Blog Trooper : Real Estate

Maximising Property Investment for New Entrants

By Julie-Ann Amos

So you are new to buying investment property and you need to know about investment property loans. Borrowing money to invest in property can be a very tricky business and it is a good idea to research your field before committing yourself to a huge loan. One way of doing this is to get advice from the people who have already dealt with investment property loans and who are happy to advise new entrants into the property market.

That’s all very well, I hear you say, but I am looking at buying investment property and I have no idea where to look for advice. The only place that most people go for advice on investment property loans is their bank, who already have a vested interest in loaning the money. One way of getting independent advice on this subject is to check out a property investment forum. There are ones that really are worth a look. A lot of the people on there have been buying investment property for some time and are well aware of both the pitfalls and advantages surrounding investment property loans. The property investment forum, in fact, is worth a visit for anything to do with the property investment market. The way the market is at the moment there are people around who are dedicated to maximising the property investment market to attract new entrants.

This is a double edged sword, on the one hand it is great news for those who are well informed when it comes to buying investment property or dealing with investment property loans, but those who don’t do their homework stand to lose a great deal of money. This is in addition to all the heartache and hard work that is associated with investing in the property market.

Despite the sometimes problematic nature of the property market you are already a good way towards buying investment property. You’ve gone to the auctions, perhaps bid more than you should, and you are now beginning to wonder whether your finances will cover the mortgage and the work that needs ot be done. Somebody has suggested to you that you get yourself a bridging loan or investment property loan and you are not really sure what they are or how to go about it. Not to worry you will find plenty of useful advice at the property investment forum. These people have experience in buying investment property and more than a few of them have had bridging loans or property investment loans so it’s worth having a  look at what they have to say and taking their advice. You need to be aware of the different property types and their usage, although most beginners will start with a residential property. There is a lot of advice out there in the form of articles like this and on the property investment forum, do your research well. Try to understand the market and if you have a property investment loan get the best rate that you can. This way you stand more chance of success in the property investment market.

Julie-Ann Amos is a freelance writer with www.exquisitewriting.com. She recommends www.singingpig.co.uk as a comprehensive source of business information and their great property investment forum.

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http://EzineArticles.com/?Maximising-Property-Investment-for-New-Entrants&id=324659

Foreclosure Dangers!

By Bill Young

Anyone can lose their home to foreclosure, even you!

The loss of a job; divorce, illness or some other “trigger event” could start the ball rolling. According to the American Banker’s Association, most people have less than 3 month’s worth of cash in reserve.

You may not realize that foreclosure can be the first step in the destruction of your family’s financial future.

The foreclosure of your house can lead to the bank seizing anything you own; property, cars, stocks, your kid’s college savings! Even the IRS can get involved, perhaps garnishing your salary. Could you imagine that?

Get ready. There is a foreclosure Tsunami coming!

If you purchased your house or refinanced in the last 4 years, you are vulnerable. The National Association of Mortgage Banker’s (NAMB) records show that more mortgages go into foreclosure 3-5 years after issue than at any other time.

A recent report by the Federal Reserve Board showed that historically, interest rate rises of 3% or more, started a housing market slump. Their increase last month brought the total rate increase since last year to 3 percent.

Also, you may have been among the 40% of mortgagors that took an adjustable mortgage recently. Those “teaser” rates of 5% or less are set to explode your mortgage payments by 25-33% or higher when they adjust. In 2006, over $300 Billion dollars worth of mortgages will adjust with $1 Trillion more in 2007, according to Freddie Mac, the secondary mortgage lender.

The last piece of this looming disaster is the tiny amount of equity the average homeowner has in his property, less than 25%, according to NAMB.

What if you were laid off and fell behind on your bills 2-3 months, including the $180,000 mortgage on the house you bought for zero down a couple of years ago, worth $200,000 today?

How hard would you fight to keep your home with prices falling and similar properties renting for less than your ballooning mortgage payment?

You might be very tempted to send the keys to the bank and walk away.

DON'T!

You must not let the bank take your house under any circumstances!

Banks generally send out Notices of Default or foreclosure notices when you miss 3 payments. This starts the countdown to the sale of your home on the courthouse steps.

