Smart Real Estate Investing

Single-family home sales in the Austin, Texas, area jumped 38 percent in March from a year ago, according to the latest report by Austin Board of Realtors.

Realtors reported that 2,104 homes were sold in the region last month, up from approximately 1,305 reported a year ago.

At $155,000, the median price showed no change from March 2004, according to ABOR.
Multifamily home sales shot up to 125 in March, an 84 percent increase from the year before. Farms and ranches showed a 50 percent increase in sales, bringing the total to 57. Townhouse and condominium sales also rose from the previous year to 167, representing a 34 percent increase.

While the number of homes sold increased, the number of active listings fell. The 8,605 single-family homes on the market this year represent an 11 percent dip from the same time last year.

The amount of time homes spent on the market rose slightly since one year ago. Single-family homes spent an average of 83 days on the market (DOM), up 15 percent from the year before. Multifamily listings sat for 63 DOM, a 3 percent increase from 2004. Townhouses spent 99 DOM, only 5 percent more than last year. Farms and ranches saw the most significant increase. Their average 143 DOM reflects a 59 percent increase.

by Ron LeGrand

I know this sounds like another one of those glorified headlines to get your attention without containing a lot of truth. Well, I know it's a very strong statement and it sounds too good to be true. But what if it is true? What if you could have a cool million dollars in your IRA within a few years so you'd never have to worry about retirement income? What if you could do this without writing another check to your IRA?

I have some good news and some bad news . . . The good news is: You can! The bad news is: It requires work!

Is it too much to ask for you to do some work for a few years so you can retire rich? You've got to work at something anyway, you might as well get rich while doing it. The information you're about to read is unknown to most of the world. Most people think the way to grow your IRA is to make annual contributions and let the manager of the IRA invest it in stocks and mutual funds. Then, over a period of 20 to 40 years, it grows into a large sum of money for your retirement. That's the thinking of conventional wisdom.

Let me tell you how I feel about conventional wisdom. It's almost always wrong! Let's take a look at a better way. Check it out for yourself and see if you agree. I speak to groups of people all over the country and sometimes I ask how many in the room have an IRA. I have never had more than a third of the class answer yes. So, why don't more people invest in an IRA? Here's what they tell me:

They can't turn loose of the $2,000 or $4,000 maximum contribution. Having the money at hand for immediate usage is a lot more important than retirement.

They never thought about it.

They feel they can invest in other investments that can produce more income.

They know they should but never seem to get around to it.
If you're one of these people, it's probably time for you to wake up and take action before it's too late. You see, an IRA is about all we have left that our "Uncle" will allow us to use to grow filthy rich without paying taxes along the way. I don't have to tell you money grows a whole lot faster if the IRS isn't taking its 25 to 40% share as fast as you can make it. Every dollar you send to the government is money that can't earn you anything until the day you die. Every dollar you can stash away that's tax-deferred or tax-free can compound throughout the rest of your life.

For example, let's say you kept an extra $10,000 out of the IRS's hands this year and invested it at 15%, (which you easily can), and it compounded for 20 years before you started using it. How much do you think it would grow to? How about . . . $197,155. That's about two hundred grand you could have available for retirement by wising up and keeping the ten grand you're now giving away. This is assuming you don't have to pay taxes as you go, and you don't in your IRA.

"But Ron, my accountant tells me I can't contribute more than $2,000 for me and $2,000 for my spouse each year. Where did you come up with this $10,000 figure?"

Your accountant may be right. There is a limit to how much you can contribute. But wait! Go back and ask your accountant if there is any limit on how much your IRA can make in a year from its investments. He'll scratch his head and tell you no. . .

There Is No Cap On How Much Income Your IRA Can Produce!

Incidentally, if you have the nerve, ask him/her what their net worth is. Go ahead, I dare you! You probably won't like the answer. I want you to remember, this is the person from whom you're seeking financial advice.

Also remember:

The Broke Can't Teach You How To Be Rich . . . They're Not Qualified

"OK Ron, so tell me how I can make my IRA wealthy without making any contributions."

Keep your shirt on, I'm getting there. If you're a real estate entrepreneur, you're making money from buying and selling or keeping houses. If I've trained you, you're doing this by using little or none of your own money. The objective is to create cash and cash flow by leveraging your brain, not your wallet or credit.

Your IRA Can Do The Same Thing

That's right. Your IRA can buy houses, the same way you do. You have to do the work, but your IRA gets the money, tax-deferred or tax-free. Here's a real life example in progress. A student called me with a house in Atlanta that's worth $575,000 in a gorgeous area. The seller owed $492,000 with a $4,200 per month payment. She was $13,000 in arrears. After some back and forth she agreed to deed us the house if we made up the $13,000 in back payments.

We did our due diligence, verifying the facts and value with an appraiser. We've closed on the house and currently own it. But, instead of taking title in a trust with me as beneficiary, I took title in a trust with my IRA as beneficiary. I had my IRA administrator send the check to the closing attorney for the back payments, as well as instructions on how I wanted to take title. He created the trust, I didn't even have to appear at the closing.

Now in this case, my IRA did have to come up with $13,000 to make this deal work but normally when I get a deed, it's free or pretty close to it. Keep this in mind and don't get hung up on the down payment. Let's look at the results: We received $83,000 in equity for $13,000. We've obtained a beautiful home in the same area several Atlanta Braves have homes as well as Whitney Houston. We've purchased with no liability and can sell the same way. We simply took over the mortgage "subject to." So, what's our exit? It's simple. Sell the same way we bought it. Get as much down as possible, preferably $80,000 and deed it to someone else. Worst case scenario we get $40,000 or $50,000 down and take back a second. Or, take something in trade. Easy in, easy out.

Let's review: If we get $80,000 and subtract $13,000 before a payment comes due, we'll net about $65,000. That's $32,500 for my partner and $32,500 for me. Whoops, that's not true, that's $32,500 for my IRA! Tax deferred. What if I did three or four of these a year? That's a hundred grand I helped my IRA earn, tax deferred. And we're only talking about this year. What if I did this every year until I didn't want to anymore because my IRA had more money than I could spend?

You Can Do 5 Or 6 Deals In Your IRA On An Annual Basis Without It Being Called A Business

At least, this is what I've been told by the people who administer IRA's. Of course, there are a few rules and more questions. I strongly suggest you do not do this without good, competent advice and participation. I must warn you that Uncle Sam frowns on buying a house in an IRA with the intent of flipping it quickly. They may tax you on the profit. Perhaps you may want to hold it in the IRA awhile before you flip it. Perhaps you'll only do one or two a year. I can't answer these questions for you and frankly, many accountants can't either. Seek the best advice you can find and do what you feel is best for you. Your IRA must be self-directed.

The best company I've ever found to handle this is Mid Ohio Securities. They'll understand what you're looking for and they taught me how to do this. Call them at (440)323-5491 and ask for a Self Directed IRA package. Mid Ohio will put your money in a money market account until you tell them what to do with it. When you find a use for the funds they'll write the check according to your directions and mail it to the address you give them. It takes less time to carry it out than it's taken me to tell you about it.

Next, you must learn and understand the meaning of self-dealing/directing. It can be deadly to your wealth. You cannot sell your houses to your IRA. You shouldn't get your IRA involved in any deal you or your entity was previously involved in. If your IRA buys a house, it should go directly from the seller to the IRA and not pass through you. Don't take back notes on houses and give or sell to your IRA. Keep it clean. Enough said about that. Do your homework. Mid Ohio has an entire book answering all of your questions. I only have a newsletter article to get you started in the right direction.

Now, you may be thinking I'm advocating you using your IRA money to buy houses. Not hardly. The last thing I want you to do with your IRA cash is to buy real estate. Why?:

Because You Don't Need Money To Buy Real Estate . . . And Neither Does Your IRA

Put some deals in your IRA that don't require cash. Next, take that cash when they sell and buy all kinds of neat stuff to increase the yield on cash. Stuff like discounted paper, defaulted paper, mutual funds, hot stocks, etc. Here's the point. As long as your money is tied up in real estate it can't be getting a high return on semi-passive investments. It can only grow as fast as the real estate will allow. So, let's get the best of both worlds. Create cash by actively buying and selling houses with little or none of your IRA's money.

