If you have already repaid your mortgage, you can take out another primary mortgage.

Taking out a second mortgage is an additional option to consolidate debts for those homeowners who still have a primary mortgage.

How sound of an idea is it to use a mortgage to consolidate your debts?

You should never use a mortgage to consolidate your debts if the interest rate for your debt is lower than the interest rate you would have on a mortgage.

This would mean that you are paying a higher cost for the mortgage than you were paying on your debts. This is not a sound financial decision.

There is a slight exception to this rule.

If you your current debt has some kind of introductory rate that will expire and leave you with an interest rate that will be higher than that of the mortgage, then a mortgage to consolidate debt is worth considering.

There are other factors, in addition to interest rate, that you should take into account when you consider using a mortgage to consolidate your debt.

When you have less than 20% equity in your home, you are required to pay private mortgage insurance.

If these premiums plus the amount of your mortgage without consolidating your debts is the same as or less than the amount of your mortgage with consolidating your debt, then you do not incur extra costs by consolidating.

However, if the private mortgage insurance causes your monthly payment to increase, then consolidation is costing you.

A lot of homeowners make the mistake of thinking only about the monthly payment of their mortgage in addition to what they are paying on their debts without consolidating in comparison to the mortgage with debt consolidating.

Take into account that when you consolidate debt with a mortgage, you are paying it over a longer period of time, which accounts for the lower monthly payment.

Before you apply for a mortgage, you should find out your credit score.

Chances are if you are having trouble with credit, then you have a less than perfect credit score.

Remember that your credit score will affect the interest rate and terms you receive on a mortgage.

If your credit score is below 600, the likelihood of you receiving favorable loan terms is low; not impossible, just low.

Keep in mind that when you use a mortgage to consolidate your debt, that the debt is not eliminated. Instead, you are transferring your debt from one form to another.

The best way to determine what it will cost you to consolidate your debts using a mortgage or pay them straight out is to use a mortgage calculator as well as a debt repayment calculator. Logic can be flawed, but numbers never lie.

Bankrate.com has calculators that will assist you in both of these calculations. Use the calculator to test out different loan amounts and mortgage rates to get a good picture of how much consolidating will cost you.

Tweet This Post

For a lot of people this can be a very attractive option.

The interest rate on the mortgage periodically adjusts based on an index.

Because of the varying interest rate, borrowers may notice their payments changing over time.

Adjustable rate mortgages are sometimes confused with graduated payment mortgages. With a graduated payment mortgage the interest rate remains fixed while the payment amounts change.

With adjustable rate mortgages much of the interest rate risk is transferred from the lender to the borrower. Borrowers benefit when interest rates on the mortgage fall. On the other hand, borrowers lose out when interest rates rise. Usually the loans are available when fixed rate mortgages are more difficult to obtain.

Key Terminology
Index - the guide used by lenders to measure changes in the interest. Each adjustable rate mortgage is linked to an index.

Margin - the part of the interest rate from which the lenders profits. The margin plus the index rate is the total interest rate. While the index will change throughout the duration of the adjustable rate mortgage, the margin will not.

Adjustment period - the period between interest rate adjustments, usually denoted in the format of 1-1. The first number is the initial period of the loan for which the interest rate will remain the same. The second number is the adjustment period. It shows denotes the frequency at which the interest rate can be adjusted.

Loan Choosing Tips
The index is one of the most important considerations in choosing an adjustable rate mortgage. Even though you don't have control over the specific index that is used by a particular lender, you can choose a loan and lender according to the index that will apply to the particular loan in which you are interested.

A lender you are considering can give you an indication of the performance of the loan in the past. The ideal loan is one that has an index that has historically remained stable. As you consider loans and lenders, make sure you also consider the margin rate that the lender offers.

Many borrowers wonder about the benefits of an adjustable rate mortgage since the payments can increase over time. In most cases, the benefit of an adjustable rate mortgage comes into play when the interest rate of the ARM is lower than the fixed rate mortgage. The possibility of a payment increase is sometimes inconsequential. This is true if you do not plan to occupy the house for an extended period or if you expect your income to increase over the life of the loan.