In some states, this is a matter of weeks, in others it may take months. In the interim, you watch helplessly as the unpaid mortgage payments, bank’s fees, late fees, legal fees, inspection fees, etc. blow up your indebtedness like a hot air balloon.

By the time of the auction, the balance of your mortgage could have expanded by $20-$30,000 or more. The softening housing market and the flood of foreclosures means your home would probably sell at a discount at the auction.

If the proceeds of the sale do not cover the bloated total you owe the bank, you are in trouble.

In most states, the bank can get a “deficiency judgment” against you for the balance. They can seize anything you own, as we noted before.

If the bank cannot recoup their deficiency from you, or your state will not allow a deficiency judgment, they will write the deficiency off on their taxes.

The IRS now comes into the picture. They consider money you owed and did not pay, your mortgage deficiency; to be income to you!

They will add it to your annual income and expect you to pay taxes on the total amount, in cash with your next return.

If you cannot pay, the IRS can come after everything you own, including your paycheck.

Don’t let your family’s financial future be destroyed. If you are facing foreclosure, seek professional help as quickly as possible.

Copyright 2005 Bill Young. Bill is a former bank loan officer. He is currently a personal financial consultant and offers assistance to those facing foreclosure. For more information, visit his website at http://SaveMyHomeLLC.com

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http://EzineArticles.com/?Foreclosure-Dangers!&id=100489

Can a Mortgage Actually Save Your Life

By Robert Ashby

Almost everyone has savings in the bank, right?  Well, the data from the Bureau of Economic Analysis (BEA) shows that despite our personal income increasing, our personal savings has decreased .2 percent during the months of October and November of 2005.  That was even before the Christmas season.  Recent data shows that for sixteen straight months, there has been a negative savings number.

What does this data mean?  It means that on average, the typical American family is spending more than it earns.  That amounts to increased use of credit cards or reducing our savings accounts.  Ultimately, we are heading down the path of destruction.

Did you know that financial planners and those books you read on personal financial planning, including “Personal Finance for Dummies” by Eric Tyson, states that you should have three to six months of living expenses tucked away as an emergency fund?

Obviously, most Americans do not have this emergency fund.  Most Americans do have a lot of equity in their homes due to the appreciation of their homes over the last few years.  So there is a simple solution to many Americans lack of establishing an emergency fund.

So how does a mortgage save your life?  Simply, it allows you to have an emergency fund available and ready for you.  This will allow you to survive during an emergency situation.  As in the case of unemployment, if you do not have the funds, you may not be able to pay your mortgage monthly and will end up in foreclosure, likely resulting in complete loss of all equity, no matter how much you had.  It may even give you the money needed to pay for medical procedures that are required to save your life.  It will definitely relieve stress in your life, keeping you healthier overall, just by knowing you have money available to pay the bills if necessary.

Also, in a disaster such as a hurricane, which would you rather have, $100,000 in equity in your home or $100,000 in cash or other investments?  You can ask the mayor of Port Arthur, Texas that question.  His statement after his house burned down in the aftermath of Hurricane Rita was, “The sad thing is, we just paid off our house!”  Remember, the money you keep in liquid investments can pay your bills for months, even years.

The solution is to take out a mortgage in some form now, before the emergency happens.  One reason is if the emergency keeps you from working, you will not qualify for the new loan at the time you need it.  Also, if the house is damaged, you are not likely to obtain a mortgage until it is repaired.  If you do not have an emergency fund, and you have some equity in your home, you need to look into your mortgage options now, before it is too late.

Robert D. Ashby is President of Solid Rock Mortgage, a licensed Mortgage Brokerage Business in the state of Florida.  He has been in the financial services business since 1998 and obtained his Series 6 and 63 Securities Licenses as well as Life and Health Insurance Licenses in the state of Virginia.  He moved to Florida in 2002 and decided to focus solely on mortgages, obtaining his Mortgage Broker License for Florida in 2003 and then opening Solid Rock Mortgage in 2004.  He has become Florida’s first Certified Mortgage Planning Specialist and Florida’s Debt and Equity Management Expert.

