Michigan Real Estate Foreclosures

While financing properties, private lenders have their own mortgage lending programs.  These programs permit buying ready to occupy properties, refinance existing homes, or take care of the cost of rehabbing properties. Where the cost of rehabbing is financed from an outside source, the disbursements often happen in installments – as the work proceeds.

Often the private lending programs consider the market value of the property (and the cost of rehabbing, if required) while financing.

One of the primary aspects of private lending basics is to ensure that the borrower gets a private mortgage insurance cover. The borrower also has to pay the insurance premium. Usually borrower has to pay monthly premiums. On an average, these premiums amount to ½ of 1% of the mortgage loan. Once the borrower’s equity reaches about 22% of the property value, lenders ignore the requirement of a private mortgage insurance cover. Under the Home Buyers Protect Act of 1998, it is your job to cancel the insurance coverage if the borrower’s equity has crossed the threshold.

Another aspect of private lending basics is to comprehend the importance of negotiation through a two way agreement process.

If you are a lender, private lending basics involve receiving a detailed real estate project plan. A clear statement that elucidates the way the funds will be put to use – for buying, refinancing or for rehabbing properties, it’s required. As a lender, private lending basics require that you minimize the exposure of risk for your loan. Get a clear explanation of why the loan is not at risk from the potential borrower. Most borrowers know that private lending is probably the cheapest mortgage offer available to them. A common private lending basic step is to ensure that, as a lender, your exposure does not exceed 80% of the property value.

As a lender, even if you are looking for more proposals, another conviction of private lending basics is not to solicit business over a phone.  If you are a lender, before signing up the mortgage, another gospel of private lending basics is to have a clear picture about interest rate – fixed mortgage rate or an adjustable mortgage rate. If it is an adjustable mortgage rate (ARM), both – you and your borrower must have a clear idea about the financial index the ARM is tied up.

Yet another view of the private lending basics is the exit strategy. Do not end up holding a huge property inventory. Principal idea behind private lending is to get the returns for your loan, not the property.

You could be rehabbing houses for resale or for self-use. If you are a Michigan real estate investor looking to accrue wealth, finding the right rehab project is one of the key things to know about rehabbing houses. By rehabbing undervalued houses, particularly in better locations, you can increase your wealth much faster.  

Once you have identified the right project, one of the first things to know about rehabbing houses is getting a good contractor. While it is tricky to find a good contractor, once you locate him, you have to be very crafty to get a great job done at a great price. You can locate a contractor through referrals from friends or from building material suppliers. Once you short-list a few, ask for bids. Do not be surprised if the bids received from contractors are much higher than what you have estimated.

Once you identify a good contractor, enter into an agreement that clearly specifies the quality of workmanship and the quality of materials he has to use while rehabbing. Insist on checking the contractor’s insurance coverage. If you are hiring a general contractor, or if you are planning to be your own general contractor, make sure to complete the task within a time schedule and a planned price without any cost overruns or contractor disputes. If you are an old hand in foreclosure business, by being a general contractor for your project, you can save capital as you manage your rehab and subcontract every task. If you are a novice, do not handle structural change jobs.

Yet another important thing to know about rehabbing houses is to plan the project. Fundamental things to know about rehabbing houses are the way you fund the project. If you are planning to use funds from external sources, clinch funds early. If you are fixing a time gap for payback of your rehabbing investment, factor in probable delays.

Payback depends on two aspects – one, the prevailing property rates in your area and two – the type of home improvements you are handling. Old hands in Michigan real estate will tell you that rehabbing the kitchen and bathroom will add more value to your property than say – rehabbing the interiors of a basement. Although superficial, learn to handle harmful molds (fungus) by preventing them from breeding. Molds breed in moisture.

To prevent breeding, it’s essential to remove moisture. It is proved that landscaping/ curb appeal can add to desirability of the property. Desirability aids in amassing wealth. Of the things to know about rehabbing houses, everything that aids desirability will get the priority while rehabbing.

In wholesaling foreclosures, as a middleman, you bring a distressed homeowner, an investor and complete a foreclosure process. As a professional real estate middleman, you can earn income quickly without investing. Wholesaling foreclosures is an income generating option if you are a novice in the real estate foreclosure industry. Achieving success in foreclosure industry involves investment. However, wholesaling foreclosures is also your top choice if you wish to enter into the lucrative field of creating wealth through real estate, but cannot raise the initial investment. Wholesaling foreclosures is also for those who can handle many opportunities in one go.

