TheRealEstateDealer.com Official Blog

How to Build Your Buyers List by Using the MLS

2010-04-06T20:51:00.004-05:00

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TheRealEstateDealer — April 06, 2010 — http://www.therealestatedealer.com/vd19 - In this 26-minute video (in three parts), we will show you how to build your buyers list by looking at transactions from the MLS.

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Part One

Part Two

Part Three

Quality real estate coaching and mentoring at an affordable price!

FHA Suspends 90-Day Seasoning for One Year

2010-01-18T09:41:00.007-06:00

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I don't know if you've heard, but the Federal Housing Administration (FHA) has suspended the 90-day seasoning rule for selling houses. This opens up new opportunities for real estate investors to sell their properties. There are some basic rules you have to follow when selling to buyers who seek an FHA-insured loan.

Read the full text of the FHA ruling by clicking here.

What is "title seasoning"? View this video by William "Bill" Bronchick.

How can I make money buying and selling real estate with no money and no credit? View this video by TheRealEstateDealer.com.

How can I build my buyers list? View this video by TheRealEstateDealer.com.

2010 IRS Business Miles Driven Deduction

2010-01-09T20:53:00.006-06:00

TheRealEstateDealer.com - Get your free log to keep track of your business miles driven tax dedution. The Internal Revenue Service issued the 2010 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Beginning on Jan. 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be 50 cents per mile for business miles driven, 16.5 cents per mile driven for medical or moving purposes, and 14 cents per mile driven in service of charitable.

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How to Grow Your Buyers List, Tip #3

2009-11-08T21:43:00.004-06:00

In this video, we will show you how to build your real estate buyers list by placing bandit signs on vacant houses.

Chicago Bungalow Money-Making Home Run!

2009-10-04T10:04:00.005-05:00

The 7 Steps To Successful Negotiations For Real Estate Investors

2009-08-31T08:51:00.000-05:00

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By: Tom Bukacek

Negotiations is not a science, rather it is an art and the degree of success most often depends on the negotiator’s knowledge and application of various tips, strategies, and tactics. No matter how good you are, you will not always be able to produce a successful negotiation. Some negotiations inevitably fail to achieve agreement. But the purpose of this article is to assist you in having the necessary skill sets to put you in the best position for success when negotiating in real estate.

In real estate, the investor will have the most success negotiating with a motivated seller. Sellers can be motivated to sell for several reasons: moving and don’t want to be a landlord, job loss and looking to avoid foreclosure, divorce, house is an unwanted inheritance, mortgage increased and can’t afford, etc… Therefore, the most important step in negotiations is to find their ‘why’ or pain point. Why are they looking to sell? And what are their consequences if they are not able to sell?

Let’s take a probate example from a property in San Antonio, TX. The seller inherited a house that needs quite a bit in repair. The property has an After Repair Value of about $100,000. However, this is an ugly house that hasn’t been painted or had new carpeting installed in a couple decades, and requires updates. The foundation needs repair and the A/C is about 20 years old. The seller is asking $60,000 but you feel the price is too high given the amount of repairs needed. How can understanding the seller’s motivation assist you in creating a more profitable transaction for you?

The property, as mentioned, is in San Antonio, but the seller lives in Austin, TX, about 90 minutes away. After talking with the seller for a little while, the skilled negotiator finds that the seller doesn’t want to fix up, maintain, nor be a landlord for the property. He is doing well financially and the money from selling the house isn’t as important to him as just being rid of the burden. The seller is tired of having to go there every weekend to landscape the property and clean the house for perspective buyers. What you end up finding is that his biggest need is not making a huge profit on the property; rather it is getting rid of the house so he can go back to his normal life routine of spending his weekends with his family, and will gladly trade equity for time. Would this information benefit you in your negotiations? Absolutely.

Therefore, the most important aspect of negotiations is having an understanding of the consequences of not achieving agreement for the seller and being able to provide a solution to those consequences.

This part of the negotiating process is absolutely important. Once you, as the investor, understand the sellers’ consequences of not achieving the agreement, then you are able to add value to your offer without adding money to your offer. If money is not the issue but time and managing the property is the issue, could you create an offer to discount the price in return for speeding up the buying process? If you could propose an offer where the banks were not involved, and you could purchase the property in 7 days but for a discounted rate, would the seller be happy with that offer? Would you be happy picking up a property for $.40 on the dollar? Finding out the needs of the seller will lead to a win-win scenario.

