Real Estate Finance Using Subject To Options
Real estate finance is one of our favorite real estate investing topics to write about.
Our students are always interested in new and intresting ways to finance their purchases of real property, so from time to time, we like to review some of our favorite strategies.
One of these is financing wholesale rela estate deals with “subject to options.”
Now, don’t let the fancy name intimidate you, subject to options aren’t as scary as they may sound, and they can really supercharge your real estate investing.
Typically the advantage to wholesale deals is that they can be turned over faster than retail deals.
If you give a low enough price that another real estate investor can come into the property, make a few upgrades or fixes and then sell it for a profit, then you have a larger market of potential buyers than if you are looking only for an end user.
When real estate investing with option contracts, all you do as a real estate investor is find a deal that you are interested in buying, negotiate a price with the seller, and then execute an option contract with the seller.
These deals can be financed in any number of ways, but one of our favorite real estate financing strategies is to negotiate a subject to option.
The subject to option gives you the right not only to purchase the property for a fixed price for a fixed period of time.
It also gives you the right to take over the property with its existing financing, meaning that as long as you’re willing to make the payments on the current mortgages on the property, you won’t need to go out and get new financing.
This is a powerful one-two investing strategy, because it allows you to contract a virtually limitless number of properties with very little money out of pocket (typically $10 for an option fee) and then to close on the properties without the expense, hassle or need for financing!
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moreWhy We Like Subject To Options Best Of All
What type of contract or strategy do you use most often in your real estate investing business?
One of the most popular in our real estate investing circles is the subject-to option.
In a subject to deal, title changes, or the option is granted, on the property, but no new financing is required, because you just start making the payments on the property to the old lender who has the mortgage on it.
In a subject to option, its even better, because you let the seller make the payment s on the existing mortgage during your option period, and until you execute the option and take title to the property, you are not obligated to pay anything on the property.
That way, if you cant sell the real estate before a payment or two or three comes due, you are not obligated to make the payments.
And better still, if you cant sell the property at all and the option expires, you are not left with a loss from carrying costs during the time you were trying to sell the real estate.
So, we like options, and we like subject to options the best of all.
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moreReal Estate Tips - Investing Successfully With Option Contracts
Anyone who reads our real estate investing materials and courses knows that we’re huge fans of real estate option contracts.
But, not everyone completely understands how get the most from your real estate investing when using this wonderful tool.
Options basically give you the right to buy a piece of real estate for a fixed price for a fixed period of time.
You can buy the property any time during the option period, but when the option expires, you have nothing, and you lose any funds you put up to acquire the option.
Many people use options when wholesaling real properties (buying low with the intent to flip for a slightly higher price to another real estate investor).
However, options are not limited to wholesale deals. Real estate option contracts can also be used to acquire an equitable interest in a property that you plan to market and sell to an end user buyer.
The choice is yours, and don’t forget to use options for both wholesaling and retailing your real estate investments.
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moreReal Estate Finance With Subject To Options
Have you ever used “subject to” as a tool in your real estate investing program?
If not, you’re definitely missing out on one of the best tools around for being able to acquire lots of investment properties for very little money out of pocket!
Real estate investingdeals can be financed in any number of ways, but one of our favorite real estate financing strategies is to negotiate a subject to contract
A subject to contract has a huge advantage over other forms of real estate purchase contracts, primarily because with a subject to agreement, the financing is not an issue.
When you take a property subject to you are taking title to the property subject to the existing mortgage or financing that already exists on the property.
Sometimes, you may hear this referred to as a wrap or AITD (All Inclusive Trust Deed) type strategy.
In these deals, you dont need financing to take title, because you are just promising to pay the mortgage(s) that is/are already on the property.
Because you don’t have to go find the financing (and qualify for it), the only money you really need to do a “sub-to” deal is the money for the down payment, if any!
Many times, you can do a “sub-to” deal with only $10 - $100 out of pocket!
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moreBank REO Inventory Changing The Game For Real Estate Investors
Wondering why lately your real estate investing opportunities seem to be a bit less than they were only about six months ago?
Well, the reason is clear and in the short run makes sense to banks holding large inventories of real properties that they foreclosed on during the recent mortgage meltdown mess.