Usually, while your are wholesaling foreclosures, the cycle is short. To make the cycle shorter, besides knowing the basics of foreclosures, you must be adept at locating real estate investors and locating properties. While wholesaling foreclosures, you need to develop a list of investors who are willing to rehab a property and sell it or rent it out to accumulate appreciation. You may have to convince the uninterested investors, the benefits of owing a property.

To do that, one of the steps involved in wholesaling foreclosures is to identify the objectives of the investor. Based on the objectives of the investor, you can structure out a property that dovetails his requirement. Since the completion of transaction involving wholesaling foreclosures does not involve “all cash deals”, you may also look for investors who can line up funds quickly from loan programs as well. Although it is extremely difficult, locating properties that have lots of equity in them will make the task easier while you are wholesaling foreclosures.

If you are also investing for long term, then, you may want to carry out wholesaling foreclosures under a separate entity. Create an LLC with the basic intention of wholesaling foreclosures.

One of the uncertainties encountered by those wholesaling foreclosures is, the worry that investors may discharge the middleman and complete the transaction to avoid the middleman’s spread. One option to overcome this uncertainty is to ensure that the investor does not meet the distressed homeowner. Alternatively, you can close with the investor first, then close the foreclosure process while wholesaling foreclosures. Once you become a regular supplier for moneymaking transactions and if you are not too greedy, most investors’ wont mind shelling out the spread.

As you embark on initiating an income stream from rentals, how do you get started? Removing this mystification is easy with this proven course of action.

Buying strategy and financing
While getting started in buying rentals, buy a fixer upper, rehab it and rent it out. Alternatively, you can purchase a ready to rent property and kick up your income stream.

You have to know the advantages of investing in single and multi unit housing and other forms of Michigan real estate – like commercial complexes, industrial buildings and the like. Most investors prefer starting small – with a residential unit and graduate to larger units later.
Before getting started in buying Michigan rentals, have a clear idea on how you are going to finance the initial outlay. Initial disbursals like down payment for the loan
and rehabbing expenses can be substantial.

Property and its location
If your strategy is to get good rentals, location is a key determinant while you are getting started in buying Michigan rentals. The condition of the property – if it requires major rehabbing – has to seriously be considered, you want a property that will generate you money, not cost you.

Team
Team up with a Michigan realtor who is active in the area where your rental property exists. He can bring in good tenants.

LLC
Forming an LLC can protect you from suits filed by tenants. To getting started in buying Michigan rentals, a major task is creating an LLC.

Credit check on tenant
While getting started in buying rentals, run a credit check on your potential tenant. You will have a clear awareness about the continuity of your income.

Rental contract
To getting started in buying rentals, you also need a rental contract that specifies – among others – the location of the property, rental to be paid, who takes care of the utilities, what the duties of the tenant and landlord are, subletting and termination of the contract.

Insurance
While getting started in buying rentals, you need two types of insurances. As a landlord, you can protect yourself when your property gets damaged or when someone is injured on your property.

Once you get a tenant, ensure that they also gets a renters’ insurance that will protect them from personal possession losses due to burglary. The renters insurance protects them from legal and medical bills, if any of their friends get injured while visiting the tenant.
Different coverages exist for both. Check the coverage and rates, then decide on the right policy.

Tax credits
IRS treats the rentals received as income. Operating expenses, insurance and maintenance costs can be deducted while computing your taxes. Then, if your housing is a part of low-income housing project, you will get additional tax credits for the rental income received. You should be aware of the tax credits you receive prior to getting started in rentals business too.

Here we are again out hunting Michigan Real Estate foreclosures around Michigan and landed right here in Port Huron Michigan. Port Huron foreclosed are raising. We have found a few sweat deals. Offers are on the table just waiting for the answers.

It has been said one of our greatest inventors of all times by the name of Thomas Edison, grew up in Port Huron. They refer to his boy hood years was here in Port Huron as his home. In the Port Huron Museum, resides the largest light bulb built by Tom Edison. My brother-in-law said once a year in memory of Thomas Edison, they would light the bulb for just a short moment.