Avoid Negative Amortization
Negative amortization is a key watch-out when you are choosing an adjustable rate mortgage. This can occur when a particular loan as a cap on payments that keeps them from covering the amount of interest on the mortgage. As a result, unpaid interest is added to the loan, causing the amount of the loan to increase, even though you are making payments.

You can start out with a positive amortization on your adjustable rate mortgage but end up with a negative one due to interest rate increases. The best way to avoid negative amortization is to avoid adjustable rate mortgages that have a payment cap.

Tweet This Post

Too often, investors rush into buying a property for all the wrong reasons – "it's a good deal," a "bargain opportunity" and the list goes on. Then they wonder what happened when the investment either goes pear shaped or becomes a full time job.

If you are serious about building significant wealth from commercial property investment, you must have a proper investment strategy. This is a get rich slow business that requires patience, planning and persistence.

The key elements to any property investment strategy are:

* Get your personal financial affairs in order and make sure they are geared towards building wealth, not paying off consumer debt. Also, check your credit rating to make sure it is in order.

* Draw up a list of your criteria for property type, size and location. Be aware that each type of property requires a different set of skills to manage and offers varying rates of return. It is much easier to fit the property to your strengths rather than you try and change to fit the property.

* Study your local market so you can quickly identify opportunities that are within your capacity to act on. It's no use looking to invest in an area where you don't have on the ground knowledge.

* Be prepared to study and learn. Once you've spotted a possible deal, you need to be able to accurately value a property based on its condition, your return expectation, and your borrowing power. You need to understand why "what is it worth" is the wrong question to ask, and how to answer the right question "what is it worth to me?"

* Last, you need to learn how to structure deals and make offers too good to refuse.

When you have done this homework properly, you will be in a position to act decisively, reap the profits and keep them. Of course, you will need to consult regularly with your accountant on tax planning and asset protection, which are cornerstones of any wealth building plan.

You also need to consider what your overall portfolio will look like. Don't fall into the trap of buying all sorts of different properties and then end up with it being a full time job as you juggle dealing with evictions, skips, delinquencies, maintenance and bills.

Once your overall planning is done, the next step is to select your real estate team. You will need a good real estate agent, loan officer, tax advisor, and lawyer. These people are critical to your success because the investor with the best knowledge can quickly identify the properties to ignore and those worth considering.

Remember the old adage, "the quick and the dead" – the speed at which you can close a deal will give you the edge in any type of market. In addition, your advisors can point you in the right direction regarding finance, tax and legal issues.

Also, there is a good reason behind the catch cry, "location, location, value". You want a return on your dollar so you are looking for a property that requires some attention so you can add value.
One strategy is to buy real estate in up-and-coming area with new developments or renovated properties. This makes it easy to attract and keep good tenants and leads to greater returns.

Another tactic to add value is to buy properties in solid locations but require some maintenance or upgrading, such as improving the aesthetic appeal of the building, thus instantly improving its value with little outlay.

In regard to financing, banks are the most obvious first lender, but commercial loans are not quite as simple as the more commonly known residential loans and you should always seek professional advice from your accountant and legal advisor.

You should also understand the various methods of financing, such as double closing, lease options, and contract for deed.

Double closing has attracted negative publicity lately, but only because it is misunderstood. This is a perfectly legal, moral and ethical method of trading that has been around for 100 years or more.

A double closing is simply two back-to-back closings wherein the proceeds from the second closing are used to fund the first closing. Both closings are done in escrow, so the "middleman" can buy and resell a property for profit without putting up their own cash.

The main downside you have to be careful of is that the closing rarely goes to plan and there are delays of up to a few weeks, which can cause the plan to unravel. Make sure any contract allows for this and you should be covered.

Contract for deed is an agreement whereby the buyer makes installment payments on an arrangement similar to car financing. That is, the seller holds the title to the property while the buyer has the equitable title.

Lease options consist of two elements, the first of which is the lease. This is a contract for use and possession of the property, thus creating a lessor/lessee relationship.