It is true that lately banks have been amassing inventory, holding on to their REO foreclosed properties to avoid dumping them on the current real estate market at extremely depressed prices.
But it is inevitable that they will have to release these properties onto the market sometime.
And, when they do, we can expect to see even further declines in housing prices.
However, smart real estate investors, know that profitable real estate investing is possible in any market. It doesnt matter if the market is up, down or sideways.
Banks will eventually cave to regulatory pressure to get out of the real estate property holding business and back into the banking business.
When that happens, the current temporary shortage of high quality, low priced real estate investments will end and rela estate investors will see more and more good investment opportunities appearing around them
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moreReal Estate Wholesaleing Increasingly Attractive In Today’s Real Estate Market
We are often asked, “What is the fastest possible way to make money with real estate investing?”
Our answer is always the same, and it’s a strategy we use all the time in our own real estate investing, even though we’ve been investing in real estate for years.
The hands-down, no argument, absolute fastest way to make money in real estate is through buying a property low, at a great price, and then flipping it off to another real estate investor who can still sell it at a profit.
Some real estate gurus refer to this as wholesaling because you are going into the property up front with the idea that you may not sell it to an end buyer.
That is, many wholesale properties are acquired by one real estate investor and sold to another real estate investor who plans to resell the property to someone who plans to live in the property and use it as their home.
Wholesaling real estate is not a lot different from wholesaling anything else.
The trick is to buy at the right price, which means you really need to know the value of properties before you start your wholesale buying program.
The second trick is to build a strong list of real estate investor buyers so that you can turn your wholesale deals quickly.
This is necessary to make the most money possible, because you typically make a lot less flipping wholesale properties than you do selling to retail buyers.
Just remember, buy low and turn deals fast, and you can succed as a wholesale real estate investor!
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moreReal Estate Market Permits Everyone To Benefit, Even The Small Investor
Real estate investing has always provided a great deal of opportunity for investors. Weve all heard why its an IDEAL investment. Income, Depreciation, Equity, Appreciation and Leverage.
But, is it still a good idea to think of real estate investing real estate as an investment today, in the current market, with all the changes, challenges, bank failures and the whole mortgage meltdown mess?
The answer may surprise you.
There are many opportunities to profit in real estate today. Its possible to purchase homes at huge discounts to what they were selling even as recently as one year ago.
As you know, the whole secret to successful investing is to buy low and sell high, or at least higher than you bought in for!
Todays real estate market offers the perfect buy low, sell higher opportunity, despite falling real estate prices.
Why? Because prices are so very low right now, that you can buy properties at pennies on the dollar and still make money selling them at nickels on the dollar.
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moreReal Estate Investment Formula Reveals Basic Principles Of Age Old Wisdom
What is the ideal real estate investing
formula?
Its pretty simple really buy distressed real estate and sell at retail prices.
Its as simple as that.
Young families can now find more affordable housing that until recently was way beyond their budget.
True, with the mortgage bailout and all the fallout from it, credit is much tighter now and harder to come by, but savvy real estate investors are finding alternative sources of financing their real estate investingactivities.
Some of those alternative sources include private lenders, seller financing and renegotiating financing as a condition of purchasing short sales, defaulted paper or REO properties from banks.
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moreMarketing Consultants Like Danny DeMichele Know How to Socialize Online
If you haven’t heard of Twitter by now then I’d say just give up. Consultants like Danny DeMichele and others have been buildin and using communities like Twitter for a while now. Still not discouraged? Then get yourself a profile and get in there now! But it does not stop there. Sites like Crunchbase provide very strong profiles. You too can create one like Danny DeMichele has and put your mark on the Web. Make sure that you upload a photo and link to your site too! There are some personal profile sites like Naymz that have risen to popularity lately. And you can be sure that Danny DeMichele is there too. And what better way to create a personal portfolio than to create and account on Portfolio.com? Danny DeMichele has one there as well. Do you? The idea I am trying to get across is that you need to get around in order to increase your success online, just as you would offline. The more places you make name for yourselfat the better.