More about Port Huron and its history in the future. Back to business. Hunting those Pesky Port Huron Foreclosures continues with a few nasty looking properties but the opportunities are out there. If you are one that likes adventures, hunting pesky foreclosures in the sub’s is great place especially, Port Huron Michigan.

hey I forgot to tell you, we closing on one of those Pesky foreclosures here in the next couple of weeks. Boy, how can I forget about that one. Lets take a quick peek.

This is Bob, signing off for now!

Is there a trouble free way to getting started in buying Michigan foreclosures? Even the best of the foreclosure investors made mistakes in their initial days. So, rather than being intimidated, set forth.

Credit history
Although buying Michigan foreclosures does not always require a large down payment, one of the first things you need to getting started in buying foreclosures is a strong credit history. If you do not possess one, your front-runner to raising credit is to look for credit programs with moderate qualifying guidelines.

Exploring the Michigan foreclosures business
While it does not cost much, one of the tasks involved in getting started in buying foreclosures is to learn more about the business. You need to get a grasp on Michigan foreclosure investment business – how to identify high potential properties, assess values, or perceive the title transferring process. Learn about the legal aspects involved in foreclosure business – each state has its own regulations and procedures.

Besides foreclosure basics, you need to know about various aspects of Michigan real estate investing. You also must understand the benefits involved in buying single units and multi-unit properties. Prepare to assume risks, as you may not always inspect the property you wish to buy. Get to know about various ways to assess rehab requirements. Then, decide on the best financial strategy that will permit you to get maximum wealth or cash flows while taking minimum risk as you acquire a property.

Deciding the game plan
A significant step in getting started in buying Michigan foreclosures is your timing to turn over the property. Some buy a fixer upper foreclosure property, rehab it and flip it for neat gains. Some buy foreclosure property and wait for its appreciation. For others, getting started in buying foreclosure means a way to earn regular cash flows through rentals.

Finding the deal
Another step to getting started in buying foreclosures is to dig out the best deal from a score of foreclosure opportunities – pre foreclosures, auctions and REO properties.

Negotiating the deal
If you are acquiring Michigan pre foreclosure or REO property, learn the nuances of negotiation. If you are participating in an auction, learn to fix your bidding limits.

Get the first deal done
Sign up the contract and complete the financial aspects. Once you get the first deal done, now that you are convinced that you can create wealth in Michigan foreclosures, you swiftly gain a lot of courage to carry on.

Folks use different methods to unearth a good contractor. If you are in the Michigan Real Estate foreclosure business for the long haul, expending time on how to find and manage good contractors is vital. While it’s a daunting and time-consuming task, old hands in the Michigan foreclosure business will enjoy super savings by spending time on identifying and retaining a good contractor.

For finding contractors, you can check yellow pages or local newspapers (for contractor ad listings in classifieds). You can also stop-by building supply stores and check contractors’ business cards or seek referrals from your friends. Your local real estate investors association is a good source for finding good contractors. If you have a good rapport with the city planning or zoning clerk, they will help you to locate a good contractor too.

If you intend to use a contractor (listed from yellow pages), ask for referrals. If there is a licensing board for contractors, check for any past complaints listed against the contractor with whom you intend to do business.

Before you embark on the process of how to find and manage good contractors, there are some sensible tasks to perform.

These include:

• 1) Define the scope of work you require from the contractor.
• 2) Specify clearly the quality of workmanship and materials to be used.
• 3) Confirm whether the contractor has insurance – for contractors’ workmen. Before the work begins, they must be insured for liability and workman’s compensation. The contractor must have a comprehensive general liability policy.
• 4) Specify a payment schedule – it would be unwise to shell out a huge advance before the start of the project.
• 5) Get a proposal from the potential contractor. In that proposal, ascertain that he includes:
  a) A probable start and finish date of the project
  b) A penalty and a damage clause in the contractor agreement
  c) A termination clause
  d) A clause that protects you from any potential and damaging mechanics liens
  e) A payment schedule
• 6) Always, sign an agreement with the contractor.
  Nail down – in dollars – costs connected to each task and item involved in completion of the project. If you are comparing proposals from various contractors, do not go for the lowest quote.

