Avky Inc – Using an Agent to Buy Foreclosed Properties

The easiest way to find foreclosed or defaulted properties for sale by banks is to go through a real estate agent familiar with that market. Some real estate agents specialize in foreclosure sales or short sales. These are two very different transactions. In a foreclosure sale, the bank owns the property and sales that property as-is. In a short sale, the seller owns the property, but owes the bank more than the property is currently worth. Both offer opportunities to purchase good investment properties at a discount. This is a guest post by the co-founders of Avky Inc, Kyle Uchitel and Aleksandr Vasser.

Avky Inc Goes Into Foreclosure Sales

Banks do not want to own real estate. With that in mind, banks employee a variety of people to get rid of the foreclosed properties they come into ownership of. While many of these people are employees of the bank, they also publish lists directly to realtors. In these challenging economic times every realtor will claim to be an expert in foreclosure sales. Buyers should still be careful. It takes experience and patience to work with banks in a sale, so not all real estate agents are created equal. Remember, even though the buyer may not pay commission, that pay is implicitly applied to the purchase price of the property. Good investors get their money’s worth from their agent.

When considering an agent, a buyer should specifically set out their criteria and then interview them based on those criteria. When considering foreclosures, a realtor should have handled multiple transactions before. They should have worked with investors in the past and have experience working with a variety of banks. They should also be able to recommend other good professionals to help the buyer through the transaction. It will be important to have a good understanding of the liens on the property, as well as an major issues. The buyer is purchasing the property “as-is” and will be required to pay off some liens before claim title to the property.

Short Sales

Short sales are significantly harder than simply buying foreclosed investment properties. Bank will have to record a loss on their books when they complete the short sale transaction. Because of this, banks will try their best to maximize their value. Borrowers will need to show true hardship through a myriad of documentation and the bank will have to genuinely feel like a default will be imminent if they are not able to close the sale.

Once that hurdle is reached, the buyer must be vetted. The bank will want to be sure that the sale can close. A good real estate agent must be very familiar with the paperwork required by the bank and must be very organized. Additionally, they will need to follow up with the bank often and be patient. While buyers can certainly find good deals in short sales, they will need to be patient as the process can take two to six months.

A great agent will earn their fee and then some in these highly specialized transactions. Don’t be afraid to interview multiple agents until the right one presents himself/herself. Realtors can also be great for sourcing these deals. Be patient and a good investment just might present itself.

Avky Inc and it’s co-founders can be reached on Twitter via the following links:

Avky Inc: @avkyinc | Kyle Uchitel: @kyleuchitel | Aleksandr Vasser: @aleksandrvass1

aleksandr vasser

Aleksandr Vasser Explains Real Estate Sunk Costs

Unrealistic sellers cost everyone time and money. Their agents list their properties to only lose the listing after six months without a transaction. The seller must constantly deal with showing their home any time of day or night. This is a guest post by the other Avky Inc co-founder, Aleksandr Vasser. Aleksandr Vasser lives in booming Phoenix, Arizona.

Buyers waste countless minutes touring and bidding on a home that will never actually sell, or, more accurately, be sold. Why? Sellers often don’t understand the concept of sunk costs.

Aleksandr Vasser Explains Real Estate Sunk Costs

Sunk costs can be defined as dollars that have already been spent on a good (real estate) that cannot be recovered. When buyers purchase their home, they put a certain amount of money down. In practice, this money goes to the seller and can never be recovered by the buyer. Unfortunately, too many buyers anchor on the moment they hand over the very large check.

Fast forward two years into the future and a 20% – 40% decline in value later, the buyer now becomes the seller. Rather than simply looking at the market price, adjusting for the pluses and minuses of their respective homes, and listing their home on the market, sellers think back to how much they paid for their home. Mistakenly, they feel that they should at the very least be paid the same, if not more for all of the hard work they put into the improvements.

The problem with real estate is that every investment is a sunk cost. As soon as a homeowner spends $10,000 to remodel the kitchen they create a sunk cost. They can never directly recover their $10,000 from the kitchen installer, short of physically removing the improvement. Even then, the recovery would be 50% of less than what was paid for the items.

Avoid Bad Real Estate Logic

Sellers become disconnected from the market when they focus on costs, rather than focusing on value creation. Buyers pay for the right to use a house, the surrounding land and to be a part of a community. This is the value they receive from a house. Each buyer is an individual and a buyer can buy access to a variety of homes for at a variety of price points. Buyers do not care what sellers spend on the kitchens or bathrooms, they simply what to buy the best experience at the lowest cost.

Using this basic logic, sellers should approach the process of seller their home differently. In a down market pricey renovations do not make sense. Their cost will never be recovered in the price of the home because buyers now want to pay 40% less for the home.

Since a home is simply a collection of rooms, it can easily be inferred that they essentially want to pay less for a new kitchen or bathroom or any other interesting remodel.

