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The latest headlines from the national media have caused a little confusion in the marketplace. Of course, the headline doesn’t tell the whole story (see this one for 2017ytdjanpendingsnvaexample: And keep in mind…


In the DC market, the pendings are NOT down. In fact, year to date in Northern Virginia – pending sales are up for the year +15.8%) , for January (+18.3%) and MTD for February (+14%), according to data from the local multiple listing service.
It’s a strong market in N. Virginia even though the inventory has shrunk since last year, sellers are finding multiple offers in some cases, and buyers have continued enjoying affordable interest rates.


(YAWN!) The difference between asset growth and cash flow

This isn’t the most exciting blog entry – but to my investor friends and agent followers – READ ON FOR WISDOM!

When potential investors tell me they want to purchase real estate, I ask them – tell me what you envision your end to be. Are you looking for a cash flow monthly or are you looking for asset growth?

These two objectives provide different approaches in the beginning of the buying process. For the investor seeking a cash flow, s/he usually has lots of cash and looking for somewhere to park the money and pull down an income each month. That’s different than the investor looking for the asset to grow who may be wanting to leverage their funds with a mortgage so they can count on two things – OPM (other people’s money) paying off the mortgage, and the market growing their asset, thus growing their equity.

Asset growth is how an investor gains a return on investment (ROI) in the double digit percentages consistently. For instance, let’s say you  purchase an investment property with 20% down – say $40,000 on a $200,000 purchase. If that condo grows in value by 5% per year (i.e., $10,000), the investor’s cash growth is actually at 25% ($10,000/$40,000).

Meanwhile, the tenant’s rent is making the mortgage payment each month, thus paying down the mortgage for the investor so  the equity is growing year after year.

For the cash buyer, however, it’s more about – what can s/he take out of the property each month for cash. If the house is purchased for the same amount – and the rent is $1,500 per month, with a $300 condo fee and $150 property tax, then the net cash flow for the year is $12,480 per year. On the initial purchase of $200,000, the cash return is about 6% per year – in cash. It’s like you own a stock paying dividends – on a monthly basis.

When you’re looking to invest – what is your end game? Until next time…

Anthony Carr is the Director of Training for Keller Williams Realty Falls Church, VA. KWFC is in the Top 10 real estate offices in Northern Virginia according in both agent count and sales volume. His real estate career is diverse and he’s a sought out speaker, author, blogger and problem solver. Mr. Carr is the author of “Real Estate Investing Made Simple: A commonsense approach to building wealth”; and he was a contributing writer to “The Best Real Estate Advice I Ever Received,” published by the Donald Trump organization. He holds associate brokers licenses in Virginia, Maryland and Washington DC.


Here’s my take on the 2016 Presidential Election. Nothing.

Neither candidate would have250433, has had, would have had or ever will have (just trying to get all the tenses in there) an effect on my business plan to help as many investors, purchasers and sellers with their real estate needs as a real estate professional.

Nevertheless- Read the rest of this entry »

How would you like to make money paying someone else’s real estate taxes? There’s a little-known investment opportunity available in 31 states where investors can put up as little as a couple hundred dollars to get in on the action.

You’re probably thinking: “I pay enough taxes as it is, why would I want to pay someone else’s taxes, too?”

Well, how does an annual interest return from 18 to 50 percent sound?

These returns are available through tax lien and tax deed certificates sold throughout the country on a county basis. Tax liens are what the local government places on properties where real estate taxes are late. Figuring that they won’t get that money right away, the local government auctions off the lien to investors once or twice a year. These are called “tax sales.”

If owner Smith owes $2,000 in real estate taxes and hasn’t paid it, the county will place a lien on his property and then auction that lien to an investor. The investor gets the lien for $2,000 and the county gets the money it needs right away to pay its ongoing expenses. Meanwhile, the treasury or finance department then starts going after the money from the delinquent tax payer.

They send nasty little notes, warning them of further action and placing stiff penalties and interest charges on the tax. These interest charges can be as high as 50 percent — and that’s how the local government can then turn around and pay these investors 16, 18, 20 percent and more.

The place to find these nifty investments is at the local treasury or finance department. There are also web sites where the information has been compiled. You could end up paying as much as $39 per state for the information or, as on one site I visited, $49 for the whole country (encompassing 3,300 counties). is a good place to start.

Since more than likely you’re going to go after local liens to start with, save yourself the money and just contact your local treasury or finance department. If you don’t know where that is, then just call the main information number for your county or city and ask for the tax department — they can help you from there. An easy search online would be: “<local county> tax liens”.

Basically, these are short-term investment opportunities. After the lien has been auctioned off, the county lets the owner know that they may lose their property to the tax lien certificate holder if they don’t pay the taxes — and now taxes, interest and penalties. This gives the property owner another opportunity to redeem the tax bill and keep his/her property. If they don’t, then the tax lien certificate holder can foreclose on the property.

