Saturday, November 28, 2009

First Look Program Allows Owner-Occupants 15 Days To Bid On Fannie Mae REOS.

By Troy Corman,

Fannie Mae has implemented it's "First Look" initiative to allow owner-occupants a chance to buy Fannie Mae foreclosures the first 15 days they're on the market. Investors and those not intending to live in the home can only make an offer after the first 15 days have passed.

Fannie Mae is also allowing owner occupant buyers up to 45 days to close, 15 days more than normal. The First Look initiative is intended to help owner-occupant buyers and low-income buyers.

This initiative will probably help a few buyers but it will undoubtedly slow down the foreclosure purging process that needs to take place. The sooner we can purge the foreclosures, the sooner ALL home owners can benefit.

Monday, November 16, 2009

Meredith Whitney On The Banks And Dramatically Rising Mortgage Rates.

Posted by Troy Corman, t2 Real Estate

Banking analyst Meredith Whitney doesn't expect bank lending to loosen any time soon. Personally, I've been having a heckuva' time going through a refinance. She expects mortgage rates to go up at least 10%. So lock in low rates now. Tight lending should fuel great housing deals for the remainder of 09 and 2010. Meredith Whitney was the first banking analyst to call the problems at Citi Group and other banks before the official bust. See her sobering outlook in the video below.

Thursday, November 12, 2009

How To Add $100K To Your Net Worth In Uncertain Times.

By Troy Corman, t2 Real Estate

We live in uncertain times. Pundits argue if we're out of the recession, if the stock market will continue to rise, and if we're looking at another leg down in the economy when the government exhausts it's stimulus programs.

So what's one to do to not only protect, but create wealth? You can store it in the bank in low-yielding money market accounts. But that doesn't produce gains if we get hyper-inflation. You can continue to speculate in the stock market. But the market can produce horrific losses if the doomsdayers are correct and we get a massive decline. You can buy gold, but gold doesn't pay you monthly income, or give you terrific tax deductions, and it is much more volatile than my investment of choice, rental real estate.

Rental real estate makes you money in 5 ways.
1. Cash Flow - renters pay more each month than the home's carrying cost.
2. Principal Pay Down - rent money pays down our mortgage each month.
3. Equity Capture - we buy homes for thousands less than they're worth.
4. Appreciation - we sell homes in a sellers market when prices are rising.
5. Depreciation - rent homes produce about $10K in deductions per $100K home annually.

The formula to add $100K to your net worth is simple. We buy homes that would be worth around $100K once they are repaired. We look for a $20,000 profit margin by subtracting the purchase price and rehab costs from the home's ARV (after repaired value). In other words, we buy a home for $70K, put in $10K in upgrades and repairs, and sell the home for $100K or more. Buy 5 homes using this formula and you've added $100K to your net worth.

In this price range, we're able to rent the homes for around $1,000 a month, which will produce $100-$300 a month positive cash flow. The cash flow helps cover vacancies and any repair work. We never buy homes that don't have positive cash flow because then we've just bought ourselves a liability.

So should we invest in real estate in Dallas/Fort Worth now? Yes. I expect lenders and banks to ramp up the disposition of their bank-owned real estate and foreclosed properties. Many have talked about a shadow inventory of foreclosures that have yet to hit the market. According to the November 9th issue of National Mortgage News, "Bank of America is now saddled with $33 billion worth of nonperforming assets, almost triple what it had a year ago". Wells Fargo comes in with $20 billion in nonperforming assets, double what it had a year ago. Sooner or later, those nonperforming assets, whether they're residential or commercial real estate, have to be off the books.

As a result, I think that 2010 will offer a once-in-a-lifetime gold-mine for investors willing to take action. The economy, government spending and unemployment will freeze many in fear, which means there will be more deals for those that step up to the plate. Despite some dour predictions of a W-shaped recession, the Dallas/Fort Worth real estate market is consistently ranked as one of the top 10 markets in the nation. Out-of-staters continue to migrate to the Lone Star state in droves attracted by our job market, affordable cost of living and lack of a state income tax. So take action. Because as Wayne Gretzky says, "you miss 100% of the shots you don't take".

Check out this video about the future of Texas real estate.

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Thursday, November 5, 2009

Homebuyer Tax Credit Extension May Pass This Week.

Brought to you by T2 Real Estate. Credits to RISMEDIA.
RISMEDIA, November 5, 2009—After two weeks of delay, the Senate cleared the way to pass a seven month extension and expansion of the tax credit for homebuyers. By an 85 to 2 roll call vote, the Senate voted to cut off debate on a package of measures that includes the homebuyer credit, making it virtually certain that the legislation will reach President Obama for his signature this week.

The homebuyer tax credit, due to expire at the end of November would be extended through April 30 of next year. First-time buyers who are in the process of making a purchase would not need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline.

For the first time, the legislation that was recently cleared makes move-up buyers as well as first-time buyers eligible for a credit. The $8,000 maximum first-timer credit will continue and will now be available to couples with income up to $225,000, a nearly $55,000 increase above the level in existing law. A new $6,500 maximum credit would also be available to move-up homeowners who have lived in their current residence for five of the prior eight years.

For homebuyers across the country, the expanded tax credit would allow more people to qualify for the credit. While two-thirds of American families own their own home, and most earn less than the income limits that have been established within the extension, more buyers may be eligible. Move-up buyers don’t have to sell their current home to qualify for the new credit, but the money cannot be used to buy a vacation home. “It’s only for a primary residence,” said Regan Lachapelle, a spokeswoman for Sen. Harry Redi (D-Nev.), who helped engineer the deal. “In expanding the tax credit, we are helping first-time home buyers, as well as homeowners looking to move up to a new home, but we would exclude from the credit speculators who may have recently purchased a home intending to flip it for a fast profit,” said Senator Max Baucus, Democrat of Montana and chairman of the Finance Committee.

The tax credit has fired-up the housing market, driving existing home sales to the highest level in over two years. The National Association Realtors reported sales jumped 9.4% to a seasonally adjusted annual rate of 5.57 million units in September and are 9.2% higher than the 5.10 million-unit pace in September 2008.

The legislation included provisions added to address complaints of fraud as well. The Internal Revenue Service is given greater authority to oversee the process to root out fraud, and provisions are added in response to past abuses of false sales or underage buyers. An investigation by the Treasury Department’s Inspector General for Tax Administration found that more than 580 children, some as young as four years old, had received $627,000 in first-time homebuyer credits. The IRS has identified 167 suspected criminal schemes and opened nearly 107,000 examinations of potential civil violations of the first-time homebuyer tax credit.

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