Next, let's take those profits and make them grow by at least 15% per annum outside of real estate.

Tax Deferred Or Tax Free If You Have A Roth IRA

Make certain you ask about a Roth IRA and take time to learn its potential. You're never taxed, you can use it for a first time home or education for your children and you never have to take it out. Of course, there are exceptions and rules. So, take the time to learn about the ROTH and use it. If you qualify I promise you it will be a huge return on your time investment.

I know! About now you're saying: "Well Ron, you just told me not to use my IRA's money to buy a house and yet you did exactly that with your own IRA." Guilty as charged! In fact, I'm quite often guilty of actually doing the stuff I tell you about. I guess that makes me a bit weird, doesn't it? I actually practice what I preach! But you interrupted me before I finished. I said don't use your IRA to invest in real estate but what I meant was, not for long term.

If my IRA writes a check for $13,000 to buy a house with the expectation of getting back my $13,000 plus $32,500 within 60 days, is that OK? I don't need a spreadsheet on this one.

That's Exactly A 1500% Annual Return On Investment

I bet that's better than any money market or CD you currently have. I'll bet that's even better than your stock portfolio's performance last year.

Is It A Great Deal? YES!
Is It The Best You Can Do? NO!
The Best Return On Your Money

Is Called: INFINITY

You see, if you don't invest money you can't measure the return. That's my kind of deal. But hey! If you've got the cash you've got to do something with it. So, can I be excused because I didn't get an infinity yield this time? Try to tell your accountant or banker you can get a 1500% yield on your money. Watch their eyes glaze over. Remember, all it takes to get a tax deferred infinite yield on your IRA is for it to control or buy real estate without using its money.

Can you option a property without money? Yes! Can you wholesale a house without money? Yes! Can you take a house "subject to" without money? Yes! Can you lease/option a house without money? Yes! Can you send Ron a check for all this priceless advice to make you rich? Yes! (Whoops, forget that one, I got a little carried away).

Wait, here's more! Did you know you could do 4 or 5 of these deals per year in your IRA without it being called a business and paying taxes? Did you know your child or grandchild can have an IRA you can start without their knowledge, that can become their own when they come of age? What a way for you to provide for your child's educational future.

Without Writing A Check!

Without Borrowing A Dime!

Incidentally, if you open up an IRA for your child or grandchild, if I were you, I wouldn't tell them. Can you guess why?

So, let's play with some numbers. Suppose you can set aside enough time away from your J.O.B. to do 3 or 4 deals a year netting a total of $50,000. You decided you were going to do the same thing for the next five years and then quit. You know you can get a 15% return in your sleep, which you can. What was your total contribution?: ZERO!

Your IRA Made Money, You Didn't Contribute It.

What is it worth in:

5 Years? $387,548
10 Years? $779,498
15 Years? $1,567,849

OK, let's now suppose you get a little ambitious and do better deals making $100,000 each year in your IRA.

What's it worth in:

5 Years? $775,096
10 Years? $1,558,996
15 Years? $3,135,698

Remember, I'll put $32,500 in my IRA on this little deal. If you're an active real estate entrepreneur it's no big thing to let your IRA have a few of your deals. Most people spend more time buying a car, planning a vacation or taking in a football game than planning for retirement. So, what about you? Is this going to be another scanned over article to be quickly cast aside because your favorite TV show is about to air? Or, could this be a valuable piece of information that will have a major impact on your future because you decided to take action? Hey! I'm only the messenger boy. My job is done. Yours is next.

When you check into the nursing home. . . may you own it, free and clear.

by Ron LeGrand

Ron LeGrand is now a very successful Real Estate Investor. He started his life literally from the ground up. There was a time in his life he didn't even have the money to replace an old washing machine. In his later years after his extreme success in Real Estate he decided to develop a system to help ordinary people just like you succeed. His system is called the "Fast Cash Generator". More information on his product and his amazing life story can be read here.

The median price of an existing home in California in March increased 15.7 percent and sales increased 7.5 percent compared with the same period a year ago, the California Association of Realtors reported today.

The median price of an existing, single-family detached home in California during March 2005 was $495,400, up from the revised $428,060 median for March 2004, C.A.R. reported. The March 2005 median price increased 5.2 percent compared with February's revised $470,920 median price.

"The median price of a home was just shy of a half-million dollars in March, although the annual rate of increase was the smallest we've seen since June 2003," said C.A.R. President Jim Hamilton. "The inventory of homes for sale has increased compared to a year ago, which has lessened the upward pressure on home prices, but consumers' perceptions that interest rates will increase continues to drive the market."

Statewide, the 10 cities and communities with the highest median home prices in California during March 2005 were: Los Altos, $1,605,000; Saratoga, $1,559,000; Manhattan Beach, $1,451,500; Laguna Beach, $1,350,000; Beverly Hills, $1,320,000; Palos Verdes Estates, $1,302,500; Newport Beach, $1,200,000; La Canada-Flintridge, $1,100,000; Palo Alto, $1,059,000; and Los Gatos, $1,025,000.

Statewide, the 10 cities and communities with the greatest median-home-price increases in March 2005 compared with the same period a year ago were: Laguna Hills, 75.1 percent; Adelanto, 66.1 percent; Atwater, 63.1 percent; Hesperia, 62.3 percent; Twentynine Palms, 60 percent; Selma, 58.9 percent; West Sacramento, 56.6 percent; Desert Hot Springs, 56.1 percent; Arroyo Grande, 52.5 percent; and Barstow, 50.3 percent.

Closed escrow sales of existing, single-family detached homes in California totaled 634,700 in March at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 Realtor associations statewide. Statewide home resale activity increased 7.5 percent from the 590,220 sales pace recorded in March 2004.

The statewide sales figure represents what the total number of homes sold during 2005 would be if sales maintained the March pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

"Year-to-date sales are 6 percent ahead of last year's pace, reflecting the continued strength of the real estate market and the improving economic fundamentals of the California economy," said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. Demographic growth in the state's population also is fueling much of this activity – California has absorbed 3 million new residents since 2000.

Home sales in Central Ohio during March dipped slightly from their year-ago level, but maintained a strong pace, according to the Columbus Board of Realtors Multiple Listing Service.

Realtors reported 2,140 residential home sales last month, down 0.7 percent from the 2,156 homes sold in March 2004.

"In comparing this past March to last year's March, there's one interesting fact to note," according to the president of the Columbus Board of Realtors. "Last year, March sales shot up 36.5 percent when interest rates bottomed out. It was one of the most phenomenal months we have on record!"

Year to date, this brings the number of sales in the first quarter to 4,911 – just 0.5 percent higher than last year, according to the Columbus association.

The association reported that the average sales price of a Central Ohio home was up 5.5 percent last month to $168,376.

Everything You Wanted To Know About Tax Lien Investing

By Darius M. Barazandeh

Tax Lien Investing, tax lien riches, tax liens for wealth, tax lien this, tax lien that...everywhere you turn there seems to be someone selling information on tax liens. What most of these 'overnight' experts don't tell you is what could go wrong with your investment if you fail to perform proper research. I have helped thousands of investors make significant profits from tax sales. I have seen the processes first hand in a number of different scenarios: 1) as an investor, 2) as an attorney, 3) as a business consultant to one of the largest tax collection entities in the United States, and 4) as a teacher and creator of the most advanced tax sale investment systems available today. If you have questions then you are not alone. Tax sale investing is an area that continues to fascinate investors. I like to tell people, 'when you want to move past the fascination phase...please look me up!'