In some areas, instead of a foreclosure, the government actually sells you a tax deed to the property — meaning if the taxpayer doesn’t pay the taxes, you become owner of the property straight out.

There are the amazing stories about people hitting it rich in these tax sales. There’s one floating around about a gentlemen in Tulsa, Oklahoma who paid $17 at a tax sale for a property he then sold for $4,400 and another where the property was bought for $298 in back-taxes and sold for $8,450.

It’s also true that each year people are hit by lightning. There are risks and hazards with tax certificates. The property might be trashed, you could lose your investment by not following procedures, title may be weak, and — let’s face it — former owners may be both irate and well armed.

Because the liens are auctioned, a hot property might only be available with unattractive terms. In some jurisdictions, you may “win” the property but then be responsible for all unpaid taxes and mortgages. If you have to foreclose, that may result in another round of costs. In some jurisdictions, the owner may have an “equity of redemption” right that allows him or her to re-acquire the property after a foreclosure action.

Be aware of these and other risks and act accordingly. Investors must carry out due diligence to limit risk. This means researching the properties (which are usually publicized in a local newspaper or on the tax department’s web site a few weeks before the sale), understanding your potential obligations, knowing what the rules are, speaking with local brokers and attorneys, and realizing that while you may do well in the best circumstances, the “best circumstances” may be rare.

Most impacted property owners (about 95 to 98 percent) actually pay the taxes. So most folks who invest in these certificates are doing so for the interest paid on their money.

For those interested, research the process, visit an auction first to watch how it’s done, know the rules, and then decide if this is an investment for you.

Finally — it’s not just me. Forbes magazine is letting its readers know that the DC market is on the upswing. Take a look at the link above for the Top 10 as rated by

I thought you would like to know this information about how the Stimulus Package will affect housing in our area. Frankly, it will tighten up an already tightening market in Northern Virginia. We have been experiencing low inventory and rising prices for the last 6 months west of the Potomac and see no end in sight. Sales are up more than 25% in Fairfax County (and nearly 100% in Prince William County) compared to a year ago. Nevertheless – the market is hot and the incentives below may create an even hotter sellers market as we move forward in 2009.

  • First-time buyers are back in the game (with 0% down financing and payments less than rent);
  • There’s now an $8,000 tax credit (with no payment back required!) for first timers;
  • Parents are helping kids purchase their first home;
  • Investors are picking up properties that create cash flow…

The challenge for many markets across the country where inventory is already starting to shrink and pending sales sour is whether the market will overheat once again.

Meanwhile, below you can see an overview of how the stimulus package will help homeowners stay in their homes

From the Weichert Insights newsletter:

“As you may know, President Obama presented a new plan this week to prevent foreclosures and stabilize the housing market. The Homeowner Affordability and Stability Plan will be funded with money from the $700 billion financial industry bailout passed by Congress in the fall.

“The plan was designed to help up to 9 million families avoid foreclosure by restructuring or refinancing their mortgages. While it may seem that the main benefactors of the initiative are homeowners at risk of defaulting on their mortgage, we will all benefit. Defaults and foreclosures result in lower home values, lost jobs and economic troubles for local communities.

“The main components of the Homeowner Affordability and Stability Plan are to:

Provide incentives for mortgage lenders and servicers to modify loans in a way that would reduce monthly mortgage payments to sustainable levels and aid up to 4 million homeowners struggling to make their payments.

Allow Fannie Mae and Freddie Mac to refinance mortgages they own or guarantee, even when more is owed on the home than what it is worth. By removing restrictions on the government-sponsored enterprises, monthly payments could become more affordable for up to 5 million homeowners.

Keep mortgage rates low for all buyers by doubling support for Fannie Mae and Freddie Mac, which were taken over by the government last year.

Said National Association of Realtors President Charles McMillan, “The administration’s proposed plan, combined with provisions like the $8,000 first-time buyer tax credit in the just-enacted American Recovery and Reinvestment Act, will help minimize foreclosures, shrink housing inventory, stabilize home values and move the country closer to an economic recovery.”

For a printable version of this message, click here.

I get this question all the time: have we hit the bottom yet? Market by market, that’s what’s happening across the country. I’ve been tracking “hot” markets for ( for the last year and I’m seeing very healthy markets across the country in state after state.

The strongest market in the country is nearly any county in Texas. As far as comeback markets, where ever the foreclosures hit the hardest is where you’ll see the biggest come back. Prince William County, Virginia (outside Washington, D.C.), many markets in the state of Florida, Los Angeles, Las Vegas, all are in the middle of a recovery.

Now, recovery doesn’t immediately mean increasing prices. So when I refer to a “recovering” market, I’m looking more at pending sales; list to sold price; the level and direction of seller subsidies; and sustainability of the market, such as job growth and the housing inventory.