Listen to the Real Estate Market

Seller need to focus on beating their competition. Before doing any repairs homeowners should consider the costs and the benefits. The costs are simply the dollars spent on the repair or remodel. The benefit is either a faster sale or a sale at a higher price.

It’s easy to see the value of a higher price, but both of these have value. If a new kitchen will make the home sell one month faster, the seller will save one month of interest and taxes. The seller also avoids one month of market volatility. In a down market, the certainty of a sale can be quite valuable. For some, selling their home in 2014 vs. 2015 could have meant an extra 10% in their pocket.

Buyers should forget their purchase price as soon as they buy their home. Smart buyers will succeed by listening to the market. Perform repairs and renovations that will increase the price of the value of the home more than their costs, but also consider renovations that will make the home sell faster. The bottom line is always focus on the market.

Aleksandr Vasser can be reached for questions on Twitter at @aleksandrvass1.

kyle uchitel

Kyle Uchitel Presents: Real Estate Due Diligence

Due diligence is the thorough research, confirmation, and evaluation of the relevant data, projections, and representations about a property. Some real estate investors who are just starting out may not have much money or time. However, they will regret not spending a sufficient amount of both on due diligence before committing to buying particular properties. The following is a guest post by Phoenix area entrepreneur Kyle Uchitel. Kyle Uchitel is a co-founder of Avky Inc.

Kyle Uchitel: Investment Plans, Operating Expenses, and Other Factors

These are some of the pre-contract due diligence measures by investors who want to succeed. Depending on the type of property or financing involved, investors may have to take additional or different steps.

  • Create a real estate investment plan that is clear about the investor’s goals, the investment strategies that will be used to reach those goals (for example, build a portfolio of five four-family homes over a 10-year period. Then pay off the mortgages on them within 15 years of purchase, etc.), and the strategies for when and how to sell off the properties in the portfolio.
  • Perform demographic research on the various areas where the investor expects to find suitable properties. Look at the research should reveal the types of people, homes, businesses, and medical, social, and community facilities that exist in the target areas. This information – which is available on the Internet, in newspapers, and from municipal authorities – will help the investor understand how much ROI to realistically expect of properties in target areas.
  • Verify information about the location, income, features, operating expenses, and physical condition of a prospective property; investors can ask to see the rent rolls of a property, can speak with the tenants on the target property and with other residents of the neighborhood, can have their real estate agent ascertain the amount of real estate taxes paid for the preceding year, and can find out whether the tenants or the owner pays for heat, water, and utilities.

Due Diligence Is Self-Protection

Due diligence is not a nuisance or a chore. It is a series of proactive steps that investors take to protect themselves from preventable surprises. The best way for investors to reduce their chance of failure is by investigating the characteristics, past performance, and future potential of a property as thoroughly as possible.

After investors do their pre-contract due diligence they are ready to look at properties and then narrow down their choices. An investor will find a property that meets the investment plan requirements. After some initial negotiation, a seller will accept the investor’s offer of a purchase price. The seller and the investor then sign a contract and anticipate the closing date. But wait – now the post-contract due diligence obligations kick in.

Kyle Uchitel can be reached via Twitter at @kyleuchitel.

financial protection

Financial Protection Advice for Real Estate Investment

From risks to rewards, real estate investment has been a boom industry and a luring attraction for countless individuals. With housing market fluctuations and financial uncertainty plaguing the market, many investors may prefer to use caution before plunging into the possibilities. Read on about financial protection for these investment options.

Although rental properties, land investment, and personal real estate ventures are commonly viewed as “safe” choices in the investment world, there are still risks involved. Several aspects of real estate ventures are often the last ones considered when a “good deal” appears on the horizon, including important details that any new investor should consider.

Real Estate Taxes and Write-Offs

When real estate properties or resale profits are at their height, the risk of real estate investment seems at its lowest point. The hazards, however, are still real and waiting to challenge investors during market tumbles and economic downturns, with unforeseen hazards from taxation and debts.

While tax incentives exist to encourage rental properties, empty houses without tenants or upkeep quickly spiral into a headache for owners. Investing time and money maintaining one or more homes can be a financial headache, especially with no tenant revenue to aid in the process.

Potential real estate hikes and property taxes also pose a problem for investors whose rental properties are now unprofitable and in some cases, in need of substantial investment to repair damage or renovate tenantless structures with dried-up rental capacity. Undesirable rental properties can spiral into money pits at worst, and break even financially at best for inexperienced real estate investors.

Financial Protection – Debts and Loans

Real estate’s risks are incurred partly from loans and invested capital involved in the process. While those investments seem like necessary hazards for reaping a profit, those decisions can become problematic when the market declines, leaving properties “under water” with dimmer prospects of future profits.

Investors must be prepared to weather rental property loan payments and property upkeep even when dreams of long-term payoff seem dim. If the property looses tenants or exceeds the owner’s monthly finances, then investors are at risk of losing it unless they enter the venture financially prepared to see it through the worst of market experiences.

