Patrick Grom will be a regular guest to give an in depth analysis about the current and future real estate market in regards to foreclosures.  Patrick will provide in great detail everything occurring in the foreclosure market and what this means to you if you are looking to profit from the tidal wave of foreclosures. By sharing key insight into the industry, Patrick will show you how to actually create wealth from the foreclosure dilemma.

Patrick is a nationally renowned foreclosure expert personally responsible for training thousands of successful clients in the purchase and acquisition of foreclosed real estate.  He is the director of coaching for TCS Foreclosures, the nation’s largest and most trusted foreclosure network, and RealtyTrac’s advanced foreclosure training partner.

Fidelity Title analysts predict the Southern California market correcting itself in 13 months as of May 1, 2008.  The problem most investors face is trying to identify the bottom of the bottom.

Without a magic crystal ball, the bottom is always just theory.  It’s like trying to pinpoint the perfect time to invest in a stock…next to impossible!

The point to buy is at a point that makes sense.  That is exactly what TCS Foreclosure Investors are doing!

Value investors within this network are buying real estate that provides positive cash flow situations in markets that have stable economic conditions.

Of course if the market is conducive to buy and flip, then go for it!  But for most of the country, buying and holding is the only feasible option for the moment.  This is why at TCS Foreclosures we have a dedicated team to exclusively recruit value investors that have deep pockets and are excited about the buy and hold.

In addition, our recent partnership with RealtyTrac allows us to post your deals to their real time website, which gets over 3 million independent page views per month!  When it comes time to market the home you have under contract to qualified and capable investors, there is no place better to advertise then through TCS.

As the saying goes: “The Numbers Don’t Lie!”   This is the buying opportunity you have all been waiting for. The increase in foreclosures continues to present abundant opportunities for those actively researching and purchasing distressed properties across the country.

Now more than ever, not only do U.S. real estate investors see this as one of “the” most opportune times to buy a piece of America at a discount, foreign investors from the UK, Canada, Middle East, and Asia are beginning to accumulate sizable holdings of US real estate as well.  Simple reasoning….”What goes up, must come down” and when it’s down…BUY IT!

A viable strategy in today’s market for long term investors is the Lease Option.  A lease option has two specific and important components:

First, lease options have a residential lease over a property. The rental charged under the lease is usually slightly above market rates due to the unusual nature of the transaction and unlike a normal residential lease, the tenant pays all repairs and outgoings; and

Secondly, a call option that allows (but does not compel) the tenant to purchase the property at a future date for an agreed future price. An initial fee is charged for this option which is then deducted from the purchase price if the option is taken up.  If the call option is exercised then ultimately a portion of each rental payment is applied against the purchase price. If the option lapses, then the initial fee is forfeited and all the payments received under the deal are treated as rent.

If you have any questions about adding the lease option to your portfolio, give me a call.  Whatever your strategy, the time to buy America is now!

Federal income tax on the taxable income the property produces.

State income tax, which varies by state, on the taxable income the property produces.

City or county property taxes based on the assessed value of the property and a designated rate, which can vary widely. Note: This tax is considered an operating expense for the property)

Special assessments, typically to cover improvements, such as utilities or school bonds.

As a result, the tax impact can be significant because a potentially substantial portion of investment income could be reduced by the tax payments.  However, since investors are taxed according to their overall income, the impact of taxation varies among investors for the same investment.

It is important to be familiar with the various taxes that can be levied on a real estate investment.

Taxation is a world unto itself.  It is defined by legislative bodies and is made up of tax code and law.  It does not necessarily reflect real-world logic or economics.  The focus of the tax world can be summed up in three questions:

How many of the dollars going in and out of an investment will be subject to tax?

2. How much tax will be owed?

3. When will the tax be paid.

Two important characteristics to consider for tax purposes involve the transfer of money and the timing of cash flows.

First, money need not transfer between two people to have a tax impact.  This is the case for depreciation, or cost recovery.  When an asset wears out, the investor does not actually receive money back for the wear and tear on the asset.  However, the investor can write-off the wear and tear through a cost-recovery deduction, thereby lowering the actual amount of money on which the investor is taxed.

Second, the timing in which money is received or paid may have a tax consequence that occurs long after the transaction is reported.  For example, for commercial and investment properties, loan points paid at time period zero are not deducted in full in the year they are paid.  Instead, they are prorated and deducted for tax purposes over the term of the loan and any unamortized points are expensed at the time of sale.

How then, does a real estate investor acquire properties at discounted prices?  The answer is simple: SHORT SALES!

Decreasing home values following the broadening of lending laws has awakened Americans to this previously unknown means of avoiding foreclosure.  Many individuals do not realize that short sales have been around since the invention of the mortgage!

So, what exactly is a short sale?  A short sale is when you purchase a home from a homeowner for less than what is owed.  The mortgage holder or other subsequent lien holders agree to take less than payment in full and forgive the remaining balance to the homeowner in an effort to avoid the cost of auction as well as the possibility of actually owning the property themselves post-auction.

Understanding short sale is essential in today’s real estate market when 80%-90% of all homes currently in foreclosure have either a complete lack of equity or are, even worse, upside down and owe more than the properties current market value.

Therefore, failing to understand how to successfully negotiate a short sale means that you are will not be able to work with 80%-90% of the distressed homeowners you come in to contact with.

Short sales do require extra patience as they take more time and effort to complete than a simple equity  buy out.  However, they can be just as profitable and well worth the extra perseverance!

For example, let’s consider a home valued at $200,000 where the homeowner owes $210,000 against it.  Most real estate investors or novice property researchers would walk away from this deal due to the lack of equity.

Instead of determining that the lack of equity means the end of the road, think of it as the beginning of the short sale process.  Through the short sale process you will “Create Equity Out of Thin Air” by negotiating with the banks Loss Mitigation Department.

By applying practical short sale principles and negotiation techniques, you can realistically get the lender to agree to take $120,000 as full payment on the loan!  That’s 60 cents on the dollar with a potential profit of $80,000.   You created $80,000 of equity!  Not only is this now a great real estate investment, but it also saves the homeowner from foreclosure.  Short sale creates a “win-win” situation for both you and the homeowner.

If you are not currently negotiating short sales, you are passing up great real estate investment opportunities!  Capitalize on all avenues of acquiring real estate at deep discounts while using short sales to help the homeowner avoid foreclosure.