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http://EzineArticles.com/?Can-a-Mortgage-Actually-Save-Your-Life&id=288171

Flipping Properties in a Bad Real Estate Market

By Bill Young

A "bad market" in this instance means a real estate market where there is little to no appreciation, the market is clogged with unsold houses, depressing sales and foreclosures are up; torpedoing home values.

So clearly, the traditional, "buy, fix up and flip" or buy and sell to a rehabber is not going to work in this environment. In fact, it is those very flippers who were late to the party or just plain greedy and are now bailing out and dumping their properties, that are helping to drive down home sales and prices.

So what is a real estate investor to do to make some quick money, especially if he or she is new or has no resources, which describes many flippers?

The solution to this dilemma lies in understanding the needs of property owners who have to sell in the reality of today's market.

People looking to sell in this environment are going to have problems; huge problems if they are forced to sell at this time.

The houses will sit on the market for months with no offers or very low offers. The homes value will slowly erode as the homeowner waits for Godot.

In fact, many people are or will be trapped in their homes; perhaps unable to afford to stay, unable to sell; especially if they have little or no equity in their homes.

In order to get out of their homes, they would have to bring cash to the closing and "buy" their way out of the house. This is impractical for most people, especially if their need to sell is financial as many are.

Rising mortgage payments, the result of financially incongruous mortgages, so prevalent during the recently departed "Boom;" called for "Resets" a few years after origination at 50-100% increases in payments.

Now, many of these families are unable to afford to keep their homes.

Job losses, divorce, illness and death are the other primary motivators that force people to sell their homes as soon as possible, regardless of market conditions.

Most people who have bought their homes or refinanced to "consolidate their debts" in recent years have very little equity in their homes. This means they can't lower their prices to meet the soft market or they will need to bring money to the closing to make up the deficit between their selling price and the fees and expenses of the sale.

These people need help, desperately.

If they cannot get out from under their homes, they face the ruination of their finances for decades to come. Contrary to popular belief, they cannot just "send the keys to the bank" and walk away, free of their troubled property.

If the bank forecloses and sells the property for less than they were owed, the homeowner would be liable for the difference and/or be subject to income tax on the deficient amount! Don't ask. It's just IRS rules.

The only way for these unfortunate homeowners to get out of the frying pan, is to get into the fire! If the homeowner filed bankruptcy, it would protect him from the deficiency judgment and the income taxes due on it.

Herein lies the opportunity to make fast money!

Find these people who are trapped in their homes and help them get out of their nightmare. Refer them to experienced real estate investors who can help them get rid of their property.

The investor will either pay you a small fee for the lead, or pay you a larger fee, say a percentage of the profits, when he or she disposes of the property.

The key is to be flexible. The real estate market changes and you must change tactics if you are to make money in the new environment.

Don't be like the rat who repeatedly went back to the box his cheese used to be stored in, even though it was no longer there.

Duck hunting season is over, Bunky; so go look for some turkeys!

Copyright 2006 Bill Young. Bill is a Financial Personal Trainer. He trains groups and individuals on how to Quit the Rat Race and find financial independence in a few short years. He has 20+ years experience as a real estate investor and personal financial consultant. He offers a free, 1 year course in real estate investing, MotivatedSellersOnline.com as well as free weekly lessons on how to solve your money problems: HowtoSolveYourMoneyProblems.Com.

Article Source: http://EzineArticles.com/?expert=Bill_Young
http://EzineArticles.com/?Flipping-Properties-in-a-Bad-Real-Estate-Market&id=343438

7 Steps to Writing a Good "For Sale By Owner" Ad

By Fred Turner

1. Decide how your home differs from other homes in your area and focus on those differences.

2.  Pick out 5 - 7 major highlights of your home and/or your neighborhood.

3. Pick out the 1 or 2 most important features of your home and put them in your ad "caption." (Remember, if you don't capture the buyer's attention with a good caption, they may not read your ad).

4. Put the biggest selling features first in the ad.

5. Don't be too wordy. Tell buyers just enough to capture their interest, but not everything about your home. If you tell everything about your home, buyers may not have a reason to call you or see your home.

6. Try to use good adjectives that describe your home's features well.

Don't use words that don't say much. For example, people often say "great home" or "nice area." Explain what make your home or your area so "nice."