The second element provides a purchase option, which is a unilateral agreement where the seller agrees to give the buyer the exclusive right to the leased property. This is NOT a sale.

Make the effort to prepare your own income and expenses pro formas from the beginning, or get your accountant to do it. Don't rely on operating results or projections presented by the agent or the seller – chances are the seller will overstate income and understate expenses, then claim ignorance if challenged.

The only way to know the investment value of what the property is worth to you, is to develop an accurate projection of income and expenses, which can only be obtained by researching the market and determining in advance what the cash flow will be once your investment and management plan is in place.

Also, you need at least a 20-25 % down payment to get access to the best financing terms. You can still get finance on a payment down to 10% but you will pay more interest, loan fees and private mortgage insurance.

Remember, borrowing to cover the majority of your acquisition costs can boost your rates of return, but too much debt expense can be dangerous if the market takes a downturn.

Tweet This Post

Although we know he has extremely creative financial and investment strategies, and expert legal advice from people such as George Ross, he has more than just the average investor. There are other investors who probably know as much as Donald does, or more. However, they do not have the successful qualities that allow them to create such wealth from commercial real estate and accomplish the goals Donald has in his years of experience.

Donald has three successful qualities that you need to possess to truly create the quality of deals and wealth he is known for. These qualities are his ability to build relationships with everyone he works with, his ability to sell the big picture, and strong, overpowering charisma that takes a room by storm.

Almost any deal can work to your advantage if you work on and develop these skills. You may have strength for one or another. However, in order to have this industry at your fingertips, you must master each one. Success is delivered through the relationship between these characteristics, as one is not as good without the other or by itself.

Being able to build relationships with everyone that you work with is absolutely critical in the commercial real estate industry. You want to rub elbows with the decision makers in your city; those who run the chamber of commerce and zoning and planning committees at every level of the city. Get past the gate keepers and speak to the core people asking for their advice and become close acquaintances on a first name basis. These relationships can be implemented before you even think about doing a deal where their influence may be necessary. Relationships will not only get you insider information, but will give way for special favors and a good word to others who may influence your accomplishments.

Charisma is the ability to ignite passion and motivation among all those who are in an ear’s reach of the person. Charisma allows everyone to breakthrough barriers that otherwise would remain standing. Those who are charismatic can make even opposing forces to agree on a common goal and move forward ambivalently. Donald can do just this- igniting passion and excitement that lines people up to follow in his direction. He becomes a true leader that others happily follow because they believe in him and his message. This characteristic will let you bring people on board that otherwise wouldn’t even think about working in your favor. It is a very helpful and powerful characteristic to possess.

The final characteristic is selling everyone on the pig picture- everyone who is influenced by the value created in the deal. The community, the city, builders, developers, banks and even businesses around the location in which the project is growing all need to understand what is not there currently. As you know, these projects that were once old, dilapidated buildings that did absolutely nothing but bring the city down, can be turned into multi-million dollar establishments that can change the value of the entire city.

Do you have these qualities? Do you see yourself having the same effect on others as Donald Trump has had on the many people he has worked for? Everyone can master these abilities with a little focus and practice. Study others who are successful and possess these qualities. And remember that they are most effective when working together, not standing alone.

Tweet This Post

One of the more classic approaches to commercial real estate investment is the buy and hold strategy. In this maneuver, you buy property that is valued at a fair price. It may be a few miles away from town or outside of a development area. You then simply hold the land for a number of years. While you do this, the city comes to you. Developments are going up all around you. Yours is the last piece of raw land around and every developer in the state wants a piece of it. You, the genius entrepreneur, then sell the land for millions more than you pay for it. It couldn’t get much better than this. While this is obviously the ideal scenario, it can work like this. As you know, land is the only commodity that they don’t produce any more of. Therefore the price of your land will eventually go up.

