All Forum Posts by: Paul B.

If anyone here could predict future interest rates with any degree of certainty, I think they'd be trading futures and lighting Cuban cigars with hundred dollar bills.

So, it's time for you to break out your ECON 101 textbook and do a little critical thinking.

First, ask yourself why rates go up. They usually go up because the economy is overheating and the Fed steps in and throws cold water on the party.

So, what could happen in the next couple of years for that to happen? Do you think things are going to turn around so much in the next couple years that the Fed will be obliged to step in?

Two things worth thinking about as you develop your answer. For so long as unemployment is high, the economy is probably not going to move much. We would need to create about 10 million jobs just to get back to unemployment in the 5% range, and lately we've been creating only 100,000 or 200,000 jobs a month. So, you're looking at a few years, minimum, unless "the next big thing" comes online. Plus, we need about 125,000 new jobs per month just to keep up with the growing population.

Second, we'll be having an election in just under two years. Although I don't know that the current administration and the Fed are thick as thieves, it's atypical for the Fed to raise rates during a presidential election, setting aside tightening activity in the early part of the last decade. This, however, was consistent with what was happening at the time.

While I think the bias is for rates to move up somewhat over the next 24 months, I do not think there will be enough gas thrown on the economy to merit any substantial moves. And even if prime goes to 4%, 5%, 6%, or even 7%, that's still relatively cheap money.

Perhaps most importantly for you, though, what are your funding alternatives?

Jennifer, I don't want to speak for J., but I think he was talking about this from an investor's perspective. If you are looking at a property for your own home, that's different, at least in my opinion.

I am curious, though, J., why you feel that way even in investor situations. Seems to me that most foreclosures are a little beat up, and that many owner-occupants can't see past it. I would be curious to see what percentage of FNMA properties go under contract during that first-look period.

I know I've seen a few very nice duplexes that were FNMA properties, and I've never seen one go under contract during the first-look period. I don't think most owner-occupants want to be landlords, too.

I'm not sure what you mean about the amortization. I'm talking about interest only with a 6-month balloon. No real point in amortizing a loan secured by a house that is meant to be turned.

Are you talking about lower-cost private money that is based more on your relationship with a person or hard money that is based more on asset values?

For private money, I'd try to target a rate between 8% and 10% with up to one point, payable at closing, although obviously on the back end would be preferable. Usually this loan would be interest only for 6 to 12 months, depending on the situation.

For hard money, rates will vary greatly with the lender, your cash investment, your credit, etc. For the most part, though, I see most hard money lenders looking for about 5 points (always paid on the front end) and a 15% interest rate for six months.

I'd always use the borrowed money for the purchase and never for the repairs. What happens if you put all your cash into a deal and then the lender fails to deliver the renovation money? Now you are in something of a jam. Plus, if you're paying for the renovations with your own money, you're not going to be on a draw schedule, and you won't have to pay inspection fees.

Just to clarify, the foreclosure sales are not advertised in every local newspaper.

You need to find out which newspapers publish the legal notices for the specific counties that interest you. There is usually only one official newspaper for each county that does this. The chosen newspaper that carries these ads is called the "legal organ" for that county.

So, if you're looking for foreclosures in XYZ County, State, you should probably start by Googling "legal organ for XYZ County State."

I know you said you're planning on attending to increase your education, and that's a great thing. However, don't expect to be amazed by what you see.

These days, with so few properties having any equity in them when they go to foreclosure, you're unlikely to see any third-party buying. Most sales will be right back to the lender. That's good for us, though, because then the lender will hopefully mark the property down as an REO listing and make it worth an investor's while.

Also, buying properties at auction is very risky. You're buying without having seen the inside, and you have no idea what the house needs in terms of systems or structural repairs. It's a huge gamble.

However, there are usually other investors milling about, so it can be good from a networking perspective.

Hard to say for sure without knowing more about the location, competing properties, the potential for your repair budget to be way off, etc.

But, assuming that your numbers are correct, you could just use the basic rule, which is 70% to 75% of the ARV less the repair costs, or $133K to $144K.

Since it's been sitting for 6 months, a cash offer in that range may actually get their attention.

The second mortgage is not late. Why would they even think about a short sale when it's not past due?

Also, you will never get a short sale approved where the seller gets any cash at all (even $1, let alone $40K). You're asking the lender to take a haircut and then you want to give the seller cash?

Lastly, if there's that much equity in the property, the second will be happy to foreclose, pay off the first, and get made whole on the courthouse steps.

If there is this much margin in the deal, give the seller his $40K, bring the first current, then take the property subject to both loans, expecting to pay them both off in full when you turn the house.

I've had it at every closing. No big shakes.

1) If BiggerPockets put on a conference, would you want to attend?

Probably. Depends on the location, cost, length, and material.

2) Would you be willing to travel (fly) to attend such an event?

Yes.

3) Do you think 2 days would be adequate for a first shot at it?

Perhaps a one- and two-day option? The first day maybe for the less experienced, the second day with deeper tracks.

4) What kinds of ideas do you have for sessions?

Would really like to share best practices and successes for marketing.

5) What would a BP conference look like to you?

All serious people; no posers.

6) Of the real estate and other events that you've attended, what is the one thing that you've liked the most?

I have never attended a real estate event except for a foreclosure training program that I took when I was 16.

7) The least?

I would prefer that there not be any back-of-the-room sales. It's kind of a turnoff when the content is really just a pitch for another upsell.

Remember to think about cost of airfare and lodging options for your participants. Oh, and extra double bonus points for selecting Las Vegas.

Interesting thread on this topic here:
http://forums.digitalpoint.com/showthread.php?t=2104646

On its face, it seems obvious that pages that are being created only for search engine juice are being pushed down, while legitimate content is reaping the benefit. Simple enough.

However, the "follow the money/conspiracy theorist" in me says, "This is all being done with an eye toward increasing Adwords revenue."

If Google pushes pages higher that have Adwords AND that generate more clicks on those ads (higher CTR), they make more money.

Google may be about doing no evil, but they are also about making money.