The National Real Estate Investor’s Association says real estate investing is one of the most sound, profitable, and widespread wealth-creation strategies in existence. Approximately 3.5% of Americans own at least one investment property, which means that for every metropolitan area of 1 million residents, 35,000 of them are real estate investors. Contributing to the availability of investment properties, RealtyTrac reports that 1.65 million properties were foreclosed in the first half of 2010 and a total of 801,359 properties were foreclosed in the first half of 2013.
Single-family homes make an attractive investment for those who want to begin investing in real estate. There are a number of reasons for this, including:
- There is a large abundance of single-family homes available
- Financial institutions want to off-load these properties as they are non-performing
- Entry into real estate investments with these properties does not require a large up-front investment
- There are many tenants available and ready in select markets
- Investors earn a high rate of return on the up-front costs associated with acquisition
At Invest America, we take each investor on a case-by-case basis and determine which of our many investment options will help each client meet their investing needs and goals. We have years of experience and have conducted extensive research into the real estate investment market. For this reason, we know that a single-family house of newer construction, with 3 bedrooms, two bathrooms, and parking space is the best investment because it is the most desirable living arrangement for tenants. This makes these homes the easiest ones to finance.
The stock market does not look like a safe investment vehicle for small investors and interest rates are at all-time lows. This makes real estate an attractive investment option and many small investors are taking advantage of it, putting small infusions of cash into real estate property transactions and creating wealth. Investing in foreclosures and bargain properties are some of the best real estate investments in the market. Now is the perfect time to purchase foreclosure properties, whether investors want to make it their primary residence, maintain it as a rental, or put it up for resale. And these are not just homes in crime-ridden areas. The worse off the economy is the more homes in upscale neighborhoods go into foreclosure.
When working with Invest America, you can rest assured that we will be able to find for you the very best investment property deals around. We have the leverage to purchase foreclosure properties at 30%-45% below market value. In addition, it is possible to get an even better deal if the property is bought from a financial institution. These institutions will sometimes wave some of the closing costs and/or offer a deal on the interest rate or down payment.
Get Educated in Real Estate Investments
If you are new to real estate investing, have no worries. At Invest America we are highly experienced at working with new investors and teaching them how to go about acquiring foreclosed homes. For investors who are not experienced. Trying to navigate the foreclosure-buying process can be overwhelming at best, but there are deals to be found, and at Invest America, we research the market and approach each potential investment with preparation, patience, and persistence.
Part of the research we do at Invest America is to determine whether or not the foreclosed property is in a good area, one that is likely to have a high resale value. After all, the real estate motto location, location, location does apply. We will make this evaluation before we approach any of our clients with an acquisition deal. Whether you want a property to rent out or you want to flip the property, Invest America can help. Flipping houses is becoming popular once again. Investors buy the property at a very low cost, put some money into fixing it up, and then sell it at a $10,000 to $15,000 profit that is still below the appraised value of the property.
Contact Invest America today to schedule a one-on-one, no-obligation consultation with a trained investment advisor and find out how you can generate wealth through real estate investing.
Memphis Real Estate – Owning an Investment Property
Owning an investment property is one of two popular investment options for real estate investors. This option means that the investor will purchase the property and hold the title to that property and Invest America can help investors find the right property at the right price. In fact, Invest America is in the unique position to offer properties in areas where there are still a number of foreclosures available.
In 2007, the housing bubble burst, crashing with the economy. The prices of houses fell drastically and foreclosures were a daily event. This left the banks with a large inventory of foreclosed properties that they could not sell. However, these houses were bought over time. Both homeowners and investors bought up the foreclosed properties. During the past five years over 40% of the single-family homes purchased have been by cash buyers and Self Directed IRA & 401(k) investors.
As the economy improved, the rate of foreclosures slowed and banks became more reluctant to sell. In addition, builders have had a harder time borrowing the funds to build new houses. The result has been a shortage of single-family homes, and the result of that is that there are too many buyers and not enough houses. Fortunately, Invest America operates in location where this has not been the case. We operate in stable areas that have never been prone to major price swings, including Jackson, MS; Orlando, FL; Birmingham, AL; Memphis, TN; and Indianapolis, IN. These are the ideal locations, where there exists a good job base and a favorable ratio of rent to value.
Once an investment property has been purchased in one of these locations, it is rehabilitated and a suitable tenant is found to occupy the property. Invest America acts as the property manager for all investment properties. On an assigned date each month, rental income is direct deposited into the bank account of the investor, less the property management fees, which are typically between 8% and 10%. These fees cover the collection of rent, the handling of all tenant issues, and minor maintenance of the property.