Tax lien generalities can be found a 'dime a dozen' in marketing-based products. Sadly, many of these products will keep you wholly fascinated and perplexed with this investment technique...especially since most will avoid the hard questions. What are those negative aspects? What are those risks that don't make it to the sales letter? If you want to learn the truth about investing then hold off on the purchasing the $29.99 eBook from the tax lien investing marketing guys...and spend a few minutes reading this article


I. Introduction

Tax Lien and Tax Deed Investing: Everything You Wanted to Know About Tax Lien Purchases

Earning 16% to 24% interest through a low risk and low maintenance investment is rare to say the least. While some investments in real estate or industry can match such high rates of return, very few can equal the safe and passive cash flow potential of property tax liens. Furthermore, tax lien instruments are generally insulated from changes to Federal Reserve interest rates. A further advantage is that the property tax lien is secured to real property as a first priority claim. The end result is a highly secured investment instrument that can provide the investor with either: 1) a favorable return on the money invested or 2) deeded rights to property. More impressive may be the fact that tax liens can be purchased for nominal amounts of money (e.g., under $200) or at larger sums (e.g. $30,000 or more). The end result is a flexible but highly secured investment with minimal downside and market risk. This paper will discuss the tax lien process and the real risks and benefits facing the investor.

II. Tax Liens vs. Tax Deeds: A Differing Approach

Tax liens or tax deeds are sold in 35 states. Almost every state and territory, in the United States, has a process that is used to collect delinquent property taxes and place reliable taxpayers back on the tax role. This process occurs at the last juncture of the tax collection process and it allows ordinary individuals to purchase the rights of local governments in tax delinquent property. The process can be separated between two general types of systems: ‘tax lien systems’ and ‘tax deed systems’. The tax lien and tax deed processes may be distinguished by the ‘bundle of rights’ sold to the purchaser. In states using a tax deed system, if the taxes are not paid, county governments will sell full ownership and possession rights to the investor. Currently 17 states authorize the sale of ownership rights to tax delinquent property through a tax deed sale or assignment deed. Conversely, in so-called ‘tax lien’ states county governments sell only their right to the tax lien or tax claim on the real property. A total of 18 states have authorized sales of the counties’ tax lien position to the public.

Tax Deed Processes
In a tax deed state the county will sell all of its rights to the property at a public foreclosure auction or through a later assignment process. The sale will generally occur 3 to 5 years after the first tax payment becomes delinquent. Property is sold for the back tax amount plus any fees, interest charges, and court costs. Since property taxes are a small percentage of market value, investors can acquire full property rights at a fraction of the market price. The purchaser will generally obtain full ownership rights or at least all rights held by the county. In these states, the purchaser generally has the customary rights of a landowner, namely to possess and/or occupy the property.

Tax Lien Processes
In a tax lien state, counties do not sell property; rather they sell their lien for unpaid property taxes. This lien is an encumbrance or enforcement right held by the county. While the lien does not grant full ownership rights to the property, it does provide the investor with two commanding rights: 1) The right to receive interest penalty charges if the lien is paid off by the delinquent property owner, and 2) The right to foreclose the tax lien and take title to the property if the lien is not paid. Even better the property tax lien is a high priority lien superior to judgment liens, mortgage liens, trust deeds, and other private liens.

Because of the powerful nature of these rights, tax liens are a very attractive investment opportunity. Moreover, since the property tax lien is usually for a small fraction of the properties’ market value the investment is highly secured. In addition, the lien purchase does not subject the investor to land owner liability since no right to possess or occupy the property is granted by the sale of the lien.

III. The Tax Lien Process: A Tax Collection Effort

The 16% to 24% interest rates available to investors who purchase tax lien certificates is a function of state law. In other words, state law authorizes the substantial return awarded to the investor.

History
Taxes based on property ownership can be traced back to antiquity; however our modern system draws its roots from fourteenth century England. Property ownership was first used as a measure of one’s ability to pay the tariffs or taxes levied by the English Crown. The tax later became assessed on the property itself. [1] Property taxes were utilized in colonial America in the early to mid 1600’s in order to fund local services such as protection from Native Americans, European intruders, the building of roads, schools, prisons and public relief. [2]

Late Taxes and Collection
Taxes tied to property are still used to fund many of these same essential public services. The fundamental importance of these services is the rationale for the high priority position of the property tax lien. Almost uniformly, state legislatures have given property tax liens seniority over judgment liens, mortgage liens, trust deeds, and other private liens. This ensures that money for public services is paid first no matter how many other claims or charges are levied on a property.

In most states, property taxes are due several months after the close of the calendar year. Some states divide payments into two or three installments each becoming due at different times of the year. While the process for collecting current taxes will vary among tax lien states, late tax collection is generally enforced in a uniform manner. If the property owner is late paying their property taxes then the tax lien will remain attached to the property until the taxes and penalties are paid or the lien is foreclosed.

Tax liens held by the county against real property do not by themselves provide the county with actual revenue (i.e., money) for its operations. Until the delinquent tax dollars are collected the lien is simply uncollected debt. Recall that since local governments utilize property taxes to pay for needed public services, collecting this tax debt is vitally important for smooth running operations and budgeting.

During this time the county will notify the delinquent taxpayer that their taxes are overdue. The county treasurer or tax collector may also offer an extended payment plan at several points in this process. Attempts to collect late taxes will generally last between 1 to 1.5 years. Generally, after one year of delinquency the county treasurer or tax collector will begin to assemble tax sale listings for the upcoming year.

Tax Lien Sale: County Preparation Processes
The list of liens will include properties that have been certified as delinquent for one year or more. Property owners, participating in a delinquency payment plan, will not find a tax lien to their property on the sale list. County officials are required to notify the delinquent taxpayer of the upcoming lien auction. These notice requirements generally demand that notice of the upcoming sale be sent to the delinquent property owner and be published in a designated newspaper for two to three consecutive weeks before the sale. In almost all counties sale listings are available 3 to 4 weeks before the upcoming sale. Most counties have sale information online or can readily fax sale lists to investors.

Tax Lien Sale Auction Format
Although variation exists among tax lien states, there are some general similarities. First, all primary sales must be held in a public auction format and ordinary citizens may take part in the sale. Second, the starting price for the tax lien is made up of: 1) delinquent property taxes, 2) penalties, 3) assessments, and 4) other charges or fees.

While some variation exists among the bidding systems in tax lien states, most can be categorized as follows:

1. Bid Up Process: Some states use a process in which the price of the lien is bid up (i.e., increased) based on competition for the lien. In this auction format the price paid for the lien may be bid higher, but the interest rate earned by the tax lien is fixed and will not fluctuate due to bidding. Examples of states using this system are: Alabama , Georgia , Indiana , Montana , Kentucky and others.


2. Interest Bid Down: The second most common scenario is the interest bid down system. During this auction format the interest rate earned on the tax lien certificate is bid down. The winning bidder is the person who accepts the lowest interest rate payable on the lien. The price paid for the lien is fixed and will not rise due to bidding. Examples of states using this system are: Arizona, Florida, Maryland, New Jersey, Missouri and others.

A few other unique bid systems exist in a small number of states. No matter what type of bidding method used there are numerous opportunities for the investor.

IV. The Tax Lien Investment: Redemption and Foreclosure

The tax lien investor earns profit in two scenarios: 1) if the delinquent taxpayer or another lien holder pays off the late taxes the investor will receive the principal paid for the lien plus any interest which has accrued, or 2) if the late taxes are not paid by a certain date after the sale, the tax lien investor can foreclose and take title to the property.

Tax Lien Redemption and Interest Yield
In order for the delinquent taxpayer to save their rights to the property they must pay the investor the amount of the back taxes plus the interest rate stated on the tax lien certificate. This process is called redemption. The delinquent taxpayer has a limited amount of time to pay off the tax lien certificate and its interest costs. This time frame depends on state law and can range from 1 year to 3 years. This timeframe is called the redemption period. Interest rates vary according to state law but generally range from 12% to 24% per year. Interest accrues based on the number of months the investor holds the certificate.

Tax Lien Foreclosure and Large Profits
Perhaps the most powerful right of the tax lien holder is the right to begin foreclosure proceedings. Foreclosure proceedings should begin if the cost of the tax lien plus interest is not paid off within the redemption period. Proper foreclosure grants the tax lien investor full ownership rights in the parcel and will eliminate the ownership rights of all other parties. If the delinquent taxpayer redeems the certificate during the start of the foreclosure proceedings, most state rules allow the investor to tack or add the foreclosure costs to the redemption price.

