Investing in real estate markets overseas

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While the housing market in the U.S. remains uncertain, it has become imperative for investors to seek opportunities elsewhere. In diversifying their portfolio, one of the best bets this year is to look at real estate overseas.

For investors that haven’t considered the possibility of looking overseas for investment opportunities, picking from among the many options available can be difficult. To help, here are a few leading picks according to experts:

1. A new report states that the top choice these days for real estate investments overseas is Panama. The property values there have appreciated in key waterfront areas which include Punta Pacifica, Balboa Avenue, and Costa del Este. Immigration to Panama is also expected to remain high as retirees, international corporations, and banks are expanding into the market. Meanwhile, the inventory for apartments remains low.

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2. Apart from Panama, Paris is also among the top picks. Even as the real estate market in the rural areas of France has not seen much improvement, Paris experienced reasonable growths in the past few years. There are active rental markets in the city and it even has a neighborhood that has been attracting attention from many investors.

3. As for those who are looking to invest in farmlands, Uruguay is worth looking into. With about 95 percent of the country farmable, there are also no restrictions to foreign ownership and the use of land.

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RE{PST: Manhattan Real Estate Feels a Russian Chill

According to this NewYorkTimes.com article, rich Russians have been sinking fortunes into some of the priciest condominiums in Manhattan. Read it below:

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Who doesn’t enjoy a good yarn about Russian oligarchs who throw their fortunes at New York real estate? Take the Russian fertilizer king Dmitry Rybolovlev, who is linked to a record-breaking $88 million sale at 15 Central Park West, or the composer Igor Krutoy, who bought three apartments at the Plaza Hotel. Yet these tales of excess could soon fade into memory.

Moscow may be 4,500 miles from Manhattan, but with tensions intensifying over the annexation of Crimea, an Arctic Russian blast could chill the high-flying luxury real estate market here.

Rich Russians have long been a force in the city, headlining some of its flashiest apartment sales, but now many are fearful that buying a New York apartment could have political ramifications at home. And even if they were willing to risk President Vladimir V. Putin’s ire, economic sanctions and visa restrictions might soon make such purchases impossible.

There are no official figures, but anecdotally, about 40 percent of the condominium and townhouse buyers in Manhattan are foreigners, and more than half of buyers in new developments come from overseas, according to Jonathan J. Miller, the president of the appraisal firm Miller Samuel. It is unclear what percentage of that total is Russian, but Russian buyers have dominated the news in recent years, along with buyers from China and Brazil.

The prospect of Russian cold feet couldn’t come at a worse time, as condominium prices at the high end of the market are surpassing levels reached during the peak of the last real estate boom, and developers are buying up sites at a frenzied pace. New projects, planned with billionaire foreign buyers in mind, are altering the landscape of the city. Perhaps most notable is the spate of super-tall, narrow towers in the works along West 57th Street, their long shapes casting a shadow on Central Park.

Victoria Shtainer, an associate broker at Douglas Elliman Real Estate, has felt the chill firsthand. She had been working with a Russian buyer, a legislator, since December. With a budget of $25 million to $52 million, he had been considering listings at the Plaza Hotel and the Marquand, a new development at 11 East 68th Street. He was coming to New York for a visit this month when Russian forces invaded Crimea. Soon afterward, Ms. Shtainer learned via an email that “due to relations with the U.S., he was canceling his trip,” she said. “It said he wanted to wait until things quieted down.” Another of Ms. Shtainer’s Russian clients, who had been looking for an apartment in the $4 million to $5 million range, also canceled a visit. “She told me she was afraid to get a visa, that they were just going to wait it out,” Ms. Shtainer said.

“Putin has drawn a red line — he has made it clear that ‘you are either with us or against us,’ ” said Mark Reznik, a broker at A & I Broadway Realty, which has many clients from the former Soviet Union. “There is so much propaganda in Russia, people are scared to do business here.”

Elliot Bogod, the president of A & I Broadway Realty, also has several clients who are pausing to regroup. “I have a client who almost signed a contract in Battery Park City but now wants to wait,” he said. The buyers, a couple who live in central Kiev, are concerned that the Ukrainian government will forbid citizens to remove their money. “They are worried that they won’t be able to transfer funds or pay the common charges,” Mr. Bogod said.

But real estate brokers naturally love to spin the news positively, and they argue that the freeze is just temporary. The wealthy in Moscow now see the writing on the wall, the argument goes, and so they will soon start strategizing on ways to relocate their money, and even themselves, to New York.

“It is the whole idea of flight to safety,” said Edward A. Mermelstein, a real estate lawyer who does a lot of business in Russia, and who says he is fielding more calls now from clients in the region. “Anytime there is uncertainty overseas, it is a good time to bring money to the U.S.”