While there is a great deal of money to be made in this sort of venture, it can take a long time to mature. This is great for someone who has a big chunk of money that they want to sit on for a few years. There is no set time limit as to how long it will take you to win. You basically have to go with your gut on this one. Should you sell it five years from now for twice what you paid for it? What if in year six, Wal-Mart wants to move in and pay you 10 times what you paid? There is really no way to know. You have to get out when you feel the time is right. Look for the signs around you. If the trends of development in your area are coming towards you, wait for a while. If you’ve had the land for ten years and the city that you just knew would be the next boomtown turned into a ghost town, you might want to get out. This strategy can produce a great return and it’s a pretty passive source. You don’t really have to do anything except buy the land and wait.

Another great way to invest in commercial property is through the rehab market. This is where you buy a run-down property that needs a lot of work done. You fix it up with a little elbow grease. Then after it’s up to par, you put it back on the market and make a tidy profit. This is a growing segment in the real estate industry. There is a definite need for this as property is always getting old. The most important thing to remember in this type of venture is you make your money when you buy the property, not when you sell it.

You must find properties that are undervalued. If you overpay, no matter what you do to the property, you’ll still come out behind. You need to find properties that need a lot of work. This has the highest potential for a great return. Don’t get involved with a property that just needs a new coat of paint and the yard mowed. This will not make you any money. In fact, you’ll most likely lose money. Stick with the properties that need the most TLC and you’ll come out on top.

Another popular strategy is that of quick turning a property. This involves finding distressed properties. You search for a great deal that is extremely undervalued. This could be a property that is facing foreclosure or a bankruptcy. Someone may take a significant cut in the price in order to get out fast. This can benefit you, the investor, greatly. You then take the distressed property and put it back on the market quickly. Since you don’t have to sell quickly, the property will get fair market value and you can make thousands of dollars in profit. As with rehabbing property, the key is finding cheap properties that you know are worth more. This is where all of the money comes from in this type of transaction. If you know the market, you can do very well with this type of deal.

For investors that already have a good sum of money saved up, there is another form of investment that is very appealing. Professionals who want another steady income can invest in expensive real estate that is already a great performing asset. This could be a luxury apartment complex or condos or any number of properties. The investor then takes over the cash flow that is generated by the subject property. They will most likely leave the existing property management in place and just take the steady cash flow. This is a great form of investment for those that are looking for a passive source of income from their investment. People who would benefit from this are usually very busy and already successful in some other walk of life. They understand that the only way to create wealth is through multiple sources of income. Diversification is the key.

Whichever method of commercial real estate investment you decide on, make sure it’s the right one for you. Consider all the factors carefully before making your decision. Just remember that you too can succeed in real estate investment.

Tweet This Post

Developers are purchasing run-down apartment buildings in properties that are close to jobs and schools, converting them into affordable condo units, and refurbishing them with more extravagant upgrades, such as carpeting and stainless steel appliances. They then will revamp the common areas and put them on the market. To help them sell, many are including incentives and even offering to pay the closing costs for buyers. Many first-time homebuyers and retirees
are purchasing them as they feel more secure.

Luxurious condos are also on the rise. While the ownership of these are centered more around a buyer looking for a quality lifestyle, extravagant amenities, and great locations, there are many that are willing to pay the price. In Florida last year, a 4,800 square foot condominium was sold for $4.65 million dollars. In 2005, California experienced a 90% jump in condominiums priced over one million. There were 1,677 condo sales, all in the one million dollar price range.

Many of these luxury condominiums are located in areas of wealth and many have top-notch views. Amenities in such luxury condos may include quality furnishings, such as appliances, granite counter tops, and window treatments. Many luxury condo buyers like the fact that the properties are secure and feel their items of wealth are protected in this type of environment and they don’t have to pay the added cost of security.

Condo hotel developments are on the rise in larger cities, as well. This type of luxury living affords one the opportunity of living in their own condominium with all the amenities of hotel living, such as room service, maid service, and concierge service. Research shows the average condo hotel buyer to be between the ages of 35 and 50 years old and many simply are purchasing them as either an investment property and vacation property.