7. Make sure you don't leave our the pertinent details and contact information in your ad such as: town, price, phone#, # of bedrooms, # of bathrooms and if your home has a basement.

Here is a good example of a good internet ad for the internet or a flyer:

GENEVA, IL                                                 $429,000

PHOTOS

OPEN AND AIRY DESIGN ON 1.2 NATURAL ACRES

4 Bedrooms       2.5 Bathrooms     2 Car Garage

Located in a prestigious desirable neighborhood with-in
walking distance to parks & school, this newer home features
a dramatic 2-story foyer with Brazilian cherry hardwood floors
and staircase. Family room with vaulted ceiling, skylights,
stone fireplace and windows galore. Eat-in island kitchen with

Corian counter tops, cherry cabinets, double oven, large pantry
and ceramic tile flooring. Formal dining room with tray ceiling,
living room with vaulted ceiling and bay window. Master bedroom
with cathedral ceiling,  his and her walk-in closets and master bath
with double vanity, Jacuzzi tub, separate shower, vaulted ceiling and
ceramic tile flooring. Full finished basement with rec. room, office/
5th bedroom, laundry room and workshop/utility room. You must see
this home to appreciate all the amenities!

View at www.SaveBigByOwner.com # XXXX

Call 630-587-6500 for an appointment.

Here is a good example of a good newspaper ad:

GENEVA, IL  $429,000  Open & airy design
on 1.2 natural acres 4 BR 2.5 BA full fin.
basement. www.SaveBigByOwner.com # xxxxx.

Call 630-587-6500

Try to include a website address to your home in your newspaper ad.
This will allow you to place a smaller ad and still give buyers more information to access.

By Fred Turner

Publisher of Homes For Sale By Owner Magazine

St. Charles, IL

Phone: 630-587-6500

Email: Fred@savebigbyowner.com

http://www.SaveBigByOwner.com

Permission to use this article is granted as long as the author information and website links are included.

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http://EzineArticles.com/?7-Steps-to-Writing-a-Good-For-Sale-By-Owner-Ad&id=291000

Life of an Escrow

By Nef Cortez

Escrow is one of the last stages in the purchase or sale of a real property.  When someone says that they are "in escrow", it means that they have either accepted an offer on the sale of their property, or their offer to purchase has been accepted.  The offer to purchase agreement is the instrument that is first signed by all parties before they “go to escrow”.  Although an escrow is not always required by law, it is an indispensable process by which an independent, neutral  third party handles the legal paperwork of a real estate sale.

The life of a typical escrow in a typical transaction follows these basic steps:

Escrow instructions are prepared along with other pertinent documents, and signatures are obtained.

Title search is ordered, a preliminary title report is received and sent out for review and approval by all parties. Demands for payoff are ordered on existing money liens, and clarification requested on tax liens and other liens.  While the escrow officer is processing the file, the lender for the buyer is also processing the loan application. If the buyer is assuming the existing loan, the escrow officer requests a beneficiary statement, forwards to buyer for review and approval, and requests loan documents for transfer or for the new loan.

Once documents are received, the file is “figured” and reviewed to determine that all conditions have been met, and all documents have been properly prepared.  Funds are obtained from the buyer, signatures on loan documents are obtained, loan funds are requested and received, and recording is ordered from title company.

All escrow instructions are confidential and disclosure can be authorized by the buyer or seller.

Keep in mind that there are some differences in how the escrow process is handled on the east coast as compared  to the west.  In addition, there are many other occurrences in the life of an escrow, and each one is unique because it involves totally unique circumstances and individuals in the real property transaction.

For any assistance in purchasing or selling, please feel free to contact me at (909) 348-0471 ext. 131 or visit my website at http://www.nefcortez.com for foreclosure lists.

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http://EzineArticles.com/?Life-of-an-Escrow&id=49080

Mexican Living: House Buying

By Douglas Bower

The Mexican Adventures of Mavis and Clovis:

"Clovis, get your butt over here right now and look at this here house!"

"Mavis, it's a right purdy house but we don't need no house right now."

"But, Clovis, it's for sale and at a right nice price. We might be able to afford it once Mama dies and leaves us her money."