The following are the eight steps to a successful negotiation:
1- Be prepared. When you are going to visit and begin negotiations with a seller or a buyer, you will want to be informed about the property and the area. Do your homework. The more information you have about the property and the area, the more tools you will have for negotiating. How many foreclosures are in the area? Is there any new construction in the area? What are the school districts like? The crime rate? Know any item necessary to discount value from a seller or add value to a buyer.
2- Have open dialogue. You will want to make your case and you will want to listen to theirs as well. Active listening is the most important part of this step. Listen for consistency in their story to find out if your have the real pain point or motivation. As in the example above, if price appears to be the issue but the seller mentions the inconvenience of managing the property from 90 minutes away, then addressing his pain point will probably lead to a discount in price.
3- Watch for non verbal clues when negotiating. The following are some clues as to whether or not the seller or the buyer is losing interest in what you are discussing:
a. Watch the direction of their feet. If the feet is pointing towards the door, you are losing them. If the feet is pointed towards you, you have their interest.
b. Closed palms, crossed legs, or folded arms can indicate a closed person, or someone who is suspicious or not buying what you are saying.
c. A hand to the back of the neck or a finger in the collar could also signal that the person is losing interest in what you are saying.
d. An object in someone’s mouth, such as a pen or paperclip, means that the person isn’t being ‘nourished’ by what you are saying and requires more information.
e. Lack of eye contact or lint picking or flicking of the fingers can be a sign of boredom or lack of interest as well.
The following are non verbal cues that the person has interest in what you are saying
a. Nodding their head indicates agreement and understanding
b. Leaning forward while you are speaking shows a good connection is being made and there is interest in what you are saying
c. Open gestures can indicate that the other person is interested and you should proceed, such as open palms, leaning back in a chair with arms open (not crossed), and nodding
d. Touching can be a sign of acceptance
e. Head tilts can mean interest as well.
4- Argue- state your case and expose the other party’s case. Many times this argument will be over the value of the property, the amount of repairs, or the length of time needed for the transaction to occur. When ‘arguing’ it is important to stay objective. Do not take business personal, and do not allow emotions to get in the way.
5- Signal- indicate your readiness to work together. Find whatever common ground you have with the other person and build on it. In the probate example, the common ground is that both parties would like the property acquisition to happen quickly. If there is agreement on this principle, what sacrifices will each party be willing to make in order to make this transaction occur? Remember, whether buying or selling, if you are not able to get the price you want, then get the terms that you want. The seller dropping the price 20% is a sacrifice. The cost of me acquiring cash at a higher rate within 7 days plus taking the property in ‘as-is’ condition is a sacrifice. But if both parties are willing to make sacrifices then a successful transaction can occur.
6- Package the deal. Put all the elements of the deal together. Make sure that both parties understand the deal and are in agreement. The more thorough you are in this step, the less chance of a last minute back-out by the other party.
7- Finalize the deal. Document all of the agreements.

Again, not every negotiation will end up with a successful transaction, but if you take the time to follow these simple steps, you will put yourself in the best position to use your knowledge base and skills in order to offer the best possible strategy to create a win-win scenario for you and your customer.

Tom Bukacek is a real estate investor / mentor in Austin, TX. For more information on Tom or how to get started in Real estate, please visit http://www.austinmillionaireblueprint.com.

How To (Obsessively) Meet With A Seller

2009-08-24T08:50:00.000-05:00

Mortgage delinquencies hit record high in Q2

2009-08-20T09:56:00.001-05:00

How to Grow Your Buyers List, Tip #1 - Contact People Who Are in Foreclosure

2009-08-19T09:31:00.005-05:00

In this video, we will show you how to grow your real estate buyers list by contact people who are in foreclosure. Homeowners who are in foreclosure typically receive mail from real estate professionals such as real estate agents, bankruptcy attorneys, and real estate investors.

Ensuring Minimal Risk When Purchasing Foreclosures

2009-08-17T08:48:00.000-05:00

How To Wholesale A Hot Smoking Deal For 5 Figure Profits

2009-08-10T08:44:00.000-05:00

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5 Figure Assignment Fees may be hard for some people to believe in today’s Real Estate Market. Believe it or not, they are still out there for the active, persistent and methodical real estate investors, even the first-timers!

Wholesaling

Wholesaling is the art of finding and assigning properties. It can be so appealing to new investors because there is very little cash required to support these types of deals and credit is not an issue. A new investor requires only a small amount of cash to cover earnest money deposits, advertising, etc.things like this.

