Five Considerations When You Are Buying Real Estate in Maryland

Buying real estate in Maryland is something that can be relatively simple - provided you've put some thought and effort into the process up front. Therefore, rather than focusing on any one particular Maryland property, here are five things that you're going to want to consider regardless of what type of real estate in Maryland you are looking to buy.

1. When you are buying real estate in Maryland, you're going to want to make sure that you are looking for properties in the areas where you want to live. If, for example, you want to stay close to the Washington, DC area when you buy real estate in Maryland, you're going to find yourself looking into places like Silver Spring rather than areas that are closer to the Atlantic coast.

2. When you are buying real estate in Maryland, you are going to want to take the time to think about what type of home you are looking for. In some cases, finding real estate in Maryland is going to be focused on locating a great condominium home that will be low maintenance for you; in other cases, the real estate that you choose to look into is going to give you a bit more freedom - single family homes that are not in the heart of a city where you'll be able to mow the lawn and play in the back yard with the kids.

3. When you are buying real estate in Maryland, you're going to want to be thinking about your family. Even if you are a young couple just starting out, if you're planning to have kids you are going to want to take a look at the school systems just as you would if you were buying real estate in Maryland and already had school age kids. If you have a larger family and you're buying real estate in Maryland, you're also going to want to be sure that the property that you buy gives everyone some space to themselves.

4. When you are buying real estate in Maryland, you're going to want to think about transportation. In these days where gas prices are greater than four dollars a gallon and show no signs of lowering in price, when you are looking for real estate, it's important to think about whether or not public transportation is going to be available and how accessible it will be.

5. When you are buying real estate in Maryland, you are going to want to take the time to find the right real estate agent - someone who will help you to get into the home that is right for you but who isn't going to pressure you, who isn't going to nickel and dime you with administrative fees and who will really listen to what you want and need in a home. The right agent will let you focus on what's important to you more than he or she focuses on a commission from the sale.

Buying real estate in Maryland is something that can prove to be a great long term investment - provided you make an effort to get into the right home at the right time. Knowing what you are looking for and choosing a great real estate agent will ensure that you're thinking about all of your options and choosing a home that will be ideal for you and your family.

Buying Real Estate Steps

Buying Real Estate is part of the American dream. For those who have never been down the "buying real estate" path yet, you just...

1. Get Pre-Approved. Even if you don't think you can afford it, or are concerned about a down payment, or your credit - the first thing you should do is talk to a skilled mortgage lender. It's their job to help you fix your credit, tell you how much you can afford, and help make it all happen. They will advise you if a down payment is needed (it may not! Many people arrange to buy a home with nothing down, $500 down, or 5% down), how much your monthly payment will translate to (i.e. tell them you want to spend $X a month, and they'll translate that into a purchase price of $Y). If you need to repair your credit, they'll be able to refer someone or give you some tips and help on how to fix it up.

2. Once you meet with a mortgage lender, you'll get a letter of pre-approval. It looks informal, but what matters is the listing agent (representing the sellers of a house you later want to buy) calling them and doing some research on whether you can in fact close and purchase the property. You then take this letter to a Realtor (R) / Real Estate Agent (note: Realtor is a real estate agent that adheres to a code of ethics; for practical purposes they're essentially the same, though a Realtor(R) has more accountability and is therefore more highly recommended). This is step 2 of buying real estate.

3. The fun part: Shopping! Step 3 of buying real estate usually involves you looking at a bunch of properties on the internet, driving around some neighborhoods, then when you see some homes you think you might like, just email or call your agent and ask to go see it. Don't get too hung up on this, and at first, go see some houses even if you know it's not quite right - just to get some ideas of what you like and don't like. On paper, or on the computer, a house is just a bunch of numbers - 3 bedrooms, 1873 square feet, etc. - but in person, you'll find that the "bones" of a house, they layout, and the materials vary widely. On each home, communicate what you like and don't like to your agent. Ideally, you should do this on each home, and by listing your favorite points, and factors you didn't like, you'll help your agent slowly hone in on what you really want. This is step 3 of buying real estate, and it usually turns out to be more work than you expect. By the way, it's OK if a house or condo or lot seems OK on paper, but just doesn't feel right. Trust your gut...buying real estate is emotional and you want to feel at home. Usually, if something doesn't feel right, it's because it reminds you of some other home, and many times, people ultimately buy a home that feels like a home they lived in as a child and therefore feel at home in.

