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Quote of the month
Life's tough, get a helmet
Understanding Your Escrow Statement
Once a year, you get an escrow statement from
the mortgage company for every property that you own. The
document shows you how much you paid in taxes that year. Based
on how much you paid, you find out how much your new escrow
payment is. Trying to understand how they get that number is
pretty difficult, and most people just buy that what they’re
told is true. But you really should try to understand what the
statement says. Mortgage companies traditionally “over
escrow.” You take your real estate taxes plus your insurance
and you add them up. Then divide by 12. Then, mortgage lenders
are able to take an additional 16 percent in overage. So, that
total is what they should take from you each month. Also, HUD
the Department of Housing and Urban Development has a
display on its site that helps explain everything
http://www.hud.gov/offices/hsg/sfh/res/respafaq.cfm
Keep in mind, also, that in the mortgage
business, mortgage lenders forget to pay your taxes on time.
Penalties and interest can accrue because of that. So, banks
often debit your escrow account for any extra charges and fees
that they forgot to pay. It happens all the time and it’s your
money. Your bank owes you that money.
Your Favorite Links
Well it has been a long time coming.
First I asked for your favorite links and only one person sent any and then I
gave everyone a hard time for not sending any links and we were bombarded with
Favorite Links. We received so many that I had to hire a temp to come in
and sort through them for you.
Click here to be taken straight
to the links page. It has over 300 links so it may be a little slow to
load.
Finding Qualified Buyers for Your Properties
Following is a question that I
received from a customer last month. It was a good question that others
may have as well.
QUESTION
We seem to be missing one critical
aspect of our business. Long Story short is , we are up and running, it seems we
have no problem finding good properties with 15k to 20k of profit margin. We
have several in contract right now. Where we are experiencing our problem is we
are not getting qualified buyers to respond to our ads. When I use the word
qualified I mean that we have upper end houses that we need to pull rents of
1K-1.5K per month and the people responding to our ads are people looking to
spend $300-$450 a month on rent with no money up front. Just wondering if you
have some advise?
MY RESPONSE
I do not have a great deal of
experience with selling high end properties on Lease Option because we focus on
mid-level homes. We like to be mid-priced or slightly below mid-price because
it is so much easier to find buyers. A lot more people can afford a mid-priced
home.
The number one tool we have for selling homes is not ads, but signs. Anytime we
have had a problem getting phone calls on homes it has been because we did not
properly use our signs. Besides the yard signs we also us as many directional
signs as possible. People who already live or work in the area may not be
actively thinking of purchasing, but if they drive by your property everyday and
see that it is available on flexible terms it peaks their interest. Hopefully,
in your case, the people who already frequent the area will be more
knowledgeable of the prices.
You can help filter your calls by putting the terms in your advertising. Some
idiots will still call, but if you clearly state that the monthly rent is $1,000
per month then you should eliminate those wanting to spend $300.
In regards to down payments, the most I have received in one chunk was $10,000
on a $200,000 house. It seems like if you get above $10K then you start dealing
with people who have their act together and who can qualify for a normal
purchase.
Rent to own v.s. Lease
Purchase...
Also, on high end homes you should consider changing
the verbiage to something like "Lease Option" or "Lease Purchase" instead of
using "Rent to Own". I spent 18 years in the true "Rent to Own" business
(appliances, furniture, etc.) and even in that business we tried to get around
the term "Rent to Own" because it has a negative cognition to it. Often people
think "Rent to Own" and they think "Rip Off". I think this is amplified in high
end homes and I would never use the term "Rent to Own" on high end homes.
This quote
from Colin Powell regarding leadership in the military is just as valid in
the business world.
Leadership is solving problems. The day
soldiers stop bringing you their problems is the day you have stopped leading
them. They have either lost confidence that you can help, or concluded you do
not care. Either case is a failure of leadership.
Colin Powell
Never take a property off the
market without money in hand.
"They offered my asking price and
said they could close in two weeks. I took the property off the market,
took down my signs, stopped the newspaper ads and even turned away other buyers.
Now three weeks have passed and I cant even get the potential buyer to return my
call". I have heard similar stories many times.
There is a simple rule that Tammy
and I learned the hard way many years ago.
Never take a property off the market without
money in hand!
I don't mean $100 dollars for
earnest money. A hundred bucks will not even cover your aggravation.
Figure out what it is worth for you to take a property off the market and get at
least that much earnest money. If I have a $1,000 monthly payment then I
would never accept less than $1,000 as earnest money. At least, if the
deal goes bad, I will cover a mortgage payment.
Get as much earnest money as you
possibly can. Are they serious about buying the property? If so,
they shouldn't mind coming up with some serious earnest money.
You can also have installment
earnest money agreements. For example, let's say the buyer only wants to
give you $500 today and you are giving them ten days to inspect the property.
Negotiate another $500 in earnest money that is due and payable in ten days.
Make your earnest money
NON-REFUNDABLE. In my contracts the earnest money is NON-REFUNDABLE.
If the buyer does not close he/she will not get a refund. When I sell
property "as-is", I tell the buyer to do their inspections "before" signing the
contract, because once they sign the contract the earnest money is mine.
It is YOUR property and YOU must
remain in control. Don't be fooled by someone who "appears" that they have
it all together. Just get the money to protect yourself.
Real
Estate Humor
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I have a temporary mortgage. What
do you mean temporary? Until they foreclose.
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Realtor: first you folks tell me
what you can afford, then we'll have a good laugh and go on from there.
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The dream of the older generation
was to pay off a mortgage. The dream of today's young families is to get one.
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If you think no one cares you're
alive, miss a couple of house payments.
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My buyers went through debt
consolidation. Now they have only one bill they won't pay.
Copyright © 2005
PCF
Investment Group, Inc.
All Rights Reserved.
Disclaimer: Any advice given in this newsletter or
via this website , email or other communication from PCF Investment Group, Inc.
should not be considered legal, accounting or other professional advice. This
e-mail and or attachments only provide general educational information. Your
individual situation may not fit the generalizations discussed. Only your
attorney or CPA can evaluate your individual situation and give you advice.
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