Often, many Michigan real estate investors find the process of completing rehabs frustrating because of a crafty contractor. If you are heedful with all these aspects, without any contractor disputes, you too can will be able to find and manage good contractors.

The folklore of real estate says that the fundamental facet to making more deals is finding motivated sellers. Unless you are a seasoned hand in Michigan real estate investment business, do not expect sellers to beat a path to your office. While finding motivated sellers, without any out-of-the-box thinking, you can look at various sources on a shoestring budget.

FSBO signs
One sure way of finding motivated sellers is through the “For sale by owner” (FSBO) signs. How do you find FSBO sellers? Classified ads in local newspapers or handmade FSBO signs in front of the property is your sure bet.

Newspaper ads
Run a creatively written ad in your local newspaper and let them call you up. Finding motivated sellers from these callers will be relatively the superlative way, as few tire kickers respond to these ads.

Out of town owners
By calling / sending mails to out of town owners of properties, finding motivated sellers is easy. The reason - many of them prefer not to face the hassles of maintaining a property from a far-away place.

Flyers
Inserting flyers in newspapers, in a targeted area, is an economical way of finding motivated sellers. Besides newspapers, look for other ways of distributing flyers.

Pre – Foreclosures
Finding motivated sellers before the auction process sets in, is yet another way. Check the courthouse for a big list of potential foreclosures.

Michigan Foreclosures
By participating at the auction, at the sheriff sales, or on the courthouse steps is another way of finding motivated sellers. Network with process servers and you can always end up receiving a call from motivated sellers without any up-front expense.

You can also look for bargains by involving yourself in HUD and VA auctions. You can ask your realtor for a lead on HUD / VA auctions or you can check their websites. Another option to participate in auctions is tax sales.

Referrals
Referrals from realtors, plumbers, carpet cleaning companies, attorneys, mailmen, accountants can help finding motivated sellers. Building networks with these people are one of the tasks essential for your success as a real estate investor.

Besides these, it is effortless finding motivated sellers from people who have a job transfer, a divorce, or a probate on their hands. It is also effortless finding motivated sellers from those owners of properties with outstanding code (building or health) violations, condemned or fire-damaged properties. It is also not taxing if you are finding motivated sellers in the landlord community. Some of them do seek to trade off certain of their existing properties.

Buying foreclosures is not for the faint heart. Before buying foreclosures, it’s sensible to understand the foreclosure process. Once you dig deep, you will find that there are enormous differences in foreclosure procedures for each state. Evaluating the value of the property before buying foreclosures is imperative. Only a few of distressed properties are potential gold mines. You can buy Michigan foreclosures in any of the three stages – pre-foreclosure, at auctions, after auctions (real estate owned properties – REO properties).

To pull off a good hit, inspecting the property before buying foreclosures is a task that is de rigueur. However, this may not always be possible if you are buying foreclosures through auctions. Inspection of property will help you estimate the repairs required, as foreclosures almost always require rehabbing.

You must also be aware of the risks involved in buying foreclosures. Buying foreclosures offered by banks is the least risky way. Buying foreclosures offered by institutions like Fannie Mae, Freddie Mac, VA (Veterans Affairs), HUD (Housing and Urban Development) or FHA (Federal Housing Administration) is yet another option. If you are planning to buy foreclosures offered by HUD or FHA, you may approach a licensed and authorized HUD broker or agent. On your behalf, the broker will submit your bid. HUD will pay for the brokerage. Fannie Mae and HUD have a search engine to help you search for the right property.

Acquiring Michigan foreclosures before the auction can be challenging, as you are completely at the mercy of the seller. The seller can rescind the contract if you slip up legally while completing the transaction. E-bay also offers a list of foreclosure properties for sale.

Many consider that buying foreclosures at auctions is the riskiest. The reason – property is sold on an ‘as is’ basis. However, the rewards are more. Before buying foreclosures at an auction, ensure that you do a title search at the county office. Assess property tax liens, federal tax liens and other liens and judgments on the property.

Before submitting a bid, explore and wrap up financing sources. Auctions will involve depositing a part or complete bid amount. Cash or a line of credit is essential immediately, or otherwise the property may go for auction again. Decide early the maximum bid you can place and stick to it. Often, getting a property at bargain prices at auctions is remote in a sellers market. Before buying Michigan foreclosures, ensure that the property is vacant. Eviction can be a complicated affair.

