An Overview of Easements

Title insurance is generally associated with insuring a purchaser's or lender's interest in a particular piece of real estate. The right to use an easement is often considered less important than unencumbered title of the insured parcel. An easement, however, can significantly affect the value of the insured parcel. Questions regarding the validity or use of an easement may result in a dispute among neighbors that may require protracted litigation to resolve.

In light of the potential for such unpleasantness, the practitioner is well advised to be aware of any easements related to the property to be insured. The following discussion is intended as a brief and general overview of some of the issues a practitioner will encounter when a title company is asked to insure an easement or a piece of real estate affected by an easement. Of course, each title order will have its own set of circumstances requiring individual attention by the title examiner.

THE BASICS

An easement is a non-possessory right of the owner of one parcel of land to use the land of another. This right to use the other's land is limited to a particular purpose and may be further limited as to the form of usage. 1 An analysis of this definition raises some important points. An easement is an interest in land and not merely a contract right. The non-possessory feature of an easement differentiates it from fee title to land. An easement holder may not occupy and possess the land burdened by the easement; he or she may only use it for the purposes and in the manner established by the terms and conditions of the easement. The meaningful distinction between an easement and a fee simple estate is that the easement describes the right to the use of the land which is specific or restrictive in nature, while the title to the fee is the grant of title to the land itself. 3 This difference is significant because a fee owner receives substantive and procedural rights unavailable to easement holders.

Easements are also distinguishable from leases. A lease is a right to exclusive possession of another's property for a specified period. The key difference here is between possession and use. In Baseball Publishing Co. v. Bruton, the Supreme Court of Massachusetts concluded that the "lease" of a wall for the purpose of maintaining a bill board was in fact an easement in gross because the wall was left in the possession of the owner, who still maintained the right to use the wall for any purpose not specifically granted or forbidden by the " lease."

Easements are also distinguishable from licenses. Much of the litigation in this area, including Baseball Publishing, begins with one party arguing that the right in question is a lease-an irrevocable interest in land- and the other party asserting that the arrangement is a license-a revocable personal right-when in fact the interest might actually be an easement. As a result, essentially the same arrangement has been found to constitute a lease in some cases, a license in others, and in still other cases, an easement.

CLASSIFICATION OF EASEMENTS

While the distinction between easements, leases, licenses, and fee estates may be somewhat murky, the differentiation among types of easements is little clearer. Easements are usually separated into easements appurtenant and easements in gross. An easement appurtenant is created to benefit the owner of another parcel, known as the dominant tenement. This easement will run over another tract called the servient tenement. The easement appurtenant therefore requires both a dominant and servient tenement. One owner's land must be burdened in favor of the estate of another. An easement appurtenant runs with the land. If the dominant tenement is sold, the easement will pass to the grantee, even though it is not specifically mentioned in the document of conveyance. 6 Similarly, if the servient tenement is sold, the grantee takes subject to the easement. An easement in gross does not require its holder to own or possess other land. There is a servient estate, but no dominant one. For this reason, an easement in gross has been described as an irrevocable interest in the land of another. Whether an easement is appurtenant or in gross is determined by examining the grant of easement to detect the intention of the parties and the circumstances at the time of the conveyance. While the deed of conveyance need not include the word "appurtenant," the courts have often presumed that an easement is appurtenant rather than in gross. There is a constructional preference for easements appurtenant over easements in gross.

This preference for easements appurtenant can be overcome by an examination of the land involved. If the easement does not benefit the owner of a particular piece of land, there is no dominant tract and the easement is in gross.8 Utility easements are usually held in gross. An easement appurtenant can not be converted into an easement in gross. The easement's classification will remain in effect throughout its usage.

CREATION OF AN EASEMENT

Most easements are created by express grant contained in an easement agreement or deed or by reservation in a deed. An express grant, however, is not always necessary to create an easement.

An easement may be acquired by prescription and by implication as well as by express grant. Whether an easement by prescription is appurtenant or in gross is determined by the use of the servient estate. If the prescriptive use was for the benefit of the possessor of a particular piece of land, the easement is appurtenant. If it is not for such benefit, it is in gross. Implied easements may be deemed necessary for the use of the dominant estate. Clearly then, they are easements appurtenant to the dominant parcel.

TITLE INSURANCE ISSUES

A title insurer will be faced with two major concerns regarding easements: whether the easement can be insured for a dominant tract and whether an easement can be waived as an exception to the coverage provided by the title policy for a servient tract.

If the title company is requested to insure an easement for the first time, the following questions will be raised:

A. Is the easement appurtenant?

B. What land is benefited by the easement?

C. Were the dominant and servient tenements owned by different parties at the time of the creation of the easements?

D. Was the easement executed by or consented to by all of the lienholders of the servient tenement?

E. How was the easement created, and was the document creating it properly drafted, executed and acknowledged?

F. Does the document creating the easement state its purpose?

G. Does the document state consideration?

H. Is the easement described specifically as an easement appurtenant, binding on successors and assigns?

I. Does the easement document provide that it runs with the land?

J. Does the easement indicate a duration, or is it described as perpetual?

K. Is the easement an exclusive right or may other property owners use it as well?

L. Has an event occurred which may have terminated the easement?

If the examiner is satisfied that a valid easement has been established, the next step is to verify the continuing physical existence of the easement. The examiner will review an inspection report or survey of the easement parcel to confirm that the easement is open and in use. In some areas, a title company may actually send out an employee to physically inspect the property. Upon receipt of the survey or inspection report, the examiner will want to verify that there are no barriers or obstructions which interfere with the purpose of the easements. A survey include the show the easement in its written legal description and in the depiction on the plat. If the easement has been recorded, the chain of title should cover the easement parcel.

The examiner will also decide whether any events have occurred since the creation of the easement which may have resulted in its termination. If the dominant tenement has been resubdivided, split into multiple parcels or undergone a change in use, the underwriter will review the situation to determine the easement's viability.

Tax Sales

If an existing easement has its own tax number separate from the servient tenement, a tax search should be ordered to verify that there are no delinquencies affecting the easement. If an existing easement lies within a tax parcel affecting the entire servient tenement, however, tax delinquencies will not affect the easement. For any easements to be created at a closing, however, all tax delinquencies on the servient tenement must be paid or redeemed prior to the closing. A tax deed shall not extinguish or affect any easement which was created on or over that real property before the time of the tax sale, unless the entire sold tax parcel consisted of only the easement parcel itself. 35 ILCS 200/22-70 (1992).

Merger

The most subtle way of destroying an easement is the application of the doctrine of merger. The risk that the title to the dominant and servient tenements has merged is a dangerous possibility that must be addressed by the examiner. The doctrine of merger states that if ownership of the dominant and servient tenements becomes vested in the same party, the easement over the servient tenement will merge into the fee title of the dominant tenement and thus be destroyed. As an example, A owns Lot 1 and has an easement over adjoining Lot 2 for ingress and egress. If A buys Lot 2, the easement over Lot 2 will merger into A's fee title and will be destroyed. A's fee ownership of Lot 2 gives A far greater right in the land than the ownership of the easement, therefore the smaller right merges into the larger one. If A later conveys Lot 2 to C, the easement must be recreated by a new grant.

The examiner will search the title of both the dominant and servient tenements to look for an incidence of common ownership of both tenements in one party. If such commonality of ownership is located, a new easement must be created, even if the common ownership had been separated later in the chain of title.

In a recent Illinois case, the appellate court stated that a merger occurs when a dominant estate and the servient estates are owned by the same person, thereby extinguishing an easement by virtue of unity of title and possession, given that one has no need of an easement over one's own property. Ownership of both the dominant and servient estates must be identical in duration, quality, and all other circumstances of right. In Ellis V. McClung, the Illinois appellate court held that where the evidence failed to show that the benefited property and the property subject to the easements was all owned by the same parties under identical circumstances, the easements were not extinguished by the doctrine of merger. These circumstances included the duration and the quality of the title. 10

Abandonment

An easement created by a grant, deed or reservation can be destroyed or lost by the owner's voluntary abandonment. There is no duty to use or enjoy an easement as a condition of the right to retain the easement. Therefore, to constitute an abandonment, there either must be an overt act which affirmatively and unequivocally shows an intent to abandon the easement, or a failure to act. This carries the implication that the owner neither claims nor retains any interest in the easement. The dominant owner must clearly relinquish possession or use of the easement. The abandonment is complete the moment the intent to abandon and the relinquishment of possession or use unite. 11

Destruction by Agreement: Abrogation

An easement may be terminated by an agreement between the owners of the dominant and servient estates. This agreement is often known as an abrogation agreement because it abrogates or ends the easement. If the examiner encounters an abrogation agreement in the chain of title which terminates the easement to be insured, the easement is uninsurable.

Waiver of an Easement

If a customer requests that an easement be waived as an exception on the title commitment for a servient tenement, the title company will usually require that a validly executed abrogation agreement be recorded. This agreement must be executed by all parties having an interest in the dominant tenement. In some cases, a necessary parties search should be ordered to determine the list of parties who will need to join in the abrogation agreement.

This articles incorporates Chicago Title Insurance Company Underwriting Guidebooks and examining manuals, as well as a September, 1997 article on Easements by Jeffrey Rezwin and Mary Scmuttenmaer of Chicago Title Insurance Company. These materials are incorporated without specific citation.

