Florida Real Estate Blog

A second mortgage is basically a loan that you take against the equity that you have already built into your home. The proceeds from the second mortgage can generally be used for whatever purpose the borrower has in mind. It can be used to pay off a car loan or credit cards. The proceeds can be used for home improvement or to take a vacation. The money can even be put in a savings account for a rainy day fund.

In the past, the total amount of debt from a first and second mortgage combined could not be more than 80% of the home’s appraised value. Recently however, low interest rates and a hyper-competitive marketplace created a lending environment where some lenders were approving second mortgages that, when combined with the first mortgage balance, totaled as high as 125% of the home’s appraised value.

Most competent financial advisors will warn against carrying that much debt on your home. At Micott Mortgage, I never recommend borrowing more than 100% of your home’s value and rarely would I recommend a second mortgage with a loan to value of greater than 90%.

A second mortgage is always subordinate to the first mortgage. This means that in the event of a default, the property is sold and the proceeds are used to pay the first mortgage first, including any legal costs and other costs of the sale. The remaining proceeds are applied to the second mortgage. If there is not enough money remaining from the sale of the home, the second mortgage does not get paid.

A Higher Interest Rate

When determining the interest rate that a lender is willing to loan money out for a home mortgage, he looks at the risk level to him for loaning that money. This is the reason that a high risk borrower with a poor credit history gets charged a higher interest rate than a low risk borrower with a strong credit history.

This theory also holds true for a second mortgage. Because a second mortgage lender is (by definition) second in position to be paid off in the event of a default, and because there is a greater chance that in default there may not be enough equity in the home to pay off the second mortgage in full, second mortgages are almost always given at a higher interest rate regardless of who the borrower is.

Second Mortgage Terms

Even though you may be offered several options for terms for your second mortgage, the terms offered will most likely be shorter than those of a first mortgage. This is primarily due to the fact that the amount of the second mortgage is generally much lower than that of the first mortgage.

Repayment terms for second mortgages can vary considerably, so it is important to look around for the one that is best for you. Mostly they range in length from 5 to 20 years, with the majority of the loans being 10 to 15 years. Some lenders may offer a 30 year amortization with a balloon (maturity date) of 15 years. This type of loan is referred to as 30 due in 15. Generally, the longer the maturity, the higher the interest rate. Conversley, the higher the credit score, the lower the interest rate.

Second Mortgages Types

Just as the length of the second mortgage can vary, so can other repayment terms. The majority of second mortgages are paid back in equal monthly payments with a portion of the payment going to interest and a portion to the principal balance, just like a first mortgage.

The two most common types of second mortgages are the fixed rate and HELOC (home equity line of credit). The fixed rate mortgage is a standard offering. The HELOC is a little unique and has been very popular. This loan type typically calls for interest only payments for the first 5 to 10 years and then the line of credit is frozen at the outstanding balance of the loan. At that point, the loan payments are recast and a standard principal and interest payment is established for the remaining 10 to 20 years. HELOC’s are typically priced with a variable interest rate.

HELOC interest rates are similar to other loan pricing; the lower the FICO score and the higher the loan to value, the higher the interest rate.

When contemplating a second mortgage, do your homework, shop around and then talk to lenders to ensure that you are getting the best deal!

Share This

The effects of rescue efforts instrumented through the various regulatory bodies have evidently kicked in. In the past year since last July (2007), “about 1.7 homeowners have completed loan workouts that have allowed them to stay in their homes” (US Treasury Secretary Henry Paulson, July 2008, Reuters). The Housing Rescue Bill (July 2008) will now lend further recovery to a housing market reeling into its second year.

It’s one thing to line up all this assistance, it’s quite yet another whether those people in need can reach it or not. A startling one-third of Americans polled literally have no idea how much money they owe. The average American also scored only a D-grade in a survey on financial literacy. We were quick to jump onto the bandwagon of owning a home so now we better buck up on how to defend it when the situation gets rough.

How to stop foreclosure is always a major undertaking and it can be accomplished through various ways most common of which are refinancing, forbearance, loan restructuring, supplementary loan and shortfall forgiveness. Where giving up the home cannot be helped, deed-in-lieu, pre-foreclosure and short sale are ways to avert foreclosure which harms the credit score, not to mention incurring penalties and legal costs.

