Wednesday, July 27, 2011

The ANT
 AND THE
 GRASSHOPPER

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OLD VERSION: 

The ant works hard in the withering heat all summer long, building his house and 
laying up supplies for the winter. 

The grasshopper  thinks the ant is a fool and laughs and dances and plays the summer away.
 Come winter, the ant is warm and well fed. 
The grasshopper has no food or shelter,
 so he dies out in the cold.



MORAL OF THE OLD STORY:

 Be responsible for yourself!






MODERN VERSION:
 The ant works hard in the withering heat and the rain all
 summer long, building his house 
and laying up supplies for the winter. 

The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away.

 Come winter, the shivering grasshopper calls a press conference and demands to know why the ant should be allowed to be warm and well fed while he is cold and starving.

CBS, NBC, PBS, CNN, and ABC 
show up to provide pictures of the shivering grasshopper next to a video of the ant  in his comfortable home with 
a table filled with food.
 America is stunned by the sharp contrast. 

How can this be, that in a country of such wealth, this poor grasshopper is 
allowed to suffer so? 



Kermit the Frog appears on Oprah
 with the grasshopper  and everybody cries when they sing, 'It's Not Easy Being Green..'



ACORN stages a demonstration in front of the ant's house where the news stations film the group singing, We shall overcome.



Then Rev. Jeremiah Wright 
has the group kneel down to pray for thegrasshopper's sake. 



President Obama condemns the ant 
and blames  President Bush, President Reagan, Christopher
 Columbus, and the Pope  for the grasshopper's plight. 



Nancy Pelosi & Harry Reid  exclaim in an interview with Larry King that the ant has 
gotten rich off the back of thegrasshopper, 
and both call for an immediate tax hike on the ant to make him pay his fair share. 



Finally, the EEOC drafts the Economic Equity & Anti-Grasshopper Act
retroactive to the beginning of  the summer. 

The ant is fined for failing to hire a proportionate number of green bugs and, 
having  nothing
 left to  pay his retroactive 
taxes, his home is confiscated by the  Government  Green Czar and given  to the grasshopper.



The story ends as we see the grasshopper and his free-loading  friends finishing up the last bits of the ant's food while the government house he is  in, which, as you recall, just happens to be the ant's old house, crumbles around them because the grasshopper doesn't  maintain it. 



The ant has  disappeared in the snow, 
never to be seen again.

 The grasshopper  is found  dead in a drug related incident, and the house, now abandoned, is taken
 over by a gang of spiders who terrorize and ramshackle, the once prosperous and peaceful, neighborhood. 

The entire Nation collapses bringing the rest 
of the free world with it.

Moral of the Story: Be careful on how you vote in 2012 - 

ELABORATE WELFARE HOUSING PROJECT

2 comments
Can we keep doing this people? How about for people that ARE US Citizens and just to lazy to work?  Don't get me wrong. I have NO PROBLEMS with my tax paid money going to people who are severely mentally disabled. Those people need help. But from my experience in the rental business, I have found that about 95% of the people that have disability checks are perfectly capable of working. As a matter of fact, actually, most of them do work under the table jobs so they can scam the tax payer and still get their check. 

We can not continue to allow this crap to happen. It has to stop. Welfare fraud is out of control in this country and is simply something that we can not afford.

Friday, July 22, 2011

What Is Wholesale, What Is Not?

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REI of Roanoke has some posting guidelines pertaining to property that is bulk emailed to the membership. In order for a property to be sent to the group it is required that the property is being sold at what would be considered a wholesale price.

So that leaves the question to everyone, what is wholesale as it is a relative term that is based on personal perception.

I am writing up some guidelines that can be used as a general rule of thumb so you can get an idea if it will be a good one to send to me or not. If your property can not meet this criteria you will be best off marketing it another way as there is no investor in our group that is interested in reading emails about retail value property.

REI of Roanoke is an educational organization and is not interested in leading a novice investor the wrong way towards a property that was recommended by the group that they are going to lose money on. It is important to our group to have very strong moral and ethical standards and for every member in our group to succeed in their endeavors. That's what we are all about, working together and combining our collective knowledge to ensure that all of our members make responsible real estate investment decisions.

