Every Real Estate Investor Should Master

When you learn about something, when you are interested in new subjects, you also learn a whole new vocabulary you start using. Well, with real estate investing happens exactly the same. If you are a Real estate beginner or an experienced investor, you must understand and master all the terms and words of the investment vocabulary, especially acronyms, so here is a small list of every acronym a real estate investor should know:

1. PITI

Initials for: Principal (P), Interest (I), property Taxes (T) and Insurance (I). Essentially this means, the “bottom line” or the minimum amount needed when you estimate the acquisition of investment property with a loan. Frequently this is estimated monthly.

This amount is what you would might spend in the investment property over the life of the loan. Every and each month is the frequency of the PITI you have to pay in order to be in good standing. Thanks to this you will know how much rent you should pay.

2. GOI

GOI or Gross Operating Income, is related to the annual income that is collected from the property, including: laundry, parking, storage, etc. and consider any vacancies.

3. LTV

Initials for: Loan-to-Value, this is vital if you’re removing a loan on your investment property, it is estimated by dividing the loan by the property’s value; then, that number is expressed as a percentage. For example, to make it easy: if a loan is $200,000 and price of the property is $250,000, then the LTV is 80%.

You will have more equity in your property and negotiate more if the LTV is lower.

4. DCR

Initials for: Debt Coverage Ratio. This is referred to a commonly used term by lenders when they have to deal with underwriting loans for income-generating properties. How it is calculated? You need to divide the NOI (see below) by the total debt. If the ratios is 1.20 or higher, this is considered the average.

5. NOI

Initials for: Net Operating Income, this is the income left over from your rentals after paying all your monthly operating expenses. So, deduct your expenses from your GOI (Gross Operating Income) to get you the property’s NOI. For example, if you take in $20,000 in leases on all the units you have and spent $6,000 on maintenance including supplies, accounting, taxes, insurance, utilities and more, the NOI for the month was $2,000.

If you felt this information was useful and want to learn more about real estate. You can go to our Official Website and see all the incredible ways we have to offer to invest in real estate.

Real estate and how to avoid being scammed

 Last week, the California Bureau of Real Estate made an advisory to help consumers, especially senior citizens in order to avoid fraud on real estate for home loans, rentals, timeshares and property recordings.

Many people know how to trash unsolicited mail with official-looking seals that offer refinancing a home loan, take out a loan and find a place to rent or avoid foreclosure. But many people don’t know that exists a Department of Consumer Affairs where a consumer can recover accounts and present their cases on the California Bureau of Real Estate.

If you are an intentional fraud victim because of a California real estate licensee you can recover actual and direct losses up to $50,000 per business deal, with a total payout of $250,000 per licensee.

Want a tip? You can call the California Bureau of Real Estate at 1-877-373-4542 if you suspect you are a victim of real estate fraud.

In order to prevent those phone calls, we give you 10 fraud avoidance tips:

1) Be alert and don’t feel bad if you are suspicious of unwanted offers, suggestions and calls. Be careful with license numbers on mailings and websites.

2) Be in contact with the state business bureaus. Be smart and look for references. Do a research with the help of Google, Yelp or other websites to have important information about the company, and the most important: to see if they have a relation with other consumer scams or frauds.

3) Do not agree to pay money for a service, and always protect your personal info– specifically your SS number.

4) Avoid paying in advance for home loan or any foreclosure relief services.

5) If you can’t afford a property, never sign the agreement for that transaction.

6) Be totally suspicious if a real estate or home loan agreement is not clear, it is difficult to understand or encloses blank spaces. If an agreement has blank spaces it is easy to be manipulated for a scam artist.

7) Don’t sign your property over to somebody who claims such a transfer can and that he or she will help you with the reparation of your credit.

8) At no time sign a “power of attorney” to give any person or company the rights to your property if you don’t know them or trust.

9) Keep a track and always check the title to your real estate properties, if you detect something suspicious or fraud act immediately. Many signs can be related to: stop getting your property taxes, some real estate documents in the mail for operations you did not make or a notice of default of your home.

10) If you are the owner of an insurance policy on your property, contact the title company and check with them if you are protected against forged deeds or fictitious documents recorded after you bought the property.

