After a major financial or social disaster you can always count on somebody to comer along and advocate for some new drastic measure that unbalances everything. This is the case with a bill that has been approved by the House of Representatives and that is currently at the Senate. The name of the bill is HR 1728 “Mortgage Reform and Anti-Predatory Lending Act”. It amends the “Truth in lending Act” by specifying more restrictive rules for the originators of residential mortgages.

This bill is creating ripples of alarming comments in all real estate investor associations throughout the nation, particularly because, amongst many things, it limits the ability of an individual owner to owner finance one property only once every 3 years.

There are people who are already talking of possible ways to work around the obstacle and others who are advocating urgent lobby actions with senators so to remove of change the few sentences that effect private owner financing.

These are the types of transaction you would be restricted from doing: sell your own home with a land contract or with a mortgage held by you, doing any kind of installment sale of any kind of residential property. To do more than 1 owner financed deal every 3 years you would have to follow the complex requirements set forth in the proposed law, and maybe get additional licenses.

With this piece of legislation the US gets closer to Europe where NOBODY is allowed to owner finance ANY type of property. Only banks are entitled to issue loans and private individuals can only accept cash payment for their properties. If the bill passes the Senate, the US real estate market is going to change. Many creative exit strategies for sellers and investors will go out of the door and some markets will probably reduce.

In Europe today the real estate market is very slow because it is becoming more and more difficult to sell properties since the banks have tightened their already strict lending policies. The bill seems conceived to protect the weakest buyers and tenants, those who got themselves into dire straights because of poor money management and careless house purchases. You might watch out to the consequences it will have on the free open market.

Roberto Mazzoni

P.S. My friend Sam Bell made a much more extensive exam of the bill and the possible counter actions on his site http://sambell3rd.com/realestatementor/real_estate_financing/90/us-senate-seizing-control-of-real-estate-investing/

How can you really capitalize on bank owned properties? It all depends on the speed with which you can locate deals, make quick proper offers and find buyers for those deals.

It can happen that on a single property many offers arrive at the same time offering even more than the bank originally asked for. So you need to be flexible and fast in locating your deals and ready also to move outside of your backyard if needed.

You have to weed through many bad deals, that’s true and you need to have a system that allows you not only to find good opportunities but also to fund them and then to market them as fast as you can.

Five ways to find properties and their pros and cons:

1. You can consult the MLS if you are also a Realtor or with the help of a friendly Realtor who can make daily extracts of what comes up in a specific area. This is fairly effective if you are dealing in a limited zone and if you have somebody who can do the work for you. The list tell you the up to date situation of the property (listed, under contract, sold) and you have most of the information you need about the house, including picture. Sometimes the Realtor can use an automatic system to send you daily e-mails so you are kept regularly updated. The problem here is that you are limited to one area and you cannot tell which is a good deal from a bad deal upfront. You need to do research on every property and it can be time consuming.

   

2. You can go on the many free sites maintained by different banks. The advantage here is to span the whole nation, but the disadvantage is that you need to check every single deal (no selection is made upfront) and you need to look up many different sites: both for covering the different banks and for collecting all the information you need about a property, including pictures.

3. You can purchase a “ready made lists” of foreclosure or bank owned properties. Here you often have some kind of value associated to the property so that you can make a general selection upfront and you can operate in many different markets. These sites sometimes also provide basic information about each property. The drawback is that these lists sometimes are not updated and therefore you waste time on properties that are already under contract or have been sold already. And you need to pay for the list.

4. You an use a software that pulls data from the MLS and let’s you make offers in an automatic fashion. MLS Gorilla is one of these software, for example. The drawback is that these software have often an high price tag attached to them, they get locked in specific areas if one of your competitors decides he wants to have exclusive access and you need to take a shotgun approach by making low offers on everything, which can lead in getting acceptances on junk properties that you then need to discard and missing the houses that are in better shape and where you could afford to make higher offers and still get a nice return.

5. You can finally subscribe to a search engine specifically designed to locate bank owned properties. In this can you can access directly the bank database without relying on MLS and any error that could be in it, you can access the private databases of major wholesalers and you can make a search for properties with a defined discount ranges, while also getting all the other properties in the area in a separate list from which you can pick and chose freely. The only system I know that is capable of doing this right now is REO Goldminer (http://budurl.com/reog) which I have been using now for 3 months and that has kept improving the quality of their leads.
   

   You can still get properties that are already under contract sometimes because it takes a while for the bank to update its own database, but you can span the whole US and pick and choose only those area where REO’s ARE available. Additionally they are providing an outstanding training support for using the system and marketing deals and they have also developed a community for wholesale exchanges. The main drwaback is that the system is not available to everybody: you have a limited number of subscribers that are allowed on it.

Pick and choose the system that fits you best and have success with it.

Roberto Mazzoni

P.S. REO Goldminer is reopening its gates for a few days starting today at noon. Last time they sold 500 memberships in 2 days or so. This second and last offer will stay open until Friday June 5^th and then it’s gone! http://budurl.com/reog.