Objective
To raise capital to invest in the refurbishing of residential properties in Wake County, North Carolina, USA. Investing in counties adjacent to Wake is also being studied.
Plan
To use proven methodology to acquire houses in financial distress, repair and improve them, then sell them on the open market for a gain.
Methodology
Properties with potential are acquired through foreclosure auctions at below market value. The properties to be acquired must meet defined criteria to ensure profitability. Necessary repairs and limited updates are made to prepare them for market. Transaction costs are minimized. Houses are sold through the Raleigh Regional Association of Realtor’s Triangle Multiple Listing Service on the open market.
Market
Wake County has a net population influx (20+ per day) due largely to the increasing employment availability in the technology sector as well as a renowned quality of life. Builders are finding available land very expensive and place an emphasis on building high end housing. Currently the available housing inventory is considered low. Although lending has become more stringent, there is still a steady amount of properties which become distressed and begin the foreclosure process each month. Such proceedings can stretch over years.
Risk
Properties obtained at foreclosure auctions are sold as is, without warranty, and may be occupied. They cannot be officially inspected before purchase. Structural issues, damage, or
The bursting of the housing bubble, known more colloquially as the 2008 mortgage crisis, was preceded by a series of ill-fated circumstances that culminated in what has been considered to be the worst financial downfall since the Great Depression. After experiencing a near-unprecedented increase in housing prices from January 2002 until mid-2006, a phenomenon that was steadily fed by unregulated mortgage practices, the market steadily declined and the prior housing boom subsided as well. When housing prices dropped to about 25 percent below the peak level achieved in 2006 toward the close of 2008, liquidity and capital disappeared from the market.
Miller, Correspondent Broker: Ken started working with the members of La Jolla Cove Investors, Inc. to originate loans secured by first priority liens on real property in 2013. Ken founded the Northern California operations of a well-established Southern California private-money lender in 2003. Ken has over 17 years of management experience in the mortgage finance industry for such firms as SunTrust Bank, JPMorgan Chase, and Aames Financial Corporation (where his duties included serving as its Supervising Broker of Record). He holds a B.S. in Finance from Arizona State University, an M.A. in Economics from the University of San Francisco and is a licensed California Real Estate
Since the Great Depression, our economy has not seen such devastating downturns. As a result, many of us have lost our jobs and subsequently, our homes. The current foreclosure crisis is affecting 1 out of every 5 Americans, Jonathan Lain (How to Solve the Foreclosure Crisis). So now the focus is on finding ways to solve the growing epidemic of foreclosures. I propose that the government fund a non-profit organization, whose mission is to reduce the number of foreclosures among the American people. Furthermore, although the initial funding would come from the government, as a non-profit, the agency would be able to obtain grants and hold fundraising events in
The foreclosure crisis that took over the United States a few years ago left many people facing economic hardships. This crisis happened because there was a huge housing bubble that was unsupported by actual home values. The bubble began bursting in spring of 2008 and the crisis culminated in mid-2009. Many lenders went out of business and many home owners began losing their homes. When the government became aware of this problem and began to implement new programs, it was already too late for many homeowners. Those homeowners are not at a point where they might be considering buying a new home. The housing crisis has created new rules, regulations governing the mortgage industry, and has also created a new agency dedicated to consumer protection. This consumer protection agency is called the Consumer Finance Protection Bureau. These dramatic changes have helped to create more responsible lending. The improving market conditions such as low housing costs and competitive interest rates are allowing those affected by a foreclosure to become homeowners again. Prospective buyers have a multitude of programs available to them, so even those with less than clean slate have several options.
Foreclosure has become an outbreak affecting the entire United States of America. Realtytrac just reported in the month of April 2011 that one in every 593 housing units received a foreclosure filing. (N1) That statistic is for just one month! Some states such as Arizona, California, Florida, Michigan and Nevada continue to be plagued with an influx of homes falling victim to foreclosure or some other form of default. Each home that is a casualty to a foreclosure, short sale or even bankruptcy was collateral for the lender holding the promissory note. The consequences tend to come at a cost for the lender selling the property but a deal for the buying investor. The costs incurred and the losses experienced by the
I often used to watch a show called “Extreme Makeover” where a team of builders would come to a neighborhood, build a need worthy family a beautiful new home, and then just give it to them. “Wow! What a lucky family,” I would say. “How fortunate.” However, as time went by, that same family would be in the news again. Why? The house was in foreclosure. The people had gone to the bank and taken out a mortgage against the home, then spent all the money they got for it on other things.
“short sales,” giving up their homes to moneylenders for a mere fraction of their actual worth.
