The news on July 11th that Freddie Mac and Fannie Mae are in trouble sent the markets into a tizzy and stocks plummeted. Now that the government has decided to step in and help bail them out, there are a multitude of varying opinions on how this will affect lending practices and the different tactics that arise to accommodate these changes.

The NAR (National Association of Realtors) has the following statement on their website, “The National Association of Realtors® welcomes the strong response this weekend by the Treasury Department and the Federal Reserve Board in response to the market turmoil and apparent overreactions that began last week affecting Fannie Mae and Freddie Mac. The health of the American economy depends on Fannie Mae and Freddie Mac and the steps taken by the U.S. government make clear that the role of Fannie and Freddie, in making fair and affordable mortgage loans available for home owners and home buyers, must not and cannot be interrupted.

“We support the federal government’s actions and authorization to help ensure the ability of Fannie Mae and Freddie Mac to promote the availability of home mortgage credit during a period of stress in the financial markets. Fannie and Freddie play a central role in our housing finance system, and we agree that they must continue to do so as we work through the current housing correction.”

Lyndon Larouche is a top economist and former presidential candidate who has somewhat “predicted” the downfall of Fannie Mae and Freddie Mac. He issued a statement this past weekend, “The financial system is already dead. It cannot be saved.” LaRouche expanded: “If any of the reports of a planned bailout of the two big mortgage lenders, by the Treasury Department or the Federal Reserve are true, I say, ‘Forget it.’ Any such efforts to delay the funeral of the present global financial and monetary system will only make matters worse. A bailout will cause an accelerated hyperinflationary explosion, far worse than the hyperinflation that hit Weimar Germany in the autumn of 1923. Back then,” LaRouche continued, “Germany had a gun pointed to its head. The gun was called the Versailles Treaty, and Germany had no choice. Today, the United States has a choice. I spelled out the choice in numerous recent locations.” He goes on, but you get the point.

We have already seen a tightening in mortgage approval standards. Proof of income, higher credit scores and minimum deposits are now required. The tightening in lending practices will more than likely continue for the next couple of years.

Is this the “end of the world” as we know it? Certainly not! Buying and selling real estate is a permanent part of our existence. People will always have a need to buy/sell property. They change jobs and have to move, have more children and need more space, or a family member passes away. Economic shift may put a pothole (sometimes a deep one) in the middle of the road, but the road will never close on real estate.

Short Sales is one of the most popular terms in real estate today. What is a short sale? – It is the obtaining a property for a smaller amount than what is owed on it from the lender.

Because of recently declining prices in homes, banks and lending institutions are making more deals than they have in years making short sales a great opportunity for everyone involved. The huge increase in short sale activity is due to the increase in subprime lending and the Adjustable Rate Mortgages that were written over the last 5 years that are resetting at astronomical rates.

Because these homeowners are now unable to afford their mortgage payments and the homes are worth less than what they paid, they are looking for ways to avoid foreclosure and get out of a potentially bad situation. Enter the short sale….

There are several strategies to find a good deal through a short sale. GuReview.com has a distressed homes search and there are over 480,000 properties in preforeclosure as of today across the country. This is a good place to start researching potential deals in your area. Here is the link to search properties:

foreclosures.gureview.com

There are several methods to contact the properties you have identified as potential deals. Some investors send postcards or letters to these homeowners with catchy marketing phrases to get them to call. Bandit signs are also an effective strategy to market your services and get potential deals. Post the signs in the general areas that you want to target. Some investors actually go knocking to the homeowner’s door to check out the property and see if they may be interested in selling the property.

You have some great possibilities, now what? You know the profitability is there. There are many nuances and details in negotiating and putting together the short sale package to the bank. This can be a daunting and overwhelming process.

Hang in there and stay determined. A good piece of advice? Don’t try to do your first deal on your own without knowing the exact steps you need to take and give you confidence to close the deal. Take a short sales course or seminar to get the information your need. Attend a bootcamp or get a mentor. There are many educational options – the knowledge you gain will provide endless opportunities.

“The way you make money is not following the herd. Lower prices mean greater investment opportunities because there are more motivated sellers and more deals coming on the horizon. Now is definitely the time to buy … but to buy smart.”