Interestingly, since tax liens generally amount to less then 10% of a properties’ market value, foreclosure creates a tremendous profit windfall for the tax lien investor. For example: with proper research, an investor foreclosing on $5,000 worth of tax liens can acquire a property valued $55,000 or more. Thus, a loan-to-value ratio of 10% is possible and seemingly unequaled ($5,000 + foreclosure costs / $55,000 = 10%). Many traditional and creative forms of real estate investing can only create loan-to-value ratios of 70% or more.

V. Tax Lien Holder Rights and Advantages

The purchaser at tax sale will receive a certificate of purchase or (‘certificate’). Thus it is said that the purchaser holds a ‘tax lien certificate’. The certificate is a document that illustrates the investor’s ownership in the tax lien. A properly researched tax lien will award the investor with numerous benefits and in most cases very few headaches. In general, the tax lien investor has the following rights and advantages:

The Right to Collect Interest or Foreclose: The prudent investor will earn profit on the lien certificate no matter the outcome. If the lien is paid off by the delinquent property owner through redemption, then the investor can generally expect to receive a double digit return on the original investment. On the other hand, if redemption does not occur then the investor can foreclose on the certificate. After foreclosure, the investor will obtain full ownership rights to the parcel. Moreover, since property taxes are a small percentage of market value, the investor stands to earn substantial profit on the transaction.


A High Priority Lien Holder Position: At the tax sale the investor purchases a tax lien once held by the county. The priority position of the property tax lien is not subordinated (or diminished) because a private party now holds the lien. The investor holds the same rights once held by the county. Because the lien occupies a first position on the land title, foreclosure of the tax lien clears almost all other liens from the title. Foreclosure not only places full property ownership in the hands of the investor, but it purges the land title of other subordinate liens and debts. The end result is a property interest that is generally ‘free and clear’ of other obligations on the title. NOTE: Exceptions will be discussed in Section VI.


No Landowner Liability or Maintenance Responsibility: An often forgotten benefit of tax lien investing is the passive nature of the investment. Only one state grants the purchaser of a tax lien possession of the property. In all other states, the investor does not obtain possession by purchasing the tax lien. The investor is simply a super priority lien holder, but not a property owner. Because the tax lien investor is not a possessor of property, there is no landowner liability. This is clearly an advantage as lawsuits against property owners/operators continue to rise. According to The Wall Street Journal (Feb 2003),

"Something as simple as paying a college kid to clean your gutters or giving youngsters a few bucks to shovel the driveway could lead to a serious lawsuit."

The lack of control over the property creates an asset protection feature for the tax lien investor. NOTE: After foreclosure the tax lien investor will have possession of the property.

Enforcement Rights Without Enforcement Duties: Another advantage is that the tax lien investor need not demand payment or start collection efforts to compel payment from the delinquent property owner. Although the lien is now owned by a private investor the county will still handle enforcement of the lien until foreclosure. Some states will actually handle the foreclosure process for you. Irregardless, there is no contact with the delinquent taxpayer. Moreover, in the redemption scenario most state tax offices handle the collection of redemption money plus interest. The investor will receive notice that payment has been made to the county. Most states will require the investor to mail back the actual tax certificate in return for the funds invested plus interest.

The Right to Purchase Later Year Tax Liens: Liens sold at auction are only for one year’s delinquent taxes. If the property owner defaults on next year’s taxes then the investor has the right to privately acquire these taxes with no competition. This can maximize investment performance depending on the tax lien jurisdiction. It also reduces research time since the investor will already be familiar with a particular parcel.

Clearly tax lien investing presents some very favorable advantages to the astute investor. The numerous purchase opportunities and the high security/low risk nature of tax liens make this an extremely attractive option to many active forms of real estate, stock and bond market investment.

Tax Lien Sales and Post Sale Opportunities: The tax lien purchaser is also favored by the surplus of tax lien instruments that are available for purchase. For example, at the 2003 Maricopa County , Arizona tax sale 21,200 liens were available for sale but only 14,156 liens were sold. A total of 7,044 or approximately 33% of liens were made available for purchase after the tax sale. In 2004, that percentage totaled 27% and was still within the historical range of fluctuation. Although Arizona ’s Maricopa County is a very popular destination for tax lien investors, literally thousands of liens are still available for purchase after each sale. Such liens would still carry a full 16% interest rate for the investor. While such a large inventory can create confusion for the investor, a systematic process for eliminating liens can transform this into a simple yet profitable exercise.

VI. Tax Lien Investor Risks

Tax lien investing does have numerous advantages, there are also risks and traps for the unwary. As with any type of investment (real estate or otherwise) technique and a proper understanding of the processes involved are critical. In the following pages I will review the general risk areas which can plague investors. A full discussion of these risks is beyond the scope of this short review, nevertheless realize that virtually all of these risks can be easily avoided using a logical research and selection strategy.

Failure to Research Property:

Viewing the Property:
Property research is important before purchasing any type of real estate. Tax lien investment is no different. Since the real property gives the lien its security and value, viewing the property is recommended. You may decide to view a parcel yourself or use a 3rd party. Many investors, including myself, travel to high interest states just to view property and purchase tax liens. Numerous states have aerial photographs of real property located in the county. Clark County in Nevada has aerial photographs of property, as do many counties in Florida and other states. In addition, realtors and other real estate professionals have been used for years by the out-of-state investor when a property sight evaluation is required. In fact, I have developed detailed selection criteria for investors who plan on viewing the property and those who do not. Applying these steps in their precise order is fundamental for success in this process. NOTE: Someone should view the property.

Researching Value:
The failure to accurately determine market value of property backing a tax lien certificate is an unnecessary risk. County appraisal data is available online for almost 70% of counties in the United States . Even more exciting is the fact that this number will only continue to rise. Counties without online data are just a phone call away. Of course, there are other components to market value such as location, future uses, zoning, flood plain paths, city restrictions, etc. The vast majority of these questions can be answered by viewing the property, speaking to county employees, and/or contacting real estate professionals in the area. The appropriate zoning department in that county can also provide you with a great deal of information on any zoning regulations that may impact the use of the property.

Environmental Risk:
The tax lien purchaser is not an owner of property for environmental liability purposes. This is good news. ‘What about investors who foreclose on their tax lien?’, you may ask. Well, Federal law has exempted lien holders who foreclose on contaminated property allowing them to maintain lien holder status and avoid liability. These rules are always subject to change so perform a few basic steps before buying. First, a phone call to the state environmental agency is a worthwhile step for the beginner. The investor is also better served by focusing on subdivision lots and/or houses. The likelihood of environmental liability with such ‘subdivision’ properties is greatly diminished and the property has quicker re-sale potential. When working a new county an understanding of the geographic area is worthwhile. In summary, environmental risk exposure when investing is tax lien certificates is less than that found in other forms of real estate investment. Remember that no possession generally means no landowner liability in most states.

Failure to Research Title:

Surviving Liens and Encumbrances:
Property tax liens are superior to judgment liens, mortgage liens, trust deeds, and other private liens. Nevertheless, some liens share equal priority with the tax lien. For example, state tax liens share equal priority with property tax liens in most states. Federal tax liens for unpaid Federal income taxes will also share priority, thus survive the foreclosure of the tax lien. The investor is unlikely to be responsible for payment since the Federal government has its own ‘right to redeem’ which last 120 days after the foreclosure of the tax lien. The investor is entitled to receive attorney’s fees, interest, and costs incurred in the upkeep of the property. Keep in mind however, that no investor should have to contend with state or federal tax liens since simple research can quickly detect such liens. Where do you find this information? I teach my students the often ‘hidden’ traps associated with researching title. It is imperative that you get good instruction when proceeding forward. Your goal should be investment certainty through a streamlined research process, not confusion from erratic methods. I have found that almost every ‘guru’ in this field tends to gloss over the ‘equal priority’ lien issue. Never invest in tax liens without fully understanding this area. If you have questions then please email me.