"Mavis, we'ins are in this here country for only one week."

"Mexico is a beautiful country, Clovis, and I wants to come back real soon and I don't wants to have to pay for another hotel!"

"Ok, Mavis. Let's buy us a house."

This isn't as farfetched as you might think. Impulse buying in Mexico happens—a lot—and results in many unhappy people with a house to unload once their infatuation with Mexico wears off.

My wife and I have lived in Mexico for two years and are still renting. We are perfectly content with renting. We may rent for the rest of our lives. I do not know. What we do know is that many expatriate wannebees come to Mexico, develop an infatuation, buy real estate impulsively, and end up very unhappy.

What we advise folks to do is rent first and buy later. This only makes sense. If you rent first you can try out all the neighborhoods in the city you have chosen to see if you really like it. If not, you can move on to another neighborhood or even another town. Do not get tied down right off the bat. You will have enough cultural adjustments to make without the headache of a money-pit (houses are money-pits no matter the culture).

Another reason not to buy first is the language barrier. Unless you are good, very, very good, in Spanish how will you know if you are being ripped off or not? I have been in Mexico for two years; I live in a town that has virtually no English speakers. This has allowed me to develop a level of fluency. I would no more trust my Spanish in house buying than I would trust the man in the moon. I may someday but not yet. Get the picture?

Having said all that, it is possible for a foreigner to buy a house in Mexico. However, be forewarned, it is not the same as in America. It is not the same at all.

For example, there are no disclosure laws here in Mexico. It is "buyer beware." In addition, there are "restricted zones," along the coast, where foreigners are prohibited from buying or building a house. You have to know this stuff.

I am providing you a list of web sites that you absolutely need to read and virtually memorize. Know what you are getting into before you come here like Clovis and Mavis and decide, on a lark, to buy a house. You will be glad you did!

Buying Property in Mexico:

http://www.solutionsabroad.com/a_buyingland.asp

http://www.mexconnect.com/mex_/buymexre.html

http://www.mexconnect.com/MEX/austin/real_estate.html

http://www.mexconnect.com/mex_/conwaymortgages.html

http://www.mexconnect.com/mex_/travel/jking/jkpropertyappraisals.html

http://www.mexconnect.com/mex_/travel/rrwalters/rrwsamsayshouse.html

A few of these maybe helpful:

Real Estate Agents:

http://www.mexconnect.com/mex_/travel/rrwalters/rrwsamsayshouse.html

http://www.mexconnect.com/amex/fenixindex.html

http://www.sanmiguelguide.com/houses_for_sale.htm

http://www.abcrealty.com/

http://209.15.138.224/inmomex/b_guanajato1.htm

http://www.mazinfo.com/mazhomes/buying%20in%20Mexico.htm

(I cannot endorse any of these real estate agencies since I am a renter and not a buyer. I provide them as a resource only.)

The point is that an American can buy real estate in Mexico but you need to do your homework first! I cannot stress that enough. And, if you are not fluent in Spanish, then you will eventually have to trust someone you do not really know to interpret for you and manage the affairs of the purchase and any remodeling.

It is a scary enough event to buy a house in America where you speak the language. Try to imagine buying a house in Mexico where you do not speak Spanish.

Good luck!

Doug Bower is a freelance writer and book author. His most recent writing credits include The Atlanta Journal-Constitution, The Houston Chronicle, and The Philadelphia Inquirer, and Transitions Abroad. He lives with his wife in Guanajuato, Mexico.

His new book, Mexican Living: Blogging it from a Third World Country can be seen at http://www.lulu.com/content/126241

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http://EzineArticles.com/?Mexican-Living:-House-Buying&id=34015

Investing In Commercial Property

By Don Suter

Why commercial property?

Compared to residential property investments, commercial property offers some key advantages:

Long-term secure cashflow -- Commercial lets normally have long lease contracts, with periods of 10 years and more not being uncommon. In addition to this, commercial property tenants are less likely to default on payments and even if the tenant goes into liquidation, the liquidator may continue paying the rent in order to stop the lease being forfeited.

Maintenance -- Commercial tenants are generally liable for the maintenance and upkeep of the property, contrasting with residential leasing, where the onus tends to be on the landlord.