Hope this tips help you, don’t hesitate to call if you see something suspicious. Check FCI if you are interested in real estate.

What is a mortgage pool?

Many times, when we are trying to learn more about the real estate world, we see many different words and expressions we are familiar to it, but do we really know what they mean? Really sure? Today, we are going to talk about mortgage pools. A mortgage pool is a group of mortgages in a mortgage-backed security (MBS) and held in trust as collateral for the issuance of this MBS.

Some people also know them as “pass-throughs” and trade in the to-be-announced (TBA) forward market. Click here, if you want more information about them.

How does it work? Here is an example:

Once a lender finishes a mortgage transaction, it usually sells the mortgage to another unit or entity. The entities or units that buy mortgages let’s say, Company A and Company B set hundreds of mortgages together into a mortgage pool. Then is when the mortgage pool acts as collateral for a mortgage-backed security.

Why is it important?

Pass-throughs or mortgage pools are involved with mortgages with close to the same maturity and interest rate. A MBS is collateralized by a mortgage pool. Mortgages pool usually have similar characteristics.

People have to be careful to not confuse MBSs with CDOs (collateralized debt obligations) because the last one is collateralized by a pool of loans with varying characteristics and they might have different terms (10-year, 15-year, 30-year) and adjustable rates.

 

What you need to consider before purchasing non-performing notes?

Some years ago, banks would have been more persuaded to foreclose on a non-performing commercial real estate property. Nowadays there are more and more banks decided to sell their billions of dollars’ worth notes.

Why is this happening? Because banks are in the business of lending money, they don’t make money owning and operating real estate, besides, when the bank sells the note, it stays out of the chain of title and doesn’t have any concerns about the time—and expense—of other property management and ownership issues; and if you add to this the cost and energy of marketing the property to possible buyers following the foreclosure and the many existing properties already being carried on their books, there is a clear vision on why banks were looking for an alternative to foreclosures. Note selling has become a new alternative.

For people who become a buyer, the benefit of purchasing a non-performing note is simple and clear: they have the chance to acquire the loan and underlying property at a great discount from its initial price. After purchasing the note, the buyer has two options: to negotiate a new loan with the borrower, or foreclose on the property itself. It is more common that the buyer owns the site and forecloses.

Fci non-performing notes

 

There are many cases of buyer success in this depressed market. However, buyers must be aware of the business, if there are people wanting to buy non-performing notes in multifamily; they need to think about this:

1. Make sure you learn about all the foreclosure laws in the state in which the underlying asset is located. In some states, there are non-judicial foreclosures and the process can be a long one. But in other states, the process can drag on for quite some time.
2. Learn about the percentage of the multifamily asset that is leased and, of such leases, how many tenants are paying their rent consistently.
3. Find an effective way to get the original note and all related amendments and assignments.
4. Obtain as much information as possible from the lender about the asset before investing money on due-diligence investigations. The lenders have many files about each asset so you will probably have to push them to release the materials to you.
5. The situation of multifamily improvements is most of the times more critical than other property types since the turnover of leases is so frequent.

If you need more information, go to www.fciexchange.com to learn more about purchasing non-performing notes. Like us on facebook at Fci Exchange or follow us on twitter at @fciexchange.

Marketing Predictions made for this year to take advantage in real estate

When the year started, some people dared to predict some trends and technologies that were going to impact marketers this year. There are only 3 months left to this 2014 to end, do you think some of these strategies were followed? Do you think real estate investors can take advantages of this facts to improve their investments? Let’s check them out.