For anyone looking to move assets stateside, real estate can be an excellent option — particularly for anyone wanting to avoid intense scrutiny. A transaction in a new development, for example, involves buying directly from the sponsor, or developer, who demands little in the way of personal information. “If you open a bank account,” said Jacky Teplitzky, a broker at Douglas Elliman, “you have to answer a lot of questions, or with stocks there is a lot of oversight. In new construction, there is no board, no application, nothing. You just write a check and buy an apartment.”

Ms. Teplitzky is representing several Russians who are looking to buy in New York and Miami. She says that although it is true Russians fear reprisals internally if they move assets overseas, and are concerned about the prospect of economic sanctions, “they are trying to think of their worst- or best-case scenario, and they have to take a chance either way; it isn’t like they can do nothing.”

Some Russians who are moving ahead with purchases hope to fly under the radar; thus, rather than buy a high-profile penthouse, they are choosing smaller apartments. “Because they don’t want their names in the paper,” Ms. Teplitzky said, “they are using a different strategy that is less visible. Nobody writes about the $2 million deals, right? They all want to cover the big expensive purchases.”

The Russians who might begin looking to buy in the States could also be of a different ilk than before. “I think the freeze is going to be temporary,” said Mr. Reznick, “and then, over the next three years as the sanctions get tougher, we will see a new kind of buyer, not an investor, but someone who is looking to emigrate. Russians will realize they want to buy a place here not just for investment, or not just for their kids while they are in college, but a place for the whole family, a large family home.”

And real estate players can take some solace in knowing that even if Russian buyers dwindle, there are other rich foreigners who would gladly take their place. New York’s profile is rapidly gaining favor among the global elite. According to the most recent Knight Frank Global Cities Survey, which tracks the cities of most importance to the world’s wealthiest people, New York is in second place this year, behind London. And by 2024, the survey is predicting that New York will top the list. That could bring a welcome sigh of relief to all those New York luxury developers quaking under their hard hats in fear of a Russian exodus.

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Factors directly affecting home value

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Knowing the direct factors affecting home value can help sellers determine the right price for their property. It also helps owners decide on the needed improvements to increase their home’s market value.

Below is a comprehensive list of the direct factors that may make or break the ideal price of your home:

Community. People move from one place to another for one important reason—community. This includes efficient city services, ample resources, and a bustling business district. The community where the house is located directly affects its desirability in the market. Among the questions home buyers need to ask when evaluating a property include “Is the community prone to high crime rates? Who lives in the community? Is it near commercial establishments?”

Schools. Studies suggest that houses located nearest the best schools offer one of the highest housing prices in the market. Thus, a home’s overall market value could be affected by a property’s proximity to good schools.

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Amenities. House features have direct impact on its price. According to Realtor.com, the most worthwhile investments for houses are its amenities, which include traditional upgrades in kitchen and bathroom, as well as creating high-end amenities like specialty rooms such as media rooms and children’s playroom. Other amenities include outdoor areas like parks.

Transportation. This is of prime importance for people who need easy access to public transportation, especially for families who commute daily to and from work.

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Jay Eisenstadt and Esplanade Capital provide investors with valuable information about real estate market trends. For similar discussions about the housing sector, visit this blog.

Highest and lowest priced housing markets in the U.S.

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Home prices were the highlight of the 2013 U.S. housing market, recovering with bigger than expected price gains and solid home sales. This year, economists predict prices to rise slowly as more homes are coming into the real estate inventory in the succeeding months.

Despite numerous price fluctuations, there are particular housing markets in the U.S. that have remained either affordable or expensive for buyers across different states.

Fox Business reports that Malibu, California, remains the most expensive neighborhood to buy a home in, with a sample-size house priced at more than $2 million. The cheapest homes, meanwhile, are in Cleveland, with a sample size house costing an average of $63,729.

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The rankings, which were based on Coldwell Banker’s annual home listing report, used sample-size houses that have four bedrooms and two bathrooms across the country. Throughout 2013, the bank evaluated 1,900 markets and 52,000 listings to come up with the collated data.

Other areas marked with expensive homes are in California: Newport Beach ($1.8 million), Saratoga ($1.7 million), Los Gatos ($1.36 million), and San Francisco (1.3 million). Conversely, the most affordable markets are Ohio ($66,000), Flint, Michigan ($84,000), Saginaw, Michigan ($87,000), and Jackson, Mississippi ($94,000).

One neighborhood that stood out from the list is New York, which has some of the priciest, as well as most affordable homes. Properties in Great Neck, for example, averaged $1.1 million, while those in Buffalo cost around $100,000.