Discover your mission, vision, or purpose in life.

Spend some time envisioning the type of lifestyle that fits your family and personality traits. Then begin to realistically set your goals based upon the vision.

Remember the basics about goals – they should be SMART GOALS.

S-pecific
M-easurable
A-ttainable
R- ealistic
T-imely[/b]

Aim for what really matters to you. Discover your mission/vision/purpose. and teach yourself how to set and persist to achieve your goals. To manage time effectively track your tasks consistently, so that you don’t waste time on non income producing activities. Visualize and focus on your goals daily to ensure that your actions reflect that which pertains to your goals.

What tools do you need?

The basic tools that you will need as a new wholesale investor are these:

* Cell phone - (preferably a PDA) with unlimited minutes, you’ll need them! This will help you to organize your tasks, records, phone numbers and synchronize with your computer.
* Computer - researching data comps and for marketing your wholesale deals
* Printer - print out contracts, contracts and any documents
* Camera - this is an absolute must have for creating your e-flyers to mail our to your database to sell your deal
* Contracts / Agreements
* Fax Machine
* Filing Cabinet – you’ll need this too.

As your business evolves, you’ll reach a point where you will find other tools and gadgets that increase your productivity and your profits.

How to find deals:

There are many places to you can locate deals and here is a list a few of them:

* Vacant Houses
* Title Companies
* Home Inspectors
* REIA Clubs
* FSBO’s
* Bankruptcy Attorneys
* Homeowners Associations
* Burned out Landlords
* Bail Bondsmen
* Code Enforcers
* Hard Money Lenders
* Meter Readers
* Waste Management
* Divorce Attorneys
* Probate/Trustees
* Tax Offices
* Garage Sales
* Estate Sales

** Every time you go for a ride, take a different route to get to know your neighborhood, the properties, comps, vacants and utility workers.

Once you’ve made contact with a truly motivated seller- you’ll make them an offer on that property based on the comps, repairs and your desired profit.

Quick Calculation of the Maximum Acceptable Offer: (MAO)

MAO = (ARV x .65) – RC – CC – AF

ARV = After Repair Value
RC = Repair Cost
CC = Carrying Costs
AF = Assignment Fee

Assigning The Contract

The most important thing to do here….in the money step is to be very clear that you’ve contracted to purchase the property as “your name….and/or assigns”: By placing and/or assigns after your name, you’ve ensured your ability to assign the deal to an end buyer. Although a contract is usually assignable unless otherwise stated, I would hate for you to fall down on the money step by leaving it to happenstance. Once you have an executed purchase agreement with the motivated seller that contacted you and you’ve negotiated a hot, smoking deal with your and/or assigns on that top line…you are ready to find your buyer.

Note: In my contracts, “and / or assigns” is a part of the agreement along with the following clause.

Buyer shall receive a key within 48 hours and be granted access to the property to allow partners and contractors to evaluate it as needed. If the seller is still living in the house, I request access on pre-arranged days and times. When they won’t be there and this allows me to get my investors in to see the property.

How to help your buyers see the value in your deal

I try to make it as easy as possible for my buyers to access, evaluate and purchase my wholesale deal by doing the following. By having my contractor to come out and submit an estimate on the needed repairs (on his professional letterhead) can save my buyer/investor a great deal of time and guesswork and I also ask my real estate agent for some accurate comps on the subject property. Even though I encourage every buyer/investor to pull their own comps, perform their own due diligence, I’ve found that by doing these things, they are steps that aid in the process of assigning the deal.

So at this point, you’re so close to that meeting with your bank teller right? …hang on!

At this stage, you have the property under contract, you’ve got your estimate(s) for the repairs, comparables, photos, and you’ve got access to the property and your blank assignment of contact in your hot little hands. You’ve done a lot and you’re close.

How to Find a Buyer for your Deal

During this point, time is certainly of the essence and you’ve got to get your e-flyer made and sent out to your database, your craigslist ads, your for-sale-by-owner posts, directional arrows and a hard copy to bring to your local real estate investor club.

In my experience, they are many, many “wanna-be” investors that read book after book, attend seminars and invest within the confines of their minds. My advice to my students is to weed out the tire kickers from the decision makers, early on before they have a deal. Create a performing database. It doesn’t have to include many, many names…. just the ones that know a hot, smoking deal when they see one and that will perform when the times comes to do so.