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moreWeb Consultants Like Danny DeMichele Leveraging Socail Media
Unfortunately many Web consultanats are behing the curve when it comes to effectively leveraging social media. I recently found one that seems to be getting it right. LinkedIn is one of the easiest platforms to use and consultant Danny DeMichele is and has beenutilizing this powerful social network. Another popular network is Facebook, and again, Danny DeMichele has a well built out profile. The thing to notice here is that Danny DeMichele has linked his profiles to each other. And in doing so, it let’s his social circle find his variousaccounts and interact with him in their preferred medium. Now there is another aspect to social media and it has to do with getting press. Having noteworthy accomplishemntsand getting the word out about them is the name of the game. And Danny DeMichele has a wealth of press releases about his accomplishments. Believe me, having your name or brand in as many places a you can across the Web is in and of itself a major accomplishemnt.
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morePalm Pre to Sync with iTunes
It has been reported around the Web recently that the Palm Pre will be capable of syncing with iTunes and will show up as an “iPod” when plugged into a Mac. This makes a lot of sense to everyone since many the Pre staff are ex-Apple employess and the creator of the iPod is the main man on the Pre.
This of course ed off Apple completely and a war of words has ensued between the Palm Pre camp and the Apple corps (pun intended). A rather heated exchange of words at that. Man o man, the marketing geniuses at Palm are really good. They have been mustering any and all the attention the can. From reports of a lack of phone availability on the launch date, to this latest iTunes development, Genius.
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moreFederal Loan Modification Program Will Help 4 Million
The Obama backed Federal loan modification program that will bring $75 billion for homeowners who are facing foreclosure is said to be able to help a lot of homeowners.
Specifically, the plan is slated to help 3 to 4 million homeowners, and the $75 billion will go directly to homeowners to help them with avoiding foreclosure through loan modifications. Loan modifications or mortgage modifications allow homeowners to drastically reduce their interest rate, drop their principal, and even halt foreclosure proceedings.
he $75 billion in this Obama Federal Federal Loan Modification Plan, the money is being used to lower mortgage interest rates to 3-4% and even in some cases as low as 2%.
For the homeowners to be eligible for a 2% loan modification rate, their total income needs to be equal to 31% of the mortgage price, so this is only for extreme cases where homeowners have either 1) lost their jobs 2) seen a huge increase in interest rates or 3) have a very expensive home.
For homeowners who live in California, Florida, and Washington DC even modest homes were selling for $1 million so its easy for homeowners to get upside down in their mortgage and need help through a loan modification.
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moreChoices in Window Shades
There are many types of window shades to choose from, the more popular type being Hunter Douglas blinds. One of the older brands of blinds, they come in many styles and colors that will provide you with a number of decorating options. Hunter Douglas blinds are also very dependable and will last for a long time, giving you a decorative and temperature controlled house. With good care, your blinds will be effective for many years and will help to add ambience to your dcor.
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moreWhy Compare Credit Cards?
There are many financial institutions offering building business credit cards- but they are not all alike. Company A and Company B can both offer pre-approved business line of credit cards to consumers with acceptable building business credit, but the terms can be very, very different. It is important to compare credit cards to ensure you are using your money and credit wisely.
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moreCharge Cards
Western Union began issuing charge cards to its frequent customers in 1914. However, the actual concept of using a business line of credit card for paying merchants was invented by Ralph Schneider and Frank X. Macnamara in 1950. Diners Club was the first to make the general purpose building business credit card followed by American Express.
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moreBrowse the Internet
Everything, including one’s building business credit, is digital these days. The way to find the best business line of credit card rate is to go online and find the average credit card rates for standard, gold and platinum credit cards. The fixed rate for a standard building business credit card averages around 13.08%, the variable rate is 14.39%. For a gold card, the fixed rate is 11.41% and the variable 13.37%, while the platinum is fixed around10.17% and variable is 13.60%. The higher “level” the card, the more you are able to save on the interest. Rates change, so it’s good to check in every so often to decide which one is right for you.
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moreBusiness Credit Card
The very concept of using a business line of credit card was invented by Edward Bellamy in 1887. He did not make a real building business credit card; he just used the idea of such a card in his novel ‘Looking Backward’.
