a very simple way for you to buy a mortgage note from the individual mortgage note owner.

Buying mortgage notes isn’t all that hard as you’ve probably heard from some other property investors.  There are two basic ways to get into your first mortgage note.  One is to approach a bank and the other is to approach a homeowner about their own homeowner mortgage. 

Purchasing the homeowner mortgage note involves dealing with people who have owned their house free and clear and went to sell it but had some trouble getting anyone interested.  After a while the homeowner is approached by one interested buyer who came along with less than perfect credit.

How a Homeowner Mortgage Gets Started
The interested buyer couldn’t go get a bank loan, but he did have about $20,000 in cash saved up.  He offered to give the money as a down payment and offered to pay the homeowner the remaining price of the property, say $100,000 over the next ten years at 10% interest! 

That is a great deal and a great investment.  Most sellers take their profits and stick it in the bank, which even with the highest current interest usually only gets them about 3 or 4%.  By letting the buyer pay you directly at the higher interest rate for a mortgage, you’d be making more money!

So, the buyer moved in with his family and spent a couple years in the home making regular payments.  In two years, his mortgage to the homeowner mortgage owner is down to $87,000.   Suddenly, the mortgage owner realizes that he needs money now; in fact he needs about $70,000 to make another great investment.  This is where you come in with the Seller Carry-Back Mortgage plan. 

Buying the Homeowner Mortgage
You can approach that mortgage note owner by offering to give him a cash lump sum for the right to collect the remainder of the mortgage note.  The mortgage note owner says great and agrees to sell.  You pay him $70,000 for the rights to his mortgage note that he first created with the home buyer. 

The mortgage owner takes his $70,000 and goes out to invest in that next hot deal and you, the real estate investor gets to collect the rest of the mortgage.  The mortgage note owner is no longer involved with the property and never seen from again. 

The buyer still keeps the same rates on his mortgage to you and continues to make the same payments towards his own house.  At the end of the remaining eight years on the mortgage the buyer owns his house outright and you have made a $17,000 profit on your investment of only $70,000.

There is more than one way to invest in the real estate market.  Now you can tap into a little known section of the industry using short sales to purchase properties with little or no equity and still make a profit!

You know that it’s possible to buy a house that has little or no equity in it for less than is owed on the mortgage!  Yes, it’s possible.  Let’s say that you, as a property investor come across this homeowner who is behind in their mortgage with the bank.  On the current real estate market the defaulted property is worth $100,000, but the homeowner is actually in debt for $115,000.  It is possible for you to get that homeowner’s house for just $70,000.

This seems impossible, but a little known practice called, “Short Sales” in defaulted note buying allows you to purchase property that is over financed and has little or no equity in it!   This is basically when you work with the bank to renegotiate the selling price of the house and the bank writes off the remainder of the mortgage. 

Getting Started with the Short Sale
When you work with this homeowner, you will become the homeowner’s advocate or intermediary with the bank.  So the first thing you’ll need to do is get an “Authorization to Release Information”, and fax it to the bank so that you can negotiate with the bank.  This basically means that the homeowner is giving the bank permission to speak with you concerning their mortgage.

When you contact the bank you’ll want to explain to the bank the reasons why they should be willing to let go of the house for less than it is valued and for less than is owed on the mortgage.  This involves putting together a little package with information that the bank may request from you and extra information that you include on the condition of the house.

For example; the house may need a new roof.  There could be all kinds of deferred maintenance and it needs all kinds of repairs.  You could even point out that the housing market is declining in the area or point out that there are loads of other houses on the same street that haven’t sold.  Basically, you present your case to the bank explaining the reasons that they should let the property go cheap.  Be sure to include digital photos of the damage to the property or the decline.

Using the Short Sales technique it is possible for you to work with the bank to reduce the selling price of that defaulted property.  You are able to purchase it from the homeowner for a reduced price and the homeowner can get out from under this mortgage without it being on their credit. 

All you need to do is approach the banks professionally, put together a good case for reducing the price (such as needed repairs to the property) and for good measure include some digital photos of damage or neglect on and around the property.