Los Cabos and Cabo San Lucas Real Estate -Financing Options for Foreign Investors

http://www.cabo4sale.com

Each year, an average of fifteen million North Americans visits Mexico. Statistics show that as many as 1.5 million Americans and Canadians purchase vacation or investment properties in Mexico every year, with the majority investing in beach resort destinations such as Los Cabos Mexico.

Financing through lending institutions in Mexico is a relatively new market. Up until just a few years ago, foreigners wishing to purchase property in Mexico had to have sufficient resources to buy Mexican real estate.

Unfortunately, not everyone can afford to pay cash for their real estate investment. So now that you've found your dream home - how are you going to pay for it? Fortunately, there are options available to you. CONVENTUAL FINANCING: Financing offers flexibility. Instead of paying cash, financing allows purchasers to put down as little as 20 percent - making purchasing real estate in Los Cabos more appealing.

Another benefit is you may deduct the mortgage interest on your home in Mexico from your U.S. tax returns. Per IRS Publication 936, mortgage interest paid on primary and secondary homes up to $1,000,000 is tax deductible. There is no clause stating that the second home must be located within the United States, therefore it is the opinion of tax professionals that interest paid on a home loan on Mexican property is tax deductible. (Check with your tax professional to see how this applies to you).

The basic qualifications are: · Must be a U.S. or Canadian Citizen or Permanent Resident of either country · Employed in same line of work for a minimum of two years · Minimum loan amount $100,000 · Credit score of at least 700 Just like financing a property in other parts of the world, financing your property in Mexico requires income verification. Typically the requirement to verify income is two years tax returns, pay stubs and/or W-2 forms. Also some programs may require bank statements. Financing in Mexico is a new phenomenon so the lending requirements are a little stricter. PRE-QUALIFY

Once you decided you are going to invest in Los Cabos Real Estate, it's a good idea to get pre-qualified. This can be done in just a few minutes over the phone or in person with the financial institution you are working with. Once it is determined that you pre-qualify for a loan, your credit will be verified and you will be notified regarding the specific documentation that will be required.

After you have provided the necessary documentation, an appraisal is ordered by the lender -- this takes roughly 2 to 4 weeks. When the appraisal has been completed and all conditions of the loan satisfied, the closing process begins which takes anywhere from 60 to 90 days. Also keep in mind that the closing costs are in addition to your down payment, so be sure to account for them when figuring your down payment. For more information contact Ryland at Baja Capital Mortgage. OTHER FINANCING OPTIONS ~ SECOND MORTGAGES: Many of our clients own their primary residence in the U.S. or Canada. As a homeowner, you can use your home as collateral and borrow the needed money against it by taking a second mortgage. For example, if you own a home and you owe $150,000 and it's now worth $500,000, it's possible to take out a second mortgage on your home and borrow against the existing 350,000 dollars of equity. One benefit of second mortgages is a faster closing time. In the U.S., funding for a second mortgage takes only 2 to 3 weeks, where as financing in Mexico is going to add 60 to 90 days to the closing process. Another consideration is that interest rates may be more attractive in the U.S. and Canada than here in Mexico so this should be weighted when considering your options. OWNER FINANCING: If the seller has clear title without any loans, (which is typical with Los Cabos Real Estate) the seller might agree to carry all the financing. In this instance, the buyer and seller agree upon an interest rate, monthly payment amount and terms of the loan and the buyer pays the seller on an installment basis. Typically sellers want a sufficient down payment. Down payments can vary from 30 to 50%. Sellers feel more secure when the buyer has a significant down payment because buyers are less likely to foreclose if they've invested a lot of money upfront. Owner financing usually has little or no qualifying. Even if the seller demands a credit report, the seller's qualification requirements are typically less than, and more flexible than, those imposed by conventional lenders. Unlike conventional loans, buyers and sellers can choose from a variety of payment options such as interest only and fixed-rate amortization. Payments can include balloon payments, and interest rates can be negotiated. Another advantage to Owner Financing is quick possession. Since buyers and sellers aren't waiting on a lender to process the financing, buyers can close faster and take possession earlier than with a conventional loan.

Your real estate professional can advise you on the best option for you.

for more information: http://www.cabo4sale.com/Finance_Options/page_2241799.html



About the Author
Website: http://www.cabo4sale.com Michael Nicol has been selling real estate in Cabo San Lucas Mexico for 12 years. With his helpful and out going personality, Michael quickly bacame on of the most successful real estate agents in the area. His wife, Sue, previously ran a successful in business in Sacramento California, so when Michael decided to open his own brokerage in 2005, he and his wife joined forces and opened Cabo4Sale Real Estate.