1. W. Burby Handbook of the Law of Real Property S23 (3rd Edition, 1965).

2. The Law of Easements and Licenses in Land, Bruce and Ely, p. 1-2 (1988).

3. Park County Rod and Gun Club v. Department of Highways, 163 Montana 372,377; 517 P. 2d 353,355 (1973).

4. Baseball Publishing v. Bruton, 302 Mass. 54, 56, 18 N. E. 2d 362,364 (1938).

5. R. Powell, The Law of Real Property, P. 430 (1987).

6. Taylor v. Lanahan, 73, Ill. App. 3d 829, 832; 399 NE 2d 425, 428 (1977).

7. The Law of Easements and Licenses in Land, Bruce and Ely, p. 2-5.(1988).

8. The Law of Easements and Licenses in Land, Bruce and Ely, p. 2-6 and 2-7 (1988).

9. Curtin v. Franchetti, 156 Conn. 387, 389; 242 A. 2d 725, 727 (1968).

10. Ellis v. McClung 291 Ill. App. 3d 448, 459,460 (1997).

11. Illinois Real Property Service, Sales and Transfers, Section 30:48 (1988).

By Neda Dabestani-Ryba

Expense List for Buying a Home

There are many expenses that come with buying a home. The following list is a good example of what to expect:

Down payment - A minimum of 20% of the home's purchase price is usually required for the best loan terms and to avoid paying private mortgage insurance (see below), but it's entirely possible to buy a house with a smaller down payment.

Monthly mortgage payments - Include loan principal, interest, and sometimes additional charges for taxes and insurance.

Property taxes - Amounts vary, but the average is around 1.5% to 2% of a home's purchase price.

Homeowners insurance - Again, the cost varies. Call insurance companies for more information, or contact the Florida Department of Insurance for surveys of prices for insurance rates.

Private mortgage insurance (PMI) - If your down payment is less than 20% of the purchase price, this can tack several hundred dollars each year to your loan costs until the equity in your home reaches 22%, when you no longer need the insurance.

Maintenance - Varies year to year, but you may spend about 1% of the purchase price annually on maintenance and repairs.

Closing costs - Include points and other fees charged by the lender, which can add up to 3% of the amount you borrow; title insurance, from a few hundred to over a thousand dollars, depending on the purchase price of your home; inspections, about $200 to $500; and other miscellaneous fees. Many of these costs are negotiable between the buyer and seller, and are dependent on local customs. You can also negotiate with the lender to reduce, and in some cases completely waive, certain costs.

Housing expense ratio Typically, mortgage lenders won't allow these housing expenses to be more than one-third of your household monthly gross income. In other words, 28% of your monthly gross pay (for example, your annual salary divided by 12) is the usual maximum "housing expense ratio" allowed by lenders.

The "housing expense ratio" compares your monthly gross income to "PITI," an acronym for:

* Principal, or the amount you borrowed, of your mortgage loan

* Interest on the mortgage loan

* Taxes: property taxes

* Insurance: homeowners and private mortgage insurance (PMI)

Debt-to-income ratio.

On top of the 28% lenders allow for monthly housing expenses, they will usually let you spend another 10% for other debt repayments such as student loans, car loans and other similar loans. Added together, your housing expense ratio and monthly recurring debts make up your "debt-to-income ratio," and should not be higher than 38% of your monthly gross pay.

Now the Good News

The good news is that there are tax benefits to owning a home. The IRS lets you deduct mortgage interest and real property taxes, within limits, on your annual income tax return! Contact a real estate or tax attorney for the specifics in your area.

Branded Email in the Real Estate Industry

Branded Email in the Real Estate Industry

You're in the real estate industry, and that means you've got a brand. Chances are, you've spent quite a bit of money to build that brand, whether it's through franchising fees, marketing, websites, business cards, other print materials, advertising, yard signs, and/or through other means. And whoever answers your phones probably answers it with your brand as well - "Good morning, thank you for calling Your Brand Here Real Estate, how can I help you?" Your brand is out there, getting you business, because people recognize and trust it. But what about your email? How much could it benefit you to include your brand on each email you send every day?

I'm not talking about mass email campaigns. I'm talking about branded email that transforms your everyday, plain text emails into dynamic sales pieces. With a good email branding system, you can include your logo, colors, your picture, and links to your website. Some solutions even allow you to upload pictures of properties directly into the designs. Because over 90% of all communication is visual, the power of having graphics in your email is tremendous. Also because of this, branded email will soon become a standard or even a "requirement" in the real estate industry, much like business cards and websites.

A Quick Scenario

Lets look at this scenario - you are a prospective homebuyer and you receive email from two real estate agents. One is a plain text email that introduces the agent and directs you to his website for more information. The second one you receive is branded with the brokerage logo, colors, and it fits with all of the rest of their marketing material, so you instantly get a great impression in your mind of her company. The agent introduces herself and directs your attention to a picture of a newly listed property in your price range, and tells you to click on it for more information. Are you more likely to search the first agent's website for a property, or click on the image to look at that house and possibly similar houses?

Branded email also helps build a relationship with your client. In the situation above, you received an email from the agent with a link to a house in your price range that you may be interested in. It was tailored to you, who would you go back to for more information or more listings?

What Should I Look For?

Next, I want to give you a quick rundown of what to look for when you're considering a branded email system. First and foremost, if the company has a free trial, take it. You don't want to purchase something and end up hating it. While you're researching, here are some questions to ask -



Do the emails get past spam filters? This question is rather self-explanatory. If your emails don't get to their recipients, the solution is a waste of your money. Note that the body of the email also has a lot to do with getting past a spam filter - if you're using big, bold, red fonts, CLICK HERE links, and/or the word free (or other flagged words) repeatedly, chances are your email won't get through.

What size are the branded emails? In this case, bigger is not better. (If you're using Microsoft Outlook to send email, it may be embedding the images on its own. Ask your solution provider how to turn this off)

Is the product easy to use, or do you have to change the way you currently send email?

Can the template be set up to contain links to different pages/areas of your website? This is very big question, since being able to say "Click on the Virtual Tours link above to check out our properties!" is much better opportunity than "Hey, go check out my site at www.EmailAppeal.com and click around until you find our tours." As the old adage goes, on the Internet you're always 1 click away from losing a customer.

Can you easily change your contact information, picture (if the system allows you to upload one) and any other sensitive information on your template, or do you have to pay the solution provider to change them for you?

Do you have control over the aspects of the design, or can the users change the design at will? Brand control and consistency is a big deal in any business.

Does the system require you to send your email through a different server or to a different email address? This is a security risk whether they say so or not, as your emails are all being routed through a third party server. A good system will work without requiring you send your email through any third party.



What Kind of Pricing Should I Expect?

Most branded email solutions are very cost effective, so your decision should boil down to features. Make sure you get the answers to the questions above, and make sure those answers are in line with your expectations of any software provider. If you do a little homework, find a great product, and use it diligently, branded email will pay for itself with increased sales over and over again.

By Jason DeVelvis

Not Everyone is Buying or Selling, Some are Doing Both

As if one real estate transaction is not hectic enough? many of us end up needing to sell one place in order to move up to the next? this is the "real estate catch 22". Do we buy first?? Do we sell first?? If we are fortunate, these events occur at the same time, but that is not always the case. The problem is trying to determine if it is worse to end up "temporarily homeless" because you sold first, or financially strapped because you bought first.

Conventional wisdom states that IF you can't make them happen simultaneously, it is better to sell before you buy. The rationale? If you sell first, you don't end up at a disadvantage at the negotiating table. This happens by feeling pressured to accept something lackluster for your current home due to your impending closing on the new home. There are several providers of short-term, furnished lease properties that can fill the gap while you find the new dream home if needed. The purpose for finding a furnished property is for the simplicity in moving.

Few people I know want to pack and unpack twice and a few months storage is a small price to pay for the convenience. (For those that enjoy packing, there are support groups available.) And yes, if you were wondering? the two scenarios DO affect the financing angle as well. Having moved on from the first home does help in the debt-to-income ratios that lenders use to qualify you and in the funds that you have available towards the down payment of the new place? both help in the rates that will be available to you.

The UK has Gone Property TV Show Crazy!

The UK has gone property TV crazy. There are now shows about developing, buying, doing up and selling your home on every channel nearly every day. TV show presenters have become celebrities and household names.Some TV stations have had property show weekends purely dedicated to property TV shows. The UK has got an insatiable appetite for the shows.

Why property TV crazy?

The UK has experienced some unsustainable house price rises . This has resulted in property owners having huge amounts of equity in their homes. The majority of people who have owned a home for the last 5 years now have a huge asset. Looking after your home and achieving the best from it has become paramount.Those looking to benefit from their profits are seeking to invest in property overseas or buy second homes to rent. No wonder the UK has gone Property TV crazy.

We have reviewed some of the most popular shows.

Channel 4 Property Ladder. Channel 4

Presented by Sarah Beeney this programme charts the highs and lows of new property developers. Typically each show demonstrates that Budget is king. Developers shed a few tears whilst making their first attempt at making money from property development. It's certainly not a task for the feint hearted. Sarah Beeney is an experienced developer herself and gives some invaluable advice.

