Creative real estate investment is a non-traditional method of buying and selling real estate. Confidence and pyramid schemes in the 20th and 21st centuries such as Nouveau Riche (real estate investment college) have embraced this term, leading to the contemporary usage of this term being synonymous with unscrupulous practices.
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Bird-dogging
"Birds" are paid referral fees to find good deals for other investors. This is often where people start their investment careers because there is only time at stake. They are usually paid when the deal closes. Some birddogs will create corporate structures and partnership arrangements as they are often not real estate agents and may not be able to collect "referral fees" for their services. These partnerships are often structured using a Joint Venture Agreement (JV).
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Options
An option is defined as the right to purchase a property at a certain price (strike price) for a certain period of time. The property owner can sell an option for someone to buy it on or before the upcoming date at a predetermined price. The buyer of the option expects the value of the property to rise or is already low. The seller receives a premium called "option consideration". The buyer can then use the option by buying a property or selling options to others to exercise (or sell). This is often done to gain control of the property without much money. Option premiums are usually non-refundable. This option represents the same interest in the property and can be recorded at the county recorder office.
Short sale or preforeclosure
When a property owner fails to make their mortgage payments for several months they are in default. The first step of the foreclosure process (which usually takes several months) to be taken by the lender is to file a default notice. This is a public document recorded. The property owner will contract to sell the house contracted to the lender who receives a lower amount than the one payable on the mortgage. Note that there is no similarity between short sale of real estate and short sale of shares.
In many jurisdictions, including the United States, the seller is liable for taxes on the amount of unpaid mortgages after sales as ordinary income.
The Mortgage Forgiveness Debt Relief Act of 2007, enacted December 20, 2007, generally allows taxpayers to exclude income from debt repayment on their primary residence. Debts reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with foreclosure, qualify for assistance. The original effective date is through 2009 but in October 2008, the law extended aid until 2012. Use the IRS 982 form to handle the provision of debt relief.
The hard money lender
This is often used to finance unconventional projects, great deals, or where money is needed quickly. Usually the hard money lender will lend 50-70% of the value of the property irrespective of the selling price (unlike the bank). They will usually cover the loan within 2-7 days. Credit and income scores are often overlooked by hard money lenders, but they may ask to see a business plan or an exit strategy for the project. They may be paid through points (for example 1 point equals one percent of the total amount borrowed), interest rate (10-20% per annum is common), and interest is fair. This will vary based on project size and agreed contract. The hard money lenders are collateral-based and usually require a first position in the property.
Tax liens
It may not be clearly included in the category of "real estate investment", but it is worth mentioning. Each country creates systems and rules for lien or deed processes so careful scrutiny is required. In general, property owners are informed of the amount of tax payable and given a period of time to pay. If the amount remains delinquent, the country will take one of the following paths (though some have created hybrids):
Tax lien conditions
The area where the property is sold sells the lien certificate on sale or auction. Some countries sell lien for the amount of arrears while others allow bids to start at that price. The tax lien buyer collects interest (determined by country) from the homeowner on the amount paid for the tax lien. If the tax lien (with interest) is not paid during the redemption period, the investor can confiscate the house. Unlike most foreclosures, when a tax lien is confiscated, all other mortgages and mortgages are written off and the property will be "free and clear". Usually the lender will pay the lien tax to avoid losing their home and/or property.
Tax deed status
The local government sells deed to the property on a public sale or auction. The benefit to investors is the ability to buy property at a discount, often for the amount owed in tax. When an account becomes arrears, the property is registered with the tax assessor's office, some even online. Properties with homes are usually bought by investors (often referred to as sharks) before foreclosure.
Paper/note/investment mortgage
This is also less than the "creative real estate investing" technique as is usually described. Mortgages are often sold by lenders to other lending institutions. Investors can conduct broker transactions by arranging buyers and sellers notes to meet or by buying them and immediately selling them for profit.
Flip
Flip buying property below the price and then quickly resell it at market value. Homes are usually sold below value by unsuspecting sellers or those in trouble (such as job loss or foreclosure). Often a property is sold below market value because it is a "top fixer". Sometimes they require very little like paint and carpet and other times they have mold problems, asbestos, or foundations. These inherently contain more risks and more work, and therefore often have great advantages.
Land confidence
Land Trust has traditionally been used as a nonprofit entity to own property. In recent years, many companies have developed methodologies that allow the Land Trust to be used to acquire property in foreclosures that allow homeowners to save their homes and allow investors to see remarkable results. In the Real Estate Investment model, Land Trusts brings ease in transactions. While some people believe that using a Land Trust also brings benefits because it does not cause a Due-on-sale clause to force the refinancing of the subject property, this is only true when the borrower is and remains a beneficiary of trust and unrelated to the transfer of residential rights on the property. Although the use of Land Trust by real estate investors makes it harder for lenders to find transfers have taken place, loans can still be accelerated if found since the transfer has taken place.
By federal law the transfer to the trustee in the trust between vivos (classified as the trust of the residential property property) can not be considered as maturity-sale ( transfer maturity ) violation unless all interests of the recipient will be transferred to another. Title 12 of the US Code Para. 1701-j-3 - yes, Garn-St. Germain Depository Institutions Act of 1982, specifically explains this.
It means that some beneficiary interests, from one to ninety-nine percent, can be given (granted) to the joint beneficiaries without triggering the lender's transfer path (that is, a penalty for a sale that demands immediate immediate satisfaction with a mortgage loan.
Insofar as the trust of the land is the beneficiary is directed rather than directed and managed by its trustee, the remaining agent (that is, the party appointed to assume responsibility for his belief and corpus in the event of death or the inadequacy of the original recipient directors) may be the remainder of the beneficiary (beneficiary) beneficiary, rather than the need to be the remainder of the trustee, as is the case with standard intervvos trusts, and far more commonly, trust-directed trust (ie, fully funded vivos family trust).
See also
- Private investment capital subscription
- Real estate investments
References
Source of the article : Wikipedia
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