There are a couple different formulas we will use to determine if the property is wholesale or not. One for rental property and one for flips. Renal property MUST cash flow. If it does not cash flow it can not be considered wholesale. A passive investment is not a wholesale property. A passive investment is a full market value property sold to passive investors. I am not saying a passive investment will not ever make you money. I am saying a passive investment will not make you money until the house is paid for therefore it is not wholesale.

The maximum value of a rental property that can be bulk emailed to the REI membership is Rent X 50 minus the cost of any repairs that are needed. This is no where near what I pay for property but it still will cash flow by a very small amount so it will be accepted. If you saw my presentation to the group on doing a cash flow analysis you are aware that it is not possible for a property to cash flow over this amount.

For flips we will use a formula called the Maximum Allowable Offer formula. Most investors across the country that I talk with will not purchase a flip property unless it is priced 65% or less of the After Repair Value (ARV). These days when times are tough that number is often much less than that as your holding costs will be higher due to an extended time on the market. But REI will consider 65% of the ARV as being the MAXIMUM value that a property can be priced at in order to market it through the organization.

First determine what the After Repair Value will be conservatively.
65% of the ARV - Cost of Repairs = Maximum Allowable Offer
So lets break that formula down.

So you have confirmed that your property value will be $100,000 when fixed up and it will need $15,000 to fix it up.

65% of $100,000 - $15,000 = MAO
or
$65,000 - $15,000 = MAO
or
$50,000 = The Maximum Allowable Offer. So if you are selling that property in this scenario for $50,000 then REI will market it for you.

The ONLY exception to this is if you are selling an expensive flip. A $200,000 or more property. Some investors would be willing to pay a little more for a flip like this due to the larger spread.

If you are having difficulty determining if your property meets the criteria, contact me with the ARV and an approximate dollar amount of repairs and I will help you determine what price REI considers the maximum wholesale amount that can be marketed through our group.

Rent Escrow Due To Poor Living Conditions

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Landlords are all now subject to the Residential Landlord Tenant Act even if you only have one property.
Tenants that read this. You are REQUIRED by LAW to ESCROW your rent with the court if you have serious maintenance related issues that the landlord will not fix. You CAN NOT withhold money from both the landlord and the court. Rent MUST be paid to the court and the judge is the one who has the authority to make a decision on what to do. YOU do not have that decision.

Thursday, July 21, 2011

Interesting Things That Can Happen With A Government Shut Down

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So they shut down the Federal Government because these congressmen can not behave themselves and spend our money in a conservative and logical manor. I say go ahead and do it. However we all know when they shut it down instead of shutting down all of those programs and agencies that we will not even know are gone which is more than half of the federal government, they will more than likely shut down things that will impact the most.

Here are some interesting things provided to me by one of our Mortgage Broker members that they could do to the Mortgage Industry.

FHA Case Numbers: For each FHA loan, we are required to order a FHA case number. This number is generated before an appraisal can even be ordered. With a shutdown, we may not be able to order case numbers. Because of this, it is critical to let us know if there is a contract executed on any loan, so that our office can go ahead and order a case number without risking the loan being on hold during a shutdown. Note: with the new FHA guidelines, a contract must be executed before a case number can be ordered.
The ability to close FHA loans is questionable, depending if HUD keeps its website running to obtain FHA case numbers and CAIVRS (During the November 1995 shutdown, case numbers could not be obtained, but this was prior to the internet and was a manual process). The shutdown in 1995 mainly caused a delay rather than a drop in FHA loan origination, but if lenders decide to stop accepting FHA applications, it could be a problem. I think we will see delays but not a complete shutdown of the FHA.

4506 IRS Transcripts: Each loan requires the verification of at least one tax return by the IRS to verify the numbers that each customer presents us on their tax returns. During a shutdown, this process would be delayed as the IRS wouldn’t be at work to verify the transcripts.

Verifying Employment of a Government Employee: We are required to verify the employment of each customer. If the customer is a federal government employee, we would be unable to verify his or her employment during a shutdown.