4. The exciting part of buying real estate comes when you find a home you want. Just tell your agent this one feels right, and you'd like to put in an offer. Let your agent do the negotiating for you, it's their job, and they get paid by the seller so the service is essentially free. You can call the mortgage lender back now and tell them you're finally buying real estate, and give them the purchase price you want to offer, along with any other expenses such as taxes and insurance. They can give you a more exact payment on the house, which you'll then give your agent a range to offer, starting low with a walk-away price. The agent helping you in buying real estate will know the conventions and strategy best for your local market and sniff out competing offers, etc. This offer will then be accepted or declined or counter-offered.

5. The nerve-wracking part of buying real estate is closing the actual transaction. Once your offer is accepted, you then start a 2-way "dance" called "escrow" or "under contract" or "closing". This means the further you get into the deal, the more committed you are financially, and the more committed the seller is because they're packing their life into boxes. Expect a bit of buyers remorse - it always happens about a week in, and just remind yourself why you like the house and imagine your life in your new home. Also, expect that the closing date is just a guideline, and it could be earlier by a few days, or later by a few days. Most commonly, people close in about 30-45 days. Depending on your state, you'll sign a new loan on about day 25 or day 29, and then move in about day 30 (or 45, depending on your contract period). You'll sign a binding loan and get keys, the seller gets cash (and their old loan paid off, if they have one), and the bank gets an enforceable contract that you make house payments toward. Once it "records" the deal is 100% done, you own the home, and about 6 weeks later you'll make your first house payment to the bank.

Buying real estate is fun, and can make a big impact in how you live your life. For most Americans, buying real estate is one of the most important financial investments they ever make, and regardless of market it continues to prove a good investment simply due to inflation if not market appreciation. Just as your grandparents paid 15 cents for coffee and bought their first house for what seems like little money, so will your grandchildren (or you in your old age!) look back on buying real estate that first time as "cheap". Back when people were buying real estate for $5,000 for a home, the average income was only $1200 a year for some... our relationship with money changes over time. Once you cross the buying real estate bridge, you'll not only build wealth - but you'll build a home filled with memories as well.

What You Need to Know about Buying Real Estate

According to the Real Estate Roundtable (non-profit public policy entity based in Washington
D.C. that works on public policy issues concerning the real estate industry), real estate
plays an important role in the economy of the United States as a whole. It generates 1/3 or
an equivalent of $2.9 trillion worth of GDP (gross domestic product) that results in the
creation of 9 million jobs. In addition, real estate is the major source for about 70
percent of local tax revenues that are used to pay for public schools, health services,
roads, peace and order, and other essential services.

That is why many individuals are attracted to buying and selling real estate properties for
a profit. Real estate market is one of the active markets in the U.S. economy, with real
estate brokers and developers bidding on different properties available for sale and
searching for hot properties from MLS (Multiple Listing Services). They will try to make
more money out of these properties and attempt to sell these properties for about 30 to 40
percent of its original purchase price.

With the continuous competition rising among different real estate players, there are things
that you need to know about buying real estate properties. Of course, you do not want to
spend much of your money acquiring a real estate property that is not properly maintained.
In the same manner, you would not want to purchase real estates that are overpriced by more
than 50 percent, excluding applicable taxes and fees.

Here are some of the things that you should consider when buying real estate properties
(especially those who are first-time buyers):

1) Value Does the property have a good value? It is a common procedure that banks will
conduct an appraisal to protect their interest on the property. In case that the value of
the property is lower than the contract price, you must renegotiate the contract price and
prove to the seller that it is not worth of what they are asking. However, in case that the
value of the property exceeds the contract price, then most likely you got a good buy based
on the value.

2) Condition as previously mentioned, you must not spend your money on real estate
properties that are not properly maintained. You should always conduct a property inspection
to make sure that it bears no deficiencies.

