It’s not uncommon for you to run into problems in the real estate investment sector, especially when closing a deal.  If you run into problems with a Simultaneous Close on a property, try switching to the ‘Assignment of Contract’ deal to finish that property sale.
Many new real estate investors can run into problems when they attempt a ‘simultaneous close’ on a property they are interested in.  The simultaneous close basically involves you purchasing a property with an investor’s money and immediately selling that property to the investor for your profits.  It’s a nifty little deal that works well, when you pay close attention to the percentage of returns on each sale.  However, many title companies have initiated a blanket policy that prevents these kinds of simultaneous closings.

If you’ve tried a simultaneous close of your own and run into a problem with the title company, there is a way around it through an ‘Assignment of Contract’.  This is simply another kind of property deal where you sell your spot in the contract to purchase the home to your investor. 

How does the ‘Assignment of Contract’ Work Again?
When you approach a homeowner to buy their property you always have them sing the intent to sell contract locking the homeowner in with you as the purchaser.  In an ‘Assignment of Contract’ you would have your homeowner sign that contract as usual, saying that they are going to sell the house to you for $70,000.  Then, you work out a deal with your buyer saying that you are selling the house to him for $90,000. 

You have him cut you a check for $20,000 and you step aside.  Your buyer now fills your place and pays the homeowner you were working with, $70,000 for his or her property.  Basically, instead of buying the house from you, he’s buying a contract from you and still pays his agreed price of $90,000.

Problems with the Bank
You can still run into problems with this kind of real estate investment deal.  The banks often won’t let you do an ‘Assignment of Contract’ on a property sale.  You may find that the bank you submit this kind of contract to for say, a short sale, will often kick the deal back out when you try to turn it in.   When this happens the bank may tell you that they will only put the name of the person on the original property agreement on the new deed, which would be you.

This is in an attempt to cut down on shady or illegal deals that can take place in property investment.  Both homeowners and banks have been duped by property scams.  They can be naturally reticent to allow a sale to go through on a property with a different investor than is originally named on the intent to sell contract.

Don’t turn your back on this type of real estate investment deal.  It’s still a good way to work around a simultaneous close that falls through, especially if you are working with a bank or company that spends a lot of time working with foreclosure investors.

You can make money real estate investing in a high-priced area.  All it takes is a little more effort and a willingness to hold onto property until it appreciates.

A lot of people are interested in real estate investment, but they also live out west in very expensive areas.  These are places where the average family style ranch may cost up to half a million dollars and the cost of living is very high.  The tendency for these potential real estate investors is to say; sure this works for people in cheaper areas of the country but the market here is so expensive it’s just not worth our while. 

It is very possible to make a return on your real estate investments out west and a good profit.  Even though the prices are higher, the process of property investment is still all about the numbers. 

You may have to work a little harder to find those properties at a price that matches what you’ll need to pay in order to make a return.  You may even spend more time in short sales and note purchase discussions with the banks to pick up properties that have little or no equity built up in them.  Yet, it is more than possible to make a profitable return on your investments.

What Rate of Return Should You Look For?
Since the properties out west have been known to sell for outrageous prices you may even be able to get yourself a very big return every once in a while.  However, there’s nothing wrong with a basic 10 to 15% rate of return on your real estate investments out west either.  Just add a couple of zeros to the numbers when you estimate how much money with which you’ll be working, since prices are a little bit higher.

Also when you work on real estate investments in places like California, you may wish to consider taking a minimum discount of only 5%.  The properties out here tend to appreciate in leaps and bounds.  Even if you are only taking the 5% rate of return on a property deal, you’ll still end up making more of a return in appreciation of your property.

It is possible to make a profit in the more expensive properties in a higher priced market.  You may have to take less of a return on each deal, but if you hold onto the properties for a little while they tend to appreciate in high cost areas and you’ll make more profit on the resale of that property.