Real Estate Investing Is A Numbers Game

It has been said that real estate is all a numbers game. Such a statement is accurate on many levels. After all, the more houses you buy at low prices and sell at higher prices, the more revenues you will be able to earn on your venture.

One method that has constantly done very well is called Wholesaling. Now a days, it is not uncommon that people will wholesale multiple properties a month. For those not familiar with the concept of wholesaling, this involves finding properties below market value then either assigning their contracts or reselling the property within a short time frame to another investor. This type of investing creates huge profits very quickly.

One strategy wholesalers that works the "numbers game" is to make massive amounts of offers on properties that are currently owned by banks. Known as REOs, these properties are easy to acquire.

Often, the banks will look for a buyer that is willing to take the properties off their hands. Remember, when banks foreclose on a property, they will have to absorb the costs of it and that is a huge expense for the bank. This then creates a great opportunity for an entrepreneur since the bank may be willing to part with these homes at discount rates.

Many times you can use a contingency option when you make your offers when seeking out the motivated seller When you find a number of reliable sellers, you can make a number of offers to purchase their properties. If the counteroffer is workable, then you might be in business.

While this process may be a little time consuming, it can yield a number of excellent offers and deals. That is why it is definitely worth exploring.

For those that would wish to cut down their time commitment to this process, there is now the ability to use software that not only finds bargain properties automatically on the MLS, BUT will also automatically generate your offers based on your investing criteria. This type of software can put your business not only on autopilot, but also into HIGH gear very quickly.

How does the software process work? Basically, these systems scour multpiple MLS sites looking for the best deals to match your requirements. The software then categorize these deals comparing the property for sale value AGAINST the comparable market value so you can easily spot deals very quickly. This type of software also give you a central point to locate deals in a very short period of time without a huge marketing or advertising budget. And, of course, the hiring of a multiple Realtor's to set up search criteria is now completely eliminated as well.

The next step of automation is that the software will make massive amounts of purchase and sale offers (based on your investing criteria and contingencies) to wade through the sellers and seek out who is truly motivated to deal. When a seller responds positively, this is the time to investigate the deal. A huge time savings and method to increase profits !

As previously mentioned, real estate is and forever will remain a numbers game. The key is to find as many sources of deals on properties as possible, make solid offers, purchase good deals, and then sell at higher prices. Yes, this is a simple plan and it is one that have been proven to be effective for years and will be to come!



About the Author
Duncan Wierman is a former Software company CEO turned Real Estate Investor and Marketer. Discover how you can use software to automate your business and make quick cash. For more details on how his software can help you make massive amounts of offers and automatically send them via email, fax and text alerts , please visit http://www.RapidOfferGenerator.com

Using Internal Rate of Return in a Real Estate Analysis

There's good reason why internal rate of return (IRR) is one of the rate of return measurements more widely used during a real estate analysis: The time value of money aspect associated with internal rate of return considers that the timing of receipts from the investment property can be as important as the amount received.

Unlike some other popular returns used by investors to analyze the performance and profitability of rental income properties that don't account for the time value of money such as capitalization rate and cash on cash, IRR does.

As a result, because it calculates for time value of money and provides a linkage between present value (PV) and future (FV) of any benefit stream, internal rate of return is generally more popular amongst real estate investors than other rates of return.

The idea is straightforward.

Because a dollar in the hand today is preferable to one a year or five years from now, real estate investors want to take into account both the timing and the scale of cash flows generated by the income-producing property to determine what that rental income stream is worth today. Internal rate of return reveals the rate at which future cash flows must be discounted to equal the amount of investment exactly.

How IRR Works

Internal rate of return reveals in mathematical terms what a real estate investor's initial cash investment will yield based on an expected stream of future cash flows discounted to equal today's dollars, not tomorrow's dollars.

Consider this.

When you make a real estate investment, you are investing cash in order to receive a series of future annual cash flows resulting from rental income plus a tidy profit when you sell the property.

The challenge for real estate investors, then, is to discover what rate of return the investor's initial equity will make based upon those periodic future cash flows at the same time it considers the number of time periods (years) under consideration in the holding period.

The internal rate of return model meets that challenge by creating a single discount rate whereby all future cash flows can be discounted until they equal the investor's initial investment.