3) Parking make sure that there are parking spaces allotted (especially if the property is
for commercial purposes). You would not want your visitors to park their vehicles several meters away from the property.

4) Safety- many real estate buyers are focusing on the value and condition of the property
that they often forget to inquire about the neighborhood where the property is located. If
you are familiar with the area, then it is not a problem (whether you will stay in that
property for good or you will lease it to other individuals). However, you might as well
check the premises for any obscure atmosphere (high crime incidence, for instance) so that
you will be able to establish the safety around the neighborhood to yourself or to other interested buyers.

Make sure that you consider the aforementioned essential aspects when buying real estate
properties. Keep in mind that the success of your real estate purchases lies beneath on your purchasing strategy and not just on what the seller tells you.

Why It's Easier Than Ever To Buy Real Estate

The opportunity to buy real estate is one that beckons to people form all walks of life. Home ownership is one of the dreams which millions, if not billions, of people all over the globe have in common, and those who do decide to buy real estate are, in all probability, making the biggest monetary expenditure of their lives.

People may save for years just to get the down payment to buy real estate, and then will have to be responsible for paying off their mortgages. Deciding to buy real estate requires the confidence to know that the property you are purchasing is likely to increase in value, and that you will be able to maintain it and to stay current on your monthly payments.

In today's real estate market, most of those choosing to buy real estate for the first time are in their late twenties, an age significantly less than the average of forty just a generation ago. But this difference, when seen in the light of current economic trends, is really not very surprising.

Higher Personal Income

As interest rates have gone down, personal income has risen, so the cost of home ownership as a percentage of a homebuyer's annual income is now at its lowest point in decades. Currently the full price a home will average about four years of a prospective buyer's salary, as opposed to the seven to nine years in years past.

Lower Interest Rates

Annual mortgage interest rates, which had been as high as fifteen percent at their peak, average around seven percent today. This means that those with higher incomes than before are also now benefiting from lower monthly installments on their home loans. With lower interest rates, those purchasing homes can now afford to buy real estate [http://www.1realestatehelp.com/Articles/Buy_Real_Estate_Online.php]

far more expensive than they could have purchased in years past.

Easier Loan Procedures

Banks and lending institutions have relaxed some of their loan procedures, and are now issuing home loans with competitive terms ranging from five to twenty years. There are even, for the creditworthy, preapproved loans to buy real estate, but they do require an excellent credit record.

The person wanting to buy real estate can have the loan within a week after the lender's has analyzed the loan application, and looked at the appraisal of the property being purchased.

In recent years, many of those who had formerly chosen to rent their homes are being confronted with consistently rising monthly rents, as their landlords try to compensate for rising utilities, taxes, and insurance costs. More and more renters are finding that what they pay in rent would entitle them to buy real estate in which they could build up equity, and also have an investment the value of which, as the value of real estate almost always does, increases through the years.

Buy Real Estate Leads - Improve Your Real Estate Business

Do you spend most of your time searching for great real estate leads? As a real estate agent or broker you require leads that help you generate business and keep the cash flowing in.

With time, the real estate industry has changed and become more dynamic in nature. If you use the Internet to buy real estate leads then there are some interesting options available to you for this purpose. The aim of this article is to help you source new and authentic ways to buy real estate leads that work for you and are not a waste of effort and money.

Here are some of the sources available over the Internet that can be explored to buy real estate leads or just use some of these channels to find real estate leads on your own without spending much money:

Real Estate Networks: definitely a recommended option. Real estate networks deliver serious and authentic leads to your inbox. The potential homebuyers and real estate sellers visit many real estate websites in order to find reputable and qualified brokers in their neighborhoods. When you join a real estate network you receive email notifications when a potential lead is interested in buying or selling property in your area.

Real Estate Lead Generation Service: an advantageous service. Convenient and beneficial because when you buy real estate leads from them, you get pre-screened and authentic leads which are matched according to your specification. Say for example someone sources you out from Yellow Pages and leaves a message on your voicemail. Naturally, you will call back, but without having any idea about the requirements of that personal, or where they live or want to live, their budget etc. This can be a time consuming activity and can be a complete waste of time.