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Jay Eisenstadt and Esplanade Capital provide investors with intelligent and responsible information about real estate trends. For more related topics about housing markets, visit this blog.

REPOST: How To Get Screwed When Buying Real Estate

Are you looking for perfect place for your business? Hanny Lerner shares tips on how to make sure that you don’t screwed in your next deal, buying or selling.

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Not many small businesses today could afford to buy a building for their business, considering that banks typically require the buyer to put down 35%-50% of the purchase price. But the federal government-backed loan program SBA 504 is a great option to consider, as it allows qualified buyers to obtain 90% financing.

Buying an industrial building for my business took me the entire 2013 – six months to find the right building, three months to negotiate the contract and another three months of being in contract. I learned an incredible amount during the process, a lot of which I’m going to share with you in this article, so you can learn from my experiences and avoid making my mistakes.

A. Negotiating the Contract

First rule: everything in the contract is up for negotiation. There is a long list of things to consider, including:

- how much of a deposit to put down
- how long of a due diligence period
- whether the seller will accept the contract subject to SBA financing
- the seller’s financial responsible to remedy title and/or environmental issues

My contract negotiations took as long as it did because we couldn’t agree on the deposit amount, due diligence period, mortgage contingency period, seller’s responsibility for title remediation and much more. We ended up settling on a 10% down payment, 45 days of due diligence period and 60 days mortgage contingency period with a closing date of 90 days from contract signing. I also agreed to buy the building “as is”, which means that the seller wasn’t responsible for doing any structural or cosmetic repairs.

1. Mortgage Contingency

It’s in your best interest to make the contract “mortgage contingent”, so you can back out of the deal for a full refund if you aren’t able to obtain financing within the contingency timeframe. A “non-mortgage contingency” (or “all-cash deal”) means that the you can’t back out of the deal, regardless of your ability to get financing. In my case, the seller begrudgingly agreed to an SBA mortgage contingency solely because she trusted her real estate broker who assured her that I would close. But in all fairness, I should have started the mortgage approval process way before I signed the contract to ensure that I had enough time to close; I was running against the clock from the minute I signed it.

2. Creating an Entity

To limit liability, you should buy a building under a new corporate entity, and not under one’s personal name or operating business name. If your business gets sued, you don’t want the Plaintiff to come after your building too. On the flip side, if someone trips in front of your building and sues you, you don’t want them to come after you personally or your business. I learnt this the hard way when I was 25 and got sued personally by an ex-tenant who claimed the roof fell on his head. The building was under my personal name at the time.For this new building, the Purchaser was an LLC that I formed once I received the contract.

3. Time of Essence

You never want to accept a “time is of the essence” (TOE) clause in your contract, unless you are buying the building with all cash. A TOE clause requires you to close by a certain date, whether you obtain financing or not. If you don’t close on or before that date, you are in breach of contract and you will lose your entire down payment and the building.

Sometimes you have no choice, like what happened to me. The 60-day mortgage contingency period was up and, thanks to the government shutdown and delayed tax return filings, I still hadn’t received a commitment letter from the traditional bank or SBA. At that point I had a choice: either to cancel the contract, get my down payment back and lose the building, or agree to a TOE and close within 90 days of contract signing.

I really wanted to buy this building. Being the risk-taker that I am, I agreed to convert the contract into a TOE closing, accepting the pressure of obtaining 90% financing and close within the next 30 days (or I’d lose my 10% down payment). Doing what I did is not recommended. If you decide to do a TOE closing, be positive that you will get the financing and are able to close on time. When I realized it was impossible to close within 30 days, I begged the seller to give me more time to close; she finally agreed to extend the deadline by 30 days, stating that she’s only doing it because she admires my determination to get this deal done.

I got approved by both the SBA and traditional lender barely two weeks before the new closing. As you can imagine, the pressure and stress I endured during this period was off the charts.

B. Obtaining Mortgage Financing

The SBA 504 is structured where a traditional bank (i.e. Citibank or Chase ) finances 50% of the purchase price. The SBA finances 40% of the purchase price and the buyer puts down the remaining 10% financing.

1. Traditional Bank

I wasted a lot of time trying to get financed with the large banks. I later learned (from my business banker at Citibank, no less) that they get hundreds of mortgage applications a day and are extremely selective in who they approve. They will always opt to finance a company that generates eighty million dollars in annual revenue over a young company that generates a couple million. I finally turned to smaller banks like American Community Bank, Sovereign and Celtic Bank, all of whom were eager to finance my deal.

2. SBA Financing

The SBA application process was tedious. Just to get them all the required documents took several months, as they kept asking for more and more items each week. They ended up offering me a 20-year fixed rate amortized over 20 years, which I happily accepted.