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 may feel that you need a lot of capital before you can start investing in mortgage notes.  However, it’s possible to use someone else’s money to make the deal go through and still get your profits!

Mortgage notes are a great way to invest in property and make an even higher return that with other types of property investment.  Plus, there is a way you can buy a homeowner mortgage using someone else’s money.

How to Find the Money
When you are working as a property invester with a mortgage owner to buy their mortgage from them, you’ll have the owner sign a “Note Purchase Agreement” to lock them into selling you the mortgage to a property for a certain amount of money. 

In this note purchase agreement, make sure that you include a certain period of time for due diligence.  This is to allow you to get your trait report and head down to the court house to check for any other liens on the property.  Make sure that your due diligence period is between 45-60 days to give you plenty of time.

While you are carrying out due diligence, you will also be looking for another real estate investor to give you cash to buy that mortgage note.  There are plenty of places to find investors, one mortgage investor in particular goes to her local real estate investing club.  Here she gets a chance to present potential mortgage note purchase deals and get investors. 

So, you attend your local club and meet a real estate investor who is looking for a 14% percent return on her investment. 

Quick Tip:  The investment and the return are inversely proportional.  The less money you invest, the more money you make on your return. 

How it Works Out
Say, you are buying someone’s $87,000 mortgage note for $70,000, that means you’ve just earned $17,000 profit in the long run.  That’s about a 24% return on your investment.  All you need to do to continue making money without spending your own is find another real estate investor who is looking to invest their money and get a slightly lower rate of return.

At the real estate club, you meet just such an investor.  She only wants a 14% return on her money investment for the property mortgage. 

So, you buy the mortgage note from the owner at $70,000, then turn around and sell it to the investor for $74,820.  That leaves about $4,000 in profits for you to pocket from your involvement in the deal.  The investor is going to make a profit too, because her mortgage note is worth $87,000 even though she only paid about $74,000.

By looking for your own investor for your mortgage note purchase you can still make money on the differences in percentage.  You’ve got to pay careful attention to the percent of return for yourself, the mortgage owner and your investor, but you can make money by setting up the sale!

There are lots of ways to invest your money.  Investing in the real estate market can be a great way to invest your money and even make money if you don’t have any capital!
You’ve probably heard a lot of people saying that the real estate market is a great way to make money and a great way to increase your returns.  Well, they are right. 

There are lots of opportunities in real estate for making profits, everything from flipping homes to buying defaulted mortgage notes and it’s all a consistent step-by-step process that’s simple to work once you know how. 

The average bank savings account makes you up to 6% interest if you are in one of the very high paying accounts.  The stock market deals in constantly fluctuating shares.  IRAs can’t be cashed in for years and they’re meant for your retirement anyway.  Real estate on the other hand, deals in property which is always there and mortgages which last for years.  Plus, you can work deals with average returns of 14-25% in profits. 

Cashing in on the pre-foreclosure market is an amazing way to make profits on your money, earn an income, or provide for your own retirement. 

One Woman’s Gain in Real Estate
Donna Bauer was a stay at home mom.  She made some money babysitting at a $1/hr per kid, but was really scrapping around for enough money to keep the family going about 20 years ago.  She could have gone out and gotten a job, but was determined to remain a stay at home mom.  So, she got into buying and selling real estate.

Three months later, she closed her first deal and earned over $5,000 and this was about twenty years ago.  So you can imagine how much more $5,000 was worth back then.  It was an amazing transition in her lifestyle.

To this day she’s making money in real estate and even teaching others how to do it for themselves.

You may feel that there are so many programs and real estate investors and real estate agents buying up the market that there isn’t any room left for you to get started.  However, foreclosures and pre-foreclosures come up in the market every single day.  This is a rotating market so there are always real estate deals for you to find and make a profit on!

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.

You are working with a homeowner and the bank on a short sale for a defaulted mortgage.  Suddenly, the homeowner wants to know why you need all of their information.

