Without getting into a bunch of calculations, I determined that I’d be risking almost 350K to make less than 50K. Not a good trade-off. I passed.

Speaking with several local real estate agents and rehabbers, I learned this is a common story right now. What happened? I thought banks were desperate to get rid of properties?

This is purely my opinion, but here’s what I think…

The government has put most of the bad banks out of business and has bolstered the balance sheets of the remaining banks through TARP funds, etc.. Additionally, by cutting lending, banks have sufficiently protected their remaining asset bases and understand the market is in recovery mode. What does this mean for you?

First, banks don’t seem to be in any rush to get rid of inventory. They are either quietly releasing properties bit-by-bit, or selling large blocks of them to REIT’s and hedge funds (meaning you don’t have access to them – you don’t have $200MM to spend).

Second, because we are more efficient and computerized than ever, and real estate data is easily obtained on the internet, investors are evaluating deals quickly. This, in turn, allows them to make tons of offers each week (I know some making 50+ offers/week).

Finally, banks have access to this same data and can easily evaluate inventory in local markets. They also see the multiple offers coming in on their properties. Thus, in active markets banks are holding out and demanding top dollar.

Are there good deals out there? Certainly. But banks right now are not “giving away” properties like we thought they would, and it seems all this activity is cutting margins and making it more difficult to find home-run deals.

Do you agree with me? I’d love to get your stories or comments to post. Are you killing it right now or having a hard time finding deals?
If residential investing has become overcrowded in your market, commercial investing may be a better play for you. And, as promised last week, here are 4 more FREE training videos from Peter Conti, a commercial mentor:

Click on each title to view the video

Finding Great Deals on Commercial Property

Contacting Brokers – How to Sound Like a Pro Even if You’re Just Getting Started

Commercial Offers That Get Accepted, But Allow You OUT if You Don’t Like the Deal

We also have a free webinar with Peter coming up on February 17th.

We’ll send some emails out ahead of time so you’ll have plenty of notice. Peter will cover:

- How to get your first apartment building in 90 days or less.
– How to use other people’s cash or credit to buy commercial properties.

Peter is the author of “Commercial Real Estate For Dummies.” He is a 20 year real estate veteran. He currently mentors a limited number of students throughout the Country.

Foreclosure activities might have risen in some states last year, but there are still factors that make some areas in the country a good place to buy a home to live, to invest for retirement and for real estate investing purposes. What’s more, these places offer good opportunities to raise a family. The job opportunities, good health care, top-notch schools, low crime, fiscal strength, great landscape, safe neighborhood, and so on are highly recommended.

Eden Prairie, MN is the first in the list of top places to live in the US with the population of 64,000, and 5.1% unemployment rate.  There are plenty of jobs and the long winter brings a lot of activities like ice skating, 125 miles of running, hiking, and biking trails.  Columbia/Ellicott City, MD ranked second in the list with the population of only 155,000 and 5.2% unemployment rate.The city, on the other hand, boasts its lovely 18th century downtown, grand homes, and lots or wonderful restaurants for tourists and visitors.  Ranked third is Newton, MA with the population of 82,000 and unemployment rate of 6.0%. The Classic New England charm is definitely one good attraction.

Fourth on the list is Bellevue, WA with the population of 124,000 and unemployment rate of 5.8%. Even if the real estate in this city is expensive, the city is able to provide more jobs for all the residents. The recent influx of jobs has brought a quarter of Asians and other foreign born individuals.  Fifth in the list is McKinney, TX with the population of 125,000 and unemployment rate of 7.8%.  Homes for sale in Mckinney Texas are affordable. The fairly low real estate of the area will allow even a first time home buyer to buy a five-bedroom home with pool for only $440,000 and the some other types at a fairly lower price.

These are just the top 5 best places to live in the country and you will notice that they don’t have to be a metropolis to be classified as the best. Safe streets, low crime rate, job opportunities, and so on are just some of the main reasons why these homes are actually in the list

I will give you our answer from a hard money lender’s perspective (based on risk and underwriting).  If you have questions about your State’s lending laws, please consult an Attorney.