In hindsight, it was a big mistake to go directly to the banks and NYBDC (SBA’s CDC) to get financed. I should have used an experienced mortgage broker who already has relationships with the banks to get the deal done. The time and energy I spent getting the mortgage (versus working on my business) was definitely not worth the 1% that I saved on the broker fee. I’ll never make that mistake again.

C. Due Diligence

The “due diligence” period is the time the buyer has to assess and research the property. The two most important reports are the title search and environmental assessment.

1. Title Search

All buyers obtaining financing must buy title insurance on the property. The title search confirms land tenure and title claims, as well ensures that there are no liens, violations, or outstanding bills on the property. Typically, the seller is responsible for clearing up any title issues, such as liens, DOB or HPD violations and outstanding debt. Double check your contract to make sure the seller assumes responsibility for removing any title issues.

In my case, the seller was responsible for up to $7500 (negotiated up from $5000) to remedy any title issues. Thankfully the building didn’t have any title issues because $7500 probably wouldn’t have sufficed if there were!

2. Environmental Phase I and II

The mortgage company conducts an Phase I environmental on the building being purchased. The environmental company inspects and researches the building to ensure that there are no underground oil/fuel tanks or contamination affecting the property. If they find anything questionable on the Phase I, the buyer is required to do a Phase II, which is a more rigorous analysis that can include drilling and excavation. If the Phase II comes back with any signs of contamination, you’re pretty much screwed. You’d have to excavate the entire ground, which can cost hundreds of thousands of dollars.

My Phase I report showed that there were two buried tanks in the building, so I was required to do a Phase II. Between missing affidavits from the Fire Department and no proof that the underground tanks were ever properly abandoned or removed, I had to hire a tank removal company to excavate the ground and properly abandon the tanks. Unfortunately, my contract didn’t include any clause for the event of any environmental issues; the seller was relieved from paying any of the remediation costs and I incurred the entire cost of excavating and removing/abandoning these tanks. I do wonder how my attorney missed adding that clause in the contract.

3. Architecture and Construction

You definitely want to bring in an architect and general contractor during your due diligence period to ensure that you’re fully aware of the costs associated to build out your space. In some cases, if the construction costs are too high, it may not make sense anymore to buy the building.

In my case, I needed to redo the roof, upgrade the electric service (so that it handled the machinery we use), and create partitions for our offices and workrooms. It was going to cost me at least $300,000 to do the renovations, which I was okay with.

D. Finding Incentives

Federal, state and city agencies offer many incentives for small businesses that purchase and renovate a building. Here are some that I researched:

ICAP : This program provides a 15 to 25-year property tax abatement when your renovation costs are at least 30% of the purchase price. This is by far the biggest incentive I’ve discovered.

New York Power Authority: NYSERDA, Con Ed and National Grid offer rebates when installing certain energy savings equipment, such as LED lighting and efficient heating and cooling systems. Excelsior: This program provides tax incentives if you create 10 new jobs when you move into the building you’re buying. IBZ Relocation Tax Credit: If your building is in the IBZ zone, you receive a one-time $1000 tax credit for each employee when you move your business. Use Tax Exemptions (IIP): You can apply for a use-tax exemption on all new manufacturing equipment/machinery that you buy for the new space. There is also a Guide to Incentives for small businesses in NYC, which include more incentives provided by the Industrial Development Authority (IDA), Energy Cost Savings Program (ECSP), as well as the Façade Grant Easement, Non-Historic Tax Credit and more.

D. We Can’t Control Everything

Buying a building is by no means a simple undertaking. If you decide to take the plunge, know that you’ll be under a lot of stress—before, during and after you buy the building. In fact, so many things can go wrong during the process that can cause you to lose the building (along with a lot of money). For example, environmental issues may be too great for you to remedy, the seller may decide to back out of the deal or your financing may fall through. Tragically, the latter just happened to me.

My TOE closing date was set for today, 12/31/13. Just a couple of weeks before closing, my soon-to-be ex-partner put a “lis pendens” on an apartment building that I own (as part of his marital asset claim); the mortgage company and SBA needed to use that building as collateral for my new building, and dropped the deal as soon as they saw the “ lis pendens”. The building that I worked an entire year to buy was sabotaged in exactly 30 seconds flat.

While I am devastated for having lost the building and all the money I put into it, I believe that everything happens for a reason. I learned a tremendous amount in the last 12 months that will only help me with my next purchase. And if dreams do come true, maybe the seller would be willing to sell me the building again one day.

Esplanade Capital provides a vigorous approach to real estate business. For more industry topics, follow this Twitter page.