When you’ve been in the mortgage note industry for a little while you’ll learn a few things that you weren’t expecting.  One of those things involves getting the homeowners you are working with to give you’re their information!

Getting information from the homeowner going into foreclosure can sometimes be worse than working with the bank.  Most homeowners just aren’t familiar with the steps involved in a mortgage sale, even though they themselves have a mortgage.   On the other hand, as the property investor you’ll be asking them for a lot of information, some of it quite personal in order to put together a packet for the bank and the hardship letter.  As a result the homeowner can become as stubborn as a mule when it comes to giving up information.

Here are some of the more common pitfalls of working with a homeowner with an information problem:

• They have no idea where they’ve placed all of their important documents
• They haven’t filed tax returns and so can’t give them to you for your own package to the bank.
• They just don’t understand why they need to give you all of the information if they are in default.

Try not to lose your patience with the homeowner.  They aren’t familiar with these processes, which is part of the reason you are there in the first place. 

The homeowner just needs to be made aware of the fact that the bank will make a major write off on this mortgage in the short sale or the mortgage note sale on the property.  That means you’ll need lots of information to back up your proposal and to convince the bank to take this deal. 

Explain to the homeowner, that the hardship letter that you put together for the bank is one way of providing the evidence you need to convince them to take a short sale.  It shows in dental that the homeowner hasn’t been earning enough income to be able to pay their mortgage.  Thus, you’ll need the homeowner’s tax returns as further evidence to back up the letter.  Be sure to explain this in detail to the homeowner so they really understand the reasons behind your need for lots of their personal information.

The banks really do care about the homeowners that are in genuine hardship.  So the hardship letters that you are putting together are very important.  The bank will be able to look at the letter and the evidence provided to confirm that your homeowners just couldn’t make payments because of medical bills, loss of job, loss of income or other reasons.  If it looks like the homeowners didn’t make their mortgage payments because they just didn’t feel like it, the bank will not agree to a short sale.

If you take the time to answer all of the homeowner’s questions and thoroughly explain your need for their personal information, you’ll find it’s much easier to work with the homeowner in default.

You can’t just approach the bank with your best offer and expect to close the deal.  You need to persuade them to accept the short sale first with a little negotiation.

You’ve found a great real estate investment to purchase, signed on with the homeowners and gotten all of your information in order.  All that’s needed is to approach the bank with a short sale offer and close the deal right?  Maybe not.

There is an art to negotiation in the real estate investment industry.  Negotiating a short sale isn’t simply approaching the bank with your packet of paperwork and your best offer to close the deal. 

You’ll need to endure at least two rounds of negotiation with the banks most of the time.  So, don’t approach them with your final offer right off.  It’s probably best if your first offer to the bank is a price that’s lower than what you are willing to pay.

Send a Cover Letter
Submit to the bank an offer cover letter filled will all of your points to justify the discounted offer you are making on the bank.  The banks you usually end up negotiating with get tons of offers for their properties.   This submitted cover letter helps you stand out and makes you look a little more professional as a real estate investor. 

The cover letter can outline your interest in the property, certain negative aspects you’ve noticed to the default property and your first offer on the property.  Don’t be afraid to make a low offer on the property when negotiating short sales.  You can always up your offers, but you can never lower them.  So, if you start out by giving them the most you are willing to pay for the foreclosure property you are interested in the bidding could quickly enter a price range you aren’t able to afford.

Make it Personal
Making more personal offers, such as using the cover letter submission, will get you into more negotiations with banks and help you close more deals.  You’ll waste a lot of time if you go out make a 100 low ball offers in a very impersonal manner.  It just won’t make real estate investment worth the time. 

Instead, go out and find ten default properties that you are interested in and make more personalized offers on them.  Put together a nice cover letter for each that outlines the points above and you’ll find that you enter more deal in less time.  Less time spent means you are making more money for your effort and you are more likely to make that real estate deal. 

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.