FAQs - Paragon Investors

What is a Foreclosure, REO and Short Sale?

Foreclosure is where a lender, generally due to non-payment of a mortgage, obtains a court order to sell off a property to pay any loans secured on it, as well as their legal costs. Properties that are being held by the bank are called REO (Real Estate Owned). These properties are then auctioned off or sold through standard real estate channels. A short sale is when the proceeds from the sale of the property fall short of the loans secured on it. Sometimes a lender, who has an owner that can't pay the mortgage, will take a loss just to get the property off their books. This saves them having to sell it off themselves.

What is the role of Title & Escrow?

The final stage of the transaction process occurs with the transfer of title from seller to buyer. An escrow professional, a third party, will facilitate the transfer of money and documents (including title and deed) between the buying and selling parties. The escrow company prepares documents, draws up the closing statements, obtains necessary signatures, records documents, and receives and disburses funds.

What is Title Insurance?

Once the Title Company has examined the searches and is satisfied, it will issue “Title Insurance” to the investor. Title insurance is an indemnity against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage liens. This insures the Title to be free and clear of encumbrances. It is purchased by a one-time premium payment and is shown on the HUD-1 Settlement Statement.

What is a section 8 Tenant?

S.8 or HUD Tenants are tenants are typically of lower income and have their rents fully or partially subsidized by the government. It has the advantage that some, or all of the rent is guaranteed each month, as your rent is coming direct from the government. Also these tenants are typically very long term. Your property will need to pass an annual inspection by the city. The waiting lists are long for this scheme, so generally the tenants will take good care of your property. If a tenant does something that leads to them being excluded from the Section 8 programme, they can never participate in any Government programme for the rest of their lives. The tenants take great care of the house because it’s in their interest to do so.

Wouldn’t I save money by going to the US, buying a house and renovating it myself?

You can and you will save money if you are prepared to:

Live in the USA, understand each market thoroughly and gain local knowledge required to identify what and where to buy and what and where not to buy.
Compete with the established buyers like ourselves who long standing relationships with agents, banks and other distressed sellers.
Find the right contractors to work with and oversee their work.
Find the right tenants and the right property manager
Build the relationships and create the systems necessary.
Learn a completely new way of buying, owning tenanting and selling real estate.

Most importantly: Are you prepared to not receive income from day one in order to renovate your house, fulfill building regulations, search for a tenant and finally rent your house? How will not receiving income for 4-6months whilst the process occurs affect your net return?

Paragon takes the risk away by investing our own capital to make sure you receive a full turnkey property generating income from day one.

I have seen the same property (or similar) on the Internet for a different price, can you explain why?

Some US Property websites are very useful for factual information regarding the house (e.g. bed, bath sq ft) and proximity to schools etc, but is not helpful on providing pricing estimates. The prices listed may be a previous foreclosure price, will not take into account renovation and improvement works, and liens paid by the new seller. That is why all Paragon Properties come with an independent Inspection and Appraisal.

Further, Paragon owns all its own properties, we are not brokers! Our properties are quite often listed for sale at different prices on other websites as a “filler” for that brokers website. Although we have sales agents located around the world, Paragon is the only company that can actually close on the property we own at the listed price.

How can I be sure my investment is being well managed?

Paragon fully understands that the return on your investment property is closely tied to its management. Receiving a steady income stream is imperative, so Paragon has spent substantial time and effort finding property managers capable of reflecting the quality of our properties. Furthermore, we have developed an excellent working relationship with each property manager to help ensure that every investor enjoys the best possible service.
All property managers associated with Paragon are equipped to meet the needs and expectations of investors, both domestic and foreign. They can issue all vendor and third party payments, quickly resolve any tenant issues or requests, coordinate repairs, and provide regular reporting. If and when a vacancy occurs, properties are professionally marketed and tenants are qualified through a stringent screening process. The full range of services include:

Applicant Processing and Credential Checking
Lease Execution
24/7 Tenant Communication
Vendor Payment (and 3rd party payments, i.e. property taxes)
Owner Payments paid into your U.S. Bank Account
Property Advertising
Property Showings
24 Hrs access to own account
Managing services, i.e. plumbers, electricians, hand man etc

How difficult is it to find Tenants for the properties?

It is not difficult to rent an attractive property in the right neighborhood. Paragon only buys attractive properties in the right areas that have the most attractive features (i.e. 3 bedroom SFR with good transport links, close to major employment hubs). We then present the property fully renovated so the tenant has a new clean home to move into. We also attract many s.8 tenants. Generally it takes no more than 2-3 weeks in the markets we are in to find the right tenant.

Is there finance available on the properties you have available?

We have several finance options available for U.S. Residents through local financial institutions. Obtaining finance for Foreign Nationals is very difficult at the moment given the strict lending requirements of most US financial institutions. However, from time to time we have financing available to foreign nationals for particular properties. Please enquire at the time of making your investment.

After you sell me a property, do I have any further contact with you?

Paragon stands behind its properties. We follow up on all after sale issues. If your property manager cannot help you with an issue we welcome any of our investors to contact us at any time with questions or any concerns. We pride ourselves on our quick response and resolution.

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