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If your credit is good, it is important to compare business line of credit cards to be sure you are receiving the best return on your investment. Start with building business credit cards that require full payment at the end of the month, such as American Express. If you can maintain a favorable credit rating with an American Express card, it is generally the only card you need.
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moreCredit Card Companies
Most building business credit card companies send mail to your home or office with pre-approved card offers. Although it sounds good, it’s only a marketing scheme for saying “We’ve noticed you but you need to pass an additional test”. That’s why the envelope comes with a proper business line of credit card application.
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moreBank Advice
The advice is that you should definitely ask around; a bank will never advertise openly such a thing as 0 interest business line of credit card unless it has a catch to it. So, even when you do get such a benefit be wary of it and read all the fine print. Banks and financial institutions are there to make money off you, not to give it away to you or anyone for that matter
To apply for a business line of credit card is not more difficult than applying for a bank account, a driver’s license or a social security card. However, it is always better to be prepared as many companies send unsolicited pre-approved applications through the mail and most often have hidden charges nestled in the fine print.
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Thinking about these things before you sign up for a card is a good way to avoid falling into the dreaded building business credit card debt and enjoying all the benefits of using a bank business line of credit card for the first time.
Numbers, Numbers, Numbers
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moreDoes My Teenager Really Need a Credit Card?
In actuality, no one needs a building business credit card. Many parents find it comforting to provide a business line of credit card to their teenager who is going away to school, with the understanding that the card is to be used for emergencies - only. Many students are very responsible and use their card only as their parents intended. However, many students define an emergency differently.
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Safety Points
When paying your credit card bills you should use the envelopes that the building business credit card company sends you when paying your bills. This sounds like a silly thing to know but it is a useful thing, business line of credit card companies sometimes have to change their P.O. boxes and this means that if you use your own envelope your payment may not reach the company in time, resulting in a late payment fee. Also, in regard to paying your bills, it is a very good thing to pay your bills earlier rather than just on time to avoid late payment fees. All in all, a bankcard used wisely can be a convenient method of payment for your day-to-day transactions.
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moreBad Business Credit
This is the main reason why you may have a bad business line of creditcard.
Though they may only want five percent of your outstanding amount, always pay as much as you possibly can. You may not be able to pay it all off but the more you pay now, the less interest you will owe. Accruing less interest means that you will have less debt. Next month, again pay as much as you can and again the debt will go continue to go down. It really is that simple.
Emergencies Only
When you have a bad business line of creditcard you need to change your thinking. Instead of seeing it as a handy way to cover those shopping expenses, see it as a financial emergency exit. Only use the card in a real emergency and not for those day to day purchases.
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The intention of a business building business credit card is to simplify the administration of your company. Here are three ways it can benefit you:
1. It can help when employees need to buy products or services for the company. It would be too complicated to give them determined amounts of money and maintaining a control of how much they actually spent.
2. It is invaluable when your customers wish to pay with a business line of credit card. It is much simpler for your administrative process to have a business credit card which brings a series of services that can be linked to your sales process, thus, reducing bureaucracy and unproductive costs.
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moreDenied Credit
Denied for Lack of building business credit
If you are denied a business line of credit card, the letter you receive will tell you why. If the denial was based on lack of credit that is frustrating but understandable.
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moreConsolidate YourCredit Card Debt and Ease a Headache
building business credit card bills are really tough to pay off; once you have more than one card with a balance it can be very difficult to keep up with the payments. Add to that the penalties that you will have to pay for late payments and the problem is never-ending. The headache of having to pay so many bills at one time is one that can easily be eliminated if you consider the option of trying to consolidate your business line of credit card debt. This way you pay off your bills as one bill instead of many and it will actually save you money.
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moreGetting a Great Bank Card for the First Time
If you are thinking of getting your very first bank card there are some things that you should know when you start looking for the right bank building business credit card for you.Among the things that you should take into consideration are your spending habits, what you are going to use your bank business line of credit card for and if you can afford for things to go wrong.
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moreIs it Safe to Apply Online for a CreditCard?