When you sign up for a membership with a real estate lead generation service you only get information that is relevant to you and you can choose to call whomever you would like to. So if you deal with only high-end clients, then you can avoid calling a potential lead that is just looking for a handy-man!

Don't Be Stupid! If You Buy Real Estate Out Of State, Avoid This Nightmare

A few months back I was in a seminar in Reno, Nevada. Actually I was the speaker at this event, though I do attend a number of real estate investing seminars to stay on the top of this industry. Anyway, during one of the breaks I was approached by a gentleman who was almost in tears over his experiences with out of state investing.

Why was this grown man so shaken up?

He told me that he had recently purchased a bundle of real estate properties in New Jersey at a price that he believed to be.60 cents on the dollar.

However, after closing he had quickly come to the realization that there was a major problem.

He asked me what I thought, and I asked him what was the market trend in the area he'd invested all that money into.

The truth is, he looked at me like I was a crazy man for asking that, as in he had no idea what I was asking- something fundamental when you look to buy real estate out of state.

For his homework that night I told him to research the location that he had invested in more thoroughly using proven techniques that professional real estate investors use, as well as hook up with a local referred real estate agent for some specific data I would need in order to advise him how to clean up the mess he had put himself in.

The next day, sure enough, he showed up with a whole stack of papers from real estate market research from sources I had given him to local comparables and more.

This is what he learned.

First, he had invested in the worst suburbs of New Jersey.

We're talking about the "war zone" areas here, if you get my meaning.

Strike 1: If you're not a local investor who has a team on the ground and specializes in lower income properties and are familiar with their problems... out of state investing there with those properties is NOT a good idea.

Secondly, he also learned through the reports I instructed him to have the real estate agent pull that not only did he NOT get these properties 40% below value as he had believed- in truth, he had paid an average of $10,000 more for EACH property than the Fair Market Value.

Big problem.

He bought 15 individual properties like that, all in one swoop.

Strike 2: If you don't know what you're doing, don't take someone else's word for it that a property you're buying is priced less than what it's really worth. Due diligence is key for successful investing- especially when you buy real estate out of state.

Needless to say, the man was even more upset than the day before, when he knew he had made mistakes- but did not know exactly just how bad his situation really was.

Unfortunately, though... this real estate nightmare gets worse.

With careful review, we investigated the properties and what they needed to even sell for Fair Market Value. The truth was that each property needed 5-10 THOUSAND dollars in fixup work EACH to even sell at fair market value.

That's money he no longer even had.

Strike 3: Don't buy properties that need fixing when you don't have money to fix them. Don't buy properties worth less than what you paid for them. Remember the golden rule of investing: you make your money when you buy.

Now, let's do some math.

Did I tell you that this bundle of properties was FIFTEEN properties?

Can you see how quickly those mistakes added up to a financial real estate nightmare?

I know what you're thinking.

Wow! That's a BAD situation. But, I'm sorry to say... once again, it gets even worse.

Much worse.

Guess where he got his 25% down payment money from for his out of state investing?

A home equity line of credit... from his PERSONAL RESIDENCE.

Yes, that's right.

He took a risky loan against his personal home to buy a bunch of properties in a state he knew nothing about, in a city he had never been to, at a price well above Fair Market Value- all while believing what he had been told that he was "getting a deal".

I know ladies, you would KILL your husband if he did something so foolish... so do your marital status a favor and make sure he reads my articles before he looks to do any investing out of state.

Or, before you do ladies-let's not be a chauvinist here!

Because the truth is that out of state investing can be extremely profitable.

IF you know what you're doing.

If you're not a local investor, though, you just need to know how to do some simple market research and learn how to evaluate the market trends before buy real estate out of state- things we teach people in our network.

And please people, don't come to me after you do something so stupid as that guy.

I know you're itching to see whether this guy's real estate nightmare could be cleaned up and how.

I'll save that crazy story for my next article How You Can Profit Even When You Buy Real Estate Like a Stupid Investor. Be sure to read it!

Buying Real Estate Within an IRA Account is a Good Way to Diversify

Buying real estate within an IRA account can help you insure your retirement and protect your profits from excessive taxes. So, more and more people are using their IRA for real estate investment, but there are pitfalls. Here's what to look out for.