Bankruptcy of the Delinquent Taxpayer:
Tax lien jurisdictions work diligently to exclude liens from the sale that have pending litigation such as bankruptcy. Bankruptcy after the purchase of a lien however can create some risk for the investor. If a bankruptcy occurs after the tax lien purchase, don’t despair since all is not lost. The tax lien holder is customarily given high priority when the debts of the bankrupt estate are paid. Very seldom is the tax lien not paid off during a bankruptcy proceeding. The end result is a favorable rate of return for the investor.

The only troubling scenario may occur in a Chapter 7 bankruptcy. Bankruptcy laws may allow the trustee to pay the expenses of administering the bankrupt estate before paying the tax lien. This is an uncommon practice and would require sufficient grounds, namely that the tax lien debt is so high that payment would make it nearly impossible to administer the bankruptcy. This is a difficult position for the bankruptcy trustee to win. Also if the investor follows certain cost guidelines when selecting a lien this risk can be virtually eliminated. In the end, even bankruptcy can have little effect on a tax lien investment if proper techniques are applied.

FDIC Held Liens:
When a bank fails due to insolvency (i.e., not enough money) any loans owed to the bank are administered by the Federal Deposit Insurance Corporation (FDIC). If a loan administered by the FDIC is attached to a property on your list, then move on. FDIC liens can create issues during foreclosure, namely delays. The good news is that it is very easy to check for FDIC administered loans during a review of title. In fact, a list of FDIC institutions is available online. Feel free to email me for listings of FDIC controlled loans. Once you obtain the list you should check the FDIC list against mortgage holders (if any) on the property. Moreover since most tax lien certificates are redeemed, the risk of a delayed foreclosure due to a FDIC administered lien is quite remote and easily avoidable.

Foreclosure Title Issues

Title Certification vs. Suit to Quiet Title:
At one time obtaining ‘clear’ title through tax foreclosure sale required a title clearing suit before the land could be sold with bank financing. Those days are quickly coming to an end with the advent of title certification processes. A title certification is a relatively simple and inexpensive process that confirms title to lenders. This creates numerous opportunities to sell the property with bank financing. Irregardless, some investors will choose to sell the property to another investor using non-traditional means, such as a below market value price (i.e., wholesaling). Depending on preference investors may also wish to rent out or owner finance properties. Appreciation and interest on owner carried financing can parlay a small tax lien investment into a cash flow vehicle demonstrating astronomical returns.

Variations in State Procedure

Understanding Differing State Procedures:
A firm analysis and understanding of the laws in your investment state is critical. There are many slight variations to the general rules discussed in this paper. The good news is that proper information and training can bridge the experience gap very quickly. I am committed to sharing my knowledge with you and providing current, realistic information to new and experienced investors alike.

VI. Tax Lien Investor Preferences

While some risks do exist with tax lien investing, these risks can be avoided by conducting simple research. Proper and systematic research techniques will award the tax lien investor with numerous benefits and in most cases very few headaches. Recall that tax liens can provide the investor with a safe and secure rate of return that outperforms many other passive investment vehicles, such as stock and bond market investments.

The low maintenance aspect of tax lien investing makes this a viable option to many active forms of real estate investment. Investors who do not wish become full-time property managers or who desire a passive, high yield, part-time investment will delight in tax lien opportunities. Investors with substantial capital can also utilize the tax lien sale process to quickly increase cash reserves. Full-time investors who desire property ownership can also take advantage of liens which have expired redemption periods. These liens are available in every tax lien state.

Tax lien investing will also allow some control over the end results. Rules can be manipulated depending on whether the desired end result is property ownership or a stated rate of return, for example:

Property Ownership Strategies:
Recall that the prudent investor will earn profit on the lien certificate no matter the outcome. An investor can greatly increase the likelihood of obtaining the property by targeting out-of-town owners and vacant lands. Houses and subdivision lots which do not have mortgages attached to the property are also redeemed less frequently.

Redemption Strategies:
Conversely, an investor interested in redemption would target owner occupied properties with attached mortgages. The more an investor utilizes these processes the more the predictable the outcomes.

VII. Conclusion

Careful investing in tax lien certificates will allow for safe and quick wealth accumulation. Recall that this investment technique combines tremendous upside potential with very manageable risk. A recap of these advantages include:

The Right to Collect Interest or Take Title to Property

A High Priority Lien Holder Position

No Landowner Liability or Maintenance Responsibility

Enforcement Rights Without Enforcement Duties

The Right to Purchase Later Year Tax Liens

In summary, perhaps the most exciting component of this investment technique is the fact that it can be repeated time and time again with consistent results. This is because the same legal processes create consistent opportunities year after year resulting in a steady inventory of tax liens. You can feel good about your efforts since your investment will help local governments fund important civil services.

Keep in mind however that the rules forming the process are subject to slight variation as time passes so keeping up with changes in the law is important. Tax lien investing is a significant opportunity which also requires some specialized knowledge. If you can ‘learn the ropes’ so to speak, then it’s very easy to multiply your money hundreds of times over. Here is my suggestion: 1) learn the process, and then 2) repeat the process until you are satisfied with you wealth! If you have any questions please feel free to contact me. These processes work very well if and only if you learn to play by the rules. The benefits can be astounding! If you have any questions please email me at: taxenterprises@yahoo.com

By Darius M. Barazandeh

The above article has been written for educational purposes only. The author, Darius M. Barazandeh, Esq. is a licensed attorney in the state of Texas. In addition to his legal knowledge he has a Masters Degree (M.B.A.) in Business Finance and brings experience from numerous fields including tax sale investing, real estate construction, corporate finance, and business consulting. Frustrated by the lack of realistic information regarding tax foreclosure sales and other investments, he is "unlocking the secrets" to many of these creative investment methods with his unique 'clear cut' writing style, attention to detail, and legal knowledge. Darius Barazander has designed the Attorney's Guide: To Investing in Tax Lien Certificates to teach you how to safely invest in tax lien certificates. More information is available here.

Housing prices in the District and surrounding suburbs have roughly doubled in the past four years, and prices have risen so rapidly that buyers and sellers are wondering whether the bubble will burst.

According to the Wall Street Journal, Housing prices in the Washington area increased almost 23 percent last year and are projected to rise another 17 percent this year.

Economist Dr Lawrence Yun, of the National Association of Realtors, says the area's real-estate boom has continued because of high demand, low supply and a good economy. "I think the outlook for housing in the D.C. metropolitan area looks bright, not only for the coming year but for the next decade," Yun said.

At open houses, buyers are advised by real estate agents to keep an open mind, because housing is priced at a premium.

Experts say buyers have to be ready to submit a contract without any contingencies and an escalation clause, which means there's an automatic increase in the selling price should a bidding war occur. Typically, people are removing financing contingencies and taking almost everything out of the contract that would be a problem for the seller. Many houses are being sold above asking price, and some only stay on the market for only a couple of days before they are purchased, experts said.

Coming soon for sale in the attractive East End real estate market: 15 acres of undeveloped beachfront property owned by Greenport Village on the Long Island Sound.

Greenport village officials plan to sell the waterfront property -- along with a building at the foot of Main Street that now provides public bathrooms -- as the financial centerpiece of their 2005 budget, which was adopted unanimously Tuesday night. The proposed budget will go up by more than 50 percent, from the current $2.59 million to $3.94 million.

The hope is, village officials said, that the sale of Clark's Beach, which is just outside the village's border to the north, and three other village properties would provide enough money to retire millions of dollars in existing bonds and still keep the tax rate stable at $12.95 per $100 of assessed valuation.

A half-dozen village residents spoke against the sale of the beach, saying it was a treasure that should be kept for future generations. "Putting Clark's Beach into private hands is an outrage," said former village board member. "Selling Clark's Beach is shameful."

But the president of the Greenport School Board, urged village officials to sell whatever properties they could. "There are 99 parcels in the school district off the tax rolls. Forty-four belong to the village of Greenport. Help us lessen the tax burden," he said.