Nothing is a 100% safe, as we often hear and read about information being stolen and misused. However, most reputable financial institutions that invite you to apply online for a business line of credit card use secure servers. A secure server is one that verifies your information will be encrypted.
These are a few ways to determine if the website you are using is secure:
1) A box will appear stating the information or page is secure.
2) You will be asked if you want to register your information on a secure site.
3) A lock will appear on the lower right corner of your screen.
4) The web URL will start with https:// instead of the regular http
Before Deciding to Apply Online for a building business credit Card
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moreThe Advantages You Get When you Consolidate Credit Card Debts
There are many good reasons why you should go for consolidation of business line of credit card debts. The most important, as mentioned above, is to reduce the interest rates charged. But besides this, there are a few more good reasons which can motivate you to consolidate building business credit card outstanding debts:
Paying one bill instead of many and hence having to remember only one due date
Having a low monthly installment instead of multiple ones which add to a large sum
Manageable paying back schedule - since the monthly installment will be reduced and within the budget
Simplifying life by paying one bill to cover all expenses
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moreBeing On Time and Staying Within Limits
Time is money, you’ve probably heard this, and with a building business credit card company this saying really holds true. Paying your business line of credit card bills on time is a very important part of preserving a good relationship with your credit card company.
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morePre-approvals
Most pre-approval mailings request a signature and a statement of recent earnings. It sounds pretty straightforward, but the words “subject to building business credit approval” are always hidden somewhere. While it is tempting to simply sign away, or make up an amount under the “earnings” title, this information will haunt you down the road when you are unable to pay your bills. No one wants a fraud or perjury charge in addition to other trouble that might come with it.
If it Sounds too Good to be True, it is
If you have been pre-approved despite not having worked for a few months or your gross income is less than $10,000, you really should think twice before attempting to apply for a business line of credit card. You should certainly not have been pre-approved.
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moreCredit Card Facts
In this case, a 0 APR building business credit card means that the bank won’t charge you interest or administrative fees for the advertised period of time. Sounds great, doesn’t it? This offer means that regardless of how much you use your 0 APR business line of credit card, you will not have to pay any related fees.
So, where is the catch? It’s quite simple. The bank wants to maintain a long term relationship with you. They can survive for one year without charging you their fees and rates, but after that period of time you will start paying them. It is a marketing tool for increasing their client base and both the consumers and the banks can benefit from it.
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moreCredit Offers
If you have checked your mailbox recently, you may have noticed the amount of envelopes for building business credit card offers. One that may have attracted your attention is the 0 APR business line of credit card. But what exactly does it mean? In a world where hundreds of companies are trying to sell us something or the other, it is better to take a look at these offers and find out more about them instead of making a hasty decision.
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moreMake Your Decision Today
Take a deep look at all your building business credit cards. Check with a consolidation center and find out whether you can get anything that will help you cut the interest rate. If you can get even 0.5% less interest rate, go for it. Even this minute decrease in interest can spin off great amount of cash in the long run. So, always be on the look out for new deals in debt consolidation by which you can save not only a lot of stress but also a lot of hard cash.
Anyone in building business credit card debt should consider a plan to consolidate your credit card debt, especially if you have one bill that has a lower interest rate
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moreVisa or MasterCard?
Both cards are usually accepted everywhere but there are still places where some business line of credit cards are not accepted. If all other factors are equal, it probably wouldn’t be advantageous to compare building business credit cards between Visa and MasterCard, because one or the other is usually accepted.
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moreWhat Constitutes an Emergency?
An acceptable emergency in which to use a building business credit card would include a medical or dental situation where payment is required upfront, a breakdown of their (not their friends’) automobile, being stranded at a party where the driver is drunk and your child has no way home, being otherwise stranded somewhere with no way home, being burned out of an apartment and needing to pay for a place to stay or to buy food (while out of an apartment). These may sound very ominous, but that should be the tone around the use and abuse of a business line of credit card.
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moreWhat Do You Do When You Have A Bad CreditCard?
Start Today
Don’t put it off another minute. If you have a bad business line of credit card then you’re off to a great start. First, get all your statements organized. If you haven’t kept all your statements, it is no wonder that you have a bad building business credit card.
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