new to note buying or real estate investing? 5 points enterprising property investors should mind
TRANSCRIPT
Real Estate Attorneywww.ProvenResource.com
NEW TO NOTE BUYING OR REAL ESTATE INVESTING?
The allure of real estate riches found in 'house flipping' and note buying is great and it's made even more appealing by reality TV Shows, relentless "get rich" infomercials, and so called "real estate gurus".
www.ProvenResource.com
A recent survey of real estate in the news this past month reveals a disheartening number of criminal
prosecutions concerning property investment scams.
www.ProvenResource.com
The US Attorneys Office for Western Texas announced the federal sentencing of a group of house flipping
fraudsters after law enforcement professionals exposed a property appraisal scheme that involved
over 800 properties and $45 million dollars of fraudulent loans.
www.ProvenResource.com
These news stories alone are enough to create significant pause for aspiring real estate investors looking to cash in on “rich” property deals since
the Great Financial Crisis of 2008. Vetting deals for potential fraud is but only the first thing that
investors need to do in their due diligence when buying property.
www.ProvenResource.com
Photo Credit: Expatch.org
Owning distressed properties often involves legal actions such as quiet title actions, evictions, and lawsuits from
former owners or even municipalities. Experienced property owners already know that legal actions aren't
always so straight forward.
Photo Credit: go.sky.com
www.ProvenResource.com
For instance, a “simple” eviction action can be delayed for months over a host of unforeseen reasons.
Investors need to have financial wherewithal in addition to a strong stomach for business.
www.ProvenResource.com
Photo Credit: go.sky.com
Investors need to assess their legal exposure. For instance, recording one’s property interest creates liability for not only property taxes, but also for compliance with municipal ordinances or even federal violations. In residential real estate, where “blight ordinances” are enforced, investors are accountable for maintaining a property to
community standards.
Photo Credit: dgl.ie
www.ProvenResource.com
Compliance does not just concern the property itself. Real estate businesses need to make sure their enterprise is licensed
properly for state regulators and for revenue agencies.
Photo Credit: dgl.ie
www.ProvenResource.com
Investors need to structure their deals with the ‘end game’ in mind. For example, real estate investors may offer ‘seller’ financing to prospective purchasers. A private financing
agreement should conform to generally accepted lending guidelines of the lending community.
Photo Credit: fawa.com.au
www.ProvenResource.com
Proper document recordings, prudent loan servicing, and income and payment verification are just several points investors need
to evaluate when offering private financing.
Photo Credit: fawa.com.au
www.ProvenResource.com
These days it is not uncommon for real estate investors to invest in distressed property markets outside the city or state in which they live. Many out of state or foreign
investors have come into the market, and fast.
www.ProvenResource.com
But if one is not familiar with the area they invest in or they don't have physical access to the property themselves, then
they had better find reliable advisers who know the neighborhood, have access to trustworthy contractors and /
or property management companies, and knowledgeable real estate legal counsel.
www.ProvenResource.com
The appeal of 'scoring' big money in flipping properties should be tempered with pragmatism. Many a 'gold rush' has gone 'bust' for lack of planning. Investing in real estate is no different. One bad transaction can create financial havoc.
www.ProvenResource.com
Prudent real estate investors who perform proper due diligence, hire competent third party advisers and contractors, and develop a realistic exit strategy should have a higher propensity of success.
www.ProvenResource.com
About the Author:
www.ProvenResource.com
31800 Northwestern Hwy.Suite 350
Farmington Hills, MI 48334Phone: (888) 789-1715
Disclaimer: You should not rely or act upon the contents of this article without seeking advice from your own, qualified attorney.