Income yield -- Commercial property tends to deliver a relatively high income yield throughout the rental period. In comparison residential property investors rely on the capital value of the house increasing to generate a good return. This is fine during periods of rising property prices, but less beneficial during property slumps.

Commercial property investments have also performed well in terms of growth and stability, compared to equities and gilts over recent years.

Commercial property for the personal investor

Few personal investors will have sufficient funds to invest directly in a commercial property, however there are opportunities for indirect investment.

For the small investor, only looking to invest a couple of thousand pounds, the choices are limited to a small number of unit trusts and life funds that invest in property or buying shares in property companies, such as British Land and Slough Estates (though these are often more linked to the equities market, rather than property market performance).

Larger investors have a greater range of options available, with a number of products offering a chance to invest in geared property investments through a limited partnership structure. Often these products will require a minimum investment in the region of £25,000 to £50,000, which is invested in a single property.

A few investors will be able to buy a complete property directly, however the cost of the property is likely to be 10 or 20 times the size of a residential buy-to-let, making direct investment prohibitive to most.

Commercial property risks

In line with all investments, commercial property investment comes with its own risks:

Poor liquidity -- Compared to equities and bonds, property has poor liquidity, both in the time spent finding a buyer and making the transaction. This can be further emphasised in poor market conditions when the ability to find a buyer offering the right price will become very difficult.

Poor diversification -- The more diverse an investment portfolio, the less susceptible it will be to tough market conditions. Investing in a single property can be a risky challenge.

Market performance -- The property market is prone to cycles, as yields grow and decline depending on the level of supply and demand for commercial property. Current rental rates could decline in the future.

Sector performance -- A decline in the sector that your property services could affect your investment. For example a period of poor sales performance and market withdrawal in the retail sector could lead to the demand for small store, supermarket, department store and warehouse property to decline sharply.

What to look for when buying commercial property

Location -- the location of the property is very important and will be a major factor in determining the value of property and rental income. Easy access to transport networks is an obvious plus factor for most tenants, but consideration should also be given to future developments in the area. For example, the development of a new supermarket, might depreciate the value of small shops.

Type of building -- The requirements of tenants can change over time, with implications on the type of building they need. For example the move to open plan office space, could make older buildings with their rigid enclosed spaces redundant. Many companies also look for facilities like air conditioning and the ability to connect computer terminals through under floor wiring.

Tenant quality -- Properties whose tenants are reliable, present a low credit risk and hold a long-term lease will hold a premium value.

Market factors -- Try to identify which sectors and sub-sectors of the market will perform well in the future. The same can be said for geographic regions, which might receive future government or multi-national investment.

Don Suter is Managing Editor of the UK Property Portal (http://www.ukpropertyportal.co.uk), an online directory and magazine for UK property sales, rental, surveyors, mortgages, conveyancing, property insurance, removals, news, investment and development

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http://EzineArticles.com/?Investing-In-Commercial-Property&id=11021

Real Estate Property Management: Is There a Tenant in the House

By Julie-Ann Amos

You’re about to take the plunge and buy your first investment property. Should you buy something that you can live in, something you can develop and sell on, or should you buy a designated rental property? If you are going to choose the last option then you need to do your homework first. There are different types of tenancies and every one of them should be handled differently. If you do decide to opt for rental property investment then check out a property investment forum to find out more. It may be more complicated than you think. So before you make your final bid, or put your money on the table, you should ask where there is a tenant in the house.

Some properties that are sold at auction already have sitting tenants. Real estate property management is not for the beginner. To begin with you would need a substantial sum of money behind you if you have set your mind on rental property investment. Then, if you still think you are up for real estate property management you need to do your homework. The property investment forum will give you some insight on what you need to know. For a start rental property investment is not the same as other investments, real estate property management can be a big headache for the uninitiated. The market changes from day to day so what works for one person at a certain point may not work for you at another. You should make sure that your finances are such that they can support you through a period when property market prices go down rather than up.