Example of a Real Estate Investment Transaction
The following property has been taken from the Invest America database in Memphis, TN to use as an example. The purchase price of the property is $83,000. The gross rent each month if $1,025 and the monthly expenses are approximately $338. An all-cash purchase gives an ROI of 9.81% and Invest America has acquired and rehabbed the property, found a suitable tenant, and manages the property. It is completely hands-off for the investor.
Property: 3 BR/2 BA Single Family Home in Memphis, TN
Purchase Price: $83,000
Gross Monthly Rent: $1,025
Monthly Expenses: $338
ROI on All-Cash Purchase: 9.81%
Memphis Real Estate – 50% Down
Trust Deed Lending
It is generally the case that those who are into real estate investing are the ones who are borrowing money in order to purchase investment real estate. However, being the lender of such funds can also be a good investment. Invest America provides a private lending option for investors. This allows you to loan money to the purchaser, a loan that is secured by a real estate deed trust or a mortgage. This is known as trust deed investing.
Invest America will never handle any funds involved in the transaction. As per state and real estate licensing laws, these funds are transferred through a title and escrow company or through a closing attorney. All money transfers are wired from your bank account directly into the escrow or trust account. This is known as trust deed investing.
Trust deed investing is comprised of two parts. The first is the promissory note, which is a written promise by the issuer to pay a certain sum of money to the payee at a specified time in the future. The second part is the deed of trust, which is the collateral against which the promissory note is issued. This deed of trust is filed with the county recorder’s office and it is proof that there is a loan against a certain property. This ensures there is a secure lien on the property.
50% Down Trust Deed Lending
The process of trust deed lending provides a low-risk investment for the lender. The more equity there is in a property, the lower the risk, which makes 50% down trust deed lending the lowest risk of all. The process of 50% down means that the property owner will put a down payment of 50% on a property, paid in cash, and that means there is 50% of the property value in equity right from the beginning.
Invest America can set up these private mortgages with their investment clients who are looking to purchase one of our turnkey properties. At Invest America, we purchase distressed properties at a reduced cost, rehabilitate that property, find a tenant for the property, and handle all the property management. If the investor who purchases the property needs a private mortgage to finance the purchase, Invest America can set up a 5-year note for the investment.
For the lender, this is the ideal investment situation. With 50% down on the loan, there is a high-yielding promissory note at 9% interest that is secured by a 1st lien on the property. Plus, the property is managed by Invest America, which ensures it will be well looked after.
No lender will ever go into an investment blind. Invest America will provide the lender with all closing documents and photographs of the property and the loan documents and filing are all handled by a closing attorney who is located in the county in which the property is located. In addition, the lender is carried as an additional insured on the insurance policy for the property.
Transaction Overview for 50% Down Trust Deed Lending
- Note Purchase Price: $30,000 to $50,000
- Security: Note is secured by Deed of Trust (1st lien position)
- Note Term: 5-year balloon note
- Interest Rate: 9%
- Payment Terms: monthly payments, principal & interest
- Loan to Value: 50% (based on appraisal value)
- Option to Extend: Yes
- Risk: Very low
Example of a Transaction
Invest America purchased the distressed property in Memphis, TN, rehabilitated the property, and sold it to an investor in Canada. The investor put 50% down on the property and Invest America originated a seller note at an interest rate of 9%. Invest America is also the property manager.
A client of Invest America has bought the note for the property. This client is receiving monthly payments over a term of 60 months or 5 years. At the end of this term, the client may renew the note, but holds no obligation to do so.
Property: 3 BR/2 BA Single Family Home in Memphis, TN
Borrower: Canadian investor
Sale Price: $88,000
Down Payment: $44,000
Loan Amount: $44,000
Loan to Value: 50% (based on appraisal value)
5-year note at an interest rate of 9%
Monthly payments, principal & interest of $446.00
Principal balance: $35,229.00 (due to note holder at end of 5-year term)
Even seasoned investors know there are NO guarantees when it comes to investing. There is no crystal ball that will show what will happen to the global economy. The best investors can do is choose between high-risk, medium-risk, and low-risk investments and hope for the best. The 50% down investment option and the other options Invest America offers are all low-risk investments. They will produce cash flow, even if the property value declines. No investor will get that from the stock market.
Please note that the investor does NOT incur any fees or closing costs associated with purchase of a trust deed note or a rental property.