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The Easy Way to Buy Investment Real Estate

Jim Duffy — Sat, 13 Aug 2011 16:35:19 +0000

Last week John Adams, of Real estate, radio and print fame; and Dean Tilman, an experienced private money lender in Atlanta, and I hosted a webinar especially for real estate investors.

The market is absolutely perfect to pick up cash flow real estate in several areas around metro Atlanta – prices are low, interest rates are low – yet rents are stable and set to rise. So cash flow is excellent on these properties. Here, we talk creative ways to finance these properties.

Of course, if you are looking for the BEST outlets to buy Atlanta investment property, give me a call, and I will put you in touch with the best sources for the best wholesale or turn key investment property deals.

As always, if I can help you with financing, call me: 1-800-MY-LOANS.

A Millionaire at Any Age (And weaving your mortgage into the plan)

Jim Duffy — Sat, 14 May 2011 06:50:47 +0000

I recently saw an article posted on Facebook. Our own Atlanta icon, Clark Howard, wrote about how anyone can become a millionaire at any age. I thought it interesting, as it spurred a long-held belief that I have had in the business of suggesting and writing mortgages.

Here is an excerpt of Clark’s article:

“[...]here’s what you have to save each month to retire a millionaire if you start with $10,000 invested and your portfolio grows by 7% every year.

25 year olds have to save a little over $300 a month. That’s just $10 a day for the rest of their working lifetime.

35 year olds have to save $775 a month.

45 year olds have to save $1,850 a month.

55 year olds have to save $5,700 a month.”

That is a lot to save, the older one begins.

And the largest expenditure for most people is their mortgage, so that is a good place to begin. Refinancing Georgia mortgages can help, and there are two schools of thought.

Refinance to a lower rate, and be sure to save the difference every month. Dropping just 2 percentage points in rate can free up hundreds every month. If that whole amount is saved, it can be a big chunk of the money to save every month toward becoming financially independant.
Lower the term of the loan, maybe to a 15 or 10 year term. If your household has the cash flow to manage a lower term, then resolve to pay off the mortgage, then dedicate that entire amount that was going toward the mortgage payment to saving and investing.

Either strategy can work, so long as you commit to it. And, while we are on the topic of mortgages – right now some even higher rates of return can be gained by buying investment real estate. Prices are low, rates are great and rents look ready to rise. You have to be ready to buy rental property; but if you are, it can be a great addition to your portfolio and growth. Call me if I can help you plan your Georgia investment home loans.

Doing Away with the Mortgage Interest Deduction

Jim Duffy — Thu, 14 Apr 2011 17:42:33 +0000

This week President Obama gave a speech at George Washington University. Among many items mentioned, the President said that he was in favor of eliminating the home mortgage interest deduction.

The AJC ran an interview article in which Senator Mark Warner of VA had this reaction to the proposal to eliminate the home mortgage interest deduction, stating, “The whole sense here that you can do this without everybody having skin in the game just isn’t the case.”

Well, sure. We all have to tighten our belts to get out of the debt crisis that is looming in this country. That much I agree with.

But eliminating the deduction for home mortgage interest is not asking folks to cut back, it is raising taxes. And while raising taxes may be necessary to get out of our mess; it is not the place to begin. The beginning is to cut government programs and wasteful spending. Adding a new tax – which is the effect of eliminating the mortgage interest deduction – will harm housing as we are trying to catch the falling knife that housing has become around Metro Atalanta and throughout a large part of the country.

Not only will it hurt any housing recovery, it will also have those “unintended consequences” that so many of the governments recent actions have produced.

If we eliminate the home mortgage deduction, we would cause at least the following Unintended Consequences:

Foreclosures would rise further: 27.9% of all homes with a mortgage are underwater, according to Corelogic. Many of those homeowners are making their payments because they can afford to, even knowing they owe more than the home is currently worth. However, take away the mortgage interest deduction, and their payments just rose in step with their income tax bracket, say 25% or so for most. A good number of those folks will no longer be able to afford their mortgages, and will need to walk away from their homes.
The Government would take over Private Property: Currently, the GSE’s, or Fannie Mae, Freddie Mac and Ginnie Mae own or guarantee 95% of all new mortgage originations. If the elimination of mortgage interest deduction causes massive default, that property will be repossessed by those same government entities. That would not only cause economic turmoil, it would also be the largest infringement on private property rights by the government, ever.
Rents would increase: Landlords very often have mortgages on the properties that they are managing and renting. Part of the calculation regarding the minimum price that they can rent the property for is calculating the mortgage interest deduction as part of the actual cost to that landlord to own the property. If that goes away, and an average landlord is in the 25% income tax bracket, then they necessarily will have to increase rents by that same amount in order to be able to afford the property. That will get passed along to the tenant.
Communities would become unstable: Homeownership is key to creating communities that are stable. And that stability breeds better citizens, better places to bring up healthy, balanced children. Doing away with the mortgage interest deduction would create less stable communities.
Greater Economic Disparity: Homeownership through having and paying down a mortgage is also a sort of ‘forced savings plan’. The homeowner pays down the mortgage over time, and thus has and eventually pays off an asset – often the single largest asset that many Americans end up owning. The mortgage interest deduction encourages that at least, and at most makes it possible for many homeowners.

