“Can we really make money in this real estate market flipping houses?”
We hear that question quite a bit around our office. Usually it comes up on Tuesday during our weekly workshop for new clients & investors on “How to buy foreclosure auction homes, short sales and bank owned/REO’s”.
The answer is most definitely YES! With accurate property research and due diligence combined with a keen knowledge of current market conditions and throw in a little luck for good measure you can make consistant and sizeable profits time and time again.
Below are the details on a recent foreclosure auction purchase made by an investor working with Real Estate Investment Firm, LLC.
Rosario Place, Renton WA
REIF foreclosure purchase
This property was purchased on March 27th 2009 at the King County Foreclosure Auctionfor $1.00 over the lenders opening bid of $364,650.00. When this property was reviewed in our Auction Investor Meeting the night before, the REIF Auction Specialist told the group that a cash buyer could purchase and flip this property in under 90 days and make a net pre-tax profit of approximately $40,000.00. In the end it only took 67 days from the purchase date until escrow closed on the re-sale. When all the costs for acquisition, fix-up, holding and re-sale were calculated, the net profit to our client was $39,463.00 Below is a breakdown of those figures and a chart that shows the ROI (return on investment) for this transaction.
|
Rosario Place Breakdow |
|
|
Purchase Price |
$364,651 |
|
Purchase Comm. |
$10,940 |
|
Fix-up costs |
$3,500 |
|
Total Purchase Cost |
$379,091 |
|
Sale Price |
$454,950 |
|
Sales Costs |
$36,396 |
|
|
|
|
Net Sale Price |
$418,554 |
|
Minus Purch Cost |
$379,091 |
|
|
|
|
Net Profit |
$39,463 |
|
Return on Investment Calculation |
|
|---|---|
|
|
|
|
Amount Invested?: |
$379,091.00 |
|
Start Date?: |
03/27/2009 |
|
Amount Returned?: |
$418,554.00 |
|
End Date?: |
06/02/2009 |
|
Gain or Loss: |
$39,463.00 |
|
Percentage Gain or Loss (%): |
10.4% |
|
Annualized Return on Investment %: |
56.7% |
If we extrapolate this data out to a 12 month time-frame, it would roughly work out to an anual net income before taxes of $240,000.00. Keep in mind as well that the investor who bought this house only spent approximately 30-40 hours of his time working on the property.
If you would like to learn how you can help secure your financial future by investing in foreclosures and distressed real estate then I encourage you to attend one of our free foreclosure investing workshops. They are held every Tuesday at 5:30 pm at our downtown Redmond office
A man in Minneapolis, MN recently became a prisoner in what was formally his home after it was foreclosed on by the lender. As Ted Poetsch was working to get his pet cat into a pet carrier workmen were busy outside his home securing sheets of plywood over the windows and doors.
Luckily, Mr. Poetsch was rescued by his former attorney before long.
If you would like to read the story in its entirety please click the following link.
http://www.upi.com/Odd_News/2009/06/08/House-boarded-up-with-resident-inside/UPI-85621244492422/
Buying or investing in properties that are in the foreclosure process is your wealth building opportunity!
Did you know that NOW is the best time to invest in foreclosure properties?
Many people are interested in investing in properties that are in the foreclosure process, but are unsure of the steps to take to get started.
The market conditions of today have converged to create a “Perfect Storm” of opportunity for the savvy real estate buyer or investor. The opportunity is there to purchase your next property at discounts of 20-50% under today’s market value. Never again will the same market conditions exist that precipitated our current liquidity crisis, stock market crash and subprime mortgage meltdown. The opportunity to take advantage of this unprecidented market is now! If you are qualified, committed and motivated we will provide you with an inventory of efficient and profitable assets to meet your short and long term financial objectives.
Our wealth-building services help you confidently invest in properties facing foreclosure
Our dedicated team of investment & foreclosure specialists can help you build an intelligent real estate portfolio that capitalizes on current economic and market conditions to create long term and lasting wealth for you and your family.
Real Estate Investment Firm’s core purpose and mission is to become the industry leader in helping people create true financial success through the acquisition of real estate. We maximize efficiency and profitability for our clients through strategic systems and processes. We are leaders, innovators and educators. We help clients implement the strategies that will ensure they reach their financial goals and objectives.
Come and learn how to “Never Pay Retail” again and purchase real estate at 50-80 cents on the Dollar!
Some of what we will cover in the workshop
- The foreclosure process and timeline
- Recent sales data and market statistics for the region
- Foreclosure trends and market analysis
- Lien priority in Washington State
- Investment Strategies to maximize your return on investment (ROI)
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The importance of establishing an exit strategy before you buy!
Shannon Bennet picks through the site in Victorville, Calif., where homes were demolished rather than completed and sold. © Nick Ut/Associated Press
Guaranty Bank recently foreclosed on 16 new and partially built homes in Victorville CA, a town 85 miles northeast of Los Angeles. Four of the homes were substantially completed and the other twelve were 50% completed or less.
Guaranty Bank, whose parent company, Guarantee Financial Group was recently issued a “cease and desist” order by the Federal Office of Thrift Supervision decided it was cheaper to just destroy the homes rather than complete and re-sell them. Home prices in San Bernadino County where the development was located have fallen 60% from their peak in 2006, according to the firm DataQuick.
The Seattle Times had a Foreclosure Q & A session on their website today with an attorney and housing councelor answering peoples questions about foreclosure and the foreclosure process. There is some very good information given.
Click here for the link to the Times web site and the story.
A recent article on MSN Money describes the surge last month in foreclosure activity around the country. March 2009 saw a 46% increase over March 2008.
Much of the increase is attributed to lenders lifting temporary moratoriums and resuming legal actions against delinquent mortgage holders.