What day is it? Now it’s payday!

Your end buyer / investor will be exchanging a signed assignment of contract with you for a fee. They are paying for the right to step into your place and fulfill the obligations that you and the seller have set forth.

Collect a deposit from your buyer as you hand over the purchase agreement and obtain a signed assignment of contract . This will help you to separate the decisive, action taking investors from those that have a case of paralysis of analysis. If your buyer is serious about moving forward, they will have the wherewithal to hand over a deposit in good faith thereof.

Since it’s your deal, you would be using your title company who is most knowledgeable and skilled in the art of wholesaling properties and the manner in which you operate your business. You will provide your title agent with instructions about the remaining funds that will be released to you upon settlement. If your title company is not able to release those funds to you at that time, it’ll be necessary to execute an addendum with your buyer.

An addendum attesting to the fact that you will be both be at the closing and the buyer ( your assignor) must pay you in the lobby immediately following the closing, along with a Notarized Memorandum of Agreement would help to protect your interest.

Assignment fees can be very lucrative in certain markets. On my very first wholesale deal- the assignment fee was $7,000 and I had never done it before….so not bad right? My third wholesale deal allowed for a $40,000 fee because it was a hot, smoking deal. The buyer, a contractor was thrilled to get that property so that he could rehab it and make his profit.

Hot, Smoking deals are out there….if you’re not paying attention, you’ll bump right in to one of them!

So, with that- see your vision, steady yourself, prepare with vigor and head in that direction with renewed energy, confidence and persistence…and remember to enjoy the journey.

Karen Roberts

Karen is a real-estate entrepreneur, investor, mentor and REIA Club president. She is dedicated to building financial independence and inspiring, empowering others to achieve their financial freedom through the FEC - http://www.financialenlightenmentclub.com

What Is A Quitclaim Deed?

2009-08-07T20:03:00.003-05:00

Find out what a quitclaim deed is. Many people mistakenly call it a quickclaim or quick claim deed. Be sure to check out our other video on our YouTube channel.

Be sure to check out our blog at http://www.therealestatedealer.com/blog

Be sure to check us out on Twitter at http://www.therealestatedealer.com/twitter

Listen to our podcasts at http://www.therealestatedealer.com/podcast

View our latest real estate deals at http://www.therealestatedealer.com/properties

The 4 Strategies To Make Money From Subject To’s

2009-07-27T09:18:00.000-05:00

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By: Jason Hanson

I've said it a million times and I'm going to say it again. This is a subject-to market, and if you aren't using this method you're probably throwing away hundreds of thousands of dollars in profits. Now, I want to show you the four ways that you can making money from Subject-To's:

1. "Traditional" Subject-to
2. "They Pay You" Subject-to
3. "Guaranteed Money" Subject-to
4. "Wholesaling" Subject-to

Alright. Let's first begin with the way that most of you are familiar with, the traditional subject-to. This is when you get a call from a motivated seller, and all they want you to do is simply take over their payments. They don't want any money, or anything else. So, if you get a call from a seller who owes $200,000 on the house, you're just taking over the payments on the $200,000 and the sellers will walk away (of course you will do your due diligence and make sure the property will cash flow, check the payment amounts, interest, rates, etc).

Next, is the "They Pay You” Subject-To. We all know that you will not purchase a property subject-to and take on negative cash flow. If the payments are $1,500 a month and market rent is $1,000, then most people are smart enough not to go negative $500 a month. Of course I say most people, because there are a lot of idiots out there who will take on negative cash flow. Anyway, let's pretend you got a call from a seller and he wanted you to take over payments of $2,000 a month. You did your due diligence and you learn that market rent is $1,800 a month. You also know that you want to get $200 a month in positive cash flow from every property that you buy. This means that your payment should be no more than $1,600 a month (because you will rent it out for the market rent of $1,800 and get your $200 in cash flow). Well, first off, when most investors get a lead like this they immediately toss it in the trash can and don't let their "creative juices" flow. However, being that you're smart (you're reading this aren't you!) you know that there's a way to make the above deal work. So, what you do is call the seller and let them know that you can take over their mortgage payments; however, because your company doesn't take on negative cash flow, he will have to write you a check for $400 a month. Yes, you read that correctly, you can create your own cash flow and have a seller write you a check for any amount you desire.

