johnmichaelrei

Hard-equity lending, consider these creative techniques Hard Money funding is often used to finance projects that are considered by most to be unconventional! Most call it Creative Real Estate Investing! The reality of it all is that Creative Real Estate Investing techniques is not creative at all as they are commonly used by professional and commercial investors! Creative Real Estate Investing is a phrase or should I say a marketing ploy to appeal to the lay man. Typically, "TRUE" hard moneylenders will lend based upon a percentage of the value of the property regardless of the sales price. They will typically close loans in a matter of days. Credit scores and income are often overlooked by hard moneylenders, but they may ask to see a business plan or exit strategy for the project. They may ad points! Typically, interest rates of 10 to 20% per year are common! Many want an equitable interest. These will vary based on the size of the project and the agreed upon contract. Hard moneylenders are collateral based and typically require first position on the property. To boil it down "A hard-equity loan is flexible and quick. Because most hard-equity lenders are private individuals and not large multistate lenders, they have more flexibility. They can also close more quickly, usually in as few as one to three days. Moreover, most take a quick look at the real property. " Hard money is not the only way to used "Creative Real Estate Investing" but can be a great source of funding for you to get the deal or you can use some of the other methods listed below: No-doc and low-doc loans. Seller-carried second mortgages. Land contract. Called "contract for sale" or Owner finance. Credit cards. Retirement accounts. Friends and family. Note buyers. Get a loan on other property. Partnerships. Just to name a few! There are many creative hard-equity programs and techniques such as: Low starting interest rate = Hard-equity loans have higher interest rates than conforming loans. A hard-equity loan, however, can have a lower starting interest rate for a certain period, from three months to five years. With a reduced payment for a time period, so you can catch up with other bills. Long-term loans = Most hard-equity loans are made for five years. The monthly amortization period may be for 15 years or 30 years, or it may be interest-only. Hard-equity loans can also be for longer terms, such as 15, 20, 30 or 40 years with no balloon payments. No payments for a time period = Sometimes you need a break from making monthly mortgage payments. This program may allow you not to have any payments for a number of days at the beginning of the mortgage. This can range from 60 days to the first year. Alternatively, you can have a provision that defers one or more monthly payments to the end of the mortgage. This allows you to use the money for other debts. Tailored payments = Most mortgages allow for equal monthly payments for the entire mortgage. At maturity, the mortgage balance is zero or a balloon payment is required. Hard-equity mortgage payments can be tailored to satisfy your needs rather than the lender's matrix. If you have seasonal employment, then the payments can be larger during the "feast" period and smaller during the "famine" period. Loans with a lump-sum payment = You may benefit from having one lump- sum payment at the end of the mortgage. Use this program if you are likely to receive a large sum of money in the future. On these loans, the interest accrues, and the accrued interest and the principal are due at maturity. Second and third mortgages = Hard-equity loans can be a first, second or third mortgage. As long as the loan to value (LTV) and the superior mortgage to subordinate mortgage ratio. Wrap mortgages = The benefit of a wrap mortgage is that underlying first mortgage is available when the wrap mortgage is satisfied. The advantage to lenders is that they are assured that the first mortgage will be paid. The interest yield on the transaction also can be enhanced. Cross-collateralized loans = In many cases, the subject property does not have enough equity to support the proposed hard-equity loan. But you may have other real property to pledge as additional collateral. With the additional property, a hard-equity lender will close the loan because the collateral is adequate. Sometimes, assets other than real estate are acceptable. Lines of credit = A hard-equity line of credit can be established more easily than a line of credit at a bank. The hard-equity line of credit can be used and repaid based on needs. It provides money that you can borrow and repay repeatedly under the terms of the mortgage. The interest on the mortgage would be payable monthly. The borrowing and repayments could continue until the mortgage matures. Future advances = Often, a loan closes and you need more money soon after. Some costs can be eliminated if the first closing takes into account the possible need for additional money. The mortgage can provide for a future advance from the lender for an additional amount that is agreed to at closing. Portable loans = When you sell a home, most generally buy a new home. Both homes probably have a mortgage. If the mortgage could be transferred from the old property to the new property, you can save time and money. A hard-equity lender may let you transfer the mortgage from the old property to the new property. Combination mortgages = Hard-equity loans can be as creative as you can make them. A hard-equity loan may contain elements of two or more of the above techniques. I suggest you read "HOW TO BE A SUCCESSFUL HARD MONEY BORROWER" Download your free copy at http://trice84.tripod.com/gifts/Jones0804.pdf A great search tool for "Hard Money Loans" can be found at: http://www.scotsmanguide.com/default.asp?ID=1223 Good luck on your success as a real estate investor! John Michael

Ok folks I have gotten many emails on this from people who think this is gloom and doom and it is not! When making a real estate investment one needs to evaluate all factors that may impact your investment! It is simply a tool to make sure you make the best investment for you. We have lost 7 properties in less than 12 months due to storm damage in various states! Total value of loss $650,000 of retail value. We Recovered $512,000 from insurance. As you can see, a big chunk of change was loss. What we have learned from this when it comes to major rehabs is to have our property insurance increased at each major step of rehab to insure proper coverage is maintained to protect our investment. This type of tracking not only can help in your investment decision but also can lead to more sales by reviewing potential migration (relocation) trends of consumers who move out of storm regions.