You probably know that you have a trustee that is responsible for the maintenance of your account. He or she is probably responsible for managing a number of similar accounts, as well as performing other functions within the firm or brokerage.

Only a few trustees are experts at buying real estate within an IRA account. In fact, only a few brokers offer their clients that option. Most stick with traditional investments like stocks and bonds. And, there is nothing wrong with those types of investments. It's just that in an ever changing economy, diversification is the key to maximum growth.

In other words, if you want to use your IRA for real estate investment, you still want other assets. Relying on real estate alone is no wiser than relying on the stock market alone. The ideal IRA custodian is one that offers their clients a wide variety of investment options. A company like Equity Trust is a good choice.

Now, assuming that you have a self-directed IRA with the right custodian, you can begin buying real estate within an IRA account, if you have the time and the knowledge. You don't want to buy just any property, so you need to know which ones to look for.

If you are already an experienced real estate investor, then you know which deals have the potential to be profitable. The reason you want to use your IRA for real estate investment is to increase your profits. The costs related to the deal come out of the account and the profits go back into the account.

Those profits are either tax-free or tax deferred, depending on whether you have a Roth or traditional IRA. All in all, you can earn as much as 50% more per deal by using your IRA for real estate investment, rather than using other funds.

Now, if you have little or no experience, buying real estate within an IRA account can cause you a lot of stress. It's just as easy to lose money as it is to make money. You would be wise to get some help. Your account custodian cannot advise you. They simply do as you direct them.

Because using the IRA for real estate investment is growing in popularity, a few knowledgeable investors are offering their services to the inexperienced investor. If you fall into that category, then they can help you avoid the pitfalls and the unneeded stress by helping you locate the right property. At the very least, they will save you some time.

If you are still working full time and you have a family, time is a very valuable commodity. Do you really want to spend your weekends searching through the classifieds, driving around neighborhoods and looking for good deals?

Probably, not, but buying real estate within an IRA account may still be a good idea for you. You can use real estate to increase the value of your IRA and if you make the right deals you can secure your future faster than you could with more traditional investment types. You just need someone to help you find those deals.

Discover Some Rules For Buying Real Estate With Roth IRA

If you are interested in buying real estate with Roth IRA funds, take some advice from an experienced investor. There are successful examples of a roll over IRA buying real estate and there are some failures. Learn from the mistakes of others and you can be one of the latest success stories.

Everyone makes mistakes, but when it comes to buying real estate with Roth IRA money, mistakes are costly. Let's start with choosing the wrong custodian and go from there.

Here's an unsuccessful example of a roll over IRA buying real estate. A man chose to take a roll-over from his traditional account and chose a custodian that offered self-investing. He deposited the funds into the account well within the 90 day time period to avoid IRS penalties.

Once he started reading the fine print, he realized that the custodian he had chosen took 45% of his earned interest on un-invested cash balances. He also learned that for each transaction, he would be charged fees ranging from $25-$150. He did a little research and found a different custodian that only charged a reasonable annual fee, while offering more investment options.

When buying real estate with Roth IRA money, you will almost always have an "un-invested cash balance" and you are likely to conduct numerous transactions per year. So, per-transaction fees can really add up.

The man truly believed that a roll over IRA buying real estate was the right choice for him, but he realized that he had chosen the wrong custodian. Instead of transferring the funds, he took another roll-over that year.

The IRS only allows one tax-free rollover per year. So, the total dollar amount of the fund had to be included in "other income" at tax time. The result was a devastating bill that almost bankrupted him.

This man, whose name I won't mention, made two mistakes. First, he didn't read the fine print or shop around BEFORE he signed up with the custodian. Second, he failed to read the IRS rules for roll-overs and was unaware that transfers were a better choice.

Breaking the self-dealing or indirect benefit rules is responsible for some of the failures, when it comes to a roll over IRA buying real estate.

Buying real estate with Roth IRA funds must be kept an "arms-length". Your account cannot buy from you or for you. Those are some of the rules that you need to know before you begin.