Now, you're probably wondering about the risks of the "They Pay You” Subject-To right? The risk is, that they won't pay you the amount of money they owe you every month, which is why you only do this type of subject-to on straight rentals (you will not do this on properties you sell via lease option). The absolute worst case scenario is that the seller doesn't send you the $400 check every month and all you will do is simply let the property get foreclosed on…..by the way, this is why the correct paperwork is so crucial. My subject-to contract states in very clear language that if the sellers don't make the payments to me then I will let the property go into foreclosure and their credit will be ruined. I bet you're probably wondering if this has ever happened to me, I know you are!

Well, one time I did this type of deal on a property in Baltimore, MD. To make the property cash flow the sellers had to write me a check for $300 every month. One month the money didn't come and I called the sellers. I spoke to the wife, who was a real BI%$#^ and she basically told me that she didn't feel like making the payments anymore. Then, I spoke to the husband who started making excuses about how his wife got in a car accident and some other B.S. So, the sellers tried to call my bluff, but I immediately stopped making the mortgage payments. A few months went buy and the sellers got a foreclosure notice in the mail and wouldn't you know, the sellers made up the payments so that the property didn't go into foreclosure. Remember, that's only happened to me once and the sellers ended up paying. This is the way I see it: With this type of deal I'm purchasing no money down and its risk free. Because, I will make $200 a month in cash flow and if for some reason I have to let the property go, at least I made $200 a month for several months (plus, most people care about their credit and don’t want it damaged).

The above technique works, but you have to believe it yourself. When I was doing the consulting day with a new investor, we were making calls on leads we had. One of the leads was a potential subject-to and we figured out that in order to make the deal work, the owner would have to write this investor a check for $600 every month. We called the seller on the phone, I "pitched" the idea to him and he was interested (I actually recorded this call on video, so go to YouTube and type in "Jason Hanson Real Estate Investing" to watch it). Now, to be realistic the majority of the time you pitch this idea the owner will say no, however, we know this business is simply a numbers game.

So, when the phone call was done I remember looking at this new investor and he seemed astonished that this would work……Remember the name of the game is "creative" real estate investing. The game is also finding motivated sellers and if you don't ask someone if they will write you a check for $600 a month, then you'll never find out if they will actually do it, plus, all they can do is say no. By the way, in the interest of full disclosure the above deal did not close where this investor was going to get the $600 check every month. But, he did learn a very lucrative lesson that you can ask people to write you a check to make a deal work, and if they're really motivated they will say yes.

We're rockin' and rollin' onto the third type of subject-to, the "Guaranteed Money" Subject-to. Here's how this works: Sometimes you're going to get a call from a seller who wants you to take over their monthly payments, however, they have a lot of equity and they want some cash at the closing. Since you know we don't do that, here's how we solve the problem of the seller who wants cash. Once again, let's create a scenario: You get a call from a seller who wants you to take over their payment, but they have $80,000 in equity and they want half. They want their $40,000 at closing, which of course you know we would never do (that would be the worst "no money" down deal in the world). When you have someone who wants cash, you will go into your script of "Mr. Seller, we will be able to give you your $40,000 within five years. This is because our company specializes in helping people with less than perfect credit……(you know the rest of the script so I'm not typing it, and if you don't, go to YouTube and watch the videos). Anyway, once the seller agrees to receive their $40,000 in five years, you will simply give them a note that states within five years you owe them $40,000. As you can see, you created another no-money down subject-to and did not have to come out of pocket at all. (Because when your tenant buyer buys the property and cashes you out, you will have $80,000. You keep your half and give the other half to the seller).

Lastly, there is wholesaling subject-to. This is where you play the middle man as you do with regular wholesaling. You have a seller who wants someone to take over their payments. For one reason or another you don't want to own the house, so you find a retail buyer to take over the payments. You will run ads in the paper that say "Desperate Seller, Take Over My Payments, $10,000 moves you in!" The $10,000 will be your wholesaling fee and the buyer will take over the seller's payments. The biggest risk with wholesaling subject-to is lack of proper paperwork. You MUST have paperwork which states you're just a middleman and that you have no control over whether the third party that you wholesale to will make the monthly mortgage payments. Of course, you also tell the seller that you're wholesaling the property and you cannot make any guarantees.

Wow, that's a lot of typing and one long article. This is the type of article that I would make copies of and keep near your desk when you're evaluating properties so that money isn't slipping through the cracks. Also, go back to your old leads and see if you can make any potential subject-to deals out of them. And now you should make a lot more money this year, because you’re now armed with 4 more money making strategies!