No matter which option is eventually adopted, the manner of approach is always quite standard. People won’t be at so much of a loss when faced with foreclosure if they had the necessary knowledge and information. The key thing is to act fast and the fundamental steps are: -Analyze the exact financial situation -Review all available options -Avoid the scams and cons -Engage professionals when needed -Follow up and follow through

Foreclosures hurt the lenders and authorities as much as they do the homeowners these days. Given the housing crisis, financial malaise and faltering economy, we can be sure that they would go out of their way to help stop foreclosure. Put bluntly, foreclosure is the knife-edge between an asset and liability insofar as houses are concerned and the last thing that’s needed now is another one crossing over into the heap.

All sorts of information and help agencies have mushroomed everywhere, not least the internet. Public information and assistance websites, real-estate brokers, banks and other lending institutions, investors and capitalists, attorneys and consultants and guides and handbooks can be found in abundance online, all possible solutions to how to stop foreclosure. Then, there are also loads of scams and crooks so watch out, you don’t want to be burnt further!

Share This

Curb appeal is an important factor in making the home look better. It does not matter if you are selling it or just want it to look better for you. The way the house looks from the curb is what gives people the first impression of it. The first yard has to be dressed up some in order to make sure that you are giving a good impression. Do you know where to start? There are some suggestions for landscaping the front yard that you could try.

When it comes to landscaping yards for better curb appeal, it is important that you come up with some displays that look pleasant and beautiful. Add some objects to the front lawn that attract some wildlife, which can add to the way your lawn looks. Simply adding a bird bath, a bird feeder, or even color plants to attract birds and butterflies, can do a whole lot for the curb appeal of your home.

Do you need a cozy place added to the lawn? Add a place to sit such as a picnic table or a bench like you would see in the park. They give a place to get comfortable and look at the gorgeous landscaping you have created. When you have company you can sit and visit outside while they take in the beauty of the landscaping.

Of course a nice swing is a great way to add some appeal and a place to sit as well. A nice swing under a tree definitely looks charming. You can even enhance the way it looks by placing some plants and flowers around it to make it look attractive and colorful.

Flowers are always a wonderful idea when you landscaping yards to make them look more beautiful. Planting flowers in your yard instantly can make it look more inviting and cheery, so consider going with some colorful flowers in your front yard for a great look.

Many people actually just plant certain kinds of plants in their yard, but you’re better off to plant both annuals and perennials when you plan flowers. Your perennials will continue to bloom each year, but your annuals will only last for a season. However, mixing them together will give you a great variety of flowers that will bloom during various seasons.

An immaculate yard is kept green and well maintained. Curb appeal decreases when the lawn is over run with weeds so be sure to keep them out though regular upkeep.

When landscaping is done in an attempt to achieve greater curb appeal water fountains and statues are an incredible addition. Not only can they improve the way the yard appears during the day but with a few lights added they can look amazing at night as well. To achieve a wonderful look for your home try some of these ideas to landscape your front yard and add to the curb appeal.

Share This

One of today’s most useful tools for helping you to budget your mortgage is a mortgage calculator. Most mortgage calculators are free to use and can provide some very helpful information that will assist you in finding the perfect mortgage fit for your needs.

Mortgage calculators can provide you valuable information about your mortgage. A good mortgage calculator will show you monthly payment information and amortization tables to help you understand how your mortgage works. Amortization with a mortgage calculator describes the process of paying interest and principle graphically; using a mortgage calculator can help you get your head around a complicated financial concept like amortization.

To use a mortgage calculator you will need to provide the amount of the mortgage principle, your interest rate, the amount of your property taxes, and private mortgage insurance if you pay it. The calculator will figure your payment amount and show how the interest is paid over time. Mortgage loans are front loaded with interest; at the beginning almost all of your payment is pocketed by the mortgage lender for the interest due. As time passes, the ratio of interest to principle gradually reverses and more of your payment goes to pay back the loan.

If you are in financial difficulty, then debt consolidation by refinancing your home can be a good idea. But beware of refinancing your home to 100% of its equity. If you do this to the full extent of your home equity, then it will be quite some time before you are able to raise future funds against your property, if they are needed. This will leave you with no emergency financial cushion. And it will take a few years for your finances to stabilize once more. Find out what the law is where you live. Some states will not allow you to borrow more than 80% of the value of your home.

So, if you’re in the process of refinancing our mortgage you might want to use a mortgage calculator so that you can avoid the mistake of taking out more mortgage then you can afford.

Share This

Think the mortgage rate you are considering is too good to be true? It’s probably a teaser rate. Is mortgage refinancing with a teaser rate a mistake, or can you leverage this lower interest rate to your advantage? Here are several mortgage refinancing tips to help you decide if that lower introductory interest rate is right for you.