Short answer:  We do not lend on primary residences and we don’t personally know any hard money lenders that do.

Longer Answer: In some states, mainly in the West, a hard money lender doing only commercial/investor loans will still have to have the same residential mortgage lending license as a normal “consumer-based” mortgage lender.  Doesn’t make much sense but that’s the case.  And since they have to have the license anyway, they might as well learn how to be RESPA and TILA compliant and do some loans for primary residence homeowners.  It’s another line of business (maybe not for every lender, but we’ll get to that soon) for them.  If you are in the West, chances are you can find a hard money lender doing primary residence, consumer-based loans.

In many Eastern states (such as DC/MD/VA, the states where we do most of our business) there is a distinction between primary residence, consumer-based loans and commercial/investment property loans used for business purposes.  Hard money lenders doing commercial/investment/business loans are not required to have the primary residence, consumer mortgage lending license.  It doesn’t apply to what we do.***

So there are some legal reasons, in many states, not to do primary residence loans.

But, more importantly, there are some underwriting and business reasons not to do them either.

Here is the most important reason:

It simply isn’t our target market.  We are in this business to lend to real estate professionals, people who make most or all of their income with their real estate investments.  People who are serious about their business and are experienced in real estate investing.  People who use our money to make more money, and are happy they did.  People who come back for more loans each month.  True professionals.

We are not in this business to lend money to homeowners who aren’t able to get a bank loan and might have a troubled financial situation.  It’s not what we do.  If other lenders do, that’s their business.  It’s just not what HMB is about.

I hope that explanation clears up this issue for people.

If anyone is looking for a hard money loan for investment purposes, please apply here:

http://hardmoneybankers.com/loan-application

Thanks!  I hope 2011 is starting off strong for you.  Stay tuned for more.

-Chris

***There is an exception in some states near us where a person’s business could take a loan and collateralize a primary residence, but it’s rare and doesn’t come up often.

In fact, that is exactly how Hard Money Bankers got started back in 2007.  Shortly after forming our company and closing a couple loans, we were on a plane to Vegas to meet up with the best private lenders in the country and to learn how they ran their businesses.

We are happy to say that was a very good decision.

We owe a lot to Pitbull Mortgage School and Leonard Rosen for teaching us at the beginning and for continuing to lead the industry today.

I gave Leonard a call not long ago to see if he would be interested in sharing some of his knowledge with our blog’s readers.  He happily agreed.

Please watch the video below to find out:

-How HMB first met the Pitbull

-Why hard money lending is such a great business model

-How HMB has fared in its first 3-4 years of business

-How did hard money lenders make out during the market crash…and why

-Leonard’s insights on the industry today and in the future

-The 3 ways you can get involved in hard money lending now

Watch the video here

And if you are considering diving in (like we did) check out Leonard’s conference below.  It’s happening on March 3^rd so time is running out!  Plus, aren’t you looking for a reason to go to Vegas?

Sign up here:

http://www.pitbullconference.com/

PS–  To get a FREE seat upgrade tell them Hard Money Bankers referred you!

Good luck with your investments!

-          First, he gets some education, overcomes his fear, and nervously buys his first residential investment property;

-          After gaining some confidence and doing a few deals, he moves up in volume, gets a web presence, and starts talking to his wife about leaving his day job;

-          Inevitably, he hits a few road bumps – trouble with financing or a deal that goes sour. But the true entrepreneur makes it through, continues to learn and hone his craft, and ultimately creates a profitable life as a residential investor.

Many investors accept this as the end of the road.  And, truthfully, it’s a good one.  Many a fortune’s been made in residential real estate.  But there is another extremely profitable road to travel, and only a few select entrepreneurs seem to follow it. Of course, I’m speaking of commercial investing – apartment buildings, self-storage, strip centers, hotels, etc.  Most of my truly wealthy business acquaintances play in the commercial arena.  I call them “Big Dogs,” and for good reason.  Through one acquisition, they can generate cash flow similar to an average person’s annual salary, or more.