Understanding 'double-dipping' in leasing

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Double-dipping is a practice of drawing two incomes. Investopedia explains that this concept can have multiple meanings depending on the context. For instance, when a person holds a government job and receives a pension, it can be considered double-dipping. It could also take place in real estate, as with the case of a New York landlord whose tenant died while still having a year left on her lease.

The landlord relates to The New York Times his concern. The contract lease between him and his tenant states that her estate is held responsible for paying the rent for the remainder of the lease. Now he asks whether he has the legal right to still collect rent money from the estate should there be another tenant before the lease expires.

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Jonathan H. Newman, a Manhattan real estate lawyer, says this is not allowed for it is considered double-dipping. According to him, since the estate is legally responsible for the lease and is paying what is due, the landlord has no legal right to collect rent from another party or lessee. However, the landlord could seek the approval of the estate to terminate the lease term with an appropriate termination fee in lump sum form. Together with this lease termination is the release of the estate from the remaining balance. Only then can the landlord be able to have the apartment offered to another person for renting.

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Having dynamic ideas about real estate acquisition, professionals like David Scharf of Esplanade Capital are able to create solid business concepts for individuals and organization. For more industry topics, visit this Facebook page.

On improving one's chances of getting a mortgage

With home prices and interest rates on the rise, it makes sense for any interested buyer to purchase a house sooner than later. The current situation still presents good deals, with prices still far from their pre-recession highs and low interest rates. However, the problem is that it has become difficult for many Americans to get a mortgage loan.

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To increase their chances at approved mortgage applications, potential buyers have several recourses. These need to be accomplished immediately as it may take some time before they make any impact on loan approval.

First, consumers can improve their credit scores. If they haven’t checked their credit scores, now would be a good time to do so. They can start by clearing up errors on their records and lowering their utilization ratio.

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During this time, consumers are advised not to open new credit card accounts, except for their first credit cards. New applications can pull down their credit scores and lower their chances. Those getting credit cards for the first time should do so about half a year before applying for mortgage. This way, they can get the benefits connected to their utilization ratio while having enough time to lower it.

Putting up higher down payments is also a good option. Lenders have reported that they are willing to work with consumers with lower credit scores when they have a good amount of the price of the house already saved up.

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Esplanade Capital represents a focused approach in property acquisition and management. Visit this website for more information on the real estate market in New York.

Important things to remember for future rental property owners

Due to the low interest rates and property prices, many real estate professionals believe this is a great time to purchase rental properties, especially for retiring professionals and other people who want passive income as lessors.

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Most real estate investors have misplaced fears about value fluctuations. However, the value of all investments fluctuates all the time, and since real estate investments are long-term investments, short-term value fluctuations should not cause alarm.

Another important thing to remember is to start early. Those who start saving and investing in real estate properties as early as a few years after graduation have better chances at properties that will provide them with stable passive cash flow over time.

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While most people quit their day jobs when passive rental income starts pouring in, doing otherwise is wiser, primarily because more income provides a window for more rental properties, therefore, better cash flow.

It is essential to buy properties that are in good shape and ready to be rented out. This will save the investor time and money in the long run.

Investing in real estate can be a bit risky, given the traumas inflicted on the housing market, but for some people, the risks are worth the rewards.

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Esplanade Capital represents a focused and defined approach in property acquisition and management. Visit this website for more information about real estate investing in New York.

REPOST: How Real Estate Professionals Can Help Clients Navigate Short Sales And Foreclosures

If buyers and sellers are facing problems in their monthly mortgage payments, how can a real estate professional help them get through the process? This Forbes.com has the details.

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Homeowners facing financial hardships may be able to negotiate with their lenders for a loan modification or refinance that will reduce their monthly mortgage payment. In some cases, this is enough to allow the borrower to remain in the home. In other cases, however, the borrower may still be unable to meet the demands of the loan – because of factors like loss of a job, divorce, illness or death of a spouse – and may have to sell the home through a short sale or lose the home to foreclosure. As difficult as these situations are, a qualified real estate professional can help guide buyers and sellers successfully through the process.

Short Sales

A homeowner in financial distress may put his or her property on the market as a short sale in order to avoid foreclosure. A short sale, or pre-foreclosure sale, occurs when a property is sold for less than the amount due on the mortgage. This type of real estate sale can benefit the lender, who can avoid the lengthy and costly foreclosure process, and the borrower, who can eliminate or reduce mortgage debt and keep a foreclosure off their credit report.

A lender may agree to a short sale if the borrower has a personal financial hardship (such as job loss, divorce or medical emergency) and owes more on the mortgage than the home is worth. If the lender approves the short sale, any proceeds from the sale will go to the lender. Since the sales price falls short of the balance remaining on the mortgage, the difference may either be forgiven by the lender or the lender can seek a deficiency judgment against the borrower for all or part of the balance (a few states prohibit deficiency judgments following a short sale). The short sale process varies from state to state, but the steps generally include:

• Short sale package – A financial package is submitted by the borrower (seller) to the lender. This includes financial statements, a letter describing the seller’s hardship and copies of financial records. 