Projecting Major Disaster areas when investing 2006 may be a dangers time when investing in real estate so projecting your potential for disaster can be a great aid to your success. History shows the following over the last 7 years 2006 has had 15 Disaster Declarations 2005 has had 48 Disaster Declarations 2004 has had 68 Disaster Declarations 2003 has had 56 Disaster Declarations 2002 has had 49 Disaster Declarations 2001 has had 45 Disaster Declarations 2000 has had 45 Disaster Declarations This year is off and running with Major Disasters and we will be looking at severe Storms that will produce Tornadoes, Flooding Landslides, and Mudslides. Along the path we are and will be facing Severe Winter and Ice Storms and to top it off Extreme Wildfire Threats. We have already seen this year with Jan producing 7 Major Disasters, Feb producing 3 Major Disasters, March producing 3 Major Disasters and April producing 2 Major Disasters. Based upon this data we are looking at a projection of over 50 Major Disasters to hit the US by the end of 2006 In addition, we are still recovering from fires in California, Colorado, New New Mexico, Oklahoma and Texas. Yet, we are still going to have to deal with past Hurricane damage. And we still face dry conditions in various parts of the United States that produce fires and we have yet to step into the Atlantic hurricane season that lasts from June to November, with the peak season from mid-August to late October. On top of all this over 350 tornadoes have been recorded as of April and this could be one of the most active and deadly seasons in history For more data see: http://www.spc.noaa.gov and To compare from 2005 to 2006 see: http://www.spc.noaa.gov/climo/online/monthly/index.html As an investor we are tough to research property titles, market value and market trends but one major area that is left out is storm trends. Why storm trends. Vary simple by projecting possible areas of Major Disasters you can determine areas of possible financial loss as an investor. When Major Disasters occur it creates fear and fear will cause folks to move this can be good or bad for your investments. I use http://www.fema.gov as an aid site to determine areas to avoid for my future investments. Let me give you an example: State of Missouri research has showed me by looking at Fema's map service in regards to tornado's for example that I may want to exercise caution in the western and northern areas of Missouri. Now to take it even one step further I can review area's of great concern by researching Fema's web site for Major Disasters in 2000 and 2006 or even further if I wish. This data tells me to be concerned with the following counties in 2006: Benton, Boone, Carroll, Cass, Cedar, Christian, Cooper, Greene, Henry, Hickory, Iron, Johnson, Lawrence, Lincoln, Mississippi, Monroe, Morgan, New Madrid, Newton, Perry, Pettis, Phelps, Putnam, Randolph, Scott, St. Clair, Ste. Genevieve, Saline Counties, Taney, Vernon, Webster, and Wright Counties In 2004, the following counties showed concern: Adair, Andrew, Bates, Benton, Buchanan, Caldwell, Carroll, Cass, Cedar, Chariton, Clay, Clinton, Daviess, DeKalb, Gentry, Grundy, Harrison, Henry, Hickory, Jackson, Johnson, Knox, Linn, Livingston, Macon, Mercer, Monroe, Nodaway, Platte, Polk, Randolph, Ray, Shelby, St. Clair, Sullivan, Vernon, and Worth Counties. In 2003, the following counties showed concern: Barry, Barton, Bates, Benton, Bollinger, Buchanan, Camden, Cape Cass, Cedar, Christian, Clay, Clinton, Cooper, Crawford, Dade, Dallas, Dent, Douglas, Franklin, Knox, Gasconade, Girardeau, Greene, Henry, Hickory, Iron, Jackson, Jasper, Jefferson, Johnson, Laclede, Lafayette, Lawrence, Marion, McDonald, Miller, Monroe, Morgan, Newton, Osage, Perry, Pettis, Phelps, Platte, Polk, Pulaski, Ray, Saint Francois, Saint Louis, Sainte Genevieve, Saline, Scott, St. Clair, Stoddard, Stone, Taney, Vernon, Washington and Webster Counties. Now what I will be looking for is repeat counties over this time period. Benton, Cass, Cedar, Henry, Hickory, Johnson, Monroe, St Clair, and Vernon counties all have a higher risk for Severe Storms that will produce Tornadoes and Flooding so what will I do in areas of concern? I will evaluate my risk factors Buy based upon my risk factor Insure based upon my risk factor Why would I want to do this? To many move outs will cause property values to decline, underinsured properties in potential areas of Disaster could cause financial loss for investors and one big issue is supply and demand. Supply and demand affects rehabbers and builders as material cost continue to rise as demand for materials increase. Real estate investing is all about the numbers and your risk and you make the determine! Keep one vary important statement in the back of your mind when investing "The Devil is In the Details".

