5 Steps To Successfully Buying Bank Owned Property

How do you buy bank owned foreclosure property?

How hard is it to buy bank owned homes? Why is it so attractive? What challenges have made it difficult for home buyers and real estate investors to purchase these properties in the past?

Buying a Bank Owned Property in 5 Easy Steps:

1. Find lenders with REO properties
2. Identify those which can, and are selling foreclosure homes
3. Get in touch with the right contact
4. Negotiate a great deal
5. Close the deal and get your keys

Sounds easy, right? Unfortunately, while it sounds simple, it has still proven challenging for many buyers. So what struggles do real estate investors and home buyers face in this process? What are the solutions?

What is ‘Bank Owned Property’?

‘Bank owned property’ normally refers to residential homes and commercial real estate that a mortgage lender has repossessed. This frequently happens when a home or business property falls into foreclosure. When a borrower falls behind on mortgage payments, the property enters the foreclosure process. If not fixed in time, the property will be sent to foreclosure auction. If it is not sold at auction, the property becomes real estate owned (REO) by the lender. There are actually many other reasons that a home can fall into foreclosure. It isn’t just due to missed monthly mortgage payments. This can include:

• Delinquent property taxes
• Balloon mortgage balances that can’t be paid
• HOA and condo dues and special assessments
• Forced placed insurance fraud
• Lender mistakes

While foreclosure auctions have generally become very busy, not all properties sell. In fact, quite a few do not. This can be due to auction rigging fraud, because the amount demanded is too high, or the property appears undesirable to those bidding. This has resulted in U.S. banks and credit unions being lumbered with tens of billions of dollars in REOs.

Why Buy Bank Owned Properties?

Bank owned homes have been in high demand with buyers. These foreclosure homes offer the promise of being great deals. However, that is not always the case.

The perception is that banks desperately need to get rid of these non-performing assets. In turn, they’ll sell them for pennies on the dollar to get rid of them fast. This has often been the case. But it isn’t always the rule. Despite how much lenders might like to sell distressed homes fast, and even be willing to do it cheap, there are challenges. These issues can include:

• Title and legal issues which can prevent the sale
• Accounting rules and a need to make the numbers
• Logistical and staffing challenges
• Greed
• Unrealistic price and value opinions
• Difficult selling process

Banks, credit unions, and government do sell off these properties. They often do it in a big way. Many buyers have found amazing discounts on bank REOs. But assuming you can walk in to your local bank branch and negotiate from a position of power isn’t always realistic. Rarely will they beg to sell you homes, even if it looks like they need to. Done well, buying bank owned homes can be incredibly profitable. Regular home buyers may find they can score a great deal on the home of their dreams. Real estate investors may be able to use this as a channel for buying distressed properties in bulk on a regular basis.

The Struggles of Buying Bank Owned Homes

Thousands of real estate investors and homebuyers have tried to buy bank owned homes. Thousands have given up. If it was super easy, there wouldn’t be any left. This doesn’t mean it isn’t profitable, but it does require understanding the struggles and solutions. Issues facing bank owned home buyers include:

• Difficulty on performing due diligence upfront
• Challenges in obtaining REO lists in bulk
• Property condition
• Difficult and lengthy negotiation processes
• Difficulty in ‘qualifying’ as a desirable buyer to bank property sellers

Property condition can be tricky. Properties selling at $10,000 or $20,000 may appear to be a ‘no-brainer.’ However, if it needs to be torn down at a great cost, it may be less of a deal than it appears on the surface.

There are many foreclosure and REO properties listed by banks, and available through the MLS. There can be deals in this pool. But the most appealing discounts are normally found by going directly to banks to find off-market deals they aren’t advertising yet. This cuts out the competition. The key to success here is making the right bank contacts, and presenting a strong case for your offer to be accepted.

Summary

Bank owned properties can be very appealing. The mechanics of buying them isn’t too different from buying other homes. But there can be extra work and time involved in finding good off-market bank owned homes. Many might choose to skip this minefield and buy remodeled homes from other investors, or wholesalers that source these properties on their behalf.