Teaser rates are very low interest rates when mortgage refinancing used to lure homeowners with the promise of extremely low monthly payments. The teaser rate is usually much less than the going rates quoted for normal mortgage loans. The catch with a teaser rate is that it only lasts for a short period of time, often only for one month. Once the teaser rate expires the mortgage lender will switch you to the actual mortgage rate and raise your payment amount.

Teaser rates are usually used to promote products that are better for the lender than they are for the homeowner; however, they can be useful in certain situations. If you need short-term financing while you sell your home, a teaser rate could save you money. Make sure the loan does not include a penalty for early repayment as this would eat up your savings with an unnecessary fee.

When refinancing a mortgage loan, homeowners have several loan options. Usually, homeowners refinance to lock in a low fixed rate. This way, mortgage payments remain predictable. Many select adjustable rate mortgages below of their low introductory rate. If homeowners choose a mortgage loan with an adjustable rate (ARM), they should anticipate changing rates. If rates falls, ARM’s pose little threat. However, if rates increase, so does the mortgage payment.

Before applying for a refinancing, homeowners should do their research and familiarize themselves with the refi process. For example, refinancing involves paying closing fees. Thus, homeowners ought to have a cash reserve or select a mortgage loan that includes the option of wrapping the closing fees into the principle balance.

Share This

In his Rich Dad book series, Robert Kiyosaki trumpets the benefits of investing, especially those of real estate investing. Those include tax benefits, and the ability to have your money go to work for you without your lifting a finger. It sounds wonderful, doesn’t it? The idea that you can turn a dollar into two just by placing it in what can seem like a magical realm can seem very enticing.

Property investing success doesn’t happen by accident, though; you first need to know the nature of the business. And what is real estate, anyways? Read on to gain a better understanding of real estate, and the different ways in which you can invest.

A parcel of land, and any buildings or structures that stand on it, constitutes “real estate.” The price of said real estate is dependent mainly on the changing climate of the local market. You may choose to invest in real estate in several different ways.

If you want to invest in real estate by owning actual properties, the mortgages on pieces of property, or both, you will want to invest in an REIT, a Real Estate Investment Trust. In addition to having a high degree of liquidity, this kind of investing carries the previously mentioned advantage of paying fewer taxes.

A partnership in real estate is just what it sounds like; investors may elect to partner with other people or organizations in building new structures, or making money off extant ones. Appreciation is another great source of profit for property investing partnerships, even when you’re dealing with undeveloped land. Tax benefits and growth potential make forming a partnership another great option for investors

Another option is to put money in vacation property, property that you use for recreational purposes but do not live in (as living in such a property would make it a primary residence.)

We’ve all had dealings with landlords at one point or another in our lives, and potential real estate investors have the opportunity to become landlords by purchasing rental properties. Nothing too complicated here, but be aware that there are some differences in renting space to businesses and renting out residences.

Even raw or undeveloped land can afford the canny investor a chance to make money off appreciation on its value, and this type of investing also provides the aforementioned tax benefits.

It is a good idea to learn about each type of real estate investment to determine which yields the greatest benefits, determined by your particular needs. Kiyosaki named tax benefits as a good reason to become a real estate investor. After all, money you keep in your pocket is just as good as money earned.

If you are particularly interested in pursuing real estate investment because of tax benefits, you may even wish to become a real estate professional, as the IRS allows people who spend at least 750 hours a year on their investing duties to have nearly unlimited tax deductions. If you are not considered a professional, and your salary is high, that can actually cost you deductions on your real estate. You must have the time to participate in your real estate activities yourself, even if you have hired another real estate professional, to qualify for all tax benefits.

Share This

No matter where you are, you will always find people who are pessimistic about money. They will claim that, since it “takes money in order to make money,” there is nothing the average person can do to better his or her financial situation. This kind of cynicism is, in fact, unwarranted, as there is no magical force field separating the world of the rich from that of the average Joe. You shouldn’t listen to the media alarmists and others who constantly claim that the sky is falling - if you listen to the right people, you will hear that anyone can develop the tools they need in order to make money.

It is a common misconception that today’s real estate market is in such an irreparably dire state that one would be a fool to start investing in properties. If this were true, however, why would people still be doing it? Real estate investors continue to make money every day; if you believe otherwise, you’ve simply been talking to the wrong people.

This isn’t a difficult principle. Think about the people you know who are cynical and jaded about the very possibility of financial success. Are any of them wealthy? Not a chance! If you want to know how you can make more money, don’t go to those who obviously have no clue. Find someone who has actually succeeded, and ask him or her for advice; what you’ll hear is that becoming rich as an investor really isn’t as difficult as you may think. So why doesn’t everyone invest? First of all, people are fooled by pessimists into thinking that it’s a losing game.

