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REO FORECLOSURES

:
“THE PERFECT STORM”
Foreclosure Rate Stays on the Boil in May
“…321,480 residential properties were subject to a
foreclosure filing during the month – 1 in every 398
homes.”
-Maurna Desmond Forbes June 11, 2009

“This is clearly the worst housing crisis
since the Great Depression.”
-John Burns CNN Money June 16, 2009

“The government wants lenders to sell off
repossessed homes quickly and it’s
lowering buying costs to get the deals
done.”
-Les Christie CNN Money June 24, 2009
The Collapse of
Financial Markets

“I can still remember raising “In what could be called
my eyebrows when I heard the collapse heard 'round
that Bank of America had the world, venerable
agreed to take on Merrill investment bank Lehman
Lynch.” Brothers declared
bankruptcy today.”
The Atlantic Monthly July 8, New York Times September
2009 15, 2008
TRADITIONAL INVESTMENTS

RETURNS
STOCKS ?
BONDS 2% to 5%
CD’S 2.5%
From 2008 to 2009, the average
investors’ portfolio value is down
over 40%
THE REAL INFLATION RATE IS:

10%
GOVERNMENT NUMBERS DON’T INCLUDE ENERGY & FOOD
Cash on Cash Is King:
To earn a real return, we need to
earn 15% to 20% cash on cash
Working with Signature REO, this can
be accomplished without specialized
knowledge!
WHAT WE DO:
Signature REO offers turnkey investment opportunities
earning up to 20% per year
by purchasing “Real Estate Owned” properties from banks.

MORE THAN JUST REAL ESTATE
THE SIGNATURE DIFFERENCE:
Avoiding bulk buys, we focus on “Assessment Before Acquisition”; targeting
opportunities where the “NUMBERS ADD UP”!

“INVEST IN EXCELLENCE”
THE FORECLOSURE
PROCESS
Postponed

Sold to Bank
Notice of Notice of Auction Trustee’s Deed
Default Trustee Sale
Sold to Third
Party

Cancelled
THE FOUR LEVELS OF
FORECLOSURES
LATE PAYMENTS: PRE-FORECLOSURES:
Owners are late in payment Notice of Default

FORECLOSURE SALE: REO’S:
Auction Bank needs to sell inventory
REO PURCHASE PROCESS
PHASE I:
“Because they often pay cash and buy several houses at once, investors are
attractive to banks trying to shed dozens of foreclosures. Traditional buyers add
time and hassle to the process because they have to be approved for a mortgage.”
AP – 20 July, 2009

 Acquire “Tape” Of Homes
 Local Review
 “Off The Board” Purchase Offer
 Offer Acceptance
 Close
REO PURCHASE PROCESS
PHASE II:
“An Associated Press analysis of 45 metro areas finds the gap between the monthly
mortgage payment on a median-priced home and the median rent shrunk from $777 a
month to just $221 a month in the past three years.” In some areas like Cleveland and
Atlanta, the gap is under $100 a month.
-AP - 21 July, 2009

 Qualify New “Owner/Occupant”
 Place New “Owner/Occupant” under “Land
Contract”
 Property Sold as is
HOW CAN YOU ACCESS THIS
INVENTORY?

LOCATION, LOCATION, LOCATION…
DOESN’T MATTER

THIS IS A TURN-KEY PASSIVE INVESTMENT SYSTEM
CREATING GREAT
CASH FLOW PER $$ INVESTED!
UNOCCUPIED HOME
VIRTUALLY READY TO MOVE IN
• Warranty Deed with free & Clear title
• $500+/- monthly average income
• Price: $25k-35k
• Average yield: 18-21%
UNOCCUPIED HOME
DAYTON, OH
3 Bedrooms / 1 Bathroom
1,056 square feet
Purchase Price: $26,500
Guaranteed FMG Repair Cost: $1,850
FMG Property Mgmt Fee: $1,500 (+10% annual)
TOTAL INVESTMENT: $29,850

Land Contract Estimate:

$55,000 @ $565/month

EXPECTED CASH ON CASH:

20.46%
OCCUPIED HOME
• Warranty Deed with a free and clear title
• Existing Rental Agreement/Land Contract
• $500+/- per month average
• Price: $27k-37k
• Average yield: 16-19%
OCCUPIED HOME
DAYTON, OH