Knowledge is everything when it comes to the success of a roll over IRA buying real estate.

A different man grew the value of his account from $20,000 to over a million in less than three years. He started out slowly by flipping vacant lots, making $1000 profit on each transaction.

Now, he holds the mortgages on several properties. He's only one of the success stories.

Buying real estate with Roth IRA money can be highly profitable, as long as you get the information that you need, ahead of time.

Considering today's economic environment, selecting IRA real estate turnkey solutions can be the best investment strategy for building your retirement wealth.

Visit my website now to learn more about investing your Roth IRA money in real estate. Using a turnkey solution can be the best investment strategy to accomplish your financial goals.

5 Steps to Buying Real Estate Within an IRA Account

Do you want to make sure you have enough money saved up for when you retire? Not sure that how you're investing now will provide you with a comfortable and enjoyable retirement? Then you should learn more about buying real estate within an IRA account- it can really add a lot to your retirement account's bottom line. This article will discuss why you should open an IRA for real estate investment and the 5 steps it takes to make huge profits with real estate.

When buying real estate within an IRA account, you need to hold your money in a self directed IRA account. A self directed IRA has a few benefits:

*You have sole control over what goes on within your account

*You have a much larger array of investments to choose from (like real estate) besides your everyday common securities

*You get to choose what you want to invest in!

Sadly, less than 4% of all IRA owners self direct their accounts. Most people are afraid of self directed their investments, thinking that it will take too much time, effort, and learning to do it all correctly. But, if you spend some quality time in the beginning learning about how buying real estate within an IRA account works, then it's not nearly as

difficult as you may think.

Here is a quick overview of how using an IRA for real estate investment works:

1. Locate the right custodians to help manage your account and convert your IRA or rollover your current retirement vehicle into a self directed IRA. Usually, you will not have to pay any fees for doing this.

2. Establish a company- specifically, a Limited Liability Company (or LLC). This LLC is created inside your self directed IRA.

3. Locate the right real estate deal- one that can be purchased well below the current market rate.

4. Make all necessary repairs and renovations to the property and make sure it's in a livable condition. Note that all expenses involved with this whole process must come out of your IRA account.

5. Locate a potential buyer for the property or find tenants that would like to rent it out.

After you either find a buyer or a tenant, understand that all the cash flow that comes out of your investment must go right back into your self directed IRA. So you can't make use of any of the profits now, but all the profits you make with your investment are tax free.

THE BAD NEWS:

Alright, I'm going to be completely honest with you. You should not go at buying real estate within an IRA account all alone. If you did, you would have to learn all about IRA real estate investing, setting up an LLC, finding the right deals to invest in that can get you a substantial profit (including all taxes and fees that go along with real estate investing), hiring someone to repair and renovate the property, and finding qualified buyers you can trust not to default on the deal.

Now THAT sounds like too much work, am I right?

THE GOOD NEWS:

There are programs out there that help people use an IRA for real estate investment with nearly no effort on their part. I know of one in particular, which provides it's clients with a "hands-off" approach to buying real estate within an IRA account.

How would you like to work with a knowledgeable and well-established company with plenty of investing experience that would hold your hand and walk you through the whole process of buying real estate within an IRA account?

How would you feel if this company would set you up with the right custodian, establish an LLC inside your account, find you the best deals to invest in, arrange to make all necessary repairs and renovations to the property, and even find you qualified buyers to take the property off your hands?

Buying real estate within an IRA account is sounding easier by the minute, isn't it?

Is it Really Possible to Buy Real Estate With No Money Down?

I have heard many questions over the years from students about whether or not it is really possible to buy real estate with no money down. The most frequent questions I get are from mortgage brokers and realtors. Since mortgage brokers are by definition trained to fund a loan based on bank requirements like 20% down payments, then by definition anything else seems to be beyond the scope of their possibilities. It has been my experience that many real estate professionals don't seem to understand the concept of "no money down deals".