When the housing bubble burst in 2007, 7.3 million borrowers lost their homes due to foreclosure or short sale. These “boomerang buyers” are slowly but surely recovering from financial setbacks and reentering the housing market. Conventional lenders have seasoning requirements that prevent buyers from obtaining a new mortgage until they have repaired their credit: a seven-year window for foreclosures and four years for short sales.
According to Desmond, Arleen is not alone in her dilemma. A great many Americans are being evicted in light of the fact that they cannot pay the rent (Desmond, 2016,p 4). Like Arleen, many poor families are spending the majority of their income on rent and utilities. In fact, using estimates from The American Housing Survey (AHS), 1991-2013, Desmond finds that, in America, most poor renting families use over half of their income on housing; and, roughly one quarter spend more than 70% of their income to pay rent and utilities (Desmond, 2016, p 4). Aside from the fact that Arleen’s monthly welfare stipend of $628 has remained stagnate for years, housing costs have soared. Due in part to the foreclosure crisis, and the deluge of millennials into the rental market, the demand for rental stock has risen.(Sisson, 2016). At the same time, escalating building and labor expenses, and declining subsidies, have helped to slow new construction. Thus, demand for rental housing is exceeding supply, resulting in escalating rent prices. Furthermore, the razing of older public housing projects and defunding of government assisted housing has pushed poor families into the private rental market (Sisson, Patrick may 19, 2016). As a result, most poor families in America today live unassisted in the private housing market. In fact, in 2013, 67 percent of poor renter households did not receive federal housing assistance (Desmond, Matthew, 2015). One day, Arleen stopped by the Housing Authority
The subject collateral consists of 2 parcels currently know as 4339 & 4401 Mount Vernon Memorial Highway Alexandria VA. Borrower must receive final site plan approval to subdivide into three recorded lots 2A, 3A, and 3B prior to closing. The Borrower purchased lot 2 for $30M on August 28, 2014 and lot 3 for $465M on July 23, 2014. They paid cash for lot 2 and borrowed $470M from Burke & Herbert Bank for the purchase of lot 3. The subject approval includes a $905M A&D closed end line of credit, a $740M revolving construction to fund up to 2 of the 3 units, of which no more than 2 can be speculative (including a model), and up to $100,000 in Letters of Credit to cover the development bond. The Borrowers plans to market the Radford model on lots 2A and 3A and Custis model on Lot 3B. These lots will be accessed through Mount Vernon Park Phase I, a 2 acre parcel in the Mount Vernon
In December 2007, caused by the housing bubble, what is known as the Great Recession began (“The Great Recession”). Prior to this, people kept buying houses with high risk loans, because their mortgage-backed securities were technically making profits when the house values increased; however, when the house values started to decrease, those securities became worthless, thus people were not able to pay for the house—many people had their house confiscated. As a result of this wealth loss, consumer spending decreased sharply and many banks collapsed. The U.S. government tried to combat this issue, but many of the fiscal policies they had created were controversial because of their interference in the economy. One debate sparked on whether
Brooklyn, NY – December 30, 2009 Foreclosures continue to rise drastically across the United States due to the recession, and have effected, and continue to affect thousands of families and individuals every day. One aspect we must take into consideration is that most people are not informed of what foreclosure means, or the process, even those who are homeowners. I believe that one step to preventing foreclosure is to educate first-time homebuyers. In addition, first-time homebuyer programs should not only assist potential buyers with financially preparing them to buy a home, but to keep the home once
The goal for the first property purchase is to take full advantage of the current housing market and to aggressively seek the purchase of a severely undervalued property, in the $450,000 price range. This may be purchased through a bankruptcy or short sale. The property will be improved as necessary for immediate resale, with an estimated return of 10% -20% net profits. The initial investment will be returned and the profit to be retained and reinvested as described in Step 2. GP Holdings, LLC will have sufficient funds to meet the 10% equity down payment that is anticipated for purchase of the first residential property and the necessary to funds for renovations. The debt financing is to be raised through banking institutions and/or mortgage brokers. It is likely in today's market that lenders will require a personal guarantee by the
Thereal estate market is currently more than adequately stocked with reasonably priced, available properties in all types of conditions, that when sold will help our economy grow. In fact, on a recent MSHDA webinar, it was stated that another few thousand homes that have been held in order to keep the market from flooding,are being released for sale by the New Year. This means that there will be even more homes available for potential homeowners to purchase. The challenge to getting these sold is to turn potential buyers into actual buyers; possibly by matching
Second, we can put you in touch with a real estate agent who specializes in foreclosures.