Clark's Beach, which is next to Inlet Point County Park property, is zoned for 2-acre residential use and has 1,000 feet of beachfront property.

While Greenport mayor would not put a price on the land, undeveloped 2-acre waterfront lots are hard to find on the East End. Each lot could easily sell for $750,000 to $1 million in today's hot real estate market. But the mayor said he would rather see the Town of Southold or Suffolk County purchase the property and include it in their park system.

A Southold Supervisor said the Mayor had not discussed his proposal with the town, but agreed the beach should be kept for open space. County officials also say they would be interested in discussing a possible acquisition.

While most Long Island villages can only dream of having a 15-acre waterfront park, Greenport -- which acquired the land for its sewage treatment plant outfall in the 1930s -- has never developed the parcel. The only access is by a dirt road. There is no parking lot, or lifeguard, or any other facility. There is no sign at the entrance. And it is the only beach in the Town of Southold open to the public where no one checks for a resident permit.

The village last night also proposed selling other, smaller municipal properties, including the building at the foot of Main Street that now provides public bathrooms. That sale would not take place, however, until new public bathrooms are built in a more central location. The mayor said the village could not handle the people who now go to the beach and camp out on it. "Some day this is going to explode," he said.

Why Should You Consider a Bi-Weekly Mortgage?

by Craig Romero, Mortgage Analyst

Homeowner’s all over the nation are changing the way they pay their mortgages. While monthly payments used to be the standard way the average household paid their house payment, more and more homeowners are changing to a bi-weekly mortgage payment plan.

Why? The answer is quite simple, and quite surprising. Homeowners who are using this up and coming payment method are saving tens of thousands of dollars and paying their mortgages off years in advance.

Think it sounds like a fairy tale? It’s not. By paying your mortgage every other week, instead of once a month, you are making the equivalent of one extra mortgage payment per year, and are shaving years off your mortgage while saving thousands of dollars in the process. How significant are the savings? Take a thirty-year mortgage of $100,000 at 7.875 percent interest. By paying this mortgage bi-weekly, instead of monthly, the homeowner will have their mortgage paid off approximately seven years earlier than if paying a normal monthly payment and will have saved over $40,000 in interest over the lifetime of the loan. That’s a brand new luxury car!

There is absolutely no reason why homeowners shouldn’t take advantage of the savings this method has to offer them. Homeowner’s who use the excuse that they don’t have the money to pay a consultant or firm to set up the plan for them probably don’t realize the plan is rather simple and with the proper tools, they can do it themselves.

If you’re reading this article and you’ve never heard of a bi-weekly mortgage payment method, you might be wondering if it’s really as good as it sounds; and if it is, why you’ve never heard of it before. It’s surprising how few people know about bi-weekly mortgage payment methods. It could be that banks don’t want consumers knowing about it, because while it saves consumers thousands of dollars, that’s thousands of dollars of profit that the lenders won’t ever see. Profit lost isn’t something banks normally look favorably upon.

Now that you know the option is out there, you may want to look into taking advantage of it. What would you buy with the money you save?


Written by Craig Romero/Mortgage Analyst
www.wisemortgageinfo.com

Coastal towns remain popular as second-home markets, and Naples, Florida, was the top search choice of consumers who used a vacation, investment and retirement home-search Web site in March.

EscapeHomes.com, which offers real estate tools and listings for consumers seeking second homes, created the Second Home Market Index to provided information on trends and consumer interest while directing consumers to some potential markets for real estate investment.

What is developed is the Second Home Market Index to which follows changes to where people are looking for second homes. What has been observed is some interesting shifts and changes, but ultimately areas like Naples, Fla., and Myrtle Beach, S.C., dominate the index. Oceanfront destinations continue to be the most desirable second-home locations, according to the president of EscapeHomes.com. In this month's index, seven of the 10 top second-home markets searched by Web site users are coastal markets.

South Padre Island, Texas, ranked second in the March index, followed by Myrtle Beach, S.C.; Destin, Fla.; Orlando, Fla.; Tampa, Fla.; Florence, Ore; Napa, Calif.; Venice, Fla.; and Park City, Utah. The results are based on more than 200,000 property searches made on the EscapeHomes in March.

Myrtle Beach ranked first on the list in the February index. South Padre Island remained in the second position while Orlando moved up to the sixth position in the March index. New to this month’s index are Park City, Destin, Tampa, Florence, Napa, and Venice.

Some changes in the March Index were due to low inventory and a lack of affordable beachfront property in Myrtle Beach. Interest in Orlando is on the rise because of a strong year round rental market and its popularity with European buyers who are taking advantage of weak U.S. dollar, according to the EscapeHomes.com announcement.

Credit Repair What You Should Know

You may have certainly come across Credit Repair advertisements in newspapers, on TV, and on the Internet. Credit Repair ads on the radio. You get Credit Repair fliers in the mail. You may even get calls from telemarketers offering credit repair services. They all make the same claims:

"Credit problems? No problem!"
"We can erase your bad credit-100% guaranteed."
"Create a new credit identity-legally."
"We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!"

Beware of the Credit Repair Scam
Everyday, companies nationwide appeal to consumers with poor credit histories. They promise, for a fee, to clean up your credit report so you can get a car loan, a home mortgage, insurance, or even a job. The truth is, they can't deliver. After you pay them hundreds or thousands of dollars in up-front fees, these companies do nothing to improve your credit report, many simply vanish with your money.

What To Look Out For
If you decide to respond to a credit repair offer, beware of companies that:

-Want you to pay for credit repair services before any services are provided;
-Do not tell you your legal rights and what you can do-yourself-for free;
-Recommend that you not contact a credit bureau directly;
-Suggest that you try to invent a "new" credit report by applying for an Employer Identification Number to use instead of your Social Security Number; or
-Advise you to dispute all information in your credit report or take any action that seems illegal, such as creating a new credit identity. If you follow illegal advice and commit fraud, you may be subject to prosecution.

You could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. It's a federal crime to make false statements on a loan or credit application, to misrepresent your Social Security Number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.

Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the promised services.

The Facts
No one can legally remove accurate and timely negative information from a credit report. But the law does allow you to request a reinvestigation of information in your file that you dispute as inaccurate or incomplete. There is no charge for this. Everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost. According to the Fair Credit Reporting Act:

You are entitled to a free copy of your credit report if you've been denied credit, insurance or employment within the last 60 days. If your application for credit, insurance, or employment is denied because of information supplied by a credit bureau, the company you applied to must provide you with that credit bureau's name, address, and telephone number. You can dispute mistakes or outdated items for free. Ask the credit reporting agency for a dispute form or submit your dispute in writing, along with any supporting documentation. Do not send them original documents.

Clearly identify each item in your report that you dispute, explain why you dispute the information, and request a reinvestigation. If the new investigation reveals an error, you may ask that a corrected version of the report be sent to anyone who received your report within the past six months. Job applicants can have corrected reports sent to anyone who received a report for employment purposes during the past two years.

When the reinvestigation is complete, the credit bureau must give you the written results and a free copy of your report if the dispute results in a change. If an item is changed or removed, the credit bureau cannot put the disputed information back in your file unless the information provider verifies its accuracy and completeness, and the credit bureau gives you a written notice that includes the name, address, and phone number of the provider.

You also should tell the creditor or other information provider in writing that you dispute an item. Many providers specify an address for disputes. If the provider then reports the item to any credit bureau, it must include a notice of your dispute. In addition, if you are correct-that is, if the information is inaccurate-the information provider may not use it again.

If the reinvestigation does not resolve your dispute, have the credit bureau include your version of the dispute in your file and in future reports. Remember, there is no charge for a reinvestigation.

The Credit Repair Organizations Act
By law, credit repair organizations must give you a copy of the "Consumer Credit File Rights Under State and Federal Law" before you sign a contract. They also must give you a written contract that spells out your rights and obligations. Read these documents before signing the contract. The law contains specific protections for you. For example, a credit repair company cannot:

- make false claims about their services;
- charge you until they have completed the promised services; or
- perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees.