Fear can become your biggest asset Fear can be a draw back when seeking an education in real estate investing but you can turn this fear into one of your biggest assets. How many times have you wanted to get into real estate, only to have that voice in your head say: It won't work! It's a scam! It cost too much! I can't afford it! I can't do it! Or even worse, you shared your dream to become an investor with others and they say: It's a scam! I tried it and it did not work! That's silly! You can't do that! It all comes back to The “Haves” and The “Have-Nots”. The “Haves” operate with: Desire/Drive Commitment/Dedication Discipline Education Courage Determination Experience Perseverance Organization Optimism The “Have-Nots” operate with: Fear of the Unknown Procrastination Lack of Education Complacency Poor Self Control Fear of Success World of Scarcity Skepticism Low Self-Esteem Hopelessness All of us at some point in life have listened to voices of caution when it comes to following dreams of success. If you and others around you question what you do and thing, and you veer away from making decisions you are simply stopping yourself from reaching your fullest potential as an investor. You are allowing this self-doubt and doubt from others to squeeze out your creative energy and inspiration that will make you a success. So what is stopping you from making that important decision in selecting a real estate education? FEAR. Fear is the greatest single barrier to success as a real estate investor. The emotion of fear is intended to warn us of danger and to act as a cautionary tool. It should make us stop and think before acting. Not to squeeze out your creative energy and inspiration that will make you a success. What fear shouldn't do is dictate the course of action you take. It shouldn't control or shape whom you are or what you want to achieve as a real estate investor. On a conscious or subconscious level, all of us have felt the impact of fear in our lives. Whether it is the fear of making a decision, the fear of failure, a fear of what other people will think, or the fear of success - the consequences are the same. Fear leads you to stop trying new things. Your comfort zone pulls tight around you and is rarely pushed further out than it needs to be. You feel stale, lethargic and wonder what's missing in your life. Your creative energy is replaced with a survival instinct. On a subconscious level, you start to really believe that you aren't good enough, or that there's no way possible that you can achieve becoming a real estate investor. On a conscious level your body and mind responds to being fed negative statements. So what are you afraid of? What stops you from taking the next step forward that will keep you on the path of achieving your goals? It's a low level of self-confidence and self-esteem that makes you feel unhappy about yourself. Because your thoughts are based on feelings of inadequacy, you set your boundaries and standards very low and achieve little in your life. The emotion of fear is part of being human. It's perfectly normal to experience misgivings and doubts! Fear will never go away no matter how self-confident or successful you are! The key to overcoming fear is to feel good about yourself and think positively. Avoid negative people and then use that same energy that fear creates and turn it into positive energy in your life. Only then can you turn indecision and fear into power and action. You have simply to choices to make one is to live your life in the arena of The “Haves” or The “Have-Nots”. Will you be a success? One will never know if you do not take the risk and seek out your dreams of becoming an investor. Will you fail possibly so but with knowledge you can limit failure. You now have two simple choices! Choose education Or Choose not to educate! You simply make no change! Life goes on as is!