It has been said that Escrow is a real estate investor’s best friend.There are many reasons for this, but the most important can be summed up with the word protection.Escrow is really nothing more than an impartial third party bank account.The purpose is to provide protection to both parties in a real estate transaction.The escrow holder, in most instances a title company, controls and disperses monies and documents associated with a transaction.The escrow holder clears payments and performs the duties necessary to settle the accounts between the two interested parties.They also handle the issuing of title insurance, the recording of the county documents and closing of the property between the buyer and lender.
Once escrow has been opened, a preliminary report is always issued.This report shows the ownership details of the property, as well as title liens and defects.If there are restrictions or conditions on a prior deed, those will also be listed.The purpose of the report is ultimately to allow the buyer to seek adjustments and or removals to the contract prior to purchase.
Escrow is particularly important in rent to buy real estate transactions and when rent prorations are necessary, such as the selling of a rental property.Because rental income and security deposits are normally prorated as of the date of the close of escrow, the seller is responsible for making payments on the property and can collect rents until the title transfer takes place.After closing escrow, the payments and income are turned over to the buyer.Escrow in this case, provides protection to the buyer by keeping an account of all monies paid to the seller in the form of rent and security deposits so that when escrow closes the income can be credited properly.
Though the real estate market in the United States is favorable for investors, it might be a good idea to look to our neighbors in the north for your next real estate investment…that’s right—Canada.
Housing market experts in Canada predict that national house prices will continue drop—another 10 percent during the course of 2009. The biggest drop should occur in Western Canada which is seeing a slowdown from their ten year long housing boom.
In Canada, real estate prices have fallen close to 20 percent nationally and in some cities, housing prices have dropped nearly 40 percent.
According to an article in Yahoo News Canada, “The Bank of Canada warned recently that, in a worse-case scenario, mortgage and consumer debt defaults could rise “significantly” if the global financial crisis deteriorates. It said the number of “vulnerable households” - the three per cent with a debt-to-income ratio above 40 per cent - could double by the end of next year.”
This is good news for investors of real estate in Canada and the United States.
More good news can be found in a Bank of Canada study that shows that mortgage default rates (foreclosures) would rise about 2.25 percent along with a 23 percent drop in housing prices throughout the country.
Canada has avoided a lot of the risky lending practices that have spelled trouble for the United States housing market. Only four percent of the mortgages sold in Canada have been subprime compared to a 40 percent subprime market in the United States.
Though housing prices are dropping in Canada and the real estate boom is slowing down, many Canadian banks are becoming more cautious in lending to new buyers, so if you’re a United States real estate investor, it would help if you can show a strong portfolio of homes and a good credit rating when you’re applying for a mortgage in Canada.
2009 looks to be a good year for real estate investors especially those who are willing to look to Canada for their next real estate purchase.
Believe it or not, the time to make your millions in real estate is now.The market is full of desperate homeowners willing to nearly give their properties away and you shouldn’t be afraid to get your piece of the pie.But where do you start if you have no experience?The answer is very simple, under the wings of a professional.
One of the biggest causes of failure when you first start out in real estate investing is self doubt.After all, is it really possible for you to put together million dollar deals?The answer is yes, it most certainly is.A good mentor will help boost your confidence when you need it most.They will show you the tricks of the trade, shortcuts and secrets that created their success.An experienced mentor will help alleviate self doubt and confusion by providing the information you need to make wise decisions.The truth of the matter is that nothing will help you gain confidence more than by making sound decisions at crucial moments.
A real estate mentor will not only teach you strategies, but they will explain those strategies in a way that will make sense to you.Professional real estate investors know which strategies work in a given situation and that information can be invaluable to you as a newbie.
So, where do you find these mentors?First of all, there are mentors dedicated to nearly every aspect of the real estate business.You can always choose a nationally recognized team of mentors such as those provided by Dean Graziosi; or you can find a local professional that is dedicated to the type of real estate you are interested in such as foreclosures and short sales.