Our Review: Sarah Beeney can come across as a know it all and "I told you so" is so often on the tip of her tongue. However it's great watching other people's mistakes and she does make some very valuable points. We found ourselves shouting 'don't argue with her just listen

Location Location Location Channel 4 UK style

Two knowledgeable, young and successful London property finders Kirstie Allsopp and Phil Spencer face the weekly challenge of finding someone their ideal home to buy - in just a few days! Filmed at locations all over the UK.

Our Review: Some good tips on looking for your new home. Some of the home seekers can be a bit over ambitious and annoying. The programme is repeated on some satellite channels so some of the house prices are very historic.

Selling Houses Channel 4

Estate agent Andrew Winter tours some of the UK's hardest-to-sell homes, he meets stressed homeowners whose properties have been stuck on the market for months.

Anxious for a sale and unable to work out why no one wants to buy their home, they are desperate for a solution. Andrew gives his frank opinion and recommended course of action. His critical appraisal is often met with opposition? until the owner accepts his advice is vital if they want to sell their house. And sell they do.

Our Review: Andrew Winton is cutting with his comments on those hard to sell houses and there owners. No delicate comments from this man. Some of the owners are subject to his frank honest opinions.9 times out of 10 he is right. It is for us his brutal honesty makes the show more enjoyable. Andrew Winton does get those homes sold. His firm but fair manner makes him a must to watch.

A Place in the Sun

Amanda Lamb presents A place in the sun the show that helps buyers find their dream home in exotic overseas locations. Amanda (Scottish widow advert) finds a wide range of the best properties available and guides potential buyers through the peculiarities and pitfalls of the local market.

Our Review: An excellent show that has extensively researched housing market trends in various sunny locations. It's a must if you are thinking of buying abroad

House Doctor

Anne Maurice is the domestic interiors equivalent of Anne Robinson. She's quick-witted, quick-tongued and quick-fire with her prognosis. If she isn't lightening it, stripping it or painting it white, she's ruthlessly depersonalising it - wrapping it all up in a big black bin bag and dispatching it with a crisp "goodbye"

Our Review: Anne Maurice points out the obvious to these homes sellers and if they don't believe her they are given frank views by potential home buyers. Her shows can become a bit repetitive. However a must watch show

Other People's Houses Channel 4

Providing an excellent opportunity to peer behind other people's curtains each week Naomi Cleaver follows a couple as they attempt to renovate a property and uses this as an excuse to see what other people have done with similar style buildings

Our Review: This programme provides a wonderful opportunity to see ordinary peoples ideas of how they think a home should look. Some useful ideas but it lacks the sparkle of similar shows.

Relocation Relocation Channel 4

Could you re-launch your life, selling your home to fund a new double existence; buying both a place in the country and a pied-a-terre in town? Professional property hunters Kirstie Allsopp and Phil Spencer present a brand new series, Relocation Relocation, helping six couples find the ideal balance: urban energy and rural relaxation.

Our Review: If you can afford two homes one for work the other for the weekends this may be for you. Some of the participants can come across as a bit smug.

Safe as houses

Safe as Houses: 'Tracy and Stephen Gibbs'

Moving house is high on the list of the most stressful things you can do and this property show explores that fact¸ with estate agent Emma Basden and builder Jason Maloney. Steve and Tracy plan to relocate from Cheshunt to St Austell in Cornwall¸ where Tracy is bowled over by the sea and fields and the kind of property they can afford. But things don't quite go to plan.

The UK has experienced some unsustainable house price rises . This has resulted in property owners having huge amounts of equity in their homes. The majority of people who have owned a home for the last 5 years now have a huge asset. Looking after your home and achieving the best from it has become paramount.Those looking to benefit from their profits are seeking to invest in property overseas or buy second homes to rent. No wonder the UK has gone Property TV crazy...

By Nicholas Marr

Inspecting Your New Home - 17 Areas You Must Inspect Before Taking Possession

Congratulations! You've made your decision; you've chosen your new home and your builder. So what needs to happen next? Once you have a firm contract and you have selected the features that will go into your new home, it is time for the builder to turn your dream into reality.

You will undoubtedly want to visit the building site from time to time during construction to check the progress of your home. Professional builders welcome your participation and enthusiasm; however, for safety reasons you should not enter the actual construction site unless by special appointment-an unauthorized site visit may also contravene the local labour code with respect to construction safety and the builder's liability.

Questions or concerns arising from a site visit or a drive-by should be addressed directly to the builder. The tradespeople on the site each have their own area of expertise and will not be able to discuss your home's progress with you. Nor are they able to make changes without the approval of the builder.

Before you take possession of your new home, the builder will invite you to "walk through" the house to conduct a pre-occupancy inspection. Three to five days before closing is best-when construction is substantially complete but there is still time for the builder to remedy any minor imperfections. Anything that is not to your satisfaction should be noted for a pre-delivery inspection report. Minor items such as scratches and incomplete paint work will be rectified before your move-in day. Other items will be corrected after you are settled.

The following checklist will help you to inspect your new home.

Exterior



Grading-should be sloping gently away from the house.

Sod-was it rolled when laid?

Wood, vinyl or aluminum siding-should be even and nailed securely to the walls.

Brick-should be evenly laid and clean, with weep holes intact.

Caulking-check around windows, doors, garage door, electrical outlets and fixtures.

Paint and stains-inspect for even coverage and proper colour.

Trim, shutters, fascia and soffit-must be proper colour, of good quality and securely fastened.

Shingles-are they clean, of proper colour and with no lifting corners?

Garage-should feature non-combustible materials on the wall adjoining the house (for instance, gypsum board with sealed joints); the garage door should open and close properly.



Interior



Basement-should be clean; no cracks in the walls; a floor drain in the lowest part; "healthy" looking wooden joists (a minimum of splitting); instructions and warranty cards for equipment (furnace, heater, HRV, etc.)

Doors-must be well-fitted and well-hung; secure locks for outside doors and door stops.

Windows-must open smoothly; lockable.

Walls-should be smooth and even; no cracks, visible seams or nail-pops; right colour; even paint coverage; no gaps at electrical switches and plugs.

Floors-minimum of squeaks and "spring"; smooth seams on carpet and other floor covering; even grouting between ceramic tiles.

Plumbing fixtures-no chips or scratches; faucets operating properly; caulking around counter tops and fixtures.

Upgrades and options-correct materials and quality; proper installation; right colours.

General state of cleanliness-no construction debris; clean heating ducts; etc.



You might want to hire a private building inspector or engineer to conduct the inspection for you. Look in the phone book under Building Inspection Services.

3 Strategies For Buying Property With No Money Down

Everyone has heard a story or read about someone who bought a property without paying a single dime as a down payment. But how does this work?

There are several "classic" methods commonly used to purchase real estate with no money down. There are an infinite variety of situations in a real estate transaction that could lead to a deal with no down payment. But for the sake of reality, I will focus on those that are most commonly seen in the current market.

1. Seller second - The buyer obtains a new first mortgage for most but not all of the total purchase price. The seller finances the rest.

Purchase price: $100,000
Buyers loan: $90,000 (90% LTV) (new first mortgage)
Sellers finances $10,000 (in the form of a new second mortgage)
The buyer has borrowed 100% of the purchase price. Thus, you have100% financing, and no down payment was paid by buyer. This is not a difficult strategy to employ if the seller has enough equity, is willing to hold a second, and the first mortgage lender approves.

One thing that is not mentioned in most articles about this strategy is the requirement for lender approval. The lender who is making the 90% loan will have to agree to allow the seller to take back a second mortgage. In cases where the buyer has better credit, this is usually OK with the lender. But if the buyer has a lower credit score, the lender may not approve of this. If your credit score is on the lower side, but you have good documented income, you may still qualify.

Herein lies the fundamental issue that makes it so difficult to write about your financing options and what to expect: The fact is that lenders who are making the first mortgages on a property can change the rules or make new rules in the middle of a deal. Therefore every deal is different. Every buyer's credit and income are different and lenders vary in their underwriting requirements.

It is a moving target. So while it can be said that you can get a 100% loan to buy a property, there are usually specific credit requirements, income requirements, etc. It makes this game rather unpredictable.

Talk to your lender ahead of time and find out if creative financing options such as a seller second would be allowed. Make sure you have a lender who is used to working on investment property loans. Some mortgage companies only have programs for owner occupants. You need to go to a lender who specializes in loans for investors.

2. Another common way to obtain a no down payment loan is to utilize one of the many low or no down payment programs that exist. Many of these are intended for owner occupants, but some are available for investors. Again, it is important to talk to the right lender.

If you have an investment property that you want to sell, consider taking back a second mortgage for 5-10%. This is not a huge amount, and it can help you sell your property faster.

When it comes to finding a seller who will help you create a no money down deal, consider buying from an investor who is willing to be flexible. Some investors are willing to do creative financing simply because they understand that it helps them sell houses. It never hurts to make an offer that includes a seller second. You never know until you ask.

There are some points to remember when purchasing investment property with no money down. A key point is the comparison of monthly payments to expected rental income. When you are financing 100% of the purchase price, your payments will be higher. If you have a second mortgage payment to add to a first mortgage, your payment may be even higher. Be sure your rental income will cover the entire monthly payment. 3. More common among professional investors is buying wholesale properties, using hard money to purchase and rehab.