So you take the plunge and you’re now in the business of real estate property management. You need to make sure that you’ve done your cash flow forecasts because you have to have sufficient funds for property maintenance. Landlords who don’t carry out proper maintenance not only upset their tenants, they could fall foul of the law and find themselves in a worse financial position. Rental property investment may be a good proposition if the place is empty when you buy it because sitting tenants may have a regulated tenancy which means that you could find yourself getting less than the market rental rate. This where the property investment forum can be really helpful because it gives a breakdown of the different types of tenancies.

Sometimes people are anxious to make money in property development but are not fully prepared for all the hard work that needs doing or the problems they may encounter. You shouldn’t be too quick to give up the day job. As this article has already pointed out the property investment market is not static and unless you have some money to fall back on you could find yourself in a lot of trouble. When it comes to rental property, as contributors to the property investment forum point out, if the property has sitting tenants then you will not make the money you might have anticipated. You may see tenants as your bread and butter but sometimes they are more of an expense than an investment.

Julie-Ann Amos is a freelance writer with www.exquisitewriting.com. She recommends www.singingpig.co.uk as a comprehensive source of business information and their comprehensive property investment forum.

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http://EzineArticles.com/?Real-Estate-Property-Management:-Is-There-a-Tenant-in-the-House&id=324660

Real Estate Bankruptcy

By Sajjad Ahmad

Although real estate bankruptcy cases no longer dominate the bankruptcy courts' dockets as they did in the early nineties, but they continue to be filed with great frequency in UK. At its essence, the real estate bankruptcy is a two party dispute between mortgagee and mortgagor. Real estate bankruptcy cases are typically filed after a foreclosure sale has been set. Upon learning of the bankruptcy filing, a secured creditor has a number of available options, all or some of which should be exercised, depending on the facts of the case, to maximize loan recovery.

A lender can ask the court to dismiss the bankruptcy case as a "bad faith" filing. A creditor asserting bad faith must prove the subjective bad faith of the debtor and that any reorganization by the debtor is objectively futile. For subjective bad faith, the court will examine whether the debtor invoked the protections of the Bankruptcy Code without either the intention or ability to reorganize its financial affairs. To determine objective futility, the court will examine whether there is indeed a "going concern" to preserve and whether there is any realistic chance for the debtor to reorganize. Most courts require a very strong showing to dismiss a case for bad faith at the outset of a case.

Under the Bankruptcy Code a motion for relief from stay will also be granted where the secured creditor can prove that there is no equity in the real property over and above the secured claims, and that the property is not necessary to the debtor's effective reorganization. This basis for relief is typically alleged as an alternative to bad faith, in the same motion. Almost all controversies surround the value of the real property, making the expert report and testimony of a licensed real estate appraiser essential to the successful prosecution of a motion for relief from the automatic stay on these grounds. The same factors relied upon to support objective futility in the bad faith filing analysis are used to establish that the property is not necessary to an effective reorganization.

An alternate ground for relief from the automatic stay is lack of adequate protection of the secured creditor's interest in the property. For example, if the real property is deteriorating in value and the lender is not receiving post-petition payments, the lender's security interest in the property is not adequately protected.

A creditor holding a properly perfected assignment of rents has a lien on "cash collateral" under the Bankruptcy Code. If the assignment of rents was properly perfected pre-petition, it usually attaches to the post-petition rents generated by the debtor's real property.

A debtor may not use cash collateral without either a court order or the consent of the secured creditor. While it is common in nonsingle asset realty cases for a debtor to negotiate a cash collateral agreement with the secured creditor before filing for bankruptcy, in single asset real estate cases, which are typically filed at the eleventh hour for the express purpose of stopping a foreclosure, such negotiations are virtually nonexistent.

Unless, within the first day or two of the case, the debtor requests a cash collateral agreement with the lender, or files a motion with the court to authorize the debtor's use of post-petition rents, a lender should immediately advise the debtor in writing that it may not use cash collateral absent an agreement. If an agreement is not reached, the debtor will usually petition the court for authorization on an emergency basis. The lender can also petition the court to deny authorization on the basis that the debtor lacks the ability to adequately protect its interests in the rents. In the final analysis, most secured creditors share the same objective when faced with a real estate case: to extract their collateral, including rents, from the bankruptcy as quickly and inexpensively as possible.

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