How to Calculate

Calculating IRR manually is not practical because the calculation involves tedious mathematical solutions that take a lot time. Even skilled real estate analysts typically use a financial calculator or real estate investment software program to compute it.

So we'll ignore the formula and just consider what it signifies.

Let's assume that you have $300,000 to invest in an income-producing property and plan to hold it for seven years. During those years, you plan on receiving five annual cash flows and then an additional amount from the sale of the property (also known as reversion). When you find the unique rate of return that discounts the sum of all those future cash flows until it equals your initial investment, you will have the internal rate of return.

In other words, it shows you what your cash investment will yield for those cash flow projections based upon today's value of the dollar, or as if those cash flows were collected today rather then in the future.

You should not, of course, rely on one single element of a real estate analysis to the exclusion of other factors and measurements to make your investment decision. But internal rate of return can help point you in the right direction and guide your purchasing decision so plan to use it.

One final thought. If you are serious about real estate investing, then it is highly recommended that you invest in a real estate investment software solution. In this case, you not only will get a wide range of essential returns that includes IRR, but also benefit from all real estate analysis features that quality investment software provides.



About the Author
James Kobzeff is the developer of the ProAPOD Real Estate Investing Software. Create rental property cash flow, rates of return, and valuation analysis presentations in minutes. IRR and other returns made automatically! Learn more at => http://www.proapod.com

Safe Investing in Real Estate

Investing is about making your money work for you. For many of you the latter part of 2008 and the first five and a half months of 2009 have seen you trying to salvage the funds that you worked so hard to get rather than building your wealth.

Many people in the financial sector have undoubtedly been telling you not to panic. The economy is cyclical. It will recover and over time you will get the money back that you have lost. Look at the charts and graphs. They don't lie. There have always been high and low cycles and recovery has always occurred. Holding the line probably will get you back to where you were. However, what is going to move you ahead and help you get to where you should have been through the months lost to the recession and recovery?

Loyalty to one's financial planner, broker or banker is admirable. However, what would you do if you had a job where every payday your employer was to tell you he couldn't pay you and then asked you to keep on working on the hope that someday you will get all of the money that is owed to you for the work completed? You need to be able to stay in your comfort zone and therefore you need to be proactive whether it is with your job or your investments. Working for someone who doesn't pay you or having investments that are losing money is not acceptable, especially when there are safe alternatives available.

The corrective action for the employment issue is easy. You change employers. However, the alternatives for the investment issue may not be as easy. What is a safe investment? The best way to illustrate the answer is through an example:

You purchase a revenue property and pay cash for it. You find a tenant who you know will take care of the property, has an excellent income and who will sign a long term lease. You do your due diligence and find that the tenant is financially strong and has an impeccable character. The client moves in and you collect the rent. Because you have no mortgage and the tenant pays the utilities, taxes, and general upkeep of the property you are able to put the net rent in the bank and then use it to invest again and again compounding your return.

Is there risk in the above investment? All investments carry some risk. The strength of the tenant in the above example suggests the risk will be minimal. However, not all people can afford to purchase a revenue property and pay cash for it.

What is the alternative? Consider the following:

You have $1,000 cash each month that basically will be spent and you will have nothing to show for it. You have an RRSP secured by mutual funds totaling $39,000 down from original $50,000. You have been dealing with the same financial planner for years and he is a friend you don't want to upset. Your total $40,000 is not sufficient to purchase a revenue property free and clear.

This situation presents a few issues that you have to deal with: 1) How can you invest in safe real estate when you don't have enough to buy a property outright? 2) How much of the $1,000/mo. do you want to put to work for you? 3) How much of the $39,000 should you move to a self directed RRSP and invest in real estate? 4) How do you invest in something that your financial planner does not offer and still retain his goodwill and friendship? 5) How do you find an investment you can get out of if you need your money?