When the rehab is done, you get a new mortgage that pays off the hard money loan. Since this is a refinance, you can take cash out of the property. You may have to bring some money to closing on the hard money loan, but you get it all back when you refinance, so you end up with no money out of pocket. This becomes not only a "no down payment" deal, but also a "cash back at closing" deal.

It works like this:
Purchase price $100,000
Repairs $15,000
Hard money loan $115,000

Purchase and repair, then get new loan to pay off hard money.
New loan is based on 90% of After Repair Value.
For our example, the ARV is $150,000

90% of $150,000 is $135,000.
New loan for $135,000. Subtract hard money loan pay off of $115,000 leaves $20,000.

You keep the extra $20,000 in cash, tax free since it is a loan, rent your house out and let the tenant pay the loan back. Your gross profit is $20,000 cash and $15,000 equity. Total gross profit $35,000. Not too bad for a couple months work.

Down payment by definition means specifically money that is used to "pay down" the total purchase price. This does not include money for closing costs, points, interest, and other items such as insurance. But if you are buying wholesale properties, fixing them and refinancing to pull cash out, you should be able to pay all your expenses and have a nice profit at the end of the day. (Just keep some of that cash in reserve for emergencies)

If you do 3 houses per year, and you only net $25,000 total, after paying all expenses on each of the 3 houses, you are still netting $75,000 cash and equity in about 6 to 8 months. Plus, if you are renting these properties, you are also creating additional streams of income through monthly cash flow as well as accumulating equity in each property.

This is a solid strategy to achieve a retirement nest egg and ongoing income for life in less than 10 years. If you look around at the real estate investors who are wealthy, the vast majority own rental property, be it residential or commercial.

They understand the concept of buying at a discount, then holding their properties for years. They get to the point where their holdings are worth double or triple the price paid. This is free money that you can earn simply by buying and holding long term.

There are wholesaling companies in every major city that specialize in selling fixer upper properties that fit with strategy number 3 in this article.

Look for their signs on the side of the road, their ads in the paper, or ads in local thrifty nickel type shopping papers. Most deals do require some out of pocket cash, even if it is only temporary, until you refinance.

True no down payment opportunities are pretty rare these days, with interest rates at historic lows. If interest rates go back up, (and they will), we will see more creative financing and more "no down payment" opportunities in the future.



By Donna Robinson

Buying Your First Investment Property

"Begin With The End In Mind"

I first heard the phrase "Begin with the end in mind" in a Steven Covey book called "The 7 Habits of Highly Effective People". This expression makes a lot of sense because the fact is, you can't get where you're going, unless you know where you want to go.

Most new investors understand that real estate is an investment vehicle that makes sense. We all know that many fortunes have been built with real estate. But when you are first getting started, all the available information can be very confusing. I often receive emails asking "what strategies should I use?" or "Where should I look to find deals?".

One reason these issues are so difficult to understand and sort out when you are new to the investing game is that the answer to the question can be different for every individual.

Seminars tend to package information in a "one-size-fits-all" crash course. But this inevitably leaves unanswered questions for each individual user. Simply put, each person has their own individual situation with regard to credit, income, employment, assets, etc. All of these factors can affect your investing choices and objectives.

Compounding this confusion is the sheer number of strategies. Should I own rental property? Should I fix up and resell? How about Options? Or, how about buying tax leins? There are so many choices, how is one to know what to do when just starting out?

I can remember floundering around myself. I spent thousands of dollars on different courses, trying to put all the pieces together and gain enough understanding to know what I should do first.

It seemed that no one wanted to tell me anything useful unless I paid them first. I soon found that no matter how much money I spent, there were many unanswered questions. I felt frozen by fear, because I simply did not understand what to do first. As a result, it was several years before I actually felt comfortable enough to get directly involved in buying a property.

Today, after having seen and participated in many deals, I know that step one is decide what you want real estate investing to do for you. In short, where do you want to go?

Like any trip, you start out by deciding where you want to go. Once the destination has been chosen, you figure out the best way to get there.

Many of the most successful and wealthy investors I know, built their fortunes with rental property. Some of them own 40 or more rental houses. Some of them own commercial properties like gas stations, storage facilities, or office buildings. They each had the same destination, that of cash flow from rental income, but two drastically different ways of getting there.

Frankly, most of the really successful investors are very patient men and women who build their portfolios slowly over a number of years. They are cautious and prudent, buying only when they know the deal is a good one.

Today, many people are lured into investing because they have heard the stories about how you can buy property with no money down, and take out enough cash at closing to pay off all your debts. This is possible, but creating one debt to pay another does have it's risks.

Let's say that your ultimate objective is to achieve $5,000 per month passive income from rental property. Now, think of that objective as if it were a city on a road map.

Most cities have a number of different roads you can take to get downtown.. It is the same way with your investing. Different people will arrive at the same destination, each one using a slightly different route to get there.

Once you decide where you want to go, your route to your destination will be determined by your financing options. .

If you have great credit, income for which you receive a W-2 statement, and lots of cash for a down payment, your financing options will allow you to take virtually any road you wish. The fact is, good credit and cash will get you where you want to go a lot faster. But it's not the only way.

If you are credit challenged, self-employed, or lack cash for down payments, your ultimate destination can be the same, but you will need a different route to get there.

Your financing options determine the route you have to take to get to your destination. In essence, the answer to getting started is find out what kind of financing you can get, and then find deals that work with your available financing options.

If you can't get any kind of financing at all, you can still buy deals where the seller will agree to finance the deal, or some scenario where financing is provided without you having to qualify.

If you have decent credit but no cash, there are investor loans with low down payments, that may make it easier for you to get in with little cash.

If you have great credit and cash - hop on the expressway. Look for any good deal, since you can get a loan at excellent rates, in addition to taking advantage of any good seller financing deals that come your way. You have the most options for getting to your destination.

No matter where you start from, you can still wind up at the same destination, and achieve the same objective.

Step One: Decide where you want to go. Then, get with a good lender to find out which roads you will be able to take. Even if you have to start out on the "no cash, no credit" back roads, remember that sooner or later, if you keep driving, you will find an access ramp to the expressway.

By Donna Robinson

Important Facts For Home Buyers

If you are considering buying a home or have spent many years saving in preparation of buying a home, the questions and process involved in buying a home can be extremely stressful. As exciting as it is to begin looking for your new home, there are many unexpected costs and details to be considered before contacting a real estate agent. Home buyers should be aware of every aspect involved in purchasing a home before they take that big step towards home ownership.

You will want to get the most value possible for your money. You should be aware of every detail in regard to the home you wish to purchase. Home inspections can reveal many hidden flaws and problems that could cost you thousands of dollars in repairs. Be aware of your right to a home inspection and contact a professional, licensed home inspector.

Compare the mortgage terms and interest rates offered by various mortgage lenders. Even a slight difference in your interest rate can add up to thousands of dollars over the length of your mortgage. A pre-approval from the lender of your choice will not only give you added confidence when shopping for a new home, but could give you added leverage when bargaining with the seller. A pre-approval will let you know the exact amount you are approved for and will save you time after your offer has been accepted by the seller.

Using a buyer agent is an excellent way to help protect your interests when shopping for a home. A buyer agent will be responsible for helping you get the best deal possible on your new home. While shopping for a home, be aware that certain features can adversely affect the resale value of the home. Detached garages and swimming pools can actually lessen the value of the property. Protect your investment by educating yourself on the home buying process and the way property is appraised.

You can make the home buying process fast and painless if you take some precautions along the way. Choose your lender carefully. Interest rates and closing costs vary from lender to lender and the difference could mean thousands of dollars over time. There are numerous flexible loan programs available. Finding the loan that will best suit your long term needs will be of great value to you when it is time to sell the home. Just a half point difference in your interest rate will translate into a lot of money over the years.

Keep in mind that there are additional costs involved in purchasing a home. Homeowners association fees, furniture, annual heating and cooling costs, and homeowners insurance need to be considered when planning to purchase a new home. Buying a new home does not have to be stressful and frustrating. Make sure you know the facts and your home buying experience will be quick and painless.

By Cedrick Reese

Oh No! Something has Happened in Florida

The Florida housing market has attracted many foreigners to invest their hard earned money in the sunshine state. The British have for a long time favoured Florida for buying a second home. Many use their Florida home as a holiday home for friends and family. Some may rent it out on a casual business basis, renting out their Florida home from adverts they have put up at work or in the local shops. Most British buyers dream of owning the home outright and eventually using the house for their retirement.

Fragile Buyers. Despite the attraction of buying in Florida i.e. cheaper prices and a wonderful climate it does not take too much for a British buyer to get cold feet. Real estate agents in 2004 reported a rush of British buyers cancelling their sales owing to the hurricanes that hit the region. Reports in 2005 concerning fatalities concerning shark attacks again spark similiar worries and may affect the fragile buyer's attitude towards the region.

Why so fragile? It is all about choice available to the European Buyer. The British for example have cheap air fares and short journeys to the most popular places to buy a second home such as France and Spain. Now emerging markets in Turkey, Egypt,Croatia and Bulgaria not only offer cheaper property prices and cheap air fares but sound short term investments. Recent house price rises in Florida are now making the region a long term investment area not one for short term gains.