The 576-unit condo hotel, the MGM Grand in Las Vegas, sold all its units during its preconstruction stage within a two month period. In other areas, such as Florida where the first condo hotels were developed, sales are doing well. In many of the areas, such as Miami, there isn’t any undeveloped land available. Therefore, developers are simply taking advantage of the market in any way they can. These condo hotel sales are hot and when they are not on the water, they offer luxurious living at an affordable price.

There are several reasons why many prefer condominium living over a single-family dwelling. Many consider themselves to be living in a community within a community. While there may be strict regulations or rules in the condominium development, most find themselves feeling safer, as well as more involved, than they were when they lived in a single-family dwelling. Condominium developments generally charge a monthly fee to all owners to take care of the outdoor maintenance, as
well as security of the building and upkeep of the common area. This allows the condo owner to simply enjoy all the amenities of condo living.

The fact is condo development is on the rise all over the United States and Canada and will continue to do so as long as there are buyers. These condo buyers are simply looking to purchase the lifestyle of condo living. For many, feeling more secure in an affordable home, being pampered by a doorman, and living close to the city is what condo living is about.

Tweet This Post

What are some sources for buyers?

Your local real estate investment club is a great resource for buyers. If you are an investor it is absolutely critical that you know the investors in your area and have contact with them. When you meet them find out what part of investing they focus on and take note. Certain investors at your local clubs may not be interested in buying properties from other investors because it is not their particular concentration. But those that are looking for those types of deals are great. You know they are investors so your real estate investment clubs should be your first source for creating your buyers list.

Another source for potential buyers is from signs and classifieds. When you see any advertisement that says “We Buy Houses” or any other advertisement that is clearly from an investor, write down the number. When you get home call the number and just start talking to the investor. Find out what sort of properties they are interested in. Take notes on each conversation that you have and keep meticulous records

One of the best sources for a buyers list is your local section 8 office. Call your local office or visit them and get a list of the local landlords in your area. This will give you a large list of people who are active in real estate investing and are potential buyers. Again, once you have the list contact each investor and talk to them and try and get a feel for what types of properties they are looking for. On a side note, you may also be able to find a burnt out landlord that would be willing to sell you their rental property or properties at a discount. So not only can this step help create a buyers list but you may also generate a few good leads from this easy step.

Remember when you are collecting all these names to take lots of notes. Get each persons contact information and as much other information as you can. One critical piece of info is the email address. When you have a property and you have 100 emails of potential buyers, all you have to do is send out one email and you have reached 100 potential buyers in literally seconds. Regardless of the strategy I am going over next, this is a very powerful way to flip your properties very quickly.

So now you have a buyers list, what next?

The next step that I recommend is to sort your buyers list. The reason you do this is to take away a lot of the hassles you might face. If you have your list separated into an A, B, C, and D list; you will find wholesaling a lot easier. You're A list may be those that can bring cash to the table within a week. Your B list may be those that have pre-qualified for a specific loan amount. Your C list may be those who have not pre-qualified but you believe could be able to get the financing in a month's time. Then your D list may be those who you have no reason to contact because you don't believe they will be able to get the money from anywhere.

However you divide your list up, this process will help out because you simply progress down your list. Start with your A list then your B list and so on down the line until you have a buyer and the property is sold.

I have also found it helpful to have a website where you can put pictures and descriptions of your properties. This however is not necessary however due to a new program a good friend of mine has created where you can list you properties and anyone can view them. To listen to an interview I conducted with this person and find out more about his program visit .

I hope you have found this information helpful and you are able to grow your buyers list bigger than ever before. To find out more strategies for wholesaling as well as other investment techniques, please visit us at .

Tweet This Post

Capital gains is something that not many of us worry about because we only have the one home which is often only sold in order to buy another property. Usually the next property will cost more money and will be a like-kind property so the question of capital gains tax never arises.

However, until now, there has been a little known tax clause which had taxed the most unsuspecting of people with capital gains. These people are newly widowed women, who suddenly find that they will now be taxed as a single woman. On top of losing a spouse, they also had to worry about losing a large chunk of their assets in the form of money from the sale of their family home.