• Short sale offer – If the seller accepts the offer from an interested buyer, the listing agent sends the lender the listing agreement, an executed purchase offer, the buyer’s preapproval letter and a copy of the earnest money check, and the seller’s short sale package.  



•  Bank processing – The bank reviews the offer and either approves or denies the short sale. This can take several weeks to months. 

Helping Sellers

If it is an option, a short sale often makes more sense than a foreclosure. While a short sale will affect the borrower’s credit report, it is not as damaging as a foreclosure. In addition, a short sale will make it easier to borrow money in the future than if the property had gone into foreclosure. The sooner the short sale process is started, the more likely the bank will approve the short sale. Falling further behind on payments will get the borrower closer to foreclosure, so time is of the essence. In fact, it is possible to pursue a short sale before ever falling behind on payments if the borrower’s financial situation has changed due to hardship.

Another advantage to a short sale is that, unlike foreclosure, the seller remains in control of the sale – not the bank. That means sellers can know who is buying their home; for some people, that makes the transition a little easier.

As a real estate professional, you can help sellers:

• Determine the value of a property to see if it is eligible for short sale (valued at less than the mortgage balance) 



•  Develop a short-sale package and get qualified for short sales 



• Set a price that will bring offers and be approved by the bank



•  List the property as a short sale 



• Negotiate with the bank to approve a purchase offer

For Buyers

A short sale can provide an excellent opportunity for a buyer to get into a house at a reduced price. It should be noted, however, that a short sale is a complicated and time-consuming real estate transaction. The lender may take several weeks or months to approve the short sale, and it is not uncommon for a buyer to submit a short sale offer only to cancel because the process is too lengthy. In order to get the property at a discount, the buyer has to be willing and able to wait for short sale approval from the bank.

As a real estate professional, you can help buyers:

• Determine a fair offer 

• Negotiate with the bank 

Foreclosures

Foreclosure is the process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership of the property. While foreclosure laws vary from state to state, there are generally six phases:

1. Payment Default – This occurs when a borrower has missed at least one mortgage payment. The lender sends a missed payment notice, and after two missed payments may send a Demand Letter. At this point, the lender is likely willing to work with the borrower to make arrangements to catch up on the missed payments.

 2. Notice of Default (NOD) – A Notice of Default is sent following 90 days of missed payments. The loan is handed over to the lender’s foreclosure department and the borrower is informed that the Notice will be recorded. The borrower is typically given 90 days to settle the payments and reinstate the loan.

3. Notice of Trustee’s Sale – If the loan has not been made up within the allotted time, a Notice of Trustee’s Sale will be recorded, and the lender will publish a notice in the local newspaper indicating that the property will be available at public auction.

4. Trustee’s Sale – The property is placed for public auction and sold to the highest qualifying bidder. After the highest bidder is confirmed and the Trustee’s Sale completed, a Trustee’s Deed Upon Sale is provided to the winner. The property is then owned by the purchaser, who is entitled to immediate possession.

5. Real Estate Owned (REO) – If the property does not sell at the public auction, the lender becomes the owner and will attempt to sell the property on its own, through a broker or with the help of a REO Asset Manager. These properties are called “bank-owned.”

6. Eviction – The borrower can stay in the home until it has sold or becomes bank-owned. An eviction notice is sent demanding that occupants immediately vacate the premises. The local sheriff will visit the property to remove people and belongings if necessary.

For Sellers

Losing a home to foreclosure can be a heartbreaking and emotional experience. Throughout the foreclosure process, the lender may attempt to make arrangements to help the borrower get caught up on the loan and avoid foreclosure. Unfortunately, if a borrower has trouble making one mortgage payment, it becomes increasingly difficult to make catch-up payments to bring the loan up to date. If a borrower knows that he or she is likely to (or will definitely) fall behind on payments, it is in their best interest to speak with the lender as soon as possible about loan modification or refinance options to lower the monthly payments. In some cases, it will be enough so that the borrower can meet the reduced payments and avoid foreclosure.

If a lender starts the foreclosure process, it is important to note that they are not required to let a homeowner know if they have decided to dismiss the foreclosure. If the borrower is unaware of the foreclosure dismissal, he or she will be left with a zombie title – the right to ownership and possession of a home that remains with a person who believes the home was lost to foreclosure. The homeowner may have moved out while unwittingly still holding the property’s title and still being liable for the costs and responsibilities of homeownership. Homeowners can protect themselves by making sure the foreclosure process is complete and that title legally transfers to another entity.