This fear and hesitancy is the direct result of listening to people who don’t know the real story.

Secondly, most people do not become successful investors because they overcomplicate things. Successful investors follow a systematic plan, allowing their wealth to steadily grow. They do not risk it all to make a quick buck off of some dubious moneymaking scheme. Most people do not have the discipline to forego flashy scams and persevere on the proven path to wealth. The adrenaline rush of making a gamble is certainly tempting, but those who succumb to this temptation frequently end up worse off than they were when they started.

The media caters to those who want instant gratification and excitement. Think about it; when you pick up a newspaper, or turn on the television, the headlines of the day are invariably gruesome stories of death and destruction, and that’s because that’s what sells. It’s a strange quirk of human nature: the vast majority are all too willing to believe that the world is a harsh, cruel place, where one’s best efforts will always go unrewarded.

Fortunately, this destructive and self-defeating perspective is far from accurate.

If you aspire to success in the world of property investing, it’s essential that you listen to those who have experience in the game, those who know the ropes and can teach you what you need to know. Consulting these people will help you to develop the systematic plan that you will follow to financial success. The key is not to get suckered in by proclamations of gloom from the news media, but rather to understand that you do have the potential to succeed, and to learn the proven strategies from those who have come before you.

Share This

When looking for a Miami reverse mortgage, you should want to discover how they work. Furthermore, you need to become aware of the reasons that make this city and this economic cycle different for homeowners asking for any kind of mortgage. By doing so, you can understand the positive points and minimize the disadvantages having to do with this kind of loan.

For instance, this type of home mortgage is becoming very popular with senior citizens because it permits them to live in their houses by taking advantage of the saved equity and without having to make any recurring payments.

In addition, it’s very simple to obtain a reverse home loan. These are the most basic requisites:

- All people in the title ought to be 62 years old or older

- Home owners must have a lot of equity in your house

- You must live in your home

As you may notice, income and credit history are not requirements. This is so because you don’t need to make any payments back to the mortgage lender. However, because of this, the equity in your house is decreased as you get these payments.

Nevertheless, prior to selecting to get a reverse mortgage in Miami, you should realize the consequences of doing so; Specially, in this point in time when there are declining house prices and mortgage lenders are releasing these type of programs.

Due to the decreasing house prices, you may not get as much money as you considered at first. This is so because banks take this into account prior on choosing on how much money to lend you.

Also, because of the hard economic period, there are some banks that are not doing this kind of mortgage any longer. Even though once you get the loan, it’s backed by the Federal Government, it’s a great point to obtain it by doing it through a large and stable lender.

When you do that, you ensure that they’ll be there with you on the long run , and that you are receiving a good deal. Large banks generally earn money by obtaining little profits in lots of home loans.

Lastly, make sure you obtain a FHA reverse mortgage. This kind of reverse mortgage gives you the most beneficial terms and it’s backed by the HUD. If you obtain a private mortgage, you may be charged costly costs because they aren’t as regulated.

Obviously, because getting a mortgage is an considerable decision, you want to understand as much as you can about how a Miami reverse mortgage functions prior to selecting one. By doing so, you can learn whether it’s the best kind of home loan for you. Also, it might be helpful to you get the adequate kind of local mortgage broker who might assist you throughout the entire process.

Share This

Reverse mortgage pitfalls. It should be a statement that everyone one should contemplate when considering taking such a loan.

Unless God forgot your eyes and ears at birth, you have undoubtedly seen all the ads everywhere from your television set to your local newspaper.

This type of loan probably fits well for many people as I’m certain that is does but there are many caveats that you need to pay very close attention to and be aware of when considering a reverse mortgage loan.

There are many loan programs, over a dozen at the time of this writing, that are designed around the reverse mortgage concept.

Your first action should be to only do business with a lender who will offer you multiple choices for this type of loan package.

Be very suspicious of any lender who will only be willing to offer you a couple of choices as these are most likely in house loan packages that are designed for the lenders self interest. These loans may not offer you the best rates and terms available elsewhere on the market.

Once you arm yourself with the facts before you go shopping, reverse mortgage pitfalls need not even occur.

Most often these types of loans are structured around a few basic requirements starting with your age. As an example, HUD requires you to be 62 while more conventional lenders will be willing to loan to younger people.

The major pitfall here is that the younger your age when the loan is made, the less interest you will be offered on that loan. This can have major consequences for you down the road.

The inflation factor. It will never go away so as the cost of living expenses grow year after year will your loan payment increase as well?

