Be prepared for what a home inspection might reveal when selling your home.

Since the start of the $ 8,000 tax credit and its extension to the end of April 201o, the flipping market has quite popular in the Philadelphia area. Some realtors and other investors that I’ve talked to over the past few weeks, have expressed that first time home buyers that are qualified for the tax credit, are finding it difficult to find desirable properties.

It’s that home price range between $ 80,000 and $ 200,000 where buyers are seeking homes that they would like to move into without doing any work to the homes at all. Homes for sale in “move-in condition” seem to be just a bit difficult to find. Also, advice to the investor that is flipping the home, do a home inspection when your property hits the market.

Home inspections can often make or break a deal. If possible sellers should have one done ahead of time so any additional repairs can be made and a home can be in its best possible condition. However, often a seller does not do a home inspection first and is caught off guard by a list of repairs presented in the due diligence portion of the contract process.

Also, make sure that your home inspector is a member of ASHI (American Society of Home Inspectors).

The most common home ailments that show up in the home inspection process are:
-Faulty electrical wiring
-Roof damage
-Plumbing issues
-Poor drainage

Yes, these problems can occur in recently rehabbed homes. If you and your contractor have done a thorough rehab, then your flip investment property should come through with flying colors. These are issues that can add up to a potential home buyer walking away if a seller is unable to step up and make the repairs or commit the money to make the repairs.

Examine these aspects of your home yourself, if you and your contractor know everything is in good condition and the work that has been done to your home has been completed by your contractor then you can rest easy, otherwise be prepared to make additional repairs in order to sell your home.

Considering investing in Philadelphia residential real estate?  If you plan to purchase Philadelphia real estate and rent your property, you may want to invest in Philadelphia’s developing neighborhoods and one of the best, hot places is housing for Temple University students.

 Consider these points about Temple housing:

•  Temple can only house their freshmen class.  This leaves a great demand for student housing in the city.
•  Temple is located in the area of North Philadelphia that has gone through and is still in the process  of revitalization.   This creates great opportunities to purchase turn-key properties that already have students in place and positive cash flow.
•  Temple students pay anywhere from $ 375 to $ 500 PER ROOM for rent, giving you positive cash flow every month.
•  You must make sure your property is zoned properly. 
•  Students begin looking for housing from May to August. Some spring rental searching starts in late March & April.

We have available several investment properties that fall into all of the criteria above.   Now is the perfect time to take possession of an investment property near Temple University.  The timing of rehab needed, will allow an astute investor to have a property ready for the upcoming rental search period.

There are lots available to build on – with permits and plans, as well as shell properties and also some that only need light cleaning and painting.   You can view of list of these properties by clicking here.

And not only do properties around the Temple area provide a nice cash flow and also appraise at a high After Repair Value (ARV) but the taxes are very low compared to other major cities.  The annual real estate taxes on the above mentioned property is $ 208 per year – that’s not a misprint.  $ 208 PER YEAR!

It is a buyer's market

When it comes to real estate the general sentiment appears to be that of putting 2009 in the past and looking forward to a brighter 2010.  Looking at where we are and where we are headed as far as real estate goes will take us from the present into the future.  Currently home values are affordable, because prices are low and interest rates are low.  Both of these low levels add up to the fact that it is a great time to be a buyer when it comes to real estate.

Plus, the extension of the $ 8,000 tax credit for first time home buyers and the new $ 6,500 for existing home buyers has created a surge in home flipping for investors.  Several flip and buy & hold investment properties  exist for real estate investors.

Interest rates have been hovering at 5% or lower for the better part of the past year, a trend that cannot be expected to continue.  As the market stabilizes more and the economy gets better, interest rates will rise.  While home prices still may drop in many areas of the country, they will not drop much more.  Areas that are less affected by foreclosures, short sales and REO properties are likely to level out faster than other areas due to the lack of distressed sales in their inventories.  A rise in interest rates may bring real estate prices down to sell but the days of 20% and 30% decreases appear to be unlikely.

In a nutshell now is a great time to buy investement real estate, especially in the Philadelphia area, if you have been waiting for the right time to plunge into the market.  Take advantage of low interest rates while they are here.  It is a buyer’s market now, it won’t be forever.

For an interesting analysis of the real estate conditions and a forecast of 2010, by CNN Money, click here.   I,  along with other active investors that I know, believe the Philadelphia flip market is strong and will do well for this upcoming spring market.