Bad News Travels Fast. Negative reports about a region will always affect the perspective of those who do not live there. So when bad news hits the sunshine state its no surprise that it affects the minds of those looking to buy overseas.

By Nicholas Marr

Prepare Your Rental Property for Occupancy

Among your many responsibilities as a landlord, the law provides for a warranty of implied habitability. This means that the dwelling must be considered habitable and any known problems must be fixed before you allow a tenant to take occupancy.

When a tenant vacates one of your units, take this opportunity to perform a walkthrough of the unit to determine its condition and discover what repairs or maintenance need to be done. Here are some of the specific areas that you will need to examine in your property before you accept a new tenant.

Do all the fixtures work properly? This includes faucets, showers, tubs, toilets, and any other fixtures. Make sure that the fixtures do not leak and that they consistently operate correctly. Address any leaks or other problems before you rent out your property. If a fixture is consistently causing problems, it may be easier -- and even cheaper -- to replace it to avoid future problems. In addition to providing quality fixtures for your tenants, repairing leaky fixtures can also reduce your water bill. If you pay for your tenants' utilities and water, this can mean substantial savings.

Have the carpets been thoroughly cleaned? Mold, mildew, and pet stains are considered health hazards, and such problems should be completely resolved before you rent out your property. Diseases such as toxoplasmosis, which is normally found in cat urine stains, can be deadly. Proper cleaning of your carpets will ensure that that your tenants will have a healthy environment. If the carpet has mildewed or there is a mold problem, you may need to replace the carpet.

Have the cabinets, closets, and storage areas been completely cleaned? Mildew and mold can lurk underneath cabinets, especially if you have had a problem with leaky fixtures. You may have to replace a cabinet if the damage is severe.

Closets are one area that tenants frequently neglect when they vacate a property. Make sure that these areas are completely cleaned and that any forgotten property is handled appropriately. You may need to track down your previous tenants to notify them that they have abandoned their belongings. Set a specific reasonable response time, and if they do not respond in that specific amount of time, you may then discard the property. Are the walls free of chips, marks, and holes? Depending on the length of the previous tenancy, you may have to repaint the unit. Any existing holes should be fixed before you rent out the property. If you do not plan to repaint, examine the condition of the walls carefully and make notes so you do not hold your new tenant liable for damage caused by someone else. At a minimum, you should patch any obvious holes.

Do all of the appliances operate properly? Old appliances waste lots of energy, which is a consideration for landlords providing free utilities to their tenants. Replacing old appliances with new models will save you money on energy and repairs and maintenance. Your tenants will appreciate the newer appliances, and your electric or gas bills should be lower as well. Does the unit have lead paint? Most properties built after 1978 do not have lead paint. But if your property was built before that, you need to determine if it contains lead paint. If it does, you must disclose this to your prospective tenants before they move in.

Do all of the doors and windows operate properly? Check all of the doors and windows of your property to make sure that they open and close properly and that they are in good working order. This includes cabinetry, patio doors, and windows.

By Neda Dabestani-Ryba

Investing in Real Estate & REITs

Real estate investing runs the gamut in terms of risk and investment success. The first rule of real estate investing, even before location, location, location, is be very careful with whom you are dealing. For some reason, real estate is fraught with unscrupulous characters, many of whom you'll see on late night television commercials with their "no-money" down methods of becoming millionaires. Only a very small percent of these so-called real estate gurus are legitimate.

If you are seriously considering investing in real estate property, it means essentially that you will need:

Investment capital, or a legitimate means of attaining some without putting yourself in debt.

A good knowledge of the real estate market and the neighborhood in which you are looking to buy property.

Good management, people and negotiating skills

The ability to do repair work or access to people who can do it for you. The name and number of a property inspector or engineer.

Unless you are able to find, evaluate and buy houses that are either in foreclosure or fixer-uppers, which can be turned around quickly, you will most likely serve as a landlord for the property while it increases in value. Be careful to whom you rent because your property must be well-maintained.

Since legitimate real estate investing means having some money to make money, you need available capital. For this reason, many people go into real estate after coming into a sizable amount of money. For example, empty nesters who sell a large home for $500,000 and buy a smaller condo for $250,000 have money to purchase another property or two. Make sure to research your location. Go to local town board meetings, do research in libraries and go on the Internet to find out as much as possible not only about the location today, but about plans for the area over the coming years.

And then there are REITs - Real Estate Investment Trusts. This is a way of investing in real estate for a lot less money and without having to worry about fixing a tenant's leaking bathroom pipes in the middle of the night. REITS invest in various corporations involved in real estate, ranging from industrial parks to shopping centers to construction companies. They are listed on the NASDAQ and the stock exchange.

Essentially REITS work in the same way as mutual funds, except they set up a diversified portfolio that deals only in real estate. They primarily pay the bulk of their earnings in investor dividends. Before investing in a REIT, consider:

The economic conditions where the key holdings are located

Past performance of the REIT and future projections

The manager of the REIT, who operates like a mutual fund manager

The overall state of the real estate market

REITS, like stocks, bonds and mutual funds, have high and low periods. Like other income-producing vehicles, they can be strong investments over time and pay dividends. They are fairly liquid and are a much safer way of investing in real estate than buying property.

By Neda Dabestani-Ryba

Is 100% Annual Return On Investments Possible With Low Risk Land Investments?

In last week's article, we discussed how substantial profits could be made by investing where baby boomers may want to relocate or buy a second home. This seemed to confuse readers since they were thinking that our web site is about preconstruction and preconstruction to them means buying condos?? In this article, I hope to broaden your horizons considerably.

Unlike many people, I have a very broad definition of preconstruction investing which can be summarized as follows:

Preconstruction investing is the pursuit of real estate projects that offer the opportunity to ride rapidly increasing prices over time without the need to put tenants in place to defray costs. Since no tenants are involved, this opens the possibility to making investments in locales that are far removed from where you live.

If you adopt this point of view, then a whole world of "alternative" preconstruction investments opens up to you. Today, we are going to look at one specific type of investment: investing in developing land projects where baby boomers might want to retire or own a second home.

Before we get into the specifics, let's talk about what all investors want:

? Low risk

? Good investment returns; and

? Minimal use of their capital;

Quite frankly, these 3 reasons are what got me into preconstruction real estate investing in the first place. Now let's see how these might be achieved on a purchase of investment land that we believe to be VERY desirable to baby boomers.

Suppose we are considering the purchase of a piece of property for speculation of future returns. If, like me, you believe in the impact of the baby boomers, then you will do 3 things to control your risk:

1. Carefully select a land project where you are solidly convinced that baby boomers will want to possess it at any costs;

2. Make sure that you believe that baby boomers will be AWARE of this project in the future do to somebody's marketing; and

3. Manage your finances and investment portfolio so that if you are wrong and you do take a loss, it is not catastrophic to you.

For the time being, let's assume that you have met these conditions on a project and now you are ready to analyze your returns and your use of capital.

Now we have to resort to hard analysis. Let's look at the following ASSUMPTIONS:

1. The land project is assumed to increase at least 25%/Yr in price;
2. We plan on holding the land for 2 yrs and then resell.
3. $200,000 purchase price with $5,000 in closing costs.
4. Annual taxes/association fees of 1%.

If you take a look at the three cases in a spreadsheet format, here is how things might turn out under this scenario.

Case 1: 10% down payment, interest only, all payments made by BUYER.

Case 2: 10% down payment, interest only, all payments made by SELLER.

Case 3: 5% down payment, interest only, all payments made by SELLER.

Cases 2 and 3 require a bit of explanation. There are some early stage land projects available where the developer will take a percentage of your purchase price and escrow an amount that will make your payments for a period of time---- typically 2 years. This means that during your 2 year hold, you would only pay taxes and association fees. To enter this in the spreadsheet, we just show a 0% rate during the holding period.

If you scroll down, you can review the performance of each case. It may surprise you that even under Case 1, where you paid in a total of $48,600 out of pocket, you still see a return on investment of 127%! That equates to 51% annual return on investment. Compare that to what your friendly banker is giving you in your CD.

For many investors, beginning or not, they would prefer not to have to put in that much money so let's look at Case 2 where the developer has escrowed 2 years worth of payments. In this case, we invest a total of $29,000 with a total, out the door profit before taxes of $81,625 thus providing a total return of 281%. If you then extend that to Case 3, where only 5% down is required, then the return goes off the charts to well over 500%!

So hopefully this article has given you a very different way to think about old fashioned land purchases in your real estate investing portfolio.

By Dr. Chris Anderson

Back To The Future - Big Changes Are Coming, Get Ready Now

The comments below are quoted from a recent speech by Ben Bernanke, a member of the Federal Reserve Board of Governors...

"Looking forward, I am sure that the Committee will continue to watch the oil situation carefully. However, future monetary-policy choices will not be closely linked to the behavior of oil prices per se. Rather, they will depend on what the incoming data, taken as a whole, say about prospects for inflation and the strength of the expansion. Generally, I expect those data to suggest that the removal of policy accommodation can proceed at a 'measured' pace. However, as always, the actual course of policy will depend on the evidence, including, of course, what we learn about how oil prices are affecting the economy."

In short, the Federal Reserve knows that there will be an impact. But no one knows how big and how fast. During the oil embargo of the 1970's gasoline prices doubled several times over a matter of months. The effect was dramatic and sudden. It was difficult to adjust, because things were happening so fast.