To read the full article click here
Locally, the total number of properties in some stage of foreclosure has been steadily increasing the past several months. Currently in King, Snohomish & Pierce county there are a total of 7,877 homes in foreclosure.
LTV/ Fico Matrix for 5-10 properties financed
Second Home or Investment Property
Purchase 1 unit 75 LTV/ CLTV Min. 720 score
R/T Refi 1 unit 70 LTV/ CLTV Min. 720 score
Investment Property
Purchase and R/T Refi 2-4 units 70 LTV/ CLTV Min. 720 score
To learn more about Fannie Mae’s new guidlines you can contact Shane Pierard with Cobalt Mortgage.
Of those 203 properties:
- 11 were picked up by 3rd parties at the auction
- 51 reverted back to the bank
- 141 were cancelled/sale off
Since we started the week with over 300 properties on the list, there were aslo over 100 postponements granted as well.
We specialize in foreclosure auctions, short sales, REO/bank owned properties
Conforming 30 year fixed rates mortgage loans have dropped considerably this past week. Locally Citibank and Countrywide are offering a 30 year fixed conforming loan for 4.875% with a cost of 2.250% and 2.000% respectfully.
Will these never before seen interest rates prompt buyers back into buying again or will they sit on the sideline in hopes of obtaining the rumored 4.5% government subsidized rate when the new Obama administration takes office.
Below is a chart obtained from MSN Money detailing available rates, fees & points available in the greater Seattle-Tacoma area.
Loans shown are 30-yr. fixed conforming loans available in Seattle-Tacoma, Washington.
| Financial Institution | Base Rate | APR | Fees($) | Points | Lock | |
| Citibank | 4.875% | 5.111% | 809 | 2.250% | 60 days | |
| Countrywide | 4.875% | 5.114% | 1375 | 2.000% | 30 days | |
| Wells Fargo | 5.125% | 5.325% | 700 | 1.625% | 60 days | |
| Washington Mutual | 5.000% | 5.371% | 929 | 0.875% | 60 days | |
| Chase | 5.125% | 5.383% | 1464 | 2.125% | 60 days | |
| Countrywide | 5.250% | 5.402% | 1375 | 1.000% | 30 days | |
| Citibank | 5.125% | 5.480% | 809 | 1.000% | 60 days | |
| Bank of America | 5.250% | 5.484% | 1400 | 1.875% | 30 days | |
| Wells Fargo | 5.375% | 5.486% | 700 | 0.875% | 60 days | |
| Chase | 5.375% | 5.544% | 1464 | 1.125% | 60 days | |
| National City Mortgage | 5.375% | 5.606% | 1034 | 2.000% | 60 days | |
| Washington Mutual | 4.750% | 5.727% | 929 | 2.125% | 60 days | |
| National City Mortgage | 5.625% | 5.765% | 1034 | 1.000% | 60 days | |
| Wells Fargo | 5.750% | 5.782% | 700 | 0.000% | 60 days | |
| Washington Mutual | 5.500% | 5.793% | 929 | 0.000% | 60 days | |
| ss="s6">Chase | 5.750% | 5.818% | 1464 | 0.000% | 60 days | |
| GMAC Mortgage | 5.625% | 5.868% | 1225 | 2.000% | 60 days | |
| Citibank | 5.750% | 6.038% | 809 | 0.125% | 60 days | |
| National City Mortgage | 6.000% | 6.048% | 1034 | 0.000% | 60 days | |
| Quicken Loans | 6.125% | 6.275% | 1400 | 0.875% | 30 days | |
| Bank of America | 6.125% | 6.287% | 1400 | 1.000% | 30 days | |
| GMAC Mortgage | 6.125% | 6.291% | 1225 | 1.125% | 60 days | |
| Countrywide | 6.250% | 6.315% | 1375 | 0.000% | 30 days | |
| Quicken Loans | 6.500% | 6.568% | 1400 | 0.000% | 30 days | |
| Bank of America | 7.250% | 7.321% | 1400 | 0.000% | 30 days |
With rates this low, anyone looking to purchase a primary residence or investment property definitely needs to look to the foreclosure auction and short sales or REO/bank owned properties to get twice the financial benefits. By buying a distressed property you can pick up a new home at discounts of 20-45% under today’s market value. Combine that with never before seen low interest rates and you can increase your buying power dramatically.
The first Friday after Thanksgiving is usually considered to be the busiest foreclosure auction day of the year. This year is definitely no exception. One week from today beginning at 10:00 am, outside the Factoria offices of Northwest Trustee Services and in downtown Seattle in front of the King County Administration building, “criers” representing approximately 17 different trustee companies or law firms will proceed to sell to the highest bidder with certified funds in hand, this weeks scheduled foreclosure properties.
As of tonight, there are 307 properties scheduled to go to auction next Friday. Should that number hold out, this upcoming week would turn out to be the largest, in terms of properties taken to sale, that King County has ever seen.
A lot can happen between now and then and several properties will end up getting postponed or cancelled before going to auction, but with such a high numbers of scheduled sales,the sheer volume of homes this week will definately present an opportunity for the savvy real estate investor to pick up a property or two at rock bottom bargain prices.
If you are an investor or perhaps just a homeowner looking to get a great deal on your next property purchase then you owe it to yourself to look closely at buying at the auction. There is simply no better vehicle today that affords the low prices that we have seen lately on the courthouse steps.
Here are some of the numbers broken down by city for Friday’s King County foreclosure auction.
Every Tuesday at 5:30 p.m., Real Estate Investment Firm, holds a FREE workshop on “How to buy foreclosures” at their downtown Redmond WA office location. I would encourage anyone who may be interested in capitalizing on current market conditions and wants to buy their next property at a significant discount to attend this Tuesday.