FEMA: Homes in a Flood Zone: Homes that are determined to be in a flood zone would not be able to close as flood insurance could not be obtained.

USDA: During a shutdown, the USDA office would be closed because they have government underwriters that insure behind the lender.  With a shutdown, we would see delays with all USDA loans.

VA: Like the FHA, the disruption is possible -- but not absolute -- during a shutdown. This would all depend on if they continued to allow their website to function. A disruption would cause delays in VA appraisals and the issuing of certificates of eligibility.  If the website was closed during a shutdown, we would see delays in all VA loans.

Virginia Energy Efficiency Rebate Program

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The Virginia Energy Efficiency Rebate program works very similar to the program the Federal Government had that recently expired. Money is taken from the tax payers and turned around and given to people who are making their homes energy efficient. 

If you are interested in getting some of your money back Go Here

About 5 million will be available on this round. You will be eligible to reserve funds for rebates for 20% of the costs of qualifying energy conserving things you do to your home. Rebates will be calculated at 20% of the documented cost of the following eligible project items up to $595 per residential property address.

1. Oil furnace (lets get off our oil dependence by installing oil furnaces???)
2. Gas, propane or oil hot water boiler
3. Insulation and air sealing
4. Replacement windows and exterior doors
5. Storm doors

An energy audit will be rebated for the cost of the audit, up to $250.

The costs can include labor costs if a contractor installs the item but not your labor if you do it yourself. You can get a maximum rebate of $595 so you can spend up to $2,975 on your project to get the maximum rebate.

If you put in a Geothermal Heat Pump you can get a rebate for 20% of the cost up to $2,000. So you can spend up to $10,000 on the project to get your maximum rebate. There is also an appliance rebate program.

Financial Assistance For Your Notes That Are Non Performing

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 EMERGENCY HOMEOWNERS LOAN PROGRAM

If you (the bank) are having problems with getting paid by anyone that you have done owner financing with and they are 2 or more months behind, they may be qualified to get help to pay you back.

People who qualify for this 1 Billion dollar tax payer funded program will receive an average of $35,000 each and up to $50,000. They must have had at least a 15 percent drop in income that the government considers to be beyond their control such as underemployment, unemployment due to the economy or an illness.

The federal government is robbing the tax payer blind by thousands of programs such as this. And you will have to pay it back. I would personally prefer to see that they lose their house if they can not afford it so the market can correct itself. Those who do have money will purchase their property.

The loan is a 0 percent interest loan that the government decided the tax payer will consider "forgivable".

Deadline to apply is July 22nd 2011. 

Tell them to go HERE if you need to get paid.

Tuesday, July 12, 2011

Unemployed to Get Year's Break on Paying Some Mortgages

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Photo by Inman News
Loan servicers collecting payments on FHA-backed loans must allow qualified borrowers who lose their jobs to miss up to a year of mortgage payments before starting foreclosure proceedings against them, the Obama administration announced Thursday.

The FHA's current three to four months of required unemployment forbearance is "inadequate for the majority of unemployed borrowers," Housing Secretary Shaun Donovan said in announcing the change.

"Today, 60 percent of the unemployed have been out of work for more than three months and 45 percent have been out of work for more than six," Donovan said. "Providing the option for a year of forbearance will give struggling homeowners a substantially greater chance of finding employment before they lose their home." Although not all borrowers will qualify for the special forbearance program, the administration said that it's removing upfront hurdles to qualification. Servicers must provide any borrowers who are denied forbearance with the reason for denial, and allow the borrower at least seven calendar days to submit additional information that may change the servicer's evaluation.

All FHA-approved servicers must participate in FHA's loss mitigation program, which includes the special forbearance program.

The administration said that it hopes that the changes will "set a standard for the mortgage industry to provide more robust assistance to unemployed homeowners in the economic downturn."

All servicers participating in the Making Home Affordable Program will also be required to extend the minimum forbearance period to 12 months "wherever possible" under regulator and investor guidelines.

Originally posted on Inman News.
 

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