This time around, it appears that the price climb will be gradual and steady, thus allowing the Federal Reserve and the government to make adjustments as they go, by examining economic data on a monthly basis. At least that is what they are hoping for. They know that the economic climate is changing, but they are hoping that it will be slow enough to control.

This week as I contemplated my own reaction to the changing economic environment, I felt compelled to encourage you to give some serious consideration to your personal economic circumstances. If you have a large percentage of debt relative to your income, you should take steps now to eliminate as much of it as possible. Prepare yourself so that you will be protected against unexpected economic upheaval.

Being debt free, or having a very low debt to income ratio is the best way to protect yourself in an unpredictable and volatile world. As we learned on September 11, 2001 things can change dramatically in only a few hours. If you put it off, you may not have enough time to get it done.

The average person needs 4 to 5 years to pay off their outstanding personal debt, not counting their home. In today's world, it will pay to get started now. I have made it my primary objective to pay off my personal debt over the next year or two.

If you currently own rental properties, be sure you have cash reserves for future emergencies.

But how might all this economic stuff affect real estate investing?

The interesting thing about real estate investing is that even bad economic conditions tend to have a silver lining. There is a cause and effect relationship at work in any given economy, whether it is considered a "bad" or "good" economy.

In good times, such as we've had the past 8 years, retailing or flipping for cash was the hot ticket, due to high demand for housing and the ability to sell properties quickly. In recessionary times, higher interest rates and lower housing sales fuel more seller financing, and rental properties flourish. Of course there are always exceptions to the rule, but generally speaking this is the case.

As interest rates got lower, rates of return for traditional investment vehicles went lower and lower. The result? More and more money poured into real estate lending. Hard money and other types of conventional real estate financing programs expanded drastically, making millions of dollars in new funds available for real estate investors.

As housing sales reached record levels, home sellers began seeing a boom in housing prices. It has truly been a sellers market since rates fell below 7%. What happened to investment property? During the past 5 years of an investing bonanza in Atlanta,GA prices for investment properties have doubled and even tripled. 3 bedroom 1 bath junkers were selling in 1999 for as little as $25,000, even in liveable condition. Today, that same type house regularly sells for $65,000 (or more) before repairs.

Going Forward:

Rising rates will have a positive effect for investors, by slowing housing sales even further. As sellers get fewer solid offers property prices will get softer. Rising rates could fuel more short selling of foreclosed properties, and this trend is likely developing now.

Foreclosures may eventually get to levels not seen since the late 1980's, due to high levels of mortgage debt among homeowners, who in many cases, have mortgaged all of their equity to pay other bills.

If rates get above 7%, you can dust off your creative financing books, as seller financing will increase. Rising rates mean rising monthly payments. This will eliminate the borderline buyers from the housing market. They will start moving back into apartments and rental houses. Vacancies will decline, rental rates will increase.

If rental rates increase, cash flows will increase. Rental property will be back in style with investors who abandoned rentals and focused on selling for fast cash in a hot market.

Companies that sell investment property can expect growing demand for rental grade properties. While it is still very early in the cycle, I believe this shift is already under way.

Economic recessions are boom times for smart investors who are positioned to take advantage of the situation. I am not predicting a recession per se' but rising oil prices and interest rates will eventually have a big effect on housing.

Be ready to take advantage when the opportunity comes. You have plenty of time to plan for it now.

By Donna Robinson

Boom or Bust

For those looking to invest in the real estate market?keep your eyes on the headlines. According to the Federal Deposit Insurance Corp. (FDIC), the number of areas across the U.S. with real estate booms shot to 55, increasing by nearly two-thirds last year. The FDIC warns, "these booms may be followed by busts".

"Boom" areas are defined as having inflation-adjusted prices at the end of 2004 that were up 30% or more in three years.

Of the 362 major metropolitan cities included in this study, over 15% were boom areas. This data, analyzed by the Office of Federal Housing Enterprise Oversight, more than doubles the peak of the 1980's booms and is the highest ratio of boom markets in 30 years.

As for "boom or bust", busts are rare. Only 17% of U.S. housing booms from 1978-1998 ended in busts, which are defined as a 15% or more drop in home prices over a five-year period.

What is making the market soar? Aside from inflation, the mortgage industry has to be considered first. Adjustable rate and interest only mortgages are growing in numbers and subprime loans now account for 10% of all mortgage loans.

With interest rates lower than they've been in years, borrowers can afford to finance an amount greater than the standard 80% loan to value. The percentage of loans exceeding 80% of the purchase price has grown to over 30%. If a borrower has an adjustable rate mortgage and the interest rates rise, their payments increase. If the market values drop, or bust and they have 90% or 95% loan to value, they owe more on the home than it is worth. But these are all "What ifs??".

In the markets with the highest number of "boom" cities, California with 21 cities has a high increase rate of 58% and Florida with 11 cities has a high increase rate of 54%. These two states alone account for 60% of the boom areas! With these numbers, would you purchase an investment property in Florida or California and flip it in three years for a possible return upwards of 50%?

Of course. A relatively sound investment. How much longer can the market withstand these price increases before it busts? Even history shows a period of time when the market stalls so that inflation can catch up. If you want to invest in real estate, carefully examine the history of the market you are purchasing in! If it has been booming like Florida and California, be careful how long you hold on to the property. If you notice the market is starting to drop, sell. Hold on too long, it may bust!

By Jason M. Rigler

Investing In Real Estate Investors

With the never-ending changes in our Real Estate Markets real estate professionals are starting to pay attention to the sound of new commission streams of income. Some realtors have either shied away or ran-away from such terms as "Cap Rate," & "Cash-on-Cash Returns." Terms that only the 'smart' and 'numbers-oriented people use to determine if a Real Estate purchase is a "Good Deal", or not. A majority of the realtor brethren attended real estate school because they are excited and passionate about the promise of selling real estate and making a fantastic living. That being said "Times are a Changing." Even if you live in a Hot Market where residential real estate sells in 2-3 days there is an old approach to real estate that is growing faster by the day?..Residential Real Estate Investors.

This deft group of real estate investors is taking real estate and the real estate investment world into a new era! No longer accepting the crazy volatility of the Dow Jones and NASDAQ families. Unwilling to accept the investment practices of their fore-fathers these Investors throw caution to the wind for returns above the traditional 5-6% in their Roth or IRA accounts. These Investors are bold and oftentimes aggressive. Today's Real Estate Investors are all about the fast fix-n-flip, high appreciation, and rock solid monthly cash-flows. Cutting their teeth on investment in their own home-towns is only the beginning as the Serious Investors turn to points outside their own back-yards to other regions that demonstrate greater promise and higher returns. You may say well how does this older adult view their investment opportunities? For starters the age of these stealth hunters ranges from 28 to 68. From "Rich Dad-Poor Dad" book series to Trumps magical presence on "The Apprentice," the young real estate entrepreneurs are making their dreams happen to the tune of 3-5 acquisitions a year! Got your attention now? The typical Investor has good to great credit scores. Excellent cash reserves or hidden resources of partners with cash, and a willingness to make the deal happen at nearly any cost. The best kept secret of all is that these investing beasts travel in packs. Where you see one another is very close behind. In other words they know the people that you need to know to grow your investor database even larger. If the real estate professional does a good job the happy clients are likely to refer many of their fellow-investors. Not just investor clients but their regular every-day real estate business. Face it, if you can demonstrate to your clients how adept you are with their largest personal purchase of real estate, then wouldn't you suppose they will be over their "trusted real estate advisors" opinion on buying a basic home, condo or beach house?

So what if you haven't been focused in the real estate investment sector. And you are thinking this all sounds pretty good, let's give it a try. First question to ask yourself is who have your clients been working with or exploring their options of real estate investing with over the past 3-4 months. Statistically 6 out of 10 clients have considered investing in real estate or have already begun doing so before their realtor even has a chance to blink an eye. Got your attention now? How about the fact that in less than one year I increased my annual commissions by 30% by just positioning myself within my primary data-base of clients. All I did was let them know that I was ready, willing and able to begin assisting them with their "Investment Realty" needs. What I learned during the first year was that if I could create an environment for my clients to learn more about real estate investing that they would thank me in a variety of ways?.Most importantly they would call me before writing a contract and would make sure that I was involved in every contract that wanted to make a real estate purchase. Before long 30% went up to 45% and further. Even if you aren't interested in expanding your client database, at least consider protecting the turf you have for so long spent tireless amounts of time and financial resources to maintain their allegiance. On the other hand if you are looking at your real estate career and are wondering how to reposition yourself for market growth certainly to go well into 2025, here are a few known facts about how real estate investors can improve your business.

1. Real Estate Investors are literally everywhere. Successfully tapping into your current database could increase your annual commissions by 20-30%.

2. Real Estate Investors will be loyal to the professional that helps fill the gap of their investment education. Workshops, mentoring groups, finding the "golden deals" in your market makes a huge impact!

3. Investing in Real Estate Investors doesn't have to mean that you lose your "typical" residential realtor position. Being a real estate investment specialist means you are smarter than the average realtor in the market.

4. Mortgage professionals are struggling to provide real estate investors with property deals, so when you can place an investor into a good deal the referrals will begin to flow even more.