When a home is sold, it has usually been the property of joint owners (most commonly husband and wife) and each owner is allowed to claim $250,000. This means that, for tax purposes, the average couple can exclude up to $500,000 of gain - provided that they have used the house as a principal residence for a cumulative two of the previous five years.

In most cases, being able to 'write off' a $500,000 profit margin means most of us are not concerned with capital gains tax.

But what happens when a spouse suddenly dies? The capital gains or the profit allowed on the sale of the house is now only one person's allowance of $250,000. If you and your husband were married in the 1940s and lived all your life in the same house, then death of one of the spouses would incur heavy taxes on the sale of the property.

The IRS has just stepped in to change this situation, but with all the mortgage rate controversy, it has slipped by almost unnoticed.

Until now, the only way to qualify for the full $500,000 capital gains allowance was to sell your home in the same year in which your spouse died. In other words, it would be the last year that you could file a tax return as a married person, so it would be the last year that any taxation could be applied to the married -deceased- spouse.

Apart from the shock of losing a spouse and thinking about selling your home all in the same time period - what happens if your spouse dies in November? You have one month to get your act together!

Theoretically, most husbands or wives inherit their spouse's share of the property at what is called a 'stepped-up' tax basis, but now that the IRS has introduced new legislation for the spousal death situation, everyone can breathe more easily.

The new change in the law, introduced at the end of 2007, now gives surviving spouses a full two years to claim the "double" allowance of $500,00 on capital gains, even though, by law, they are now single.

Tweet This Post

Whether you are buying or selling real estate, you need to do the right talking to the right people in order to get the best deal.  Being or using a negotiator is the best way to make sure that you know exactly what is going on and are able to fall into the right piece of property.  Whether you are a negotiator or working with someone who negotiates, you will want to make sure that you walk into a home with your facts straight.

The first thing to do as a negotiator or to look for in a negotiator is to make sure the facts are there.  You will need to know going rates, real estate investments and the market, the trends that are in place, and what facts will be best for the properties that are being looked at.  Of course, this will mean that you want to spend time to find the right deal and the right piece of property.  Whether you are an individual looking for property, or are working with a negotiator, make sure that your individual needs come first.

If you are working with or as a negotiator, you want to make sure that they have your best interests in mind.  Often times, negotiators will try to sell someone on a deal just so they can receive commission.  This is not necessarily a good way to negotiate or find a deal.  Everyone should walk away feeling like they won with the investment in the property.  This starts with finding the right information and ends with making and signing the right contract.

If you are interested in real estate or just want to work with a negotiator, make sure that they fit your description of a good sales person to work with.  This will make a large difference in the property that you invest in as well as a difference in your ability to have your individual needs met.

Related articles by Zemanta

• Why Use a REALTOR When Buying a Home? #Realestate (visionaryrealtynews.com)
• Lawyers Provide Better Representation - Pt. 2 of 4 (raincityguide.com)

Tweet This Post

Flipping Properties

If you want to maximize your profits off of a property, then the way to do it is to flip properties.  Flipping properties is a term that is commonly used in real estate.  It is where someone will walk into a property, put in some small changes, and resell the property for more profit.  If you want to invest little and make more, then this is a great way to get into the real estate business.

Usually, you will begin flipping a property by finding a home that is under priced for the current real estate market.  These are usually called 'fixer upper' homes and are available all the time on the market.  Any type of foreclosure, home at an auction, or home that has been neglected can be bought for a lower price.  Flipping properties will most likely be done by dealers or retailers, but it is possible for anyone to take part in the art of flipping properties.

After you have found a home that needs some fixing, you will buy it like you would any other home.  Usually, you will be liable for going through the mortgage process and will sign a deed of trust for the property.  When you do this, you will want to make sure that you do it as a business instead of an individual.  As soon as the paper work is done, you can move into the home, make some changes, and put it back on the market for a higher price.

Renovating and reselling is the major art behind flipping properties.  If you want to stay ahead in the market and begin to profit, then understanding the basics of this and how to work as a business with real estate is one of the potential ways to make a living.  There are several who have worked with real estate and flipping properties that have had the ability to make a large amount of money off of the investments.

Tweet This Post