Thursday, July 17, 2008

How A Buyer Can Refinance Quickly

If the seller has enough cash to do the transaction this way, there are a number of ways to have the new buyer refinance quickly. I recommend having the new buyer get an equity line or a six month line of credit. There are 6 reasons why one may want to start with an equity line and get a permanent mortgage later.

1. The buyer can typically refinance within a week or two, fully paying off the seller and the closing costs may be between $0 and $500. The loan may be as low as prime -1 % or has high as prime plus 2%. Sometimes these 6 month notes can be obtained with no payment until the end of 6 months.

2. The closing costs on an equity line or line of credit have ranged from $0 to $500. Thus it does not cost me much to do the loan and later refinance with a permanent mortgage.

3. It gives added flexibility in case I want to immediately resell the property without wasting closing costs on origination fees etc.

4. This method allows some time to pass before the buyer gets a permanent mortgage. This possibly has some benefits. Specifically, allowing time between the purchase and refinance may allow for more leniencies with the rules for appraisal. The appraisal might come back higher just because the new buyer waited a few months. It also may add leniency from the underwriter and may prevent problems that would hold up or even cancel the closing. The cost of this method is really just the additional closing costs of the first loan (maybe just a few hundred dollars or less).

5. Using the six month note with a local branch allows enough time for the property to season to use major brokers. This could ultimately result in getting a better rate than if you refinance right away with a local bank with a 15 or 30 year fixed mortgage. Often the rates are lower through major brokers, but many major brokers who offer the best rates won’t allow the immediate cash out refinance.

6. If you have a good business plan and relationship with a local bank, they will probably let you put a 6 month note on the property in your L.L.C.’s name if you sign for it personally. I know it is significantly more complicated and requires a little more work, however, .5% reduction in interest rate over 15 or 30 years will probably be worth your time and effort depending cost value you put on your time. For me, it is worth it.

If the seller can wait a little longer, the buyer can refinance right away with a longer term loan like a 15 or 30 year fixed. This method is advisable if the new buyer knows that they will be renting this property for an extended period and knows that they will not quickly resell. It is very difficult, however, to get a major mortgage company to underwrite such a transaction.

Typically these need to be done by a relatively strong buyer by a local bank, or a bank that does not have seasoning requirements. Most major mortgage companies can refinance the new buyer after 6 or 12 months if the buyer and property qualify.

Brad Zitzner is a real estate investor, coach, and realtor. Brad has bought or sold over 150 properties. His web based Property Management System “ZZZ Real Estate” helps real estate investors remove the chaos and paperwork from their real estate business. To get Brad’s FREE real Estate ebook go to

Thursday, December 13, 2007

Learning your market

Good deals can be found in any market through listed properties; however, the consistency of finding such deals is different from market to market. This plan cannot be adapted to all other markets with the same success.
Duplicating deals is a method that works if you are able and willing to work diligently on learning your market. Spending at least 15 minutes every morning scanning listed properties from the day before can help you develop a working relationship with local real estate agents.
First of all, you will need to pick your market. Hopefully, you can pick an area where you are already comfortable with the demographics. Ideally, your targeted area should have between 500 and 1500 foreclosures per year.
The MLS will be one of your most useful tools that you will encounter; most real estate agents can retrieve this information for you. If you want to find it on your own, you can probably do this through the internet. Finding a site that will allow you to search for the MLS can be an option that you can use to become familiar with the demographics aggressively search the MLS to see what properties are selling for. Additionally, you should be able to find properties through the bank’s websites directly. Some examples of such websites are,,,,,, There are many more sites that you will find with local bank owned property for sale.
Secondly, become familiar with local investors and buyers. Begin by attending auctions and your local real estate investors association. Sheriff’s sale auctions and other real estate auctions can be some of the best opportunities to encounter the processes in bidding and practices. Remember, you should not do this until after you have graduated your 120 day training program. Instead, go to the auctions and practice. Familiarize yourself with investors and buyers in forming relationships with them.
For you, buying and selling properties should be about numbers. Decisions should be based on your formula and on facts about profit margins. However, you need to recognize that for others, buying and selling properties is about emotions, and about satisfying their needs. Once you understand that it’s not always about the numbers for other people, you can begin to do the things necessary to sell your properties quickly.
During the training program you need to call as many real estate agents as possible. Let them know that starting in (three months from now) you will begin buying REO properties in their area, take them out to lunch. Find what they like, you want to let them know that you are here to make their lives easier. It is your job to make the agents like you. If they like you, they will send you good deals when they arise. If they do not like you, or if you do not stay in touch with them, they will not send you good deals when they arise.