5. Real Estate Investors tend to be more conscientious about your personal time away. Investors also like to shop Monday-Friday for their deals before the "Weekend Warrior" investors get out into the competition. This translates into more normal hours and days of operation for you and your business.

6. Real Estate Investors buy-sell cycles are shorter than primary home purchasers resulting in more transactions in shorter time-frames.

If any of these points are encouraging you to seek new options in your business then make sure to sign up for the monthly "Grow your Real Estate Investment business" e-mail newsletter from www.InvestorLoft.com additionally, other excellent tools to improve and expand your real estate business can be explored at the InvestorLoft's educational Shoppe.

By John E. Roush

French Property - a Buyers Guide to Purchasing Property in France

The Compromis

This document is the document you will sign agreeing to buy the property at the agreed price. It is signed by both vendor and purchaser and sets out all the details of the purchase price and fees.

Once signed there is an initial 7 day cooling off period, where the purchaser can pull out of the sale with no penalty. After this cooling off period the contract is binding for both vendor and purchaser, and a deposit is payable. The deposit is usually 10% of the purchase price.

The Compromis is a legal binding contract and to withdraw could result in your 10% deposit being lost. There are however classes that can be drawn up in the compromis that could allow withdrawal under certain circumstances, such as being declined a French mortgage.

To have the compromis drawn up you will need your passport, marriage/divorce papers, relevant details of paperwork if you are taking out a loan to purchase the property.

You should seek advice once you receive the compromis and if necessary have it translated by experts before you sign.

Surveys and inheritance advice

Once the compromis is signed and you have paid your deposit the Notaire then begins searches on the property, checking land boundaries, public rights of way, checks for termites are carried out as well as lead and asbestos checks. The Notaire is responsible for ensuring these are carried out and the vendor is responsible for these costs.

Unlike in the UK France does not always have surveys carried out on properties when sold. You can find surveyors in France who will offer this service, or alternatively a registered builder is often called in to offer his opinion. These are things that should be dealt with before your initial signing.

French Law with regard to inheritance is a complicated affair and you should consult legal advice on this matter.

The final signing

This is carried out in the Notaires office, if you are not able to be in France for the final signing it is possible to arrange power of attorney and have someone sign on your behalf. See legal representation on this matter

Ideally you should have seen the property on the day of the signing as there is a clause stating “sold as seen on the day of signing”. You will need to ensure that the transfer of the balance of payment has arrived in the Notaires account in time for the final signing, this date will have been agreed with the vendor in advance and it is obviously important that this is met, otherwise you could lose your deposit and more importantly the sale of the house. The sale can not be completed unless the money had cleared the Notaires bank account.

Property Investment - What Future For the Biggest Bubble of All Time?

The Economist magazine published a special report in this months issue entitled "House Prices ? After The Fall". Some might call it pessimistic, alarmist, nonsense or worse but only the foolish would choose to ignore the research that comes out of a think-tank with the kind of resources that this highly respected publication has. Though as a caveat I might add that I am living in Ireland, the country that a recent Economist study declared the best place in the world to live and I could find several dozen reasons to dispute this ? but that's another story!

What the Economist tells us is nothing that we don't already know. An obsessive interest in property by investors, prompted by low interest rates and a loss of faith in equities, has fuelled a massive 'bubble' in the property market, the largest house price boom ever witnessed. Perhaps what we didn't know is this bubble exceeds by 20%, the global stock market bubble of the 1990's and we all know what happened there! It burst, as all bubbles do when under excess pressure.

So what are the predictions for the future and what implications might they have for those considering an investment in property now? Using information gathered from lending institutions, estate agents and national statistics, the Economist has compiled a set of global house prices indices covering 20 countries from 2002 to date. The figures indicate that house prices are seriously over valued in many countries including Spain, Ireland and France, fuelled mainly by speculative demand. America, though heating up a little later is following the same path. Using the current slow down in Australia as an example, and Japan and Germany's negative house price growth, predictions are that with even a flattening off of the market rather than a total collapse, recession is inevitable since people will be far less inclined or unable to release capital on their homes for spending in the economy. So even a 'soft-landing' will cause significant economic pain! In addition, massively inflated prices that are disproportionate to income spells bad news, especially for landlords. In Ireland, for example, rental yields have fallen to below 3%, well below current mortgage rates.

Significantly, all the countries in the Economist's house price index are well developed established economies. The report gives no mention to the emerging economies in Central and Eastern Europe. If, as indicated the housing market in Britain, Ireland and the Netherlands is starting to cool, this will have an immediate impact on the property market in these economies as investors chase better returns. Already ?1 billion of Ireland's anticipated ?6 billion of real estate investment funds are expected to flow to countries outside the EU-15.

It seems the only option now left for the canny property investor is to play the cat and mouse game, chasing newer markets that are experiencing similar conditions for growth and expansion that led the older 'burnt out' markets to their success. But with this comes the element of risk. Economies are delicate, unpredictable systems that don't always fulfil the expectations of players within them.

For those who prefer to shy away from the risks of property investment, preferring to sit it out while the bubble follows its course, there is another option. Chateaux Lafite 2003 will yield creative investors a 13% tax-free rise over 11 months and if the market crashes, you can always drink it!

By Tracey Meagher

5 Hot Tips for Successful Real Estate Investment

The last downturn of the global stock market saw millions of 'every day' investors having their fingers badly burned. Overnight life savings were eaten away, retirement funds went into decline and the economic forecast for all of us who had any money invested in stocks and shares was gloomy to say the very least.

As a direct result investors in their thousands turned their backs on the rollercoaster stock markets and sought alternative asset classes in which to invest their hard earned money. This has led to a global boom in real estate markets and property prices, and it has spawned a generation of budding real estate investors.

For those of you wondering whether it's too late to venture into real estate investing or considering how best to make the most significant returns from property investment, here are 5 hot tips for successful real estate investment to set you on the path to potential profits!

1) Consider Investment Property Abroad

There are many relatively untapped property markets in countries around the world that offer the real estate investor greater return on investment in the form of rental yields or short to medium term capital growth.

While major markets in the USA, UK, Australia and Europe are slowing down, there are emerging property markets globally that are hungry for investment and are proving to be highly profitable.

For example, in 2007 a number of countries are already aligned for accession into the European Union and as a result property markets in these countries are likely to benefit from greater numbers of visitors, more trade, increased investment into infrastructure and more stable economies. The likes of Hungary, Slovakia, Bulgaria, Croatia, Turkey and even Northern Cyprus are just a few examples of overseas destinations with emerging real estate markets that may be worthy of your consideration.

2) Make Sure Your Plans Are Profitable

This sounds ridiculously simple right? Well, you'd be surprised how few people actually make sure their plans are actually sustainable and as profitable as they hope.

Examine any real estate market that you're about to enter by firstly comparing property values across the city, state or region and making sure you know what your money will buy you. Then ensure that the rental yield you intend to obtain from your property is actually realistic or that the asking price you intend to set once you've renovated the property will be offered.

3) Never Assume Anything

This goes from assuming a house is structurally sound to accepting that tax laws won't change - from believing your tenants when they tell you that they are house proud and honest to accepting the first builder's quotation!

Do your due diligence on every single aspect of the process from ensuring the asking price for a property is fair to checking your tax returns before your accountant submits them for you. This is your investment, your future, your potential profit and therefore it is ultimately your responsibility.

4) Employ An Expert When In Doubt

Few people are a master of all trades therefore be prepared to acknowledge areas where you are far from being an expert and at least consider courting a second opinion. Again, this goes from checking out the structural soundness of a property to understanding the legal ramifications of letting out your property. If in doubt always double check - and if this means you have to call in an expert, make sure you call in an expert!

5) Set A Realistic Budget And Stick To It

Whether you're purchasing property to let out or buying real estate to renovate you need to sit down and add up every single area of projected expenditure to enable you to set a realistic budget with which to work.

Make sure you add in everything from having searches and surveys conducted, legal fees, accountancy fees, insurance costs, likely interest payments on any finance required, taxation, connection of utilities, marketing for tenants or buyers, real estate agency fees, and of course don't forget to add on the cost of the property and the price of any renovation and refurnishing and decorating work required.

Spend time considering every single area where a cost will be incurred and detail every likely payment that will have to be made and you will arm yourself with a bullet proof budget and do all you can to ensure you encounter no nasty surprises along the way.

By Rhiannon Williamson

Selling Your Own Home: 10 More Tips

Selling your own home can be a time-consuming and frustrating process. Sometimes, though, in the right market, it makes sense to save thousands of dollars in commission and do it yourself. If you've decided to give it a try, use the tips here to do it right, and to avoid common FSBO (for sale by owner) mistakes.

1. Understand value. It isn't what you think your house is worth, and it doesn't even matter how much you put into it. It is only what it's worth to potential buyers. Find out what they have paid for other similar homes before you decide on a price.

2. Be objective. This is a difficult one. You may want to get your most honest and outspoken friend to walk through the house with you. He'll see problems you didn't know were problems.

3. Have a plan. What will the kids or wife say to those who call? Where will you be closing? Will you have documents prepared by an attorney? A plan will help it all go smoother.

4. Make a list. What needs to be fixed, cleaned, changed, or removed? Do the most obvious things first.

5. Be a prepared salesman. List every question a buyer might have, and be ready with an answer. Have comparison sheets showing other home sales, so buyers can see the value. Have a map showing where nearby stores and libraries, etc. are.

