Friday, August 23, 2013

Fire sale in Gary, Indiana: Homes for $1

  @CNNMoney August 20, 2013: 10:13 AM ET

dollar home program
One of twelve $1 homes in Gary, Indiana
NEW YORK (CNNMoney)

The city of Gary, Ind., is running a real estate fire sale: A dozen homes for $1 each.

The catch: "They need work," said Gary's mayor, Karen Freeman-Wilson. "It's up to the homeowners to provide the sweat equity."

The program was announced in June and quickly drew interest from more than 400 potential buyers.The city bought the homes at county tax sales after owners fell behind on property taxes, and the sale is part of a neighborhood stabilization effort underway in the University Park section.
Few of them, however, met all the minimum requirements: Buyers must have lived in Gary for at least six months; have $1,000 in savings; earn at least 80% of the median annual income of $35,250 in the area; and demonstrate that they have the financial ability to rehabilitate the home.
The program is open only to those who do not currently own a home, and they must occupy the house for five years before they assume full ownership. If they leave before that, they forfeit everything.
Those restrictions reduced the number of finalists to 25. In September, 12 will be chosen by random drawing, and each will get a home.
Eventually, if the program works well, Freeman-Wilson would like to sell 50 homes a year.
The neighborhood stabilization initiative also includes financial assistance for current homeowners whose houses need repairs, and selling several houses the city has already fixed up for just under $60,000 each.
The plan, according to Arlene Colvin, head of the city's Department of Community Development, is to halt a gradual decline in the neighborhood.
Freeman-Wilson, 52, hopes that buyers will have the same kind of experience she had more than 20 years ago, when she bought her first house in Gary for a dollar under a U.S. Housing and Urban Development program.
As a deputy prosecutor, not long out of Harvard Law School, she spent $15,000 to $20,000 to renovate her two bedroom house.
By keeping her housing costs low, she was able to free up time to take advantage of opportunities that eventually landed her in the mayor's office.
"I was able to go out on my own and forge a life in the community," she said. "That participation made me more committed to Gary."
There are a lot of blighted areas in Gary, which has gone through decades of decline since its decades as a manufacturing heavyweight. The city was founded in 1906 by the United States Steel Corporation and named for the company's chairman, Elbert Henry Gary. Gary's population has plummeted by more than half since 1960.
Felicia Goodman, born and raised in Gary, is one of the finalists. The customer service rep for Southwest Airlines currently lives in an apartment about 20 minutes from University Park.
If Goodman wins the draw, she'll pay contractors to do the plumbing, electricity and other serious repairs while she and a brother do some of the cosmetic work, like painting and finishing.
She's very excited about the opportunity. "I love it over there," she said. "It's beautiful and there are some very nice houses in the neighborhood." To top of page



Tuesday, July 9, 2013

Three Things That Make A Great Real Estate Investment


House investment
If you’re looking into real estate investments, you likely want to earn wealth on real estate based on risk you are taking, while minimizing the amount of time you need to spend attending to the property. In order to accomplish this, you need to make some smart choices upfront when buying investment property. Your goal should be to strive to get as close as possible on as many of these optimal scenarios as possible:

Pays a Fair Cash-on-Cash Return

When you buy property you are taking money out of your liquid financial assets – stocks, bonds, CDs – and investing it into a very illiquid asset – real estate. You were earning a rate of return on your financial assets, such as 4 percent or 6 percent, and you should strive to earn a fair cash-on-cash rate of return on your real estate. To do this, you need to pro forma your deals and buy cash flow-positive properties that earn you decent returns – not those prize properties that are negative, negative, negative. For more guidance on this, see Smart Investing – A Tale of Two Townhomes.

Isn’t Too Risky an Investment

All real estate is extremely high risk. Development of real estate, land, Tenant-In-Common (TIC) investments, private real estate funds, fixer uppers, etc., all have much higher risk profiles than just simply buying a nice established cash flow investment property. In many of those investments, you will never see a dime of your money again because there are just so many things that can go wrong! So if you want to own real estate, consider simply taking fee simple title in your own name – or an entity you wholly own – to the properties you purchase. In addition, you must do the proper due diligence, analyze, test, review reports, etc., to make a lower risk real estate decision.

Doesn’t Require a Lot of Time or Managing

Some properties just require way too much time and management to make them smart investments. Examples include vacation rentals, low quality properties in bad areas, college rentals, etc. Nice boring properties rented for as long as possible to decent credit profile tenants seem to take the least time to manage. In addition, treating your tenants fairly and with respect goes a long way towards keeping good relations with them; and reducing your hassles when there is an issue you need to address. And believe me — there will be issues!
It’s the nice, boring, wholly owned, in good shape, cash flow-positive properties that are the best investments. They are out there for your picking, but it’s not as simple as finding a property on the MLS and buying it.
You need to do some hard work, research, read up, and make smart, educated decisions to acquire the best real estate investments!

Wednesday, February 27, 2013

Zombie foreclosures: Borrowers hit with debts that won't Die



Even though Christopher Warner's mortgage debt was extinguished upon his foreclosure, debt collectors are still seeking $120,000.
NEW YORK (CNNMoney)

Borrowers are discovering that their foreclosed homes are coming back to haunt them -- long after they have moved out.