Real Estate From A Billionaire’s Perspective

How do the world’s richest billionaires think about and use real estate investments 

Forbes’ richest billionaires, and almost 90% of U.S. millionaires place a high priority on real estate. They are famous for their impressive estates and massive investments. Yet, all too often those just starting out mistake these fruits with the ultimate goal. Or at least necessary accessories to boost their own egos and show the world how great they are. So how do the wealthiest view real estate? Why do they invest in it?

Privacy: One of the reasons the ultra-wealthy choose such elite penthouses and vast estates is for privacy. Once you start to make it big in real estate, you’ll discover not everyone is as happy about your success as you are. It often creates jealousy, and will make you a target – even from those you are trying to help. Keeping out the paparazzi becomes a necessity. You’ll want to create a cushion or hedge with land separating your home from spying eyes. Or move into an exclusive building with great security. This is why Equinox has done so well with its exclusive fitness clubs that come with a $26,000 membership price tag. A home is a castle, a retreat, and a place to get away from it all. Warren Buffett reminds us that his own home has been his greatest investment ever. These escapes can account for a significant amount of wealth. They become shelters from taxes and malicious lawsuits. They often represent a large part of inheritances to be handed down to the next generation.

Rights: For the sophisticated investor, real estate is more than a piece of turf or a home. The intelligent investor sees a far wider range of elements. Take a look at the investment histories of Donald Trump, Warren Buffett, John D. Rockefeller, and even King Solomon. They have leveraged oil and mineral rights, air rights, timber rights, and rights of use. There are many ways to profit from real estate investing. You can also use real estate to profit from other ventures. Have you been undervaluing the potential?

Safety and yield: Take a look at the most popular global investment destinations. They often aren’t the fastest growing markets. In fact, they are often quite the opposite. This is because the wealthy prize preserving their capital above all else. Income comes second. Speculating on growth through appreciation a distant third, fourth, or fifth. This is why they have continued to invest in Miami, New York, and San Diego. Southern California, in particular, offers a happy medium for those on their way up. Prime San Diego property is becoming an asset class of its own for wealthy international investors. While more suburban and rural parts of SoCal offer value and growth for those needing predictable traction.

Affordable housing is important: It might seem surprising to many onlookers, but affordable housing is heavy on the hearts of the wealthiest investors. Mark Zuckerberg and Facebook launched into multi-family housing for tech workers. Warren Buffett has said he is willing to pay more taxes to help others. One of Buffett’s longest running and most profitable investments focuses on affordable homes. Clayton Homes provides affordable manufactured housing and financing. Real estate is a superb vehicle for creating and preserving wealth. It is a smart choice for income investing and attractive yields. But, it isn’t just about getting. In fact; the most successful investors and real estate pros are those that give and serve others the most. Not everyone wants cheap, basic accommodations, but billions need them. It is critical to recognize that without affordable housing, businesses can’t have affordable workers.

It’s a tool for philanthropy: Real estate is not a destination or end goal for the world’s richest billionaires. Sure – they enjoy magnificent homes which enhance their lifestyle, but, they aren’t just for showing off. Their real estate investments aren’t just for personal gain. Forbes’ billionaires may enjoy jousting for position on annual ranking lists. Yet, most plan to give away the bulk of their wealth to charitable causes. Some plan to give all their business assets to charity. Bill Gates, Warren Buffett, and Tony Robins all have great homes. They are all serious about philanthropy, feeding the hungry, and solving social crises. Their investments provide them with a method to funnel billions to these causes. They get to enjoy fantastic living and lifestyles on the way. But their hearts and minds are more focused on helping others.

They are greener than you think: Some only see the spending, fancy cars, and obscenity of pollution from private jets and yachts. Those that do research will find those billionaires building and investing in homes are often the greenest. In many ways, they may be doing more for the environment and development of healthy homes than any other organizations. Clayton has green home models. Larry Ellison bought an entire island to convert into a sustainable paradise.

The 2015 Social Media Survival Guide for Real Estate Professionals

How can real estate professionals survive and thrive in the new social landscape?