6. Sell benefits. Don't say "near stores." Say "You can walk to the store in five minutes." Don't say "garage." Say "No chipping ice off the windshield in the morning."

7. Have all important information in ads. Square feet, number of bedrooms and bathrooms, address, telephone number, and price. Leaving out the price means some buyers just won't call, and you'll waste time with others who shouldn't be calling.

8. Listen to buyers. The biggest mistake sellers make talking to buyers is to get defensive about their home. Listen to criticisms, and resolve them or ask how important the issue is to the buyer. In other words, learn a little about selling.

9. Be careful with the sales agreement. Be sure that it is understood by both sides. What happens, and when? What if the buyer doesn't get their financing? What's included in the sale? When will the buyer take possesion? Who pays the closing fee?

10. Make closing easy. Have the documents all ready to sign. Be prepared with answers to likely questions. This is likely the largest financial transaction in your buyer's life. Make him comfortable.

There is a lot more to selling your own home than can be covered in ten tips, of course. Use these however, and you'll be doing better than the average FSBO seller.

By Steve Gillman

Dont Sell It Yourself

Don't sell it yourself! Sometimes a "FSBO," or house "for sale by owner" can sell as fast, and for as much as it would have if listed with a real estate agent. Sometimes. Before you decide to give it a try though, consider the following ten points.

1. Most buyers work with agents, and look through MLS listings. If you don't list with an agent, most buyers will never see or hear about your home. It's hard to find that "right" buyer or get top dollar when your invisible to most of the market.

2. FSBOs get lower offers. It's only logical. The buyer thinks you'll take less because you're saving the commission! Save $10,000, get $10,000 less - where's the advantage in that?

3. You pay advertising. All the costs the real estate office normally pays are yours if you sell it yourself. How much will you spend on ads if it takes a a year to sell?

4. You don't have the resources. The agent has books of sold properties to look at, for example, to determine the best price for your home. You can get that information by digging through county records, but you do have to value your time too, right?

5. You may not know the market. What's the target market for your house? Young couples, retirees? What features are they looking for? You should know these things before you write your ads. An experienced real estate salesperson will know.

6. You may not know the laws. What about written disclosures, and who pays the real estate transfer tax? Just because you sell it yourself doesn't mean you get to ignore the laws.

7. You may not be a good salesperson. How do you develop rapport and properly answer objections? Will your defensiveness scare off a buyer who criticizes your home? Think back to your own purchases. You know a good salesperson makes a difference.

8. A real estate agent handles the paperwork. Can you help the buyer properly fill out an offer to purchase? Do you have the other closing documents ready?

9. Real estate agents negotiate for you. When is the last time you learned a new negotiating technique? Do you know how to counter-offer without angering a buyer? A good salesperson is trained in these skills.

10. You may not save a penny. Documents, newspaper advertising, signs for the yard, and more - it's all your expense when you sell it yourself. Then after your hard work, you get low offers, and negotiate poorly? The truth is that sellers often net less money from the sale when they try to save the commission.

You can see why most "FSBO" sellers eventually turn to a real estate agent for help. You can learn to do many of the things an agent does, but is it worth it to spend all that time and maybe not even save any money? Don't sell it yourself unless you really know what you're doing, and you're ready for the hassle.

By Steve Gillman

Estate Planning

Estate planning can enable you to control your property while you are alive, take care of you and your loved ones if you become disabled, and give what you have to whom you want, the way you want, and when you want, and if you wish, you can save every last tax dollar, professional fee, and court cost possible.

Estate planners frequently begin the estate planning process by analyzing clients' personal and financial dreams, aspirations, fears and objectives. The financial side of this analysis usually begins with the following question: "What do you own and how do you own it?" More often than not clients say "I know what I own, but I do not know how I own it." The way that you own your property will greatly effect your estate plan.

There are three frequently used forms of ownership of property: "fee simple," "tenancy in common," and "joint tenancy with right of survivorship."

Fee simple ownership means that you own property by yourself as the sole and absolute owner. You can give it away, sell it, or keep it and control who will inherit it upon your death.

Tenancy in common means that you own property with at least one other person. You do not own the entire asset. Let us assume that you and a friend own a 100-page book and that you own it as tenants in common. Each of you owns 50 percent of the book; that is, each of you owns fifty pages. Each of you could give your fifty pages to anyone you like while you are each alive. Each of you can leave your fifty pages to anyone at your death. In short, each of you is the absolute owner of each of your respective shares of the book. There is no limit to the number of tenants who can own something with others in tenants in common. Commonly two, three, or four people purchase property together, with each owning one-half, one-third, or one-quarter of the property.

Joint tenants with right of survivorship is a very commonly used method of owning property. This form of ownership is commonly used but greatly misunderstood by the public. Let us assume again that you and a friend own a 100-page book. This time you own the book as joint tenants with right of survivorship. Unlike tenants in common where you each own 50 percent of the book, in joint tenants with right of survivorship you each own 100 percent of the book. Each of you owns the entire book. There is no limit to the number of tenants who can own something with others as joint tenants with right of survivorship. While you are alive, you can sell or give your part away. Such actions would change the nature of ownership of the property between the purchaser/recipient of the gift and the remaining tenants. The survivorship feature means that as each individual joint tenant dies, the deceased person's interest is automatically distributed by operation of law to the remaining joint tenants. This is what might be called the "winner takes all" game.

Let us assume that four people own a beach house as joint tenants with right of survivorship. As long as more than one of them is alive, none of their wills or trusts will control the disposition of the beach house. If one of them outlives all of the others, she could distribute the house to whomever she wants at her death and totally exclude the others' families and loved ones.

Tenants by the entirety is a special form of joint ownership that works the same as joint tenancy with right of survivorship. It is used in some states by a husband and wife to own real estate. For our purposes, think of this form of ownership as a special form of joint tenancy for a married couple. The married couple is viewed as one person.

In summary, if you own property in fee simple you own it all, you can give it away, sell it or leave it to your chosen beneficiaries upon your death. If you own property in tenants in common you own part of it, you can give your part away, you can sell your part, and leave your part on death. If you own property in joint tenancy you own all of it with someone else, you can give your interest away, you can sell your interest but you cannot leave your interest on death.

How do you own your property? Why do you own it the way that you own it? It is very likely that decisions regarding the form of ownership of your property were made by well intentioned others. Did the settlement attorney ask how you want to own your home? Did your real estate agent ask you this question? If he or she did, is your home titled the way you requested? When you went to the bank to open a checking account, did your banker discuss the various forms of ownership with you? When you opened your brokerage account, did your advisor discuss the importance and ramifications of account title? Chances are your settlement attorney, banker, and financial advisor titled your assets in joint tenancy with right of survivorship if your are married and in your sole name if you are single, widowed, or divorced.

Make sure you know what you own and how you own it. Do your estate planning documents control your property? Make certain that what you own, how you own it, and your estate plan are consistent with your specific planning dreams and aspirations.

By Neda Dabestani-Ryba

Tenants in Common (TIC)

Tenants in Common is a way of sharing ownership of property among two or more people. Each tenant holds an undivided interest in the property, and each tenant may own a different size portion of the property. Tenants in common ownership may be established in many different ways: through a will, deed, or other document of title. Today Tenants in Common (TIC) ownership has become a popular way for people to complete 1031 tax deferred exchanges when they hold title as an individual or other entity and would like to participate in a partnership or partnership style structure. Other people are using Tenant in Common structures to purchase multi-family real estate that may be suitable for a condominium (condo) conversion after a certain seasoning period.

There are other benefits to owning property as Tenants in Common as well. For people looking to diversify, TIC structures allow you to invest in larger properties, different types of investment property and different geographic markets. Perhaps you are looking to move up to institutional grade or single tenant properties with triple net lease arrangements. You may also benefit from fixed-rate, non-recourse financing with institutional terms for tenants in common owners. This type of financing with 5-10 year terms is usually not available to small, single investors. Many, perhaps most, tenants in common arrangements are created through inheritance whereby the decedent's will leaves property to intended heirs with or without specifying the size of interest that each is to receive. One of the most attractive features of a TIC structure is that acquiring an interest in investment property as tenants in common does not preclude you from buying investment property on your own in a subsequent 1031 tax deferred exchange. Returning to sole ownership is always an option should your investment preferences change.

Is the Tenant in Common Structure Flexible?

A tenants in common ownership interest can be purchased, sold, gifted, bequeathed by will, or inherited, and is subject to property taxes, gift tax, estate and inheritance taxes in the same manner as any property held in fee simple (single) ownership. Upon the death of a tenant in common, his or her interest in the property passes through inheritance as directed in the will or other estate planning documentation and does not divide among the other owners as there is no right of survivorship an important difference from joint tenancy ownership.

Tenant's rights

Each tenant has unrestricted rights of access to the property subject to the equivalent rights of the other tenants. Each tenant in common can petition for and secure a division of the property at any time. The partition usually will result in the petitioner being granted exclusive ownership of a portion of the property the court views as equivalent to his or her previous undivided interest. Or, the judge may order that the property be sold and the net proceeds divided among the tenants in the same proportion as their respective ownership interests.

By Neda Dabestani-Ryba