Your reverse mortgage contract must include some sort of cost of living adjustment. If it doesn’t where do you think your income will put you 10 years from now?

Another reverse mortgage pitfall factor that you must pay close attention to is your yearly taxes. These must be payed by you, the home owner. Have you figured those costs into your income levels 10 years down the road from now?

Keeping up your property. Yes, the lenders will require this. Expenses such as roofing, heating, air conditioning, plumbing and on and on will pop up from time to time and you need to factor in these costs over the years as well.

Home owners insurance. Another things you must keep in mind. Your lender will require up to date insurance as they must protect their future investment. Again, you must included this into your overall income figures.

Last but not even close to least is your utility costs. They will continue to rise as previously mentioned in the inflation factor. How much to you think you will be paying on your electric bill a decade from now?

So what is the bottom line? These are but a few of the pitfalls you need to consider when talking with your lender. There are many more and you can find these online if you know where to look.

Add up all the costs you will be expected to pay over the course of the next 10 to 15 years and make sure your contract adjusts upward so the power you have in one dollar today is reflected with that same power a decade from now.

Reverse mortgage pitfalls? Yes and no. Be aware of what you are doing and this may work out beautifully for you. Remember, knowledge is power and it is up to you to empower yourself!

Share This

Preparation is the key to success in many fields. The same goes for selling your home. It is a rough market out there and we all know it. Taking the extra steps to get your home positioned correctly can make the difference between selling it or not.

Tips are like mosquitoes in a swamp. There are a lot of them. This is also true for real estate topics. Frankly, it can get confusing because there is such a storm of information. Well, here are the key ones you need to know.

The first step you have to take is to make an emotional adjustment. Most people view their home as a part of their life. Memories have happened here and such. When you make the decision to sell, this view has to change if you really want to succeed.

Making this adjustment can be very difficult. You must get over it. Your home is now just another real estate property. Your attitude should be to make improvements and such that will be desired by the biggest group of buyers possible.

Now apply this product attitude to your home. This means pulling all personal items. You want people to picture their family living in the home, so pull all your personal photographs, drawings by kids and so on.

Now apply the 12 month rule as you walk around the home. What is this rule? If you have not used something in a room for 12 months, it needs to be pitched in the trash, stored away or given away to someone else.

When doing this walk through, make sure you also look for comfort items. Every house has them. You know, that chair or couch that is comfy, but is not exactly in good shape. While good for living, such items are bad for selling.

We all value our privacy. Once you list the home, you will have no privacy. Buyers will be into everything because they are going to put down a ton of money if they buy your home. Make sure to remove anything you want to keep private.

Now a last step, make sure you do quick improvements to any obvious problems. If you have a few bucks, paint all the trim on the home. This small change can make an absolute world of difference in the overall appearance.

The news regarding the real estate market tends to be doom and gloom. This just means the market is slow. Properties are actually selling. Take the time to prepare properly before listing your home and the results should be good.

Share This

You probably have - or used to have - a friend like Jonathan. Maybe he spent a couple of years in college, maybe he dropped out before he finished. He’s average looking, kind of quiet and doesn’t really stand out in a crowd. In fact, you’re fairly certain that you’re much more knowledgeable than him about your mutual interests and business, and yet, the other day, you and he were talking about your common interests in real estate investing, and it turns out that he’s been involved in it for 6 months and has done as much as you did in the past year!

So what gives? Maybe he’s an investing whiz, but maybe, he’s just doing something you’re not. And that something may very well have to do with the way he’s thinking about himself, his investments, and his future. It’s possible that your outlook on yourself may be holding you back, so consider implementing these positive thinking strategies in all areas of your life - especially your investing portfolio - and get ready to take off!

1. Positive Thinking Is Contagious. If you’re positive about your abilities, other people will be too. And the more faith you have in yourself, the more you’ll be inspired to fulfill your obligations and take your business and your life to the next level. And as your outlook improves, so will the mindsets of the people around you - so you’ll all be supporting each other in individual and group growth!

2. Always use positive words in your inner dialogue. If you constantly reaffirm to yourself that you Will succeed, you’re less likely to succumb to feelings of inadequacy that can lead to giving up and letting things slide.

3. Visualize several successive successful outcomes. If your goal is to make a million dollars, that’s great. And you need to visualize that outcome With It’s Implications constantly.

Not only will this motivate you and maintain your faith, but it will prevent you from stalling upon the attainment of your goal. Will a million be enough for you to do it once? Don’t just think about how to spend it, but imagine how you’ll make a POSITIVE impact on your life and the lives of your loved ones with future goals. The simplest positive steps can drastically alter your life upon implementation. So take control of the things closest to you - your mind and your heart - in order to seize the success you deserve.