The vast majority of real estate agents and investors now claim to be using social media. Most still aren’t seeing the results they hoped for. It is more challenging due to rules always in flux. They tell us we need it. But it isn’t always easy. Done wrong, social can be counterproductive. Done well, it can be one of the best real estate marketing mediums. So how can agents and investors survive on the front-lines of social media in 2015? How can you increase results?

Facebook

Facebook continues to be a core part of social media marketing for real estate. But it has changed. Many are unhappy with recent changes to reach and the cost of paid advertising. Many feel they are getting less and less for more time and money invested. Most would peg this as a losing customer service strategy – a doomed business model. Many younger members of Generation Y and Z have already kicked Facebook to the curb. It’s now for old people. But, it is so deeply embedded in the daily life of users. Millions of those users are great prospects for buying, selling, and investing in real estate. They are also among the most qualified. And if marketed to correctly, will become powerful interns, brand ambassadors, and referral partners – for free.

The challenge is that the rules have changed. What works has changed. Updates are now shown to far fewer followers and connections. Sometimes they may not get shown at all. To be visible posts must be far more engaging. They have to generate action from those that do see them. This can take a little more effort, investment, and strategy. But it is worth it.

Paid advertising still works for those with a Facebook marketing budget. The key is laser targeting and watching the ROI. Keep an eye on other social media platforms copying Facebook’s evolving rules.

How to Use Hashtags

Due to Facebook’s changes, Twitter may now work better for many marketers. Real estate agents, investors, and brands seeking fast growth and instant results may be better off on Twitter. It depends who you are trying to reach, and the results you are trying to achieve.

Leveraging Twitter in 2015 is less about one-liners. It is more reliant on sharing photos and video. And excellent use of hashtags. Intelligent hashtag anchored marketing campaigns can deliver great results. They have more viral potential. They boost visibility, SEO, and sharing. But they have to be great.

6 quick tips for creating and using hashtags in 2015:

1. Keep them short and sweet
2. Make them catchy
3. Ensure they are easy to spell
4. Be unique
5. Don’t overuse hashtags in the same post
6. Incorporate them into action based campaigns

Get on Google+

Too few real estate pros are using Google+. Less are doing it well. The future of Google’s social network is uncertain. But it still has value right now. Think about it. Many only use Facebook because they think Google will reward them for it. So how much more important do you think the search giant places on Google+ performance? It’s a great platform for visibility and getting messages across to other professionals. It has also emerged as the network for serious action takers. This is in contrast with the frivolity of Facebook. Build those circles, follows, and content.

Video, Video, Video

If real estate is all about “location, location, location.” Social media marketing is becoming all about “video, video, video.”

Smart text and captivating images still work. But look at the most popular social networks with younger generations. Maybe they should read more. But they are watching more video. YouTube, Instagram, and Vine are all growing in popularity with younger generations.

Many real estate pros avoid video because they don’t have pro equipment. Or they don’t feel photogenic. That doesn’t have to be a roadblock. And you don’t have to only publish competing third party content to fill in the gap. Consider how to get more user generated content. Use property videos. Use Google Hangout videos of interviews. Use slideshows.

3 Strategies for Increasing Social Media Engagement

1. Publish Less Junk

More content is often considered better. But, given the above trends, 2015 might be the year less is more – at least when it comes to social media. That is posting less, but better quality, more engaging content. Get this right. Then scale away. Focus on more original, unique, and interesting content. Focus on calls to action.

2. Maximize What You’ve Got

It’s amazing that so few direct contacts are engaged. Real estate brands should be recruiting more participation from the networks they already have. This is free. Conversions are higher. The exponential potential is more powerful. Are your friends, family members, and employees following you online? Why not? Are your email contacts in your Google+ circles? Why not? Are your Facebook friends following you on Twitter too? Start with these connections before spending money on paid ads.

3. Be Generous

Are you ever disappointed with your social media marketing results, shares, and follower numbers? Start by asking how generous you have been. How many new connections and follows have you made today? Not this week. Today. How many posts have you re-tweeted, liked, +1’d, pinned, and shared? Today? Why should others be investing their precious time and reputation in promoting you, when you can’t to do the same? Succeeding in social media requires being social.

Social media can be confusing. What works changes. Invest more time in learning to do it well. Or hire someone that is on top of it.