The answers for safe investing in this case are simple: 1) Investing in property has been made easy by syndicators. An investor joins a group of like-minded investors who want to own real estate that has no mortgage. Jointly they have enough money to make the purchase. A debt free private mutual fund trust accomplishes this goal and can have entry levels as low as $1,000. The group owns the building. The tenants pay basic rent and operating expenses with the remaining funds becoming the investors return. The syndicator completes the due diligence and reports to the investors. The challenge may be in finding the right syndicator. The degree of transparency that the syndicator offers will help you make that choice. 2) The portion of the $1,000 you want to put to work for you is your personal choice. You may not want to give up any of the funds as they represent a lifestyle you want to maintain or you may want to make the full amount productive now which will allow you to spend more in the future. A few private mutual funds allow you to make monthly contributions to your account. It may be as low as $100. Surprisingly, $100 per month will compound relatively quickly. 3) There are people in the financial sector who will tell you to invest the whole amount into their investment product. However common sense should tell you that spreading the risk is a wiser choice. Some so called experts suggest that 25% of your investment dollars should be working for you in real estate. Who came up with 25% is anybody's guess. You should look at your investment portfolio and determine which investments have performed the worst. Those are the ones that you must deal with first. "Stop the bleeding!" Then you should look at the remaining investments and compare their returns to what you will make from receiving your share of the rent in the building your group is purchasing. You may want to move more dollars into that project or perhaps the next building being purchased. 4) True friendship should never stand in the way of business and investing should be treated like a business. In your review of your existing investments choose the ones that are giving you the best returns and keep them. Your financial planner will appreciate your confidence in his products and will understand your need to move losing funds to something which generates a positive return. 5) Getting out of an investment in times of need is essential. Many investment companies have penalties if you want to take your funds out of their investment. Be careful when you are investing. Ask about exit strategies and costs for early exit. The bottom line is that it is your money and you should be able to take it back when you need it. However if you do not deal with this issue up front you may have a problem down the road.

Investing safely hasn't changed over the years. Real estate has made many millionaires and will continue to do so. Recession creates fear. Fear leads to bad decisions. You should never have to play catch up with your investments. You must manage those investments intelligently in both good and bad times. Sitting doing nothing is the worst thing you can do. Making your earnings earn more is the key to becoming wealthy. Recovering what you have lost is really a step backwards. Consider investing in real estate. Keep moving forward.



About the Author
David Humeniuk is a partner in Teluric International Investments Ltd. For further information or answers to questions you may have please visit Teluric's website at: http://www.teluricinvestments.com/.

Seattle Mortgage Reel Kick Off June 15, 2009 Seattle Real Estate

To view the video:

http://www.themortgagereel.com/seattle-mortgage-reel-weekly-kickoff-june-15-2009/

Interest rates move lower, why?

As China re-emerged investing in long term bonds home loan mortgage rates welcomed the investors lowering yields and rates. China originally questioned the ability of the United States to be able to repay our long term debt. China is currently holds approximately 37% of the United States national debt. With such a large stake in our country it was with due diligence they questioned the current administration for their spending. Now that China is once again investing in the U.S. shows signs of reassurance to the global economies that we are beginning to stabilize.

Will interest rates fall below 5.00%?

At the current trading levels it will take more days like we saw at the close of market last week for rates to fall lower. Monday, June 15th, began with the same positive patterns in monies flowing into the long term bonds however there is a lot of speculation around the outcome of the presidential election in Iran. With the right political leader in place the United States can benefit from the new relationship which could pressure the price of oil lower for the summer. Consumer Price Index and the Philadelphia Fed Index due Wednesday and Thursday could bring some volatility in rates being pressured higher. Keep in mind we lost the high 4.00% rates in a matter of 48 hours and the spike higher continued for 10 trading days. With the economy in a potential recovery from recession all indications lead to interest rates moving higher.

What will it take for rates to move even lower?

Economic data coming out week after week show positive signs of the economy in recovery. What still looms and weighs on the market is the unemployment in the United States. Initial jobless claims continue the steady rise. This could be the pressure to keep rates from moving higher. However as we saw almost two weeks ago if confidence is lost in our long term bonds rates can spike higher quickly. Investors Foreign and U.S. are looking for higher paying yields which will keep pressure on rates to move higher. If you are waiting for rates to move below 5.00% you will have to have a stomache for volatility. A combination of investments in bonds, unemployment and economic data will have to play back to back to pressure rates lower. Many economists have already said this would have to now the perfect storm for this to happen. Higher rates are definitely the forecast for the future.

Timing, timing, timing will be key!!!!

Are you working with a licensed loan originator who has the knowledge and the tools in place to keep you informed? Ultimately this could lead to savings of hundreds of dollars a month, thousands a year.

If you are looking for licensed loan originators we would like to apply for the position.

How can we be of service?



About the Author
Seattle Mortgage Reel provides current mortgage trends to interest rates. This allows all consumers to buy at the right time to secure the best interest rates possible. We are also providing more Seattle Real Estate news, educating buyers on the tax credit opportunities to the short sale process.