Share This

A home is not really a home. It is a collection of systems. These systems are surprisingly varied when it comes to their lifespan. Specifically, the may last a long time or, in the case of a roof, they may not.

When considering the number of years different roofs might last, it is vital to keep in mind that while materials and other issues certainly play a role, the biggest issue is the impact of the power of nature.

When you think about it, a roof lasts an amazingly long time. It expands every day when the sun beats down on it and then contracts when night comes. It takes all the wind can give, gets pummeled by rain and even holds up snow many feet thick.

Given the beating a roof takes, it is not surprising that the type of roofing material used makes a huge difference. A slate rock roof is like putting tank armor on your home. It is going to last for at least 70 years, but it is going to cost you an arm and leg to buy and install.

On the other end of the range, we have the wood shingle roof. Depending on the type of shingle, you can expect it to last anywhere from 10 to 25 years. It is important to understand that these shingles basically come from left over wood pieces with all that implies.

Unlike slate roofs, there is another concern with wood shingle systems. Fire is the problem. Embers landing on wood shingle roofs almost always turn them into fire pits. You can buy far retardant treated wood shingles, but they are not much better.

If you like tiles, I have good news for you. One of the best roofing choices you have from both a financial, aesthetic and fire resistant point of view is the tile roof. They will last between 30 and 40 years as well so long as you consistently replace any broken shingles.

One really interesting new type of roofing you might want to check out is solar shingle roofing. These roofs come in rolls that are spread out in vertical columns down your roof. They are layered so that they look like flat shingles overlapping from top to bottom.

The solar shingle is pretty amazing. Initially, it turns your roof into an energy producer. In some states, you can feed that energy into the local utility system and actually make your meter run backwards, which eliminates your utility bill. Nice, eh?

Having a roof over your head is important, but only if it actually keeps the elements out. If yours is failing, take a look at the different roofing systems available. They can change the entire look of your home and even provide power.

Share This

Buying tax lien certificates can be a very profitable way to invest in real estate and with the right knowledge can provide very healthy returns on your money. But it’s not to be treated as a “get-rich-quick” scheme, as the in-experienced can find it soon becomes a “lose-your-shirt-quick” investment model. By way of a brief introduction, a tax lien is basically a means that guarantees that a business or individual that lends money or provides a service will be repaid for that investment, by securing a lien on the property of the person receiving the money or services.

A tax lien certificate is issued and is secured against the personal property of the person receiving the loan. Of all the different types of liens, the most popular or common is the mortgage lien. Every different type of lien is subject to its own set of rules and regulations.

Of the property liens we are considering here, there are two types - namely the general lien and the particular lien. The particular lien comes into play when an investor claims the right of access to a property in return for services or money which they invested in the particular property. Most liens can also be divided into two main groups - namely legal and federal liens (which can be enforced in a court of law) and equity liens which are valid only in courts dealing with equity.

When you buy a tax liened property you need to be aware that you are not actually buying the property itself. What you are doing in effect is lending the property owner the money they need to pay back their tax arrears. The property owner is also agreeing to repay that loan, with an agreed amount of interest, within the already determined repayment period that was established when the tax lien certificate was sold.

So here’s how we make our profits. If the property owner is able to repay the value of the tax lien certificate back to you within the allotted schedule, including all interest owed to you, he retains ownership of the property, and his credit rating remains intact.

If the property owner fails to repay the lien in time, ownership of the property is transferred to the holder of the tax lien certificate - in this case you, as the recent purchaser of the lien - and you are free to manage that property as you see fit as the new legal owner.

As a tax lien investment, the mechanism will make money whatever the outcome. If the original owner repays the lien on time, your profit is the amount of interest that was set on the tax lien certificate. Where the owner defaults, and you become the new owner of the property, the amount of profit will be determined what you choose to do with your new real estate acquisition.

There is a lot more information you need to be aware of, and a lot more knowledge required before you go off a buy your first property tax lien certificate, but in simple terms, it is a very realistic model to make money and invest in real estate.