I believe most investors never venture into commercial investing simply out of fear.  Fear of the size of the deal – it’s too big and their afraid of dealing with banks or getting financing.  Or fear of all the different lingo – cap rates, debt service coverage ratios.  Or fear of creating business plans and pro-forma financial statements for banks and investors.  Or fear of networking to find the money to do the deals or the deals themselves.  Or, worst of all, fear of success.  Many of us just don’t want to believe we can generate that kind of opportunity for ourselves, so we don’t let our brains even consider it.

The message I want to get across today is, DON’T BE AFRAID.  When you first started residential investing, you were probably afraid.  I know I was nervous as hell on my first deal.  But you got educated, learned the lingo and the process, and started making money.  Commercial investing is the same.  And what makes commercial investing so appealing is that very few people step up to the plate to swing at the big deals, so there is much less competition.

Of course, this does not mean commercial investing is easy, or doesn’t have risk.  It may have a bigger reward but, to get that big reward, you will have to be smarter, work harder, and be willing to take bigger risks.

I have a lot of information upcoming in the next few weeks through hmbcribs.com about commercial investing.  I will discuss with industry experts:

-          How to get started in commercial real estate;

-          What are the biggest pitfalls of commercial real estate;

-          What’s the easiest way to buy your first commercial property;

-          How to get investors/financing for your commercial deals

I will even give you some tools so you can get started right away.

In my next blog, I will tell you the 5 fastest ways to lose all your money in a commercial deal.

1. It generates income – Competition is high when it comes to buying single-family homes, but less intense in multi-family homes.  In this case high competiton means prices of home might get increase and if this happens you cannot really generate income from them even if you have 5 single-family units unoccupied because of its expensive price.  A multi-family home has several units that can generate income and bring you cash every month. Repair cost per unit is lesser compared to a one single unit that needs repairs and maintenance. No worries if you don’t have a job.

2. It can stand on its own – A portion of the income generated by the multi-family property is used to pay for its mortgage, taxes, utilities, payroll, advertising, landscaping, and so on.

3. Cash flow even when its not 100% occupied – One unoccupied unit cannot affect your cash flow every month.  The remaining unit can still pay for your mortgage or property expenses while still having income.

4. Undemanding maintenance – Compared to four single family units spread all over town, a four-unit multi-family home is easier to maintain.  Furthermore, contractors will give you a better pricing if you are building multiple units.

5. You’ll have extra income called “ancillary” income – This form of income stream is generated from leasing fees, vending machine fees, laundry services fees, and so on. These fees are paid to you by companies that wish to provide services to your residents.

6. Easy loan approval – Investing in multi-family properties promises an easier loan approval compared to non-income producing~single family South Riding Homes because lenders qualify and approve these types of loans based on the properties ability to repay the debt itself.

These are just some of the benefits investors get from investing in Stafford VA Multi-Family Homes. Not counting leverage, landlords can benefit from tax refunds procured from the property repairs. Remember that multiple tenants mean multiple revenues, and multiple revenues decrease your risk. Real estate investing is not only about single-family properties, but also on multi-family homes. While both are good forms of investment, the latter can generate income and that proper maintenance can offer a lucrative business.

Take note of cash rotation while investing on properties.  Remember that an investment is not a good investment if it has no cash rotation.  The rent, for instance, can be used to pay for old loans and other outstanding debts.  Moreover, buying a property in a particular area where the real estate sector has a great demand now and then selling the property at a higher rate sometime in the future is still an attractive form of investment.

There are other ways on how to make sure that you get the maximum returns of investment on your property like converting Homes for Sale in Virginia into commercial places.  These homes can also be converted into apartments, individual dwelling units or multi-family kind of apartments to fetch higher rents.  However, these conversions also depend on the locality of the property.