Wow, what a weekend we have had with Real Estate in Michigan.

We meet with couple dozen Michigan Real Estate Investors and exchanged cards with them working on Short Sales / Preforeclosures in Southeast Michigan.

Later that day, We looked at Michigan REO’s in Port Huron, Marysville & St. Clair that need no work to needs ton of work including mold infested pesky foreclosures.

We are working on two Short Sales / Preforeclosures, looked at 4 FSBO’s who need no work and submitted offers. Plus, We even looked at multi-families in good sub’s in St. Clair County.

As I’m writing this quick note, Bonnie is having me sign the 4 offers, the nerve of her. Go get them Bonnie. Check out her articles … they are great. Link is Women in Real Estate on nav.

Received several calls on my Sunday ad, the news paper made a mistake and left my first line off the ad. We will be talking with them on Monday. In the meantime, we got a call from a bird dogger on a property on the West side of Detroit … 62k to buy, 15k rehab, after repair value is 120k, and I know that area on the west side … it’s a good one. We had several properties in that area and have been looking again. Made a call to my West Side Partner and no answer yet … tomorrow we are hunting pesky foreclosures in the city mid-day …

Today I even put in a new side door on our house … go figure, spent time with my parents at lunch in Marysville.

Wow, now the fun begins with offers on a number of Michigan Real Estate Foreclosures in Port Huron & Fort Gratiot.

On Monday, we are meeting with a couple who want to buy St. Clair County Foreclosures. Look at that … the word is getting out about Port Huron Foreclosures.

On Tuesday, we are working on meeting new private investors.

On Wednesday, all of our contractors numbers will be back into our office and the offers are flying into the Real Estate Offices.

On Thursday, we are meeting with our Mentors & several partners again to finalize our new real estate project. More on that one later. You’ll get a chance to read about it in the paper.

And on Friday, more Pesky Foreclosures are hitting the press … off to the show to find some more and let the offers fly.

This Bob, signing off for now!

Consider this. In the past 70 years, the average inflation rate per year is about 4%. As you age, the value of your retirement plans decline by 4%. Is there a way to win in this risk return tradeoff? Fortunately, retirement plans are flexible and you can beat the decline in dollar value.

If you are a self-employed individual or an employee, you get tax breaks for contributing to IRA. While you get tax breaks for contributing to certain types of IRAs, you can also benefit from returns generated by investing these contributions into real estate.

Is it legal to buy real estate with your IRA? Whatever the type of retirement plan, you can safely invest your IRA money in single units, multi units, commercial property or raw land. Keogh plans or Individual Retirement Accounts are great sources for funding your Michigan real estate buying for investment. However, the IRS does not permit you to use the property for personal use or for vacation.

You can create many individual retirement accounts. You can also invest funds from these accounts in various investment vehicles. By investing in Michigan real estate, you can diversify the risks of your retirement portfolio, as you are spreading the amount over a series of investment options. With shrewd investing, you are spared of the risk involved in cyclic investing – like stocks.

Once you are convinced of the advantages, how do you begin buying real estate with your IRA? IRA does not permit you to be custodian of your own account. So, you have to find a custodian who permits real estate as an IRA investment. Since you cannot hold the title of the property you are purchasing, your custodian will hold the title on your behalf until you reach 59 ½ years of age or until you sell it. Since you can ask the custodian to sell the property, your custodian will transfer the title to the buyer and credit the sale proceeds to your IRA account.

If your property requires some expenses or involve paying taxes, that amount must originate from your IRA account and not from your personal account. Since the custodian pays every expense from your IRA account, ensure that there are sufficient funds to offset these expenses.
One aspect you have to consider when buying Michigan real estate with your IRA is the custodian fee. You will also have to check out the services provided by your custodian. Some of them provide services like collecting rents, handle rehabbing or paying property taxes, some don’t. You may have to engage other service providers for tasks not performed by your selected custodian.

Despite such cumbersome procedures, buying Michigan real estate with your IRA will be a good move if there is a good appreciation in the property value.
 