Share This

Boomers-Bank The Investor’s Guide to Commercial Real Estate and Retirement Planning How to Invest In Commercial Real Estate Using Your IRA or 401(k)Maximize Your Profitand Save For Retirement

Boomers-Bank Introduction Why invest in real estate using your retirement plan? In this book, we’re going to discuss several concepts for buying real estate using IRAs and 401(k)s; the socalled nontraditional investments. Let’s start by asking what advantage is there to all of this? Why not just let your IRAs and 401(k)s sit around and do whatever it is they’ve always done? Well, you can secure tax-deferred or tax-free income for one thing. Anytime you have a profit or a gain, either you are not paying taxes on the gains until you start using the money, or if it is in a ROTH IRA, you aren’t paying taxes at all. By having real estate in a retirement plan, you are also avoiding what’s known as capital gains every time you sell property. Your money is allowed to accumulate and your interest will compound. Moreover, you can put all of the money back into your next deal. However, you’ve got to bear in mind the current state of the economy. Money doesn’t just sit around these days. In most parts of the world, the dollar is losing value at a pretty alarming rate. The United States is a country at the edge of a financial and economic precipice, owing trillions of dollars to other countries and borrowing money against, well, the value of its existing borrowed money (we’ll talk about this later). The infrastructure of the United States is at present rather unorganized. We aren’t producing much and so we’re importing more than we’re exporting. It’s basic mathematics. Notice how the prices of food and gas have been rising recently. That should give you a pretty clear idea of what’s going on and what is likely to continue to happen (we’ll also talk about this a little later on). The main focus of this book, however, is to demonstrate the value of nontraditional investment choices for 401Ks. Our goal is not only to introduce you to the reasons why these choices are advantageous, but it is also to explain the particulars of the related processes. For the sake of helping you confront your financial advisor or accountant, we’ll discuss the various strategies for undertaking this type of investment. We also plan to take you through the processes for finding appropriate real estate to undertake the actual investment. Since the property market can be a bit difficult to navigate, particularly if you’re a beginner, we’ll allow you to benefit from our wealth of experience and wisdom on the subject.

We need to establish here why most people don’t invest their 401K, despite the fact that it is a very sound financial move. Firstly, what most average Americans do not understand is that you and your IRA/401K are two separate entities. Repeat: you are not one and the same, nor are you in any way, shape or form joined at the hip. You will need to absorb this fact so you can begin to understand how to actually structure a deal with your IRA. If you don’t take the time to learn the difference between you and your retirement plan, you’re going to spend a lot of time wondering, “is it me, or is it this plan that owes this money and needs to pay this bill?”. Let’s avoid confusion. Depending on the particulars of the loan you broker, the answer to this question, who owes the money, will be quite different. The next concept you need to bear in mind is that you and your IRA/401K, being two separate entities, have a third-party administrator for all of your deals. All deals involving your IRA or 401K will thus have a third party acting as a recordkeeper, administrator and a custodian or trustee. They will be the entity that is actually holding the money as well as the person who must meet government guidelines and regulations to be able to hold your retirement money. That said, let’s move onto the specifics of IRAs and 401Ks. We’re going to mention these entities quite a bit throughout the book, so it pays to be clear now. An IRA is a place where you can keep your assets for retirement, basically all the money that will see you through when you are no longer working. What most people don’t understand, however, is that you can pour into your IRA whatever type of investments you want, while your assets can take any one of a number of forms. It is important to note though that your IRA is not an investment in itself. Next, let’s take a look at non-traditional investments. Of course, retirement planning is a big issue for a lot of people. Most people, when they think about it, consider themselves limited to stocks, bonds, mutual funds, and the like. There’s a general consensus that these are the types of things that we should be investing our money in so that it will grow in the years that we’re working, giving us something to fall back on when the time comes. What a lot of people don’t know, however, is that these investment types are not necessarily the best option. They certainly aren’t’ the only option.