1. The consumer becomes the new content marketer: More brands were supposed to add more photos, video and other content from consumers and repurpose them for marketing campaigns. If you are in the real estate business you need to update all your listings constantly, upload videos and photos, you have to see the way to convince people to make business with you.  The Fact: Every time a consumer posts something on the web it is seen by 150 people. So, realtor, what are you waiting to start posting?
2. Brands weave a social layer across traditional advertising: Marketing teams amplifies the reach of TV and print campaigns by incentivizing viewers to post hashtagged content and running related social ads. Start with the #realestate #investments hashtags now!! The Fact: 44% of TV viewers use a second screen ½ the time they watch TV. Realtor: Attention to this!! 88% of marketers believe that integrated multi-screen   campaigns will become very important in the next three years.
3. Marketers connect the dots between email and social: Email and social are two powerful channels with a symbiotic relationship. In 2014, brands will use them in combination to build, target and convert audiences. The Fact: 70% of email marketers find product or prize giveaways to be an effective tactic for audience acquisition. Only 39% of email marketers use Facebook contest requiring fans to submit their own content but 60% rate it effective, so, what you need to start doing is using Facebook of course, but in a effcient way.
4. Brands run more frequent social campaigns: Social gives brands the freedom to launch content and campaigns on the fly. To stay competitive, you need to run frequent campaigns that engage multiple audience segments in different social media platforms to reach more clients.

Hope this post helps those people investing in the real estate business, if you need more info about this, just go to http://www.fciexchange.com for more information

How are you preparing for real estate’s new market reality?

You need to start to learn and understand! There are no more days when you could simply hand your clients information, now you need to explain them what are you sharing to them. It is said that there is a large gap between information and actionable knowledge.

Heart of a Teacher: This means that you shouldn’t be trying to convince someone to do something; you can help your clients trying to discover what their options are and let them make decisions that are best for them and their families.

Dave Ramsey says: “When getting help with money, whether it’s insurance, real estate or investments, you should always look for someone with the heart of a teacher, not the heart of a salesman”

Strong Visuals: People process visual information 60,000 times faster than text. With attention spams dropping, this can mean the difference between someone seeing and understanding your message versus missing it completely.

Go mobile or go home: Having visuals on your smartphone or tablet is just a way to earn the trust of your clients by confidently answering their questions wherever you are.

Keeping current is vital: In a day when market information and analysis are so important, staying on top of the changes and the impact they will have is perhaps most important.

For more information on real estate, go to www.fciexchange.com or follow us on twitter at @fciexchange

DO YOU KNOW THAT ONE OF THE MOST PERFECT PLACES TO INVEST MONEY IS ACTUALLY REAL ESTATE?

There is a ton of emotional sellers that you can make money off.

If you are looking to invest in real estate you need to have something clear: you can always find a deal as long as you look for it. If you have some fortitude and some patience, investing in real estate might be an excellent time to invest in real estate.

You don’t need to be experienced to learn about the deals and start connection to be successful. You can understand market trends and bargains so you will be more likely to make money.

You should only be bidding on properties that have been on the marketplace for 6 or more months, and you should always be cash-flow-positive with any property.

Don’t take features like schools districts for granted because homes with these types of desirable characteristics usually sell fast. Plus, homes with good school districts frequently have a lower crime rate.

You should consider another important fact, when you are looking to invest real estate, you are thinking about buying a new property and then selling it. But the truth of the matter is that buying and selling foreclosed properties is far more profitable than dealing with new ones. Why is that? When you buy a new property, you will be purchasing its value as its value market; however, with foreclosure properties you are buying far below the market value.

In conclusion, if you are looking to invest in real estate, there is always going to be an opportunity to you to earn money buying and selling properties. One of them can be find on http://www.fciexchange.com, dare yourself to start new things.

HOW DOES IT WORK WHEN YOU DECIDE TO BUY A MORTGAGE NOTE?

Buying a mortgage note means you take ownership of a mortgage and you receive the interest income from the mortgage, of course you have to deal with it if the borrower stops paying. However this can´t be that bad, because if the borrower doesn´t pay you can decide to start a foreclosure and claim the property as yours.

Nevertheless, there is something you need to have clear; the foreclosure process will have a cost, which is a minimum amount compared to the outcomes you´ll get after selling that house. This means you´ll get paid the monthly fee + interest + the house value after it´s sold and then subtract the amount you invested. So, do the numbers and you can see that it´s great business after all.

Mortgage notes, and any other instrument of debt, can be bought and sold, rapidly. The main purpose is to increase one’s investment yield. As an investor, this becomes a fourth level profit center.

If you have any additional questions on the process or if you want to discuss how to create the most valuable mortgage notes for resale to an investor, I suggest contacting our company FCI EXCHANGE (Click on www.fciexchange.com to access the web page) to do so, as we are a direct and independent note buyer on the secondary mortgage market.