For Buyers

As with short sales, foreclosures can provide the opportunity for buyers to purchase a home at a discount. That said, buying a foreclosure – even at a steep discount – does come with drawbacks. These homes are generally sold “as is” with no guarantee of condition, and a buyer is often not able to inspect the property before making a bid. The result is that any money saved by purchasing a foreclosure could go toward making the home habitable and up to code.

As a real estate professional, you can help buyers:

• Find suitable properties 

• Determine if the price is a good value 

• Arrange inspections, when available 

• Navigate the paperwork 

The Short Sales and Foreclosure Resource (SFR®) Certification

Confidently and successfully navigating short sales and foreclosures requires expertise and experience. Many buyers and sellers turn to real estate professionals for assistance, but not all have adequate experience in dealing with these types of transactions. You can increase your marketability as a real estate professional by gaining the knowledge and skills needed to effectively and efficiently handle short sale and foreclosure transactions.

One way to show potential clients that you have the skills is through the Short Sales and Foreclosure Resource (SFR®) certification (offered by the National Association of REALTORS®). Holders of this certification have specialized training in short sales and foreclosures, qualifying sellers for short sales, negotiating with lenders and protecting buyers.

The Bottom Line

Financial hardships can take their toll on homeowners, yet provide good opportunities for buyers. Both buyers and sellers can benefit from your skills as a real estate professional experienced in dealing with short sales and foreclosures. With your expertise you can help clients navigate the process, value properties, list properties and negotiate with lenders.

Are you interested in investing in real estate? Esplanade Capital can help by providing you with an intelligent and dynamic approach on real estate investments. Visit this Facebook page for more information.

REPOST: Financing for Foreigners

This report from the New York Times reveals how foreigners looking into purchasing homes in New York are reacting to the low interest rates for financing. Read about it below: 


The foreigners streaming into New York to buy housing often pay in cash, but with interest rates low, more have been seeking to finance their purchases.

During the financial crisis, risk-wary lenders were less likely to extend financing to foreigners. The pool of lenders offering such financing is still limited, but their foreign loan business is up.

HSBC, the multinational bank based in London, reports that its volume of home loans extended to foreign borrowers in the United States has tripled since 2010. “It’s just the ability to get that money at such a low interest rate that is really driving all these applications,” said Joe D’Alessio, an HSBC mortgage consultant who works with high-net-worth clients.

With a presence in 81 countries and territories, HSBC has a big appetite for foreign customers and offers some of the most attractive mortgage terms. Financing is available for up to 70 percent of the purchase price, up to a maximum of $3 million.

Interest rates tend to be slightly higher on loans to foreigners, Mr. D’Alessio said, but the rate on a five-year adjustable mortgage is still in the mid-2 percent range.

HSBC’s terms are stiffer on apartments in buildings that are nonwarrantable (meaning they don’t meet Fannie Mae’s financing guidelines). In these cases, the bank may require 50 percent down.

“But that doesn’t seem to deter buyers,” said Mr. D’Alessio, who has worked with clients from Britain, Hong Kong, Turkey, Japan and Brazil. “They are usually coming and looking for all-cash deals. Then they find out they can borrow, and so they take advantage of it.”

Borrowing also gives foreigners more buying power. Some choose to “buy a larger property that might have a higher rate of return in the next few years,” he said.

Foreign interest in investing in New York is driven in part by the perception that property here is a bargain compared with that in other global cities, said Ace Watanasuparp, the president of DE Capital Mortgage, an affiliate of Wells Fargo.

A recent report by Knight Frank ranked New York the eighth-most-expensive city for residential property. Going by average price per square foot, New York has an edge over Monaco, Hong Kong, London, Geneva, Paris, Singapore and Moscow. The report notes that growth in high-quality housing in New York is also a draw.

Through Wells, DE Capital offers financing for foreign buyers, but the program is “not an aggressive one,” Mr. Watanasuparp said. Loan amounts are capped at $1 million, and borrowers must put at least 40 percent down.

First Choice Loan Services, a subsidiary of First Choice Bank, has seen an “uptick” in inquiries from foreign nationals in the last few months, according to Jason Auerbach, a divisional manager. The company will lend foreigners up to 65 percent of the purchase price. But such loans are carefully scrutinized by the bank before approval.

“We will also generally ask them to keep a small escrow account with us so we feel that we are definitely protected,” Mr. Auerbach said.

Other lenders that work with foreigners include the Bank of Internet and Apple Bank.

Still, currency remains king for many foreign buyers. Alen Moshkovich, a sales agent with Douglas Elliman Real Estate, says the vast majority of the foreigners he works with — most recently buyers from Brazil, Russia, China, Venezuela and Israel — continue to pay in cash.