“Flipping” Houses and Other Risks

The practice of “flipping” houses, or making quick real estate turnovers was a popular trend at the height of market values. While economic upswings make real estate flipping a tempting investment, the risks involved form an expensive wager beyond stock market moves.

Likewise, the cry “location, location, location” also holds sway over property values. Investors should be aware of housing trends and future projects within the rental property’s neighborhood and community, to avoid ending up with a great property whose value is erased by surrounding properties and troubling social and economic issues.

Investors who weight the risk and are still willing to take the plunge may be rewarded long-term with financial gains. A future market recovery will find many investors who have weathered the storm and acquired a few properties with significant value. Potential investors, however, must weight the risks and rewards of property investment individually before venturing capital for possible future gains. 

This has been an article about financial protection of real estate investments.

patrick mackaronis

Patrick Mackaronis: Guidelines for Your Country Living Search

Country living can involve major changes. And, moving beyond urban boundaries can mean a lot of different things. For some folks, it may be the simple desire for a quieter and safer place to raise their children away from the hustle and bustle of urban life. For others, it may mean the chance to raise animals, or to put down roots, which could require something as simple as a garden plot or acres of leased or purchased land. The search for a house on a small lot or for something a bit larger can be vague. With deliberate preparation, a good deal, a just-right place can be closer at hand than luck alone might provide. The following is a post by Brabble CEO Patrick Mackaronis, a thought leader in the field of entrepreneurship in New York City.

Patrick Mackaronis, Brabble CEO and Founder Weighs In

Learning About Your Wants and Needs

Know what you want. Maybe all you’re looking for is fresh air, a little space between homes, and a community environment you consider healthy for your kids. Do you really want a farm, or a ranch, or something a little smaller? Thinking about your motivation for moving to the country, as well as your long-term goals, should be as specific as possible.

Know Your Boundaries. Although employment may be a controlling factor in finding a place to settle, other important considerations include weather and the proximity to a metropolitan area or the distance from family members. How about schools, shopping, and medical care? Make a list of the factors that are important to you.

Know what you can afford. Some buyers look for farms when they should be looking for farmettes. With the help of a banker or a real estate broker, and Internet research sites, you can pinpoint your price range. After adding your cash on hand for a down payment, what’s a realistic loan level for you and your family? And, how much money will you need soon after you make your move to the country?

Learning About Special Needs for Country Living

Ask about country living. What you need to know about yourself and your country living dream may be revealed when you to people who are knowledgeable about living outside the city. Seek out different points of view, talk to the neighbors around the places you think you’d like to own. Have a frank question-and-answer session with people who really know about country living.

Ask about employment. Is a job important to you? Where can you realistically find work to supplement what you may earn from the land? In today’s job market, this question and realistic answers can’t be left to chance. Be cautious about your optimism. Some of the best real estate bargains may be in areas with high unemployment rates.

Ask about transportation. Access to farm markets, routes to jobs and schools, and connections to highways may be important to realizing your hopes and dreams for country living. Checking with the country road commission and the bus route coordinator in the school district may reveal important considerations, like how long your kids will be on the bus going to and coming from school.

Learning About the Country Land

Be certain about water supplies. Well and septic tests should be part of your real estate transaction. However, during your search for a country home you should be in touch with the county health department, and even local well-drillers, to get insights about water. Is it drinkable? How deep is the water table? How about mineral contents? These are not small questions.

Be certain about soil conditions. What is right for raising cattle is not necessarily right for raising cash crops, is that right or not? While garden plants may survive, even thrive, anything else may not be worth seeding. Caution: Your reputation with a green thumb in the garden may get a bigger test with a larger plot of land. Get in touch with agricultural experts to help you evaluate soil expectations.

Be certain about land use. Just because the property you want to buy is outside the city, doesn’t mean the land can necessarily be used for agricultural use or for raising animals. Are there minimum land use requirements? How is the property and surrounding land zoned? Make a call to the county zoning officer. Ask about how you can use the land you want to purchase.

Learning About the Real Estate Market

Find Information Online. The Internet has become a great resource for making the best use of your time as you discover more about your potential move to the country. Real estate brokers can be helpful. too. However, finding a good deal before it hits the market may depend on your connections early in your country living search, states Patrick Mackaronis.

Find Information Around Town. Local folks may be the first to know about friends and neighbors who are about to put up a “for sale” sign. Ask around. Check with the farm and ranch supply store manager, chat up the mail delivery person, listen to what the hair cutter has to say about potential deals in the area. You may be surprised what you can learn.

Find Your Dream With Patience. You may get lucky or be blessed and make a great find and buy with your move to the country. Chances are, you’ll need to invest a good bit of time and energy in building up your knowledge and awareness. This article is just a starting point towards a way of thinking that puts emphasis on not rushing. This article is also for making your quest for country living as fruitful and satisfying as it can be.

Patrick Mackaronis is the CEO and Founder of social media company Brabble. For more information, visit Patrick Mackaronis on Twitter at @pmackaronis.