Firstly, the definition of no money down does not mean "no money down". It simply means none of YOUR money down. It could be Uncle Bob's money, the sellers' money, or a loan from Aunt Sally. It could also be a credit line, a private investor, hard money lender or anyone else for that matter. It is very important to understand this concept.   Now, if you were to purchase a house and put down 20% which you borrowed from your relative, then you would have purchased the house with no money down. You can call it 100% financing or whatever you want to call it. As far as the bank is concerned you put down 20%. However there is a problem with that since as many mortgage brokers will tell you, banks want to know the source of the funds. When they see that the funds are borrowed and that you have no "skin" (your money) in the deal then they will reject the loan.

So, what is an investor with no cash going to do to get around this problem? The solution is to borrow ALL of the money to purchase the house for cash. If you borrow from Uncle Bob all of the cash then you can be a cash buyer. Cash buyers are very rare today and if you are a cash buyer then you can buy bank owned REO properties at a substantial discount to market value.   But Uncle BOB is not going to feel comfortable loaning you money to buy a house unless there is substantial security for him. Since banks loan money at loan to value (LTV) ratios of 70% Uncle Bob might be especially cautious and only agree to loan money at 60% LTV. Is this risky for him? Well it is less risky than conventional mortgages that are funded by banks. Why is it less risky? Well firstly, conventional banks loan based on a mortgage application, a credit score and an appraisal. But Uncle Bob is a little smarter than the average bank. He actually can go out to the property and inspect it himself. After all, if you don't pay him then he is going to get the property since he has the first mortgage.   So Uncle Bob is going to need to have enough knowledge of real estate to feel comfortable that if you don't pay him, and he gets your house that he will have a deal.

Uncle Bob is going to do his own comps and is not going to rely on an appraiser. Uncle Bob is going to spend days or even weeks investigating the property compared to the 30 minutes that an out of state loan officer looks at a file. If Uncle Bob is convinced that your deal is a good deal, then he is going to loan the money. If you are paying him 10% interest and the bank is only paying him 2% then Uncle Bob will make more money loaning on real estate compared to having his money in the bank. If Uncle Bob has done his homework then he will only fund a deal at 60% LTV or less. What this means, is that if he thinks the house is worth $100,000 he will only loan you $60,000 and no more.

Your challenge will be to find a $100,000 house that you can buy for $60,000. Being a cash buyer will make your job much easier because 99% of the buyers that are competing with you will be looking to get a mortgage. Currently it is very difficult to get anything other than an FHA or VA loan. Cash buyers are able to buy properties directly from banks for as little as 50 cents on the dollar. This is a once in a lifetime opportunity. So start looking for "Uncle Bob" or anyone that you know that has money. Then once you have an investor lined up begin looking for wholesale real estate deals. When you find a deal the mechanics will work like this:

House is worth  - $100,000

You purchase for - $60,000

Uncle Bob loans  - $60,000

Money out of pocket - $0

Now that you own the house, you wait 6 to 12 months for something called "seasoning of the title" and then you go to your mortgage broker and you tell them that you want to do a refinance. You want to get a conventional mortgage at 7% to pay off Uncle Bob at 10%. The bank will require an appraisal and if you were correct in your initial assessments the appraisal should come in at $100,000. If the bank agrees to give you an LTV loan for 70% of the $100,000 appraisal, then they will loan you $70,000. Assume closing costs are $5,000, so after paying Uncle Bob back the $60,000 you are left with the following scenario:

House value  - $100,000

Bank Loan - $70,000

Equity - $30,000

Cash left over from refinance  - $5,000

You just purchased a house with no money down. AND you now have $5,000 in your pocket and $30,000 of equity in the house. This is called distressed real estate investing. Your challenge is not finding Uncle Bob. There are many Uncle Bob's out there. They are called hard money lenders or private investors. Your challenge is to find a $100,000 house that you can buy for $60,000. That is the hard part. To do this you are going to need to find a distressed seller. If you can learn how to do that then you will have no problem finding the money.   Beginner distressed real estate investors think that finding the money and having good credit are obstacles to their beginning to invest in real estate. This is not true. The biggest obstacle is education. Learn and understand how and why you can buy a $100,000 house for $60,000. Understand and know what a distressed seller is and why they would sell a house for less than its current value. Then go out and start looking for a deal. When you find one, give me a call. Maybe I will buy it from you.