01/26/2010

Leverage your American Foreclosure Profits

Many property investors made money on the way up in America. They borrowed to buy property which rose in price and maximised their returns.

Now, the market’s crashed, the same opportunity can be repeated, even by non USA residents. The key is to buy the right property at a low price and, of course, getting finance. Here’s how it can be done.

The “no cost” house

Buying one of P4P’s foreclosed property means that you are buying a quality house under Bank valuation. The property has been foreclosed, then refurbished, let and turned into a valuable asset. A Bank valuation will most likely value a house purchased for $45,000 for $75,000 or more.

However, the challenge in the present market is getting a mortgage. Price is a super bargain; to have easy loans in addition is just too much to expect! But, as always, there are ways to overcome this problem.

Route 1: Mortgage now

We have lender willing to offer 80% LTV, so on our quality $45,000 properties, that means $60,000 loan on a modest valuation of $75,000. Allowing the owner to pocket $15,000 and keep the house!

Interest rates vary from 4.75 to 5.25%, which makes for only $250 a month (on 5%), interest only. So, no problem to cover the mortgage payments as typical rent is $750 per month. At worst, mortgage payments, plus repairs and the odd void week should equal income. At best, there’s even income as well as withdrawing $15,000 and reaping benefits of capital growth!

Where’s the catch, you may ask? It’s crazy to be able to be paid money to own property that is more than likely to re-adjust to something more normal in price over the coming years. Well, the main hurdle is this lender wants a deposit of $100,000 available at the time of agreement. The last words are important as this deposit can be immediately withdrawn after acceptance of your application. So, deposit the 100,000, then withdraw it within a week or so, if desired. Still a challenge to access temporary funds, but a lot less of a hassle than finding permanent deposit.

Route 2: Mortgage later

The other way for non USA residents to gain a mortgage is to show a regular payment of rent into their American Bank account. The period varies from Bank to Bank, typically ranging from 18 to 24 months, possibly less.

Either way, it’s well worth considering as the leverage should be phenomenal.  On the first option, there could be an instant gain of 30% on initial capital, which is fully returned. Then it’s just a matter of waiting for your property’s price to reach something like more normal market value. Even reaching build cost would be nice! Our estimate is a doubling of price in 3 to 5 years.

The key to the whole process is to buy the sort of houses we offer. It may be possible to buy un-modernised houses in bad locations cheaper than what we offer, but you can be sure such property offers NO exit strategy. Except a painful loss. Our properties have strong buyer appeal as they are good family sized units in popular locations. Just the sort of property that will appeal to the majority of American buyers at the time you wish to sell.

Florida option:

We offer three target areas: Detroit, Atlanta and Florida, to give access to the best bargains in Foreclosures . One plus point about Florida, apart from the sunshine, is there’s no need to deposit $100,000 to gain a mortgage.

We have information on a  deal, that’s fixed at 6.8% APR for the first 5 years. LTV is 75% and maximum age of applicant is 80. Never too late to invest!

For more information, contact us.

Make a fortune, at American banks expense

The opportunity is there to make a lot of money on the back of the American government’s largess in keeping interest rates low and subsidising the release of such highly underpriced properties.

The US government have poured billions into lending institutions, allowing them to write off bad loans. Mortgages of $70,000 and more are typical for the properties we sell.

And they have injected billions (trillions, in fact) of money into the financial system, using proxy institutions to buy government bonds and buy “toxic” assets of Banks. Whether this is sensible economics is highly debateable, but that’s not the point. It offers a unique profit making opportunity, that is only available until the US government runs out of money, or the freedom to provide money on the present scale. That time is soon coming.

Such unusual economic conditions might concern some investors, but buyers of P4P property already have strong protection against loss as they are buying good property for a fraction of true cost. In short, it’s right at the bottom of the market. Plus, the works we do to the properties add even more value and puts the icing on the cake.

Add the leverage of OPM (Other People’s Money) to the equation and the figures should look startlingly good.

Example: US083.

Nice colonial style property, refurbished and let

Price $41,000. Tenant in place paying $825 a month (60% of rent also guaranteed by US government)!

Bank valuation: about $80,000!

80% LTV = $64,000, which is $23,000 (less loan set up fee) profit!