Deposit Bridging No Money Down Investment

Jakob Austin from the UK writes our guest post today about different types of financing.  This is very similar to our Rehab Financing that we use.

If deposits aren’t available as ready cash it is advisable to be able to borrow it. Bridging is of two types open bridging and closed bridging. In open bridging, lenders don’t know when the money will be repaid while in closed bridging they know it.

Closed Bridging or Deposit Bridging

It is offered as a secured short-term loan against any residential property. It requires Market Value lending where  investment doesn’t come from a vendor but a third party. Deposit bridging, works well for individual resale properties. If the incentives are high enough it can result in a No Money Down investment but it is usually a Low Money Down.

Same Day Bridge and Refinance

Mortgage Express allows investors to buy a property at a net price, using short term bridging finance (24 hours). The investor immediately re-mortgage the property, based on the market valuation. It was an excellent product but has been withdrawn recently. You can still use the bridge and re-mortgage (http://en.wikipedia.org/wiki/Remortgage) system, but have to wait for 6-12 months to do the re-mortgage.

Open Bridging

In this Short and Medium Term Techniques are used for Low and No Money Down. Lenders fund short term finance up to 12 months. They will lend up to 70% of Open Market Value. Many lenders restrict the maximum borrowing to 85% of the cost, no matter what the open market value and the purchase price is. However if you pledge another property, you can borrow up to 100% including all costs. This would result in a true No Money Down deal.

Open Bridging is suitable for investment property with large discounts, new build and re-sales, auction property and distressed sales. However open bridging isn’t advisable as the cost of open bridging is high, obtaining discounts is difficult and the investor cannot commit on a mortgage 6-12 months ahead.

There are many sourcing companies in UK which advise investors on deposit bridging. Axis Property Investment (http://www.axispropertyinvestment.com/) is one of them and has built expertise over this domain. To know more about deposit bridging and other investment methods visit  http://www.axispropertyinvestment.com/learn.html.

Summary: Deposit Bridging is becoming an integral part in a No Money Down investment. There are two types of bridging Open Bridging and Close Bridging.

Back on Market-Rehabbed Saint Paul Duplex

I love working with investors.  Maybe one of my favorite parts of my job is seeing people take properties that were previously run down, neglected, ugly (and sometimes almost destroyed), and bring them back to life and restore them to their beauty.  This Saint Paul home is no exception.

Downstairs this duplex had no kitchen left and someone had tried to combine two of the three bedrooms to make a larger master suite (removing the hardwood floors in the process).  The upstairs tenants had destroyed the bathroom and the property did not have a working heating system.  Once my investor purchased it, they found that the entire plumbing system was incorrect installed.

Needless to say, they spent considerable time and money to restore this 1928 Crocus Hill duplex back to its original glory.  I love it (I was tempted to tell my wife to start packing as we are moving in!).  Here is just a partial list of the work they did:

• New kitchens including cabinets, counter tops, appliances, and tile floors
• New bathrooms with all new plumbing and tile throughout
• Refinished hardwood floors and restored woodwork
• New Bryant furnaces in each unit
• Upgraded plumbing (both waste and supply) including 2 new water heaters

Each unit is 3 bedrooms and 1 bath.  This property will work for either an investor or an owner occupant.  The seller is very comfortable that you could rent either apartment for $1250 per month each.

Check out the website for 728 Dayton Avenue.

Twin Cities Foreclosures for Q1 are Up 22%

According to the Metropolitan Foreclosure Report by RealtyTrac, Inc, the Twin Cities real estate market saw an increase of new foreclosures filings by 22%.  This is a 2% decline actually from the last quarter of 2009.

Before you investors start salivating….Keep in mind that even though a foreclosure filing happens on a property, several things can happen.  The owner can pay the past due amount and fix the problem.  They can sell it in a short sale.  If neither of those happen, we need to wait 6 months for the end of the redemption period for the properties to hit the market.

The staggering numbers from the report show that one in every 162 houses in the Twin Cities (only .62%) has at least one foreclosure filing in the database.  This is slightly lower than the .72% national average.  The Twin Cities ranked 80th on the list of large cities (over 200k people) in number of foreclosures.  Of the top 10 cities with the worst foreclosure rates (like cities in California, Florida, Arizona), eight of them reported improvement in foreclosure filings over last year.

IP101 Seminar: Investment Property 101

Are you interested in taking advantage of the incredible deals in the real estate market right now?  Have you always wanted to own an investment/rental property?  Come and join us for a 1 hour free, no-pressure seminar.  We are just here to give you some information and help you determine if real estate investing is for you.

Seminar is in Burnsville at 6:30pm.

Sign up on our registration form or call 612-281-5419 for more information.

IP201 Seminar: How to Evict Your Tenant!

If you are a landlord long enough or own enough rental properties, you will eventually need to evict a tenant. It can seem like a traumatic and complicated event, but if you follow some simple tips, it is actually quite simple.  As a new landlord, it is very easy to listen to the sob story about why a tenant can’t pay their rent and before you know it, they can become several month behind in their rent. Ultimately, most books and “experts” will say, start the eviction process the first day after the rent is late. I would argue that in the real world, it rarely happens that way.  Come and hear practical and step by step ways to get rid of that bad tenant.

Sign up on our registration form or call 612-281-5419 for more information.

Home Prices Continue to Stabilize as Oversupply Issue Improves – March Stats

From the Minneapolis Realtor Association Newsletter-4/19/10

For the third consecutive month, home prices in the Twin Cities 13-county metropolitan area showed a year-over-year increase. We haven’t seen three consecutive months of progressively increasing year-over-year growth since June 2004.

The March median sales price of $165,000 was a healthy 7.1 percent increase from $154,125 last March. That’s the strongest year-over-year increase since May 2005. Part of the reason for the stronger upward movement is that a lower share of home sales are foreclosures as compared to last March. Short sales are another story.

“There are definitely some promising indicators and several positive trends at this time,” said Brad Fisher, President of the Minneapolis Area Association of REALTORS® (MAAR). “However, we need to keep a close eye on several submarkets, including short sales, new construction, and high-end properties.”

The median sales price of traditional homes (excluding foreclosures and short sales) in March was $199,900, down $11,600 or 5.5 percent from $211,500 last March.

Foreclosures posted a slight 0.3 percent increase to $118,000, while short sale properties posted a 2.0 percent decline to $147,000. Although short sales have become the new problem child on the block, the 10.0 percent decline in bank-owned new listings after a period of unprecedented growth is good news for everyone.

There were 5,051 signed purchase agreements in March, an increase of 14.6 percent from a year ago. The spring market continues to have a flurry of activity as we approach the April 30 deadline for the federal home buyer tax credit. Home sales are expected to continue to increase as buyers move to take advantage of this substantial market incentive.

This increased buyer activity has brought inventory down and restored some sense of equilibrium to the market. April’s supply-demand ratio of 4.39 means that there are 4.39 homes available per buyer for the month. In March 2008, that mark was 8.16. While the rate of inventory decline has been slowing in recent months, supply and demand is far more balanced than it was two years ago. This is a critical sign that the market is correcting oversupply.

“The oversupply issue has corrected in much of our market, and that has led to price stabilization,” said MAAR President-Elect, Pat Paulson. “This provides reason for cautious optimism.”