Well, finally something that’s been touted here at this blog site for several years is proving to be true, although it comes to no surprise for those of us seeking, wholesaling and purchasing cash flow real estate investments in Philadelphia and the region. 

Based on a Zillow “Home Value Index”, a slideshow released last week on CNBC’s website has two Philly zip codes coming in at second and third place in the U.S.

Philadelphia homes in the South Philly zip code of 19145 (# 2) has seen a “year-over-year price growth of 19.1%“, while the zip code of 19148 (#3) has seen a “year-over-year price growth of 16.9%”. 

At sellphillyproperty.com , we have wholesaled and purchased ourselves cheap investment houses in these zip code areas over the years.  We presently have an investment property in 19145.    They have become great cash flow investments for our real estate property investor client base.  There is also a spill over effect from these zip codes too.  With Philadelphia Zillow’s one year home value going down only .1%, there have been pockets of Philadelphia investment homes being purchased at great values resulting in cash flow and equity. 

These are the zip code areas neighboring 19145 and 19148.  The various neighborhood growth developments being acted out in the Philadelphia Northern Liberties, University City (19104 # 14 with 13.5% growth), West Philadelphia, South Philadelphia, Temple Univ. – North Philly, Nicetown/Logan (Temple’s newly opened medical school)  and parts of northeast Philly, are undeniable.

Continue looking into real estate investment to enhance and manage your retirement. Learn how to purchase investment homes with your self-directed IRA.

Foreclosures are expected to subside in the coming year

The latest data released by UFA L.L.C., a firm located in Ann Arbor Michigan that researches mortgage activity, states that foreclosures are expected to decrease in the next year.  After four years on the rise there is no doubt that it will be nice to see foreclosures start to subside.

Improvements in the foreclosure arena are seen linked to tighter lending practices, home prices stabilizing, and an improving economy.  The one element working against foreclosures is the increasing unemployment which will leave some without the ability to make their mortgage payments.

The onslaught of no-doc loans and inflated home prices led to four years of increasing foreclosures.  The decline of real estate values is largely attributed to an elevated rate of foreclosures.  A decrease in foreclosures will be a welcome sign for a real estate market that has seen better times.
Click here to read an article at Business Week about foreclosure rates.

And check out our list of wholesale investment properties on our website. Sign up on our email list and receive the latest for properties available and refinance rates from area lenders.

A short sale can be time consuming and complex

A short sale is the selling of property to avoid foreclosure, the catch being that the property is being sold for less than the amount owed on it.  What makes a short sale tricky is that the sale price is not up to the seller, the lender has to agree to the purchase price.  The home owner isn’t walking away with any money at closing in the case of a short sale so he doesn’t care if the home sells for a dollar, the bank’s involvement is to reduce their loss as much as possible and the buyer just wants a bargain.

The basic process of a short sale is:

• Borrower must be in arrears on loan payments
• Borrower or broker contacts lender to discuss the possibility of a short sale
• Potential buyer makes offer, knowing what is owed by borrower/owner of property
• Lender reviews loan and offer
• Borrower has to show/prove financial hardship
• Lender and broker discuss value and condition of property and examine any offers
• Lender makes final call

We sometimes have short sales available as investment properties – sign up on our email list and you’ll be periodically updated.

The short sale process looks easy on paper, follow the steps and the deal is done, short sale completed.  However, in reality the communication between the borrower, lender, Realtor and potential buyer is complex and time consuming.  Simply wanting a short sale won’t make it happen.  Using a CDPE (Certified Distressed Property Expert) eases the pain and insures you better success when trying to complete a short sale.  Being in financial stress is not easy on anyone and using an expert will help you get the job accomplished in a more timely manner and help create a successful real estate transaction.

As investors seek properties at discount properties, they too can take advantage of the short sales in today’s Philadelphia real estate market.

If you’re a real estate investor, and active seeking real estate deals, rehabbing them, placing tenants to provide cash flow in your properties, it’s been a rollor coaster ride when it comes time to refinance your investment property. 

The investors that we have wholesaled our investment properties in Philadelphia, as well as our  own properties, have seen the rates stabilize a bit. 

Stan Bril of GFI Capital Resources, has rates in the mid-5% area, fixed rates are available for terms from 10 years to 40 years, and most times Debt To Income ratio (DTI) is not an issue. And they have refinance programs up to 75% LTV.