For the superwealthy, any savings obtainable from financing is insignificant, Mr. Moshkovich said. More important, he said, “cash gives them more purchasing power, in terms of negotiating deals, and a quicker closing.”



Esplanade Capital is a real estate investment firm founded in 2004.  Find more links to news on the real estate industry on this Twitter page.

Pros and cons to seller-chosen lenders for apartment buyers

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Individuals interested in purchasing apartments in New York may encounter sellers who have already selected a mortgage lender for them. Sellers, it seems, are adopting a strategy quite similar to the tactic used by developers with a new offering. Many banks have taken a cautious stance when reviewing the types of buildings that they’re willing to finance so many developers started working with a preferred lender.

For apartment sellers, taking time to select and recommend their preferred lender will also allow them to avoid buyers who can’t find financing on their own. They’ve already made sure that the property they’re trying to sell is eligible for backing by Fannie Mae so the interested buyers they’ll end up conversing with are the ones who are also credit-worthy.

Image Source: alexarealty411.com

Buyers also save more time with the preferred lender setup. With arrangements for a lender already in place, the buyers can opt out of dealing with management companies themselves.

However, agreeing to this condition does not mean that they can’t apply for a mortgage with another lender. It just means that when their own plans fail, they already have a solid backup plan that they can go with once they’re pre-approved by the seller-chosen lender.

In spite of the lender’s pre-approval, there is still no guarantee that the mortgage application will easily be approved. Without any previous encounter with the lender, they may have no solid proof that their application will be swiftly processed, and they may end up paying additional fees due to the length of the processing time.

Image Source: guardian.co.uk

Esplanade Capital provides an intelligent and dynamic approach to real estate acquisition. For more information about its services, visit its official website.

Four reasons why you should invest in real estate

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Once you have your own home, putting aside money to pay for a second house that you can rent out for additional income is a good idea. After all, who wouldn’t want to have a passive income, right?

Here are four reasons why you should invest in real estate the second time around:

• Real estate appreciates in value. Normally, real estate value increases with inflation. If a real estate property increases in value, it means that it can be sold for more money than what you paid for it 10 years ago, making it a really good investment.

• Inflation increases rent revenue. When inflation increases, rents tend to increase as well. This means that your cash flow will increase without additional expense in maintaining and keeping the property. Also, when inflation is up, many people will be renting. This increases demand, which means higher rental prices, and more profit for you.

Image Source: news.com.au

• Real estate leveraging has a lower risk. Compared to leveraging in the stock market, leveraging in real estate is safer because the risk that real estate value will plummet is very low.

• Improving a real estate property increases equity. Improving the facilities and amenities of a real estate can greatly increase its value. For example, adding a swimming pool to a house can increase the value of the said house by eight percent.

However, investing in real estate and real estate funds still carries a risk. This is why talking to real estate investment experts, like Esplanade Capital and Prudential Real Estate Investors, is a good idea.

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Esplanade Capital has the goal of providing an intelligent, responsible, and dynamic approach to real estate acquisition. Visit its website for more information.

Adieu to the ‘Big Apple Crunch’: Bright real estate prospects in New York

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With the modest recovery of the real estate industry forecasted to take place in 2013, putting investing in properties is not shaping up to be bad. Always a gold mine in investments despite the recent housing downturn that shook up the country’s real estate prices, New York still presents a lucrative deal.

Image credit: grandemountainhome.blogspot.com

The housing bust may have also reached Manhattan, but the area’s attractive real estate properties continue to play their roles as investment magnets. Smart neighborhoods in New York simply flush out smart-money investments not only from hedge funds and investment trusts, but also from foreign investors and typical moneyed gentries. To say that real estate opportunities abound in New York despite the shaky economy is never an exaggerated point. Probably the locus of one of the top, if not the best, financial markets in the world, New York has never lost its economic appeal, even in the global stage. The Big Apple’s neighborhoods just continue to innovate and consistently showed robust growth in infrastructure in the past years. The High Line in Manhattan, for example, is currently attracting huge investments. Capital influx on real estate properties is shooting up on this side of town. From Midtown Manhattan where skyscraper constructions form a new skyline landscape to Queens and the Financial District, including the other residential hot spots like the Upper East Side, New York displays a picture of a thriving real estate hub.

With better prospects looming ahead in the real estate sector, there is no reason for doubt. Surely, barring any other future economic mishap, investors will find real value for their money in the Big Apple.

Image credit: telegraph.co.uk

Esplanade Capital provides an intelligent, responsible, and dynamic approach to real estate acquisition. For more related content about the real estate industry, visit www.esplanadecap.com.