So, eliminating the home mortgage interest deduction not only skirts the real issue, that of cutting spending, but that action would cause grave economic turmoil and would be an infringement to our Constitutional rights. It would be the wrong move.

2011 is the Year of the Investment Property in Georgia

Jim Duffy — Sat, 01 Jan 2011 17:30:54 +0000

I have been closing 8-10 loans for rental property every month in 2010 – which is about 7-9 more than at any time in my career!

And, going into 2011, the timing is absolutely perfect to pick up a cash flow rental property around Atlanta. Think about it – rates are low, property prices are depressed, and rents are quite stable and look like they may be able to rise over the next few years.

If you have been considering buying a rental property or two, then definitely listen to this conversation on the topic with the King of Atlanta real estate investing for the past 20 years or so, John Adams.

So, if you want to look into buying investment property, then call me. I know the best rehab companies in metro Atlanta who can make the buying and management process fairly turn-key, and I will be happy to introduce you to them if you don’t want to take on the entire project yourself.

In the meantime, you can hear my Georgia mortgage updates on The John Adams Radio Show on 920AM WGKA every Saturday afternoon from 12 Noon to 2:00pm. I hope you can catch the show.

US Housing A Mere $4 Trillion Under Water

Jim Duffy — Tue, 20 Jul 2010 13:09:36 +0000

Bloomberg had a story a few days back on the lingering effects of the housing bubble…and what a pop that bubble caused!

Take a look at the chart:

The conclusion being that Americans will either have to pay off a boatload of this mortgage debt quickly; or home prices will need to appreciate just as quickly to make up for the shortfall.

And since neither of those are likely to happen, then where, exactly, do we stand? I mean, if we are going to profit from real estate, where do we stand?

Well, quite simple. There is little in the form of short-term housing gain right now. In fact, by nearly all accounts, now that the first time home buyer tax credit has expired, there is a lag in demand and we will probably see housing prices under more pressure, especially if (okay, when) mortgage interest rates rise.

Based on all of that data, where do I suggest you look to find a great deal with a good return on investment? Two places:

If you are in a position to purchase a home for you and your family, a place you want to call “home” for years to come, then do so now. But look for a deal on a home you and yours will be comfortable in. Think resale if the sellers are thinking in a wholesale mentality. Otherwise, think REO or foreclosed home, or a short sale. And if you go the short sale route, do two things – have a competent real estate agent to guide you through the process; and practice the virtue of patience. You will be happy that you did.
And, if you are in a home long term, then look at the metro Atlanta investment property market. I have been financing a lot of investment properties of late, and without even counting future appreciation on the property, I am seeing regular rates of return of 12% on your investment. And that is positive cash flow from the starting gates even after factoring for repairs, holding costs and management fees.

Opportunity abounds if you are in a position to take advantage of it. Call me if you are, and I will be happy to review the best practices I have seen, contacts that make the process turn-key, and review financing options that fit with your goals.

Investing in Atlanta Real Estate

Jim Duffy — Wed, 27 Jan 2010 14:45:53 +0000

“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” – Warren Buffet

We have all heard that quote before, and think we understand it. But acting on it is an entirely different thing.

I have over the past several months been working with a number of real estate investors picking up just terrific deals on Atlanta real estate. While the news anchors and commentators generally wring their hands wondering which wave will hit next to push real estate values down further, some sharp investors are buying Atlanta area real estate.

And, they make money as they buy, because they buy right. And that is the key. Rents, though down by all accounts, still are enough to cover the note, management fees and to set aside sufficient reserves for repairs and vacancies, right from the start. And the cash flow, tax benefits and future appreciation are there for the taking for these savvy investors.

Recently I was asked to participate on a podcast, which you can hear right HERE, with a nationally recognized expert on real estate investing, Jason Hartman.

Enjoy the podcast, and if you are interested in picking up an investment property or two, just let me know. I work with some of the pros in Atlanta who make it turn-key and easy.

How to Buy a Foreclosure Today

Jim Duffy — Sat, 25 Oct 2008 17:26:57 +0000

This is a video that I shot with my friend, Randy Watson, who is one of the leading Realtors by sale in Georgia. Since Randy has sold over 120 foreclosed homes for banks so far this year, and I have financed many foreclosures for investors and for owner occupants, I thought you might enjoy this brief sit with Randy and I to highlight a few of the pitfalls to avoid and advantages to enjoy when buying a foreclosure.