The best thing to do is contact SEVERAL finance sources and see what they have.  Check out our website for some sources to start with.  Click on the “Refinance” and “Hard Money” buttons on the left.

Investors seeking cash flowing properties might take a look at the real estate we have available in South Philadelphia and West Phila.  Some are flips and some work both as flips or buy & holds.

It’s always recommended to get to know an area you’re looking to acquire property investments.  You’ll find a wealth of information for South Philadelphia in the South Philly Review. For West Philadelphia, West Philly News seems like a good source.  Especially check out the article on the Baltimore Ave. eateries.

We have a property on the 5400 block of Baltimore Ave.

If anybody has other local suggestions, click on the “Leave a Comment” link on the top right of the blog.  Check out our Philadelphia investment real estate properties by clicking here.

Real Estate sales were up considerably in July

Positive signs for real estate have surfaced yet again, indicating a troubled market that appears to be stabilizing.  July housing statistics are in and have exceeded economists’ forecasts with sales up over 9%.  While the number of sales are down considerably from the peak of 2005, they are up quite a bit from January.

The upswing of Real estate sales is largely attributed to the first time homebuyer tax credit which covers 10% of the value of the home up to $8,000. The current tax credit is only good until December 1^st and there is a big push to extend the credit. Home builders in particular want to see the credit extended because any projects that are started today cannot be guaranteed finished by the tax credit cut-off date.

For more information on July’s sales and the current state of the National real estate market visit Yahoo Real Estate.

Let me take you through one of our recent properties that we’ve wholesaled to an investor, and maybe you get a perspective on how you can recoup all of your money invested in a deal and have positive cash flow every month. And plus there’s a little added twist to this story in the end.

This was a home in “HOT South Philly”. It was a typical Philly row home.

The ARV (After Repair Value) for this property, was at $ 110,000. Recently banks have been pushing down their appraisal numbers, so we try to stay conservative. We use comps of similar sq. ft. and within a .3 mile radius of the property, that are no more than 6 months old. With the volume of property sales taking a dip recently – we have to sometimes expand our parameters.

The comps ranged from $105,000 (which needed rehab too) to $258,000. The property we were wholesaling was a fixer upper, and the rehab was $23,000. The price for the property was $49,500, which included our assignment fee.

WHAT IS THE GOAL IN AN INVESTMENT DEAL LIKE THIS? Recoup all of your investment in the purchase and rehab of the property AND create a MONTHLY POSITIVE CASH FLOW by renting it out.

So how do the numbers work. Total into this deal for the investor was $77,239.50 – this includes purchase, rehab, closing costs and even refinance costs. After finding a tenant at $ 800, the investor has the bank refinance this property as income producing real estate. The bank ARV number was $ 105,000. $ 5,000 less than our projected $ 110,000.

The bank will give the investor a refinance loan at 75% LTV (Loan To Value) which equals $78,750.00.  So, not only does the investor get ALL of his money out of the deal AND pockets $ 1510.50, but now has a monthly positive cash flow.

Realize what happend here. The investor’s $ 77,239.50 value has increased to $ 105,000 within a matter of 4 to 6 months. This is a 25% increase. Can you tell me what investment can do that?

Now the twist to the story. The investor decided to spend an extra $8,000 on the rehab. Something I would advise against. The property manager found a tenant right away at $ 850 per month. He spent an additional $ 8,000 and received an extra $ 50 per month for it. Was it worth it? He should’ve stuck to the original plan.

We have various types of deals on our website. Take a look and sign up on our email list to get early notifications of upcoming income producing properties.

Real Estate values and sales seem to be on the rise

The Clear Capital Report sees home prices rise across the country when analyzing quarterly results.  The report sees home value gains in all regions of the country, averaging out to 5%, with the Midwest gaining the most at 11.2%.  The real estate improvements are linked with summer being a buying season, increased investment opportunity and the previous large drop in home values.

The second quarter of 2009 followed a period of extremely low real estate activity, couple that with tax incentives, low mortgage rates and reduced home values, and the evidence of a true buyer’s market became omnipresent.  Acquiring a mortgage is probably still the most difficult part of the home buying process but money is strating to loosen.  Increased sales volume indicates an improvement in the real estate sector, a welcome sign for a beleaguered economy.

For a complete look at the Clear Capital report click here.