What Your contract must specify:

- the payment terms for services, including their total cost;
- a detailed description of the services to be performed;
- how long it will take to achieve the results;
- any guarantees offered; and
- the company's name and business address.

All is not lost
Just because you have a poor credit report doesn't mean you won't be able to get credit. Creditors set their own credit-granting standards and not all of them look at your credit history the same way. Some may look only at more recent years to evaluate you for credit, and they may grant credit if your bill-paying history has improved. It may be worthwhile to contact creditors informally to discuss their credit standards.

If you can't resolve your credit problems yourself or you need additional help, you may want to contact a credit counseling service. There are non-profit organizations in every state that counsel consumers in debt. Counselors try to arrange repayment plans that are acceptable to you and your creditors. They also can help you set up a realistic budget. These counseling services are offered at little or no cost to consumers. You can find the office nearest you by checking the white pages of your telephone directory.

In addition, nonprofit counseling programs sometimes are operated by universities, military bases, credit unions, and housing authorities. They're also likely to charge little or nothing for their services. Or, you can check with your local bank or consumer protection office to see if it has a list of reputable, low-cost financial counseling services.

DIY (Do-It-Yourself) Credit Check-Up
Even if you don't have a poor credit history, it's a good idea to conduct your own credit check-up, especially if you're planning a major purchase, such as a home or car. Checking in advance on the accuracy of the information in your credit report could speed the credit-granting process.

You're entitled to one free report a year if you can prove that (1) you're unemployed and plan to look for a job with 60 days, (2) you're on welfare, or (3) your report is inaccurate because of fraud. Otherwise, a credit bureau may charge you up to $9.00 for a copy of your report.

Credit bureaus usually are listed in the yellow pages of your telephone book under "credit reporting agencies." Three large national credit bureaus supply most credit reports: Equifax (call 1-800-685-1111), Experian (call 1-888-EXPERIAN) and Trans Union (call 1-800-916-8800). You may want to contact one of them for more information and a copy of your credit report.

Overall mortgage applications jumped last week, increasing 6.1 percent on a seasonally adjusted basis from the week before, according to the Mortgage Bankers Association's weekly survey.

The MBA seasonally adjusted purchase index increased by 6.4 percent to 474.5 from 446 the previous week. The seasonally adjusted refinance index increased by 5.6 percent to 1,899.6 from 1,798.8 one week earlier.

The refinance share of mortgage activity decreased to 38.1 percent of total applications, from 38.3 percent the previous week. The adjustable-rate-mortgage share of activity increased to 35.8 percent of total applications, from 35.2 percent the previous week.

The average contract interest rate for 30-year fixed-rate mortgages increased to 5.95 percent from 5.91 percent one week earlier. Points including the origination fee increased to 1.36 from 1.26 for 80 percent loan-to-value loans. The average contract interest rate for 15-year fixed-rate mortgages increased to 5.51 percent from 5.48 percent one week earlier. Points including the origination fee increased to 1.34 from 1.32 for 80 percent loan-to-value loans.

The average contract interest rate for one-year adjustable-rate mortgages decreased to 4.28 percent from 4.29 percent one week earlier. Points including the origination fee increased to 0.97 from 0.9 for 80 percent loan-to-value loans.

Washington, D.C., is the most popular real estate market in the nation for relocation, according to RELO, a network of independent residential real estate firms that assist consumers when relocating.

Also topping the list, in descending order, were: Jupiter, Fla.; Atlanta; Chicago; Dallas; Raleigh, N.C.; Charlotte, N.C.; Houston; Tampa and New York.

The top five real estate suburban relocation hot spots in descending order are: Fairfax, Va.; Longwood, Fla.; Parsippany, N.J.; Bothell, Wash.; and Overland Park, Kan. The findings are based on broker-to-broker referrals sent through RELO's network of 4,700 offices and 110,000 sales associates in 2004.

And the five most popular up-and-coming relocation cities, according to RELO, were Greensboro, N.C.; Wichita, Kan.; Grand Rapids, Mich.; Virginia Beach, Va.; and Albuquerque, N.M.

RELO has 650 members representing 4,700 offices and 110,000 associates across the United States and in 20 countries. The group offers access to RELO Home Search, which includes 2 million home listings. RELO members assisted in the relocation of more than 50,000 home buyers from city to city in 2004, according to the company.

Real Estate Luxury home sales spiked 31 percent in 2004 among the member firms of RELO, the group reported. Sales in the $1 million-plus category topped $42 billion in sales volume and nearly 24,000 transactions last year.

The highest concentration of $1 million real estate home sales among RELO members was in the San Francisco area followed by Southern California. Other high-volume areas were New York City, Long Island, Westchester, Fairfield County, Washington, D.C., Miami, Chicago, Phoenix, Vail and Denver.

By David Lindahl, The "Apartment King"

Having rehabbed over 470 properties in the last seven years and collected over 600 apartment units I’m often asked, how can I become wealthier faster investing in real estate?

While most investors concentrate on some aspect of single family houses, I was always interested in apartment houses first, and then single family homes as a means of getting more apartment houses.

From the very beginning of my investing in real estate, I liked the idea that a group of people (the tenants in a building) would get together and pool their money to pay down the mortgage on a property, and I liked the idea that they would also pool their money together to pay for all of the maintenance work for a building.

I especially liked the idea that they would give an owner so much money that the owner would have a bunch of money left over at the end of every month that could be used to either re-invest, save or to go out and have a good time with. Essentially, I like the idea that other people were willing to help make me wealthy.

The first property I purchased was a three family apartment house. I used credit cards to fund the down payment. When I began to purchase my third three family, I realized that there were a lot of good deals out there and I needed a system to come up with down payments. That’s how I developed my “Chunker Strategy”. What I do is buy a single family house with little or no money down (through private money or partners), flip it and use a chunk of money to live today and use the other chunk for another apartment house.

I became an expert at flipping single family houses. I learned to wholesale, retail, pre-foreclosure, rehab, subject to and lease option single family houses. I became a transaction engineer because I didn’t want to lose any potential deal that might be available to me. I soon came to realize that I could also wholesale, retail, pre-foreclosure, rehab, subject to and lease option apartment houses as well.

You see, when I throw out my marketing dragnet for single family houses, I find that I was also attract motivated sellers of smaller apartment houses. If for some reason I wasn’t interested in holding an apartment house for cash flow, I could make a chunk of money flipping it using one of the methods that I described above.
Learning how to invest in apartment houses is like adding another tool to your tool box. You might not need it every day, but when you get the chance to use it, it pays for itself over and over again.

Every once in a while, you come across a great deal on an apartment house. A deal that is going to bring you in a great monthly cash flow of eight hundred dollars a month or more. These deals are actually more common than you think, you just haven’t trained your mind to recognize them. Imagine for a minute, as you are buying and selling your single family houses, you start “collecting” apartment houses with cash flows of at least eight hundred dollars a month (if you are buying 3+ units, you will want at least a net positive cash flow of eight hundred dollars a month, unless you are in a first half of a rising market, and then and only then should you get less).

You will find these deals by dealing with motivated sellers. These deals do not commonly come through real estate agents. There are many good marketing courses available that teach you how to attract motivated sellers, get one and prosper! Let’s say that you collect just four apartment houses a year, one every 3 months. At the end of the first year you will have a net positive cash flow of $3,200 per month. That would equal $38,400 per year.

Now let’s say that you continue to flip single family houses, get chunks of cash, and when the opportunity arises you continue your shrewd method of investing and continue to collect four apartment houses the next year. You have just increased your monthly income to $6,400 per month and your total yearly net positive cash flow from your apartments to $76,800.

Let’s jump forward to the end of year four. You have now collected a total of 16 apartment houses. Your monthly income from your apartments is $12,800 per month, your yearly net positive cash flow from your apartments is $153,600!. That means that if want to take all of year five off and do nothing, no flipping single family houses, no buying more apartments, no doing nothing, you would still get $153,600 in as a net positive cash flow from your existing apartments.