When inventory begins to drop, with pending sales moving upward – that’s the beginning stages of a recovering market. That’s what’s happening all over Northern Virginia, for instance, in the shadow of the White House. In Fairfax County over the last month, pending sales have jumped above last December’s levels by more than 50%; sales are up in the 30% range and inventory has dropped by about 35%. This has been happening for most of the year (2008).

Does the mainline media pick up on it? Of course, not, because they think a recovering market means one thing — prices. Unfortunately, by the time you put in a contract on a home when prices are moving up – your chance for a great deal have already disappeared. Most likely, you’ll pay at or above asking price and must bring your own money to the table without the benefit of seller closing costs to help you keep your own cash for redecorating, fix ups, etc.

I recently competed on a foreclosure property in Springfield, Virginia against four other investors. My buyer won, only because we came in closer to asking price more than anyone else and asked for no closing costs at all. We got a good deal, as the houses are selling for more than $100,000 more than what we pulled in on the property — of course, it needs fixing up.

So as you look around for that “great deal,” look at the underlying numbers that reveal the bottom of the market – not the sales price which tells you nothing more than the fact that the bottom’s already hit.

Periodically I hear from readers who want to make $1 million in real estate — quickly and with no money down. Usually they want to know more about real estate foreclosures — how to buy them and how to profit from such homes. I’ve participated in a couple of these deals, and I’m now working on my second million — I gave up on the first.

Foreclosure properties can be a good place to invest for exponential growth (or loss). There are some deals out there for little or no money down, but potential investors should take precautions because foreclosed properties can involve significant risks.

There are various ways to invest in foreclosure properties. The first and probably most popular is to purchase a property, fix it up and then rent it out, hopefully creating a positive monthly cash flow. The investor then becomes a landlord, with all the responsibility of an investment property owner.

The second way to invest is to seek out foreclosures or “handyman” specials, buy them, invest more money to fix them up and then sell them, taking — hopefully — a profit once the house is sold.

A third approach is to purchase a foreclosure that is underpriced and selling it immediately at a higher value.

One way to sell homes for a higher value is to take back a mortgage. For example, let’s say a house worth $100,000 is sold at a foreclosure to an investor for $50,000. The investor may put down 10 percent and assume or create a new mortgage for $45,000. The investor then advertises the property at a discount, say $80,000, offering 100-percent seller financing (remember, we’re figuring that like houses are worth $100,000).

The owner hopes to create a sense of urgency by underpricing the house and pulling in buyers.
If successful, the investor takes a promissory note from the new purchaser for $80,000. He has now created a $35,000 note for himself (The difference between the $80,000 sale price and the original $45,000 mortgage). The new buyer makes payments to the investor for an $80,000 loan and the investor makes payments on the original loan for $45,000. In real numbers, here’s what it would look like.

If the original loan is for $45,000 at 8 percent over 30 years, the principal and interest is $366.88. When the second buyer takes a note for $80,000, the investor may charge a bit higher interest since he’s offering 100 percent financing.

Let’s say he offers an $80,000 loan, 9.5 percent over 30 years. The monthly payment is $672.68, creating a positive cash flow of about $306 per month.

If the borrower stays in the house for 30 years, the investor will make $88,295 in interest and $30,000 in capital gains after he’s paid his own interest on the first note for a total return of $118,295. Not a bad return on a $5,000 downpayment.

Keep in mind that not all mortgages allow an owner to “wrap” a second mortgage onto original loan. Most loans today contain a “due-on-sale” clause, meaning if the property is sold, the first trust must be paid off immediately. Wraparound financing is popular when investors purchase foreclosed Veterans Affairs (VA) properties as the VA allows wrap-around loans in such cases.
Before you go out, checkbook in hand and ready to bid away, take some advice first.
If you’re deciding to invest in foreclosure properties with a spouse or with other investors, be sure that everyone understands this form of investing. You are about to enter a world of high finance, property management, calls in the night from tenants and other risks that regular homeowners never experience.

Second, get educated. Reading this column does not constitute preparing the first-time investor to start bidding on properties. There are plenty of real estate agents and auctioneers who do this on a daily basis and would be happy to educate you in the world of foreclosure properties. Also, visit the bookstore for guides by reputable authors who know investment intricacies.

  • Third, be realistic.
  • Not all foreclosures are good deals.
  • Not all foreclosed properties are available at discount.
  • If you take back a loan your buyer could default.
  • Most loans today prohibit wraparound financing.
  • Repairs might be far more than you expect.
  • Not all tenants pay their rent on time — or at all.
  • Some renters damage property.
  • Changing interest rates could impact your bottom line.
  • It may not be possible to re-sell the property without extensive — and costly — repairs.
  • Not every deal yields a profit.
  • If you have a profit you may face taxes.
  • If you only look at foreclosures you may miss other investment opportunities.

The list of potential downers goes on…and on and on…. Think of it this way: If making money with foreclosures was both easy and a sure bet every time, no one would bother with IPOs — or jobs.

Fourth, get professional help from brokers, lenders, attorneys, accountants, home inspectors, and others.




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