Cash Back When You Buy a Home

While buying a house is a huge investment, it can also be a way to save money. Programs offering cash back on real estate have become extremely popular and are available to most people, no matter whether they are buying a house by themselves or through a REALTOR, and regardless of whether this is their first home or a commercial property.

Step 1:

Get money back when working with a REALTOR if you search and find your own home but use a REALTOR to close the deal. According to real estate experts, you are entitled to a percentage back at closing time because you did the legwork. Do keep in mind that most REALTORS will not offer you a cash back reward unless you ask for it, so be sure everything is agreed to in advance.

Step 2:

Use a company that offers cash back on real estate upon closing the agreement. There are many certified companies that offer rebates, and one of the advantages of using a certified company is that all moneys are kept in escrow until closing time, so you are never at risk of losing your percentage, no matter how the process goes or changes.

Step 3:

Get cash back from the seller. If you are buying a home that is in foreclosure and paying actual cash for it rather than buying it through the bank with a loan, you are allowed by law to offer the actual priced quoted for the house, even if the seller is willing to take less for it. At the time of closing, you can take part of this money back as a credit towards repair, but you will still be legally able to report the total price on your taxes, increasing your break.

Caution:

Cash back payments that involve telling the lender (usually a bank) an inflated price for the house are illegal. While many real estate agents and homeowners are not aware of this problem, it is technically illegal to request a loan higher than the actual price of the property with the idea of getting some cash back from the seller at the time of closing the deal.

Commercial Real Estate – A Primer

When speaking with a group of real estate investors recently, the question arose as to how many of them have completed a commercial real estate deal in the last year, and surprisingly, the answer was none. It seems that many of them were either happy with the currently market conditions or they didn’t really have the aptitude to go about buying a commercial property.

Market specialization? No. It seems that the majority of real estate transactions go something like this:

1. Residential real estate is the sweet spot of the small real estate investor.

2. Commercial real estate is typically left for the small business owner, who has decided to stop renting.

3. Both of these sectors of the real estate industry do have some crossover, but the previous two statements are typically the norm.

So how exactly are commercial properties being bought, sold, being rented? What’s the best way to acquire commercial real estate, and who you need to help you in doing an acquisition?

Here are five key points to consider:

1. By far the most popular business entity for owning commercial real estate is now the limited liability company (LLC).

2. Commercial real estate is a much less popular subject, in part, because it isn’t as personal and doesn’t tug at our own financial purse strings.

3. Commercial real estate is a term to describe a property with 5 or more units. The significance of this is that FNMA only finances 1-4 units, which means getting a loan for a commercial project is more difficult.

4. Investing in commercial real estate is riskier and more costly than investing in residential property – but ultimately it can be far more profitable.

5. Commercial real estate is a business investment driven by economic factors, not so much the property itself.

Investing in commercial real estate can be a good way to invest but you should make sure you are well represented by an attorney and accountant before moving forward since buying commercial real estate can have significant tax consequences and if you’re buying or developing commercial real estate, it’s important to protect your financial interests with legal support. It may sound redundant, but the axiom location, location, location, is an important factor in buying commercial real estate too. Here is the key to buying commercial real estate: the one with the most information wins.

The winners are the people that recognize that the world of commercial real estate is constantly changing and understanding the nature of commercial real estate is a precondition to the timing question. They also understand the data and realize that information is the most critical aspect of any transaction. In other words, the most valuable commodity you can have in the commercial real estate market is information.

False Rumours on New Law Affecting Owner Financing

I’ve received a number of emails from people claiming that House Bill 1728 will eliminate owner financed deals to once every 36 months.

This is patently FALSE.

Become an informed citizen and read it yourself:

http://www.govtrack.us/congress/bill.xpd?bill=h111-1728

This bill aims to include owner financed deals within the definition of “Truth in Lending” law. I’ve always instructed in my courses and seminars that you should comply with Truth in Lending, which requires just a few simple disclosures.

The bill also would, in theory, make a person who sells a home a “mortgage originator”. This would require compliance with RESPA, which I’ve always instructed in my courses and seminars that you should comply with anyway.

Finally, the bill would require that you actually qualify your buyer. It prohibits, “lending without due regard of the mortgagor’s ability to repay”. Duh! Only a fool would put someone in an owner financed house deal without checking their income, debt and credit.

All in all, there’s nothing to worry about here for investors, it’s just a matter of compliance with some federal rules and a couple of disclosures.

Any comments or questions are welcome.