In these "zombie foreclosures," borrowers move out after their bank schedules a foreclosure auction only to learn months or years later that the auction never took place or the bank never transferred the deed. That means the borrower still technically owns the house and is on the hook for property taxes, fees and homeowners' association dues.
Since the housing bubble burst seven years ago, almost two million properties have started but never completed the foreclosure process, according to RealtyTrac. While no one knows the exact number, it's estimated that tens of thousands could be zombie foreclosures.
Many of these homes are in low-income communities where foreclosures are so difficult to sell that lenders sometimes delay taking possession to save on taxes and other costs that then stay under the borrower's name.
Those debts can then go unpaid for years because the borrower is unaware they owe them, further slamming their credit score and making life after foreclosure even harder.
"The most frustrating part is that I can't move on," said Rose Nathan, a 37-year-old office manager.
Nathan lost her South Bend, Ind., home in January 2009, after working out a deal with CitiMortgage to voluntarily walk away in a "deed in lieu of foreclosure."
"On Christmas Eve, the bank called and told me a sheriff's sale was coming and I had to move out right away," she said. "So that's what I did -- seven days after New Year's."
She sold her belongings and moved to Hawaii. Nearly two years later, she received a property tax bill from the City of South Bend for $5,000. The bank had never taken possession of the house.
Citi told her attorney, Judith Fox, that the holdup was due to a lien on the home that they were never told about. Nathan said she knew of no liens at the time of the transaction. Upon doing a title search, Fox found no evidence of a lien until well after the bank agreed to the deed-in-lieu deal.
- See more at: http://money.cnn.com/2013/02/20/real_estate/zombie-foreclosures/index.html#sthash.T5q287Ie.dpuf

Tuesday, February 26, 2013

Back in the rental market? Some things to know


Back in the rental market? Some things to know




Do your research and shop around
 The housing market's slow rebound makes renting a good option for many. Former homeowners looking to recover their financial stability are joining new renters on the hunt for their first apartment and long-time tenants facing rising rental costs. But in the rush to find a place to call home, here's what all renters should know.
This past year saw rent increases in 70 percent of markets. The good news about the demand: the market is spurring investors to purchase distressed inventory to convert to rental properties, which may help bring rents back down. Shop around by checking free real estate websites with dedicated rental features, including maps and local information on desirable locations. Some websites have rental mobile apps that make exploring a particular neighborhood on the ground even more convenient. Additionally, research fair rent prices so you don't find yourself overpaying for a place.
Work with your landlord, but know your rights
Keep the lines of communication open with your landlord, but know the laws that protect you. On a federal level, the Fair HousingAct protects against discriminatory housing practices, so if your renter's application has been turned down, be sure to find out why.
Read up on your state's landlord-tenant laws, as tenants often do not realize their specific rights. Attorney Ryan J. Weatherstone of Mercer Island, Wash., offers one example: "Seattle tenants are required to be given a packet stating their rights under landlord-tenant law when they begin a tenancy each time a lease is renewed. Failure of the Landlord to provide these documents allows a tenant to break the lease early and/or seek a fine of $100 plus attorney fees."
Read the fine points of your lease before you sign
Typically, a lease protects you from rent increases while committing you to pay rent for the full term of the lease, even if you have to move out. But read your lease closely to prevent surprises. If you don't agree with certain provisions, see if you can negotiate with the landlord and make sure any changes are made on all copies of the lease. Pay attention to provisions about the security deposit, which is legally refundable — provided you leave your rental in the condition you found it. To ensure there is no dispute, first walk through with your landlord or property manager and document any damage in a written checklist as one would with a rental car. Send copies of date-stamped photos to your landlord.
Beware of illegal provisions that absolve the landlord of liability for negligent acts, waive the landlord's duty to repair the building or its systems, or allow the landlord to seize the tenant's personal property if the tenant fails to pay the rent. Weatherstone warns of general leases that some landlords use, such as those available "at Staples or other office supply stores or even on the Internet," which often contain terms that contradict state law and thus are void. One common error in Washington is "requiring the tenant to provide more than 20 days' notice prior to the end of a regular rental period to terminate a month-to-month agreement."
Understand your rights to privacy
While the general rule is that your landlord cannot enter your home without advance warning, notice requirements to enter the rental property vary from state to state. Landlords don't have to give notice in cases of emergency or when there's a court order. Check your state's privacy statutes or contact a lawyer or tenants' rights group to find out how much privacy protection you can expect.
Consider an eviction notice seriously
An eviction costs more than money; it damages tenants' credit scores: "The eviction will stay on their credit history basically forever," said Elizabeth Rankin Powell, an attorney based in Tacoma, Wash. "And it gets there the day the landlord files the action, win or lose." However, some states have safety nets. In Washington, evicted tenants have five days to "pay off the judgment and be restored to their tenancy, if they have a lease that has not expired," said Powell.
Buy rental insurance
Rental insurance offers an affordable form of protection from a range of hazards, from theft to fire damage. While you'll need to sift through insurance policies with a fine-toothed comb to see what protection will and will not be included, rental insurance is a good bet, especially when it can cost as little as $10 per month.
Get the assistance you need
The U.S. Department of Housing and Urban Development has a list of helpful resources and links for renters. Find information about tenant rights, laws and protections in your state. Many states and counties also have programs for low income renters that include legal counsel and sometimes even representation. Whatever your situation, take the time to learn your rights; it can make for a happy home.