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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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.

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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.

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Things that should be considered when choosing a rental property

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One of the most common things that many financially free individuals do is invest in rental property. However, as not all rental properties are the same, there are factors needed to be considered when choosing a property to invest in. Investopedia.com lists the following:

• Neighborhood. The type of neighborhood a rental property is located in can influence what kind of renters or tenants it can attract. Rental properties in the city, especially those near offices and commercial areas, usually attract professionals and seldom have vacancies. Areas near colleges or universities usually bring in students or professors, and are usually vacant during summer and holidays when students usually head home to spend time with their families.

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• Schools. The distance of a rental property to a particular school, as well as the reputation of that particular school, can also influence rental prices.

• Jobs. One of the many reasons why rent is more expensive in the city is because it is where most jobs and offices are located. And because there are more people who want to live near their workplace to lessen the stress of traveling back and forth, rental properties in those areas always attract more people and see higher rental prices.

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• Natural disasters. Rental properties in or near these areas should be scrutinized properly, as some of them may be water-damaged or have structural problems due to earthquakes. Also, it is important to remember that rental prices in these areas may be lower than those in less natural disaster–prone areas.

Based on this information, the most important factor in choosing a rental property is, as the saying goes, “location, location, location.”

More information on real estate investment can be found at Esplanade Capital’s website.