That philosophy, spoken by Robert Shemin — Wall Street Journal best-selling author, nationally renowned speaker and major real estate investor — is at the root of successful foreclosure investing in the market today.

An increase in foreclosures translates to more available investment opportunities. And more available investment opportunities creates competition, driving down real estate sales prices across the board.

Here are five strong strategies that Shemin has put together:

1. Buy to hold — Historically, long-term investors almost always do well. A long-term investment strategy is five to seven years plus. Medium is six months to five years and short-term is less than six months.

2. Buy cash flow — Speculators take a chance on rapidly appreciating properties and risk a softening market; however, investors look for investments that produce cash flow from day one. Be an investor … go for cash flow.

3. Find secret appreciating markets — Look for areas that didn’t appreciate a lot in the past four years and are now steadily climbing or where there is strong job growth. These translate to housing demand and are the best-kept secrets in real estate.

4. Uncover “hidden” markets — There are exciting markets within markets that make strong investment opportunities. For example, the Las Vegas market is very soft right now, but in the low- to moderate-income there is a strong demand for new homes (starter homes) in the $200,000 to $250,000 range. So there is a strong market within a weaker one.

5. Buy international — Don’t be afraid to invest in other countries. Do your homework. Talk to other investors. Go to a seminar. Then make your choice.

He has been involved in more than 1,000 real estate transactions throughout his successful career. To find out more about Robert Shemin and his investment strategies, see his Bio Page.

Bulding a real estate team is recommended by many successful real estate investors. Having a trustworthy team of professionals alleviates professional real estate investors with an important asset - time. Some real estate investors try to do everything themselves, creating a shortage of their time to chase after the next great deal. Thriving real estate investors build a team they can rely on and trust. The following are some team members to consider when deciding to grow your business and building your real estate team.

An REO and Investment Agent - An experienced investment agent can be a powerful ally. They find the best deals in your market.

Your Mortgage Broker - Good to have a mortgage pro on your side. When you use the same broker for every deal, they will do their best to get your qualified for the best loans.

A Contractor - A good and reliable contractor is a valuable asset on your team and can advise you on repair estimates and may even make you aware of a deal-killing issue before you close.

There are many other specialists and experts that can make great associates in your real estate business. It is critical to every investor to know how to choose the best professionals in their local markets. Leap Into Prosperity is an upcoming event that is full of information on building your dream team of real estate Superstars. They have also put together 6 of the nation’s top national trainers that are flourishing in today’s real estate market.

For more information please visit www.leapintoprosperity.com.

I have heard a lot lately about “Subject To” real estate investing. “Subject To” is when you purchase an investment property subject to existing financing. The seller keeps the current loan on the property in place and a separate agreement is signed to make it available to the investor and eventually the buyer’s use.

Here is an example. Jane Homeowner lives paycheck to paycheck. Jane receives a promotion from her company, but has move out of state and sell her home. With the real estate market in her area slowing down, she is concerned it may take longer to sell her home and she will run out of time because she only has 30 days to move. Her local realtor told her she would have to take a financial loss on the home because she has very little equity and the prices on ouses have gone down in her area. She decides to put a classified ad in the paper and online to sell her house.

Joe Investor sees the ad and calls Jane Homeowner to see her house. After touring her home, he offers her the asking price with these concessions:

• The current mortage is kept in place for 2 years to allow more time for equity to build before allowing the house to be sold at a profit
• Jane Smith will have her mortgage paid off from the sale, plus will retain 10% of whatever profit is made from the sale after the mortgage and expenses are paid
• Joe Investor will make the monthly payments on the mortgage after a “quick claim deed” is signed over to Joe by Jane.
• Joe Investor then rents out the property to cover the monthly mortgage.

Jane takes the offer and moves on with her life. The property is sold in 2 years for a $60,000 profit and Joe Investor sends Jane Homeowner a check for $6000 10% of the proceeds from the sale of the house.

Not all Subject To deals work out in this manner. You should always enlist the advice of a good real estate attorney when determining the legalities of making deals.

It is also very helpful to gain additional knowledge from a real estate investment professional who has successfully completed these transactions. Check out an online education course on Subject To Investing and have your questions answered by a pro. Go to Foreclosure.com for additional information.