One of the best ways to break into Michigan real estate investment business is bird-dogging. A bird dog is anyone who identifies a distressed or undervalued property or land (that is available for sale) and passes on the information to a real estate investor. For bird-dogging, the finder will get a finder’s fee after the deal is closed. Investors prefer using bird-dogging, as it will always lead to a motivated seller. People who are exclusively into bird-dogging generally do not invest and close a deal with an outside real estate investor.

If you are bird-dogging, you can identify any type of undervalued Michigan real estate – single units, multiple units, commercial and industrial properties, land and real estate paper. The Michigan real estate industry does not specify any predetermined fee for bird-dogging. Finder’s fee will depend on the value of the property, negotiation skills of the bird-dogging finder and the length of relationship with the investor.

If you are a Michigan real estate investor, establishing a bird-dogging network is your prime bet for finding motivated sellers. Besides novices in real estate, who else can do bird-dogging for you? Mailmen, meter readers, probate attorneys, accountants, corner storeowners, process servers, realtors, plumbers, carpet cleaning companies or court clerks are prime targets if you are enlisting a network for bird-dogging.

Besides finding an undervalued property, bird-dogging basics tell that the finder usually locates the owner of the property. Some of them find out information about who is funding the mortgage. Some of them even evaluate the extent of motivation to sell the property.
Bird-dogging is not always a bed of roses. Novice finders, sometimes, may not get their finder fee, (even after closing) from shifty investors. Sometimes, the payment of the finder’s fee gets delayed. Some bird-dogging finders find properties that are inconsistent with the investor’s requirements.

Greed is also a big bother. As they gain experience, bird-dogging finders can demand more than a small finding fee. Such demands not only increase defaults (in payment of finder’s fee); they will lead to ruining of a relationship.

For those looking for a career in Michigan real estate, bird-dogging is the best launch. They do not need large amounts of capital. The risk is non-existent. For those who initiate into Michigan real estate investment through bird-dogging, the next step is to get into wholesaling. As they get hold of some capital or get to raise credit, they get involved in buying undervalued properties, rehab them and sell them for bigger cash flows. They plough back and become hardcore Michigan real estate investors. Bird-dogging is the best way to find mentors.

If you are a newbie in Michigan real estate, according to the basics of Michigan real estate short sales, when a lender agrees to receive a reduced loan payoff on a property, you have a short sale situation. As an investor, you are buying directly from the lender. Now, why would a lender agree for a discount in the mortgage payments?

The tenet that governs the basics of short sales states those lenders avoid going into a foreclosure for two main reasons. One, lenders, like banks do not prefer holding property inventories. They want their investments back. Banks also know that if they auction foreclosure properties, they tend to lose more capital, as they have to pay for the closing fees.

Under the basics of Michigan real estate short sales, when do you, as a Real Estate investor enter into the picture? Veteran investors believe that the best time to enter into a short sales situation is in the pre-foreclosure stage – once the lender has taken steps to get the notice of default recorded.

Does the basics of Michigan short sales dictate any preference for properties? While there is no cut and dry preference, the potential for earning bigger discounts exist in those properties that require a greater amount of rehabbing. Besides this, properties that have a second and a third lien, are also Real Estate Investment gold mines waiting to be exploited.

According to the basics of short sales, as a Michigan real estate investor, what are the risks involved and how do you mitigate them? Some distressed homeowners will not allow you to inspect the property. Inspection of the property is essential in assessing the potential value. Inspection also allows you to arrive at a preliminary quote when you are approaching the lender.
The second major risk is the deed from the distressed homeowner. Unless the homeowner signs the “Authorization to Release” form, the lender will not show any interest in your bid. You also have to get a letter from the distressed homeowner stating the reasons he is unable to keep up with the mortgage payments. Besides that, as an investor, you have to protect yourself with a CYA letter.

The third major aspect in the basics of short sales is the negotiation with the lender. Often, without involving the distressed homeowner, it is difficult to get the attention of the lender.
Another aspect in the basics of short sales is the exit strategy. Many novice investors are enamored about completing the process quickly, they ignore thinking about the payback of their investment. They wait to tailor their exit strategy until after the process. Shrewd investors try implementing their exit strategy simultaneously with the short sales process. As the process reaches a crescendo, by fine-tuning the basics of Michigan real estate short sales, they also exit from the property.