Looking to invest in a foreclosure or bank owned REO?  

Los Angeles & Orange County Investment Real Estate & Foreclosures
There is a lot of interest in buying foreclosures & bank owned properties these days. A lot of information, some good and some bad, is floating around about the subject.   Often the information offered is for sale, with the promise that you can make a lot of money with little effort once you know “the secret formula”.  The fact is that there are no secrets, and to make money does require effort.

What’s an REO?
REO stands for “Real Estate Owned”.  These are properties that have gone through foreclosure and are now owned by the bank or mortgage company.  This is not the same as a property up for foreclosure auction.  When buying a property during a foreclosure sale, you must pay at least the loan balance plus any interest and other fees accumulated during the foreclosure process.  You must also be prepared to pay with cash in hand.  And on top of all that, you’ll receive the property 100% “as is”.  That could include existing liens and even current occupants that need to be evicted.  A REO, by contrast, is a much “cleaner” and attractive transaction.  The REO property did not find a buyer during foreclosure auction.  The bank now owns it.  The bank will see to the removal of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing.  Do be aware that REO’s may be exempt from normal disclosure requirements.  In California, for example, banks are exempt from giving a Transfer Disclosure Statement, a document that normally requires sellers to tell you about any defects they are aware of.

Is buying a Los Angeles Foreclosure or  REO a bargain?
It’s commonly assumed that any foreclosure or REO must be a bargain and an opportunity for easy money.  This simply isn’t true.  You have to be very careful about buying a REO if your intent is to make money off of it.  While it’s true that the bank is typically anxious to sell it quickly, they are also strongly motivated to get as much as they can for it.  When considering the value of a REO, you need to look closely at comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling needed to prepare the house for resale.  The bargains with money making potential exist, and many people do very well buying real estate  foreclosures in Los Angeles.  But there are also many REO’s that are not good buys and not likely to turn a profit. 

Ready to make an offer on a foreclosure or REO in Los Angeles?
Most banks have a REO department that you’ll work with in buying a REO or foreclosure property from them.  Typically the REO department will use a listing agent to get their REO properties listed on the local Southern California MLS.  Before making your offer, you’ll want to contact either the listing agent or REO department at the bank and find out as much as you can about what they know about the condition of the property and what their process is for receiving offers.  Since banks almost always sell REO properties “as is”, you’ll want to be sure and include an inspection contingency in your offer that gives you time to check for hidden damage and terminate the offer if you find it.  As with making any offer on real estate, you’ll make your offer more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.  After you’ve made your offer, you can expect the bank to make a counter offer.  Then it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer.  Realize, you’ll be dealing with a process that probably involves multiple people at the bank, and they don’t work evenings or weekends.  It’s not unusual for the process of offers and counter offers to take days or even weeks.

 

TAX LIENS 

Tax Liens as an investment vehicle have been gaining popularity for a while now. Several courses have sprung up, but I believe there is a better way of learning how to use them. In this article we’ll cover the basics of investing in tax liens.

Here’s a quick tax lien overview. In many states, when somebody doesn’t pay their property taxes the government places a lien on the property. An investor pays the taxes for the property owner (that’s what you do when you “buy tax liens“), plus any fees associated. For doing this, the investor gets a couple of things. First, the investor gets the right to collect interest on the money he paid, which is usually a statutory amount. Second, if the owner does not pay off the lien in the allotted time(usually 3-5 years) the investor may get a tax deed on the property.

Tax Lien Differences

Tax liens function differently in each state where they are available. In some places, the liens are auctioned to the investor who will accept the lowest interest rate, or to the investor who will pay the most above the value of the lien. In at least one state, the option to buy a lien is granted through a sort of lottery. Some states only sell the liens once per year. You just need to find out exactly how they work for your area.

The Safety Of Tax Liens

The good thing about tax liens is that you know you are going to get something. Either your money back plus interest, or a property. That’s a pretty sweet deal if you ask me. It is possible to get a property at a great discount this way.

There are some dangers to look out for, though. First off, the property could be worthless. You should know what you’re getting into, and should never buy a lien on a property that wouldn’t be profitable to own. You also need to keep up on your liens. If the owner continues to default on their taxes, and doesn’t pay off the lien you hold, you need to continue paying the taxes on the property.

That being said, as long as you keep up on it, you stand to make a decent return, and that’s what usually happens.

Tax Liens can be a pretty good investment, especially compared to savings accounts in your local bank. Be careful to screen out the hype, as chances are very good you’re just not going to get a million dollar home for $5,000. But you will get something, so you might as well look into it.

 

PRECONSTRUCTION

The Benefits of Preconstruction

It is a commonly held notion that real estate is one of the most stable and lucrative ways to invest your money. Naturally, as the opportunities and ways to invest have evolved over the years, investment real estate has become much more accessible to the average investor. The easiest and most cost effective technique for investment that has come to the forefront of real estate investment in the past few years is preconstruction real estate. Preconstruction is a very simple concept that has many investors wishing it was always an available option. Essentially, preconstruction is a natural discount investment strategy that is effective for a few reasons.

Developers are selling a future property in-order to get money down on the project. Many times, the most effective preconstruction investments are through a condo hotel or a resort property. If one were to visit this property directly after purchase, they would see an empty or partially developed property. This is because the properties are purchased before construction is finished. This brings up another reason why there is a natural discount.

 

Investment in preconstruction real estate has been around for decades, but not until recently has it received this much attention. This is especially true in Orlando, Florida and other resort areas. There are many theories attempting to explain why the investment real estate market has seen so much growth.  The truth is, several factors fuel this explosive market.

The first factor is that the US dollar is weak right now. This factor is prompting foreign investors to purchase US land as an investment. In turn, these foreign investors are not only investing in the real estate but in the currency market as well.

The second factor

 

 

Why isn’t everyone doing it?

You are probably asking yourself “If there is so much money in preconstruction real estate, why isn’t everyone doing it?”  This answer is simple; there are not many preconstruction opportunities, and when opportunities do arise, they are sold out in days, if not hours.  Also, serious investors are going after available preconstruction opportunities so aggressively that developers are finding that they don’t have to advertise to sell their property.  In fact, it is not uncommon for a developer to release all of the project’s preconstruction units at once.  In the time span of one workday, it is not uncommon to see all available units of a preconstruction offering reserved.. Preconstruction real estate is booming, and this is your opportunity to take advantage of these great investment opportunities.