4 Bedrooms / 1 Bathroom
2,127 square feet

Purchase Price: $29,500
Guaranteed FMG Repair: $0.00
FMG Prop Mgmt Fee: $1,000 (+8% annual)
TOTAL INVESTMENT: $30,500

Land Contract Estimate:
$62,000 @ $545/month

CURRENT CASH ON CASH : 19.72%
Section 8: Gov’t Guaranteed Rent
• Qualify your property for HUD Section 8 rental
• Locate a renter who meets federal guidelines
• Receive monthly rental check from HUD
Guaranteed… even if renter defaults
• You keep the property, appreciation & tax
benefits
• Your cost: $30k-40k
• Average yield:15-18%
SECTION 8 HOME
DAYTON, OH

3 Bedrooms / 1 Bathroom
1,128 square feet

Purchase Price: $31,500
Guaranteed FMG Repair: $0.00
FMG Prop Mgmt Fee: $500 (+5% annual)
TOTAL INVESTMENT: $32,000

Rental Contract: $545/month
CURRENT CASH ON CASH
(after prop tax and insurance):

16.22%
CAN YOU MAKE REAL CASH
FLOW USING $200,000?
NO… WITH TRADITIONAL INVESTMENTS:
2% on $200,000 = $4,000 per year
Compounded Value in 20 years = $297,189

YES… WITH SIGNATURE REO:
20% on $200,000 = $40,000 per year
Compounded Value in 20 years = $7,667,520
Representative Total Returns
Total Investment Land Contract
(Land Contract: $55,000 @ 10% interest/20 years) ($29,500)

Sale at 5 years:
Cash Flow (compounded at 5%) $32,822
Sale Value $48,894
Total Return 277%
Amortized @ 20 years:
Cash Flow (compounded @ 5%) $196,411
Total Return 668%
REMEMBER:
WITH THIS MODEL LOCATION
DOESN’T MATTER

THIS IS A TURN-KEY PASSIVE INVESTMENT
SYSTEM

CREATING THE MOST
CASH FLOW PER $ INVESTED!
DO THE MATH:
ONE $250,000 CA property paying
$1,100/ month

OR…
TEN $25,000 Midwest properties
paying $5,500 per month
MORE $$ in your pocket…more
diversification…
MITIGATING RISK
 Turn “Default Attitude” into “Pride of Ownership
Attitude.” “I DREAM OF OWNING MY OWN HOME!”
 Offer below market payments & 20 year amortization
schedules because it creates equity for your owner.
 Reserve 10% to create a reserve fund for potential
repairs or a defaulted deal.
 Diversify: Don’t buy one stock, buy 20. Thus, don’t
invest in 1 home. Buy 3+ so the worst case scenario
equals a 15% cash on cash yield.
 Use no more than 50% of your liquidity. This is a
legacy product; retirement cash flow play. Expect a
minimum of a 5 year hold period.
Ensure that property has been viewed by local
property management team.
HOW DO I BUY A HOME?

• Individually
• Tenants-in-Common
• Limited Liability Company
• IRA/401K
USING YOUR IRA OR 401k
Why Haven’t I Heard About This?

San Francisco Chronicle
“The reason you haven’t heard about
them (these self-directed investment
alternatives) is that there is little profit
incentive for financial institutions, which
primarily sell stocks and bonds to IRA
accounts.”
What is their motivation?
-San Francisco Chronicle
January 2, 2003
Your retirement or their commissions?
QUESTIONS
COMMONLY ASKED
• How can I do this in my retirement account?
• Where are the homes located?
• What if the owner/occupant re-finances or
sells the home?
• Can I talk to my spouse first?
• What type of home should I get?
• What if I want to see the house?
REO FORECLOSURES
“45% of all homes are currently being
bought by investors. This is the
highest percentage in history.”
CNBC February 26, 2008

“ While the foreclosure epidemic has
caused tremendous pain, it has also
created a once-in-a-generation
opportunity…"
Steve Dexter
Buy and Hold Forever-Building Real Estate Wealth in the
21st Century. USNEWS.COM July 7, 2009
HOW TO….

Step #1 Commit to 5 hours in the next
two weeks (more if using IRA)
Step #2 Sign Reservation Agreement
and deposit $1k (refundable)
Step #3 Go through the “Six Steps of
Education” & select properties
Step #4 Sign Management Agreement
& Closing Documents
CONTACT:
Crystal@SignatureREO.com
603-553-6773