By the way, one clarification in this video that has been asked. Real Estate Investors should plan to put 15-20% down on an investment property today. If you are looking at buying a home for your primary residence, then financing is very attractive with 0%, or 3%, or 5% down payment.

To your success, should you decide to wade into the land of buying a foreclosure!

Opportunities Abound

Jim Duffy — Wed, 08 Oct 2008 10:46:15 +0000

A quote from Warren Buffet has been flying around the internet of late, and for good reason as it is right for the times, ”Be fearful when everyone is greedy and greedy when everyone is fearful.”

Well, I would submit that there has not been a time in our lifetimes when the general populus has been more fearful. Uncertainty surrounds us, in areas which neither you nor I can control. And uncertainty stirs more fear than the known bad event.

For the brave of heart, there is plenty of opportunity that you can control, and you should.

Here are a few:

Investment property: If you have ever thought of jumping into buying rental real estate, now is the time. A perfect storm is brewing. Interest rates are low, and less people can buy a home than two years ago, so there are more renters on the street looking for a roof over their heads. And, at least here in metro Atlanta, I have noticed home prices dropping dramitically in the lower priced homes, and in the upper end of the market. The middle of the market is fairly stable in many areas around Atlanta.
First Time Home Buyers: On top of the $7500 tax credit for First Time Home Buyers in place now through June of ’09, again, home prices in the first time buyer market are low, and rates are great. Sure, you will most likely need a down payment now, but there are creative ways to come up with that. See my post on that topic.
Shoring up your finances for what appears to be a prolonged period of economic downturn: If you have equity in your home, and have some credit card or other unsecured debt that you just cannot seem to get rid of, now may be the time to do a debt consolidation loan. Along with that, take a good, hard look at your expenses. And, cut where necessary. Financial stress is eating a lot of people alive. Don’t be one of them.

Call, let’s discuss that options for you. Opportunities Abound.

Investment Property & Debt Consolidation Change

Jim Duffy — Tue, 09 Sep 2008 12:55:23 +0000

I am getting calls these days from folks all around metro Atlanta with two requests; two sides of the same coin, really.

The first is from real estate investors, new or experienced. Who want to pick up properties they see as excellent deals. Last week an interesting call happened. An investor who bought and rented multiple single family homes in the early ’90′s then sold them all for nice profits at the beginning of this decade, called. He noticed that some of the same properties that he owned personally before were now on the market for the same price as he paid for them in 1991. And, he wants back in the game.

The flip side of that is another frequent call I am receiving these days. With the economy sluggish, a lot of people are feeling a financial pinch. Okay, squeeze. And I mean a LOT of people, not just related to the real estate industries. So, they are calling asking about debt consolidation or cash-out refinances. Many folks just need to get a hold on the credit card debt that is sapping their living expenses and strangling their monthly budget. So, pulling equity out of their homes is a good solution.

Lending Changes Affecting Investors and Homeowners

Fannie Mae recently proposed a few changes that will affect both real estate investors and homeowners who want to pull equity out of their homes and consolidate debt.

These new guides might have slipped under the radar for some with all of the news focussed on the government action with FNMA/FHLMC, but they are big changes.

Highlights:
- 1-2 unit investment property going form 90% LTV to 85% LTV. So, investors need 15% down payment.
- Cash-out refi on primary res. going from 90% LTV to 85%.
- Pricing Adjustments on investment property are increasing.

The old adjustments for purchasing investment property were (more on that in a moment):

LTV:

< 70 -1.500

70 – 75 -1.500

75 – 80 -2.000

80.01 – 85 -2.500

The New Adjustments are:

LTV:

< 70 -1.750

70 – 75 -1.750

75 – 80 -3.000

80.01 – 85 -3.750

Confusing. So let me clarify. The “adjustments” refer to required discount points that we must charge to get the loan. On investment property, the less down payment the borrower brings, the higher the discound points charged.

Only, most lenders don’t charge the points up front at closing. We roll them into the rate, and offer a higher interest rate, or premium rate, without the borrower bringing the extra fees to the closing table. Most times, that works best, so long as cash-flow still works on the property being purchased for investment.

Properties around Atlanta are plentiful that are good deals, and will cash-flow well, even with the increased loan pricing adjustments. If you are thinking of buying an invetment property, I will be happy to review the cash flow analysis on the property with you.

And, if you are interested in a cash-out refinance, remember that the changes in loan to value being capped at 85% of your home’s value applies only to conforming loans. You can still go to 95% LTV with an FHA loan. So if you want cash out of your home, let’s explore an FHA loan first. It is likely the better deal.