Non-traditional investments such as real estate, notes, foreclosure properties, rehab properties, and other things along these lines, may actually be much more viable investments for the baby boomer generation. In this book, we’re going to explore the ways you can go about investing in real estate for maximum efficiency and return. By law, there are only two things you cannot put in a retirement plan: you can’t use retirement money to buy life insurance and you can’t put collectibles, such as art work or antiques, into your plan, not that most of us have to worry about these types of things. Long story short, the IRS gives you a pretty free rein. They let you be your own advisor and best financial friend when it comes to retirement. Many people believe that they already have a self-directed plan for their retirement, particularly if they are working with a brokerage firm. There is some truth to this. While you select your own mutual funds and stocks in many cases, most brokerage firms won’t allow you to invest in real estate or notes. Thus, they usually have a limiting plan for investment. Unless you take something of a do-it-yourself route, real estate investment options using your 401k or IRAs are actually quite limited. To purchase such nontraditional types of investments within your retirement plan, you need to be allowed to self-direct. The person or entity holding your money, the custodian, must allow you to self-direct. One of the perceived disadvantages to self-direction, of course, is that you are assuming responsibility for how well your retirement plan actually does. You can, for example, pick the wrong stocks and bonds and hence secure nothing but financial losses. Thus, you can end up jeopardizing your future if you don’t take the right approach. On the other hand - and let’s now consider an example - you can save yourself a lot of money by acting in a financially sensible and knowledgeable way. Consider the case of Ms. X. Working as an investment advisor, Ms. X has been investing stocks and bonds for many years in her retirement plan. Her plan, like most of her contemporaries, is driven by traditional types of investments. During her working life, Ms. X has invested a good deal of money in real estate. In fact, it’s become something of a hobby to her. However, one of the problems with such an approach is that she had to pay taxes on the profits she made from her real estate investments. Using her retirement plan to make the investment, however, Ms. X discovered a way of avoiding these issues, as a number of other savvy individuals have done before. Real estate investing is nothing new as a means of acquiring wealth; it is a practice that has been popular since the beginning of recorded history. Most of the wealthiest people in history have either secured or built the bulk of their wealth using real estate. Land had always been the defining possession of the nobility in the vast majority of early socio-economic systems. Even during times of war and economic depression, land and property have tended to hold up as strong sources of wealth. Hence, it is safe to say that things are unlikely to be much different these days. However, despite the popularity of real estate and the many centuries of experienced buying and selling, even some of the most savvy investors are still unaware that they can use their retirement plans to invest and thereby save themselves from capital-gains’ taxes and other such annoyances. Although many people claim to feel ‘trapped’ by traditional investment options, the vast majority of them are totally oblivious to the fact that real estate is available to serve as one rather convenient nontraditional investment commodity for use in individual retirement plans (IRAs) and 401(k)s.

The dual advantages of real estate and IRA/401(k) investments are overlooked. The only requirement of the IRS is that you have a custodian for your IRA or other retirement plan, which we will review. Beyond that, you are free to use your IRA or other qualified retirement plan to invest in real estate. You can also use your plan to keep your real estate investment, earning money and limiting what you have to pay in taxes. Since 1975, one has been able to use Keogh plans, now known as qualified plans, to purchase real estate as a tax-deferred investment option. With the increase to allowable contributions, simple employee retirement plans have become popular as well. In 1997, Roth IRAs further enhanced the popularity of tax-free investments. In 2006, the establishment of Roth 401(k)s made it possible for deferrals to be made regardless of salary amounts. At this point in time, the long and the short of it is that investment options are phenomenal and as we shall explore soon, the need for making sensible investments has never been greater. Whether you currently have retirement funds or you’re looking to set up funds for investment purposes, the time is right for you to make an investment in real estate using your IRA or qualified retirement plan. This book will show you how. This unque book has a retail value of $35,000. When included with our one on one coaching program–so enjoy and If it were me I would the entier book as this will be the only time this marketing promotion will happen… The book will continue with he next post you can go to http://blog.IRA-401K-RealEstate.com and request the entire ebook with all the charts pictures and examples.

Please enter a paragraph

Share This

In certain years a blanket assessment is enacted resulting in a re-assessment of property taxes. Often inaccurate “quick” values are concocted. Many times adjustment is enacted using a multiplier factor to adjust these values. Little time is allocated to this rendering of property value.

Appraisal companies bid for the blanket reappraisal contract for a community. The low bid wins the contract. Ask yourself if the bid allocation was $35 per home, how much time could be spent on that appraisal? Consider the appraiser has to make a profit for his effort further reducing the time allotment to appraise. Often college kids or those with little appraisal experience are employed.

Errors frequently occur when blanket appraisers do their job. Furthermore, if the original assessment was in error, employing multipliers to roll over previous years assessments is invalid.

If the building and tax department cooperated, there would be no need for a blanket reappraisal. Building permits and final market values could be incorporated into the individual values of homes with the tax role. There would be no need for blanket reassessment duplicating already established values.

A tax assessor has little time to appraise a home and usually do not engage in that activity. Tax assessors are often politically appointed and are not trained and experienced real estate appraisers. Their usual method of deriving value is based on a cost basis instead of a market value approach. The market value approach is based on what an informed buyer would pay for the home, not what it cost to build it.

Selling prices of homes are constantly changing. When appealing your property taxes, only market value holds weight. Your home must equal the current selling price of other comparable home in your area.

A huge amount of money is spent on blanket municipal appraisals. Sure they may catch the occasional patio or shed built without a permit, but that does not warrant the extra appraisal cost.

This spells out gigantic loopholes for homeowners. Doing a simple analysis of your home’s market value and seeing how it lines up with the appraised value can save thousands of dollars wasted on taxes.

Share This