With $153, 600 you can do a whole lot of nothing!

Now you might be thinking whoa! What about all those tenants! I don’t want to deal with any tenants…you don’t have to. As your purchasing your property, you factor in the cost of a good management company. If the property still cash flows properly, buy it. If it doesn’t…next!

Some people don’t have a problem managing their own buildings. I did it for my first two and one half years in business but I soon realized that dealing with my tenants took time out of me going out and finding more deals, so I systemized the management of my buildings and hired a girl to work in my office and manage them for me.

I haven’t talked to or taken a call from a tenant in over four years and yet I happily deposit those cash flow checks in my bank account every month!

When I buy properties out of state, I hire local management companies to manage them for us. The rule of thumb is to pay them 8 –10% of the gross collected rents for buildings with 20 units or less and 5 – 8% for buildings with 20 units or more. Let’s get back to the cash flow because cash flow is the real reason you should consider buying apartment houses while your doing your single family investing.

The cash flow gives you the freedom to do what you want when you want, go where you want when you want, and buy what you want when you want. This is exactly why we are in the real estate game.

What if you don’t decide to invest in apartment houses? It’s now four years later, you’ve been flipping a lot houses and are making some good money, heck, you’ve even got some single family houses that your holding for long term cash flow. Let’s look at the reality of the situation. If you want another payday, you have to buy and sell another house. The cash flow on your single family keepers average $300 per month, what happens if you lose your tenant for just one month? You’ve probably lost your profits for most of the year.

If you were collecting apartment houses during that same four years while buying those single family houses, you would have a pay day in the tune of $12,800 per month each and every month for doing nothing (your net positive cash flow). The management company does all the work! If you lose a tenant in your three family building, no problemo! The other two tenants still pay enough to cover the expenses and also give you a little cash flow.

Not only that, you are creating more and more equity in those apartment buildings through the pay down of the mortgage and the appreciation that takes place each month that goes by. Your setting yourself up for some huge paydays further on down the road.

How do you become wealthier faster investing in real estate? Start collecting some apartment buildings as you buy and sell those single family homes.

** David Lindahl, also known as the “Apartment King” has been successfully investing in single family homes and apartments for the last eight years. He is the author of four popular, money making home study courses “Apartment House Riches”, “How To Estimate And Renovate House For Huge Profits” “Managing For Maximum Profits” and “The Real Estate Investors Marketing Tool Kit”. He can be reached at dave@rementor.com

Upcoming Seminar : Dave Lindahl's Apartment Riches Boot Camp

AMCORE Bank this week announced its Home Possible Mortgage, which aims to make affordable home financing more accessible to working families and many key community professionals who may have limited credit or down payment savings.

AMCORE Bank is one of the first to work with Freddie Mac to offer this new suite of mortgages to borrowers at or below 100 percent median income or living in underserved areas.

Borrowers can choose from different Home Possible mortgages to finance one-to-four family properties, including manufactured homes. Specifically, the Home Possible fixed-rate mortgages offer:

- Expanded flexible financing up to 100 percent loan-to-value, or up to 105 percent total loan-to-value with agency-subsidized secondary financing for down payment;

- Limited out-of-pocket contributions as low as $500;

- Special options for borrowers who serve our community through their work as teachers, law enforcement officials, firefighters, or healthcare professionals;

- Flexible sources for closing costs and down payment, including gifts and grants from relatives, agencies and property seller contributions;

- Non-traditional credit references eligible;

- Free access to required home ownership or landlord education.

AMCORE Financial Inc. (NASDAQ:AMFI) is headquartered in Northern Illinois and has banking assets of $4.9 billion and investment assets under administration of $4.4 billion with 72 locations in Illinois, Wisconsin and Iowa.

Real Estate Foreclosures, the number of new foreclosed residential properties soared 50 percent nationwide in March from the previous month, according to Foreclosure.com, which tracks residential foreclosures and for-sale-by-owner properties.

According to data released today, 28,190 new foreclosed residential properties were listed for sale in the U.S. during March 2005, up from 18,824 in February 2005. The total number of U.S. residential foreclosure properties available for sale in the U.S. during the month of March was 80,757, an increase of 10 percent from February.

"New real estate foreclosure inventory rose in 47 states in March. This signifies a national trend in foreclosure inventory and can likely be attributed to the rise in interest rates during the latter half of 2004, and a slowdown in the trend of rising home values in the fourth quarter of 2004," according to the president and CEO, Foreclosure.com. "Foreclosures are most prevalent in areas of the country where home values are not rising, such as Ohio, Texas, South Carolina and Michigan. However, if the combination of rising interest rates and dropping home values continues, real estate foreclosure inventory will likely continue to rise across the country."

The states that reported the highest number of new foreclosure listings in March included Texas (3,645); Ohio (2,470); Michigan (2,390); Georgia (2,357); and Indiana (1,545). The states that reported the fewest number of new foreclosure listings in March included Rhode Island (2); Hawaii (3); Vermont (11); Washington, D.C. (12); New Hampshire (16); and Wyoming (20).

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Related Link : Foreclosure Homes For Half Price - Extensive foreclosure list exclusive 7 day FREE Trial!

Homeowners looking to refinance second maortgage are being hit with the option of “no cost” refinancing. It is extremely appealing to homeowners who do not have the cash on hand to pay the costs of conventional refinancing or refinancing second mortgage through an upfront mortgage broker.

But does “no cost” refinancing actually come with no cost to the borrower? Not always. When the big picture is taken into account, some “no cost” refinancing actually has costs that are pretty steep, but well hidden. Most no cost financing options will have you paying ½ a point to 5/8 of a point more in interest than you would with a full-cost loan.

Is there ever a good reason to take advantage of a “no cost” refinance? Yes, if the interest rate you are paying now is significantly lower than the current “no cost” refinance rates. You may also want to consider this type of financing if you plan on being in the house for a short period of time, say from one to three years.

If you are not sure how long you are going to be in your home, it is still okay to pursue a no cost loan, and if you wind up staying in the home for a long period of time, you can refinance at a later date.

For borrowers who are considering a no cost refinance second mortgage because they can not afford the costs to refinance, dig a bit deeper. Many times when you refinance second mortgage you can roll the costs of your refinance into your loan, enabling you to refinance without a large amount of money up front.

If you do decide to opt for a no cost refinance second mortgage, make sure that you are truly getting a no cost, and not a hidden cost. With a no cost loan, you will not be paying the lender fees or settlements; the lender pays for these without increasing the cost of your loan. You will however be responsible for per diem interest and escrow costs, though your escrow costs will be credited at closing by your old lender.

There is a current way to pay off your 30 year mortgage with mortgage cycling in as little as 10 years without refinancing? And in the process you could be building up your equity 10 times faster with mortage cycling then using a traditional bi-weekly mortgage.

Thousands of homeowners across the United States have become aware of mortgage cycling, a new mortgage loophole developed recently too build up equity 10 times faster than using a traditional biweekly mortgage.

After over 4 years of development and testing, Craig Romero a senior mortgage analyst shows homeowners how to build up to $14,000 in equity their first year and up to $45,000 equity in only 3 years.

Smart homeowners know that to make their mortgage a positive investment they need to build up their equity fast. while decreasing the amount of interest paid to the bank or mortgage holder.

Mortgage Cycling allows them to do this without changing their current mortgage, refinancing, or using a bi-weekly service. Imagine what you could do with over 20 years of mortgage savings in your bank account? For once you could cheat the banks from taking your hard-earned money and be able to re-invest it into your family.

Homeowners across the country are reporting great results using Craig's system with numerous testimonials on file showing how he has helped them with their dreams of paying off their 30 year mortgage in 1/3 the time while building up their equity 10 times faster then a bi-weekly mortgage. So powerful are Craig's techniques that he has recently had his system registered as patent-pending to protect it from copy-cats.

To read further about Mortgage Cycling and how-to save literally thousands of dollars on your home mortgage visit, Craigs Romero Mortgage Cycling Revealed here.