A good location is important in property investment. Then you can start renting it out, but be sure that the rental fee received is more than enough to cover the mortgage payment of the property.  When it comes to the property’s profitability, capital, location, and duration are just three of the most important things to consider in property investment.

You just have to be creative in buying or selling Homes in Virginia to increase the market value of your home, to get the highest returns, and to increase your profits. In real estate investment, remember that cash is NOT the only thing that you need.  You also need to have the desire, knowledge, and motivation while doing the business.

The rising real estate inventory has made the American dream affordable, however, one major flaw is the strict requirements imposed by ending companies as well as large secondary market providers imposed on their clients. Stricter guidelines, timelines, higher credit scores, higher down payments, no down payment assistance programs as well as having more reserves in the bank are just some of the new but stricter requirements.

Because of the tight measures FHA and other secondary providers oblige potential home buyers, making your American dream come true is still difficult to fulfill even if the prices of homes in the market are really affordable.

The real estate was hardest hit when the recession transpired. Try to search for Salt Lake homes that were valued in millions of dollars before, but now are barely six figures. What happens now to the real estate market since the recession has been lifted up?

Since there is a rising surplus of homes in the real estate inventory, contracting out a property will more than likely take longer and the price is at a much lower selling price. The real estate market now is still unstable and analysts reports that this surplus of homes will continue until the economy is well by 2015.

A home buyer must be wise enough to learn something about basic knowledge like average home sales, average time a property waits in the market, foreclosure rate, and so on. Even if the real estate investing is not that good, some real estate investors are triumphant and successful. One major difference between them and those that failed to remain in the business is simply their ability to have a plan B in case plan A doesn’t work. Having learned the craft from reading and knowing the theories behind is not enough. You really have to be wise and experience the risk in that while the real estate market is volatile, you’ll surely be able to make a quite a profit if ever you decide to invest in Bountiful UT homes.

Prior to passage of the Housing Assistance Tax Act of 2008 (H.R. 3221) you only needed to live in the property as your personal residence for any two of five years that you owned the property and you could exempt up the full amount of exclusion.  The two years could be any of the five years in any combination:  live in the property for two years and rent for three years, rent the property for three years and then move in for two, or even live there every other year of the five if you really liked moving.

Under H.R. 3221 the period of time the property is not used as your personal residence is termed “non-qualifying use.”  The ratio of non-qualifying use compared to the 5-year time frame reduces the amount of gain that can be excluded.  For example, John who is married and files jointly lives in a property for 2 years of the 4 years he owns the property.  Fifty percent of the time is non-qualifying use so his gain of $100,000 would only be excludable up to $50,000 and he would owe capital gains on the balance.  If he had owned the property for five years; rather than four, his exclusion percentage would have increased to 60% leaving capital gains due on $60,000.

People are not always familiar with certain aspects of foreclosure sales like the “short sale investing” which is very important to an investor in order to make money. Just any Real Estate Investing Course will not do instead be smart select a course that will provide you with all the information that you need. There are several courses that provide the investor with information that is imperative to learning all about Real Estate investing.

What are your investing interests?

When you are about to select a Real Estate Investing course you should first consider what type of real estate that interests you for investments. There are courses that cover investors who are interested in commercial property and development. If you are the type of person who wants to buy up properties and turn it into commercial development then your courses in real estate need to center around that.

Many people who want to invest in real estate because they want to use the property as rental properties. When you become a landlord then you have a residual income that keeps coming in on a monthly basis. You need to know more than just how to buy the property now you need to know more about the rights of the tenant just as an example. This requires you to take more than just Real Estate Investing Courses.

Other Information needed

No matter what type of investor you become you will need to know about taxes. There are taxes charged for your income, the property that you buy and there could be state and local taxes. You need to take courses that include information on taxes. There are different strategies that you can use that will save you money when it comes to taxes and this is a vital part of any Real Estate Investing Course.