Jason R. Hanson is the founder of National Real Estate Investor Month, author of “How to Build a Real Estate Empire” and mentor to students all across America. To get a FREE copy of Jason’s Special Report “The Insider’s Guide To Buying Your First Investment Property in 83 Days or Less!” visit http://www.PrimoCoach.com or call 800-865-1702.

How To Buy Rental Property With These Quick And Easy Steps

2009-07-20T09:16:00.000-05:00

How to Prescreen Motivated Sellers

2009-07-13T09:50:00.002-05:00

View our other videos here.

Have you ever gotten tongue-tied whenever a motivated seller called you? Do you know what questions to ask them to make money? In this video brought to you by TheRealEstateDealer.com we will not only show what questions to ask motivated sellers, but we will also show you how to get the same form we use for our business for FREE!

This video is available in two parts. Please go to our YouTube channel to view the second part.

Vital Facts To Know When Buying Real Estate

2009-07-13T09:15:00.000-05:00

What If A Seller Calls With A Listed House

2009-07-06T09:13:00.001-05:00

It's Time To Make Lemonade

2009-06-29T12:55:00.001-05:00

Thank you for visiting the official blog of TheRealEstateDealer.com. If you are new here, you may want to subscribe to our RSS feed by clicking the link in the upper right-hand corner of this page that says, "Subscribe to this Blog". Thanks for visiting us!

By: Pete Milano

Before I get into the story here are a few things that can help you keep from failing.

Regardless of your situation the following does apply. Did you keep a running up-to-date record of all costs associated with your flip? If not, either get on the ball or get out of the business. You will FAIL!!!

Purchases
When it comes to tracking expenditures I'll give you the best piece of advise to get you on the right track. A credit card purchase should have either the "flip" items or not. Never mix for the same purchase on a CC. Get an online account at the banks where you have credit cards and use the download transactions option. You will now have the exact amount of each purchase and the vendor. For stores like LOWES they will have the store # listed too. You can open the downloaded file with your spreadsheet software.

The Story
I purchased the foreclosure well below market, fixed it up doing all the "right" things and at way below the going rates and costs. I contacted a knowledgeable broker who was recommended to me by my mentor. The broker and I sat down and reviewed our findings of area comps. Since the nearby homes are all different with none to compare to we decided to use "price per square foot" of the home sales to determine an asking price. Then I listed the house for sale at a great price (for this house). The listing company is a major brand name nationwide real estate firm.

Before I go any further let me tell you about the property. Great curb appeal. The lot is considered a "double lot". Very large size (just under 10,000 sqft) with plenty of room for anything one might think of doing with it. This property is a corner lot, with one large shade tree, new porch, solid foundation, and fairly recent aluminum siding. That's just to name a few of the positive things.

So the property gets listed and we have one showing the first weekend. Unfortunately, since the showing we have not realized any bites or interest. A week or so passes and now it's time to think this over. Taking into consideration the expected financial situation of the profiled buyer I lowered the price and I offered to pick up $5,000 of their closing costs. Granted there are many houses in the area that are for sale but they are either in a need of rehabbing or priced $30k+ above my price. So, another week or so passes without any activity. It is now time to roll up my sleeves and get creative so I prepared and sent out individual packets using high quality paper, colored picture of the property and an offer letter to every Church in the zip code (over 40 mailings). The letter presented a very generous donation offer to the church (1% of the sale price) if anyone from the church or referred by the church purchased the house. Still no bites! What gives?

Now I'm getting serious about the matter at hand. It is no longer a pricing question for me. Of course I want to find out if the price is too high but maybe it is that people are not looking to purchase a house at any price? First thing is I talk with my broker and he just happened to have spoken with another broker who focuses selling and buying homes in my area. I tell my broker to call the other broker and offer the house during the current week at a ridiculously low price that is way below value and even a steal for another investor. Mind you, this house is picture perfect and almost all new inside too. New kitchen, plumbing, bathrooms, 2-zone HVAC, electrical, washer/dryer, prepaid 3 year security system, and more. Calls are made by my broker and still no bites. But just wait a minute. Didn't I just say "way below value and a steal for an investor"? I'm an investor, ain't I? Like Da!

It's time for the Indian story
Like the Indian who stayed up all night to see where the Sun came from. It finally DAWNED on him.

No thanks there will not be any extra helping of Stupid at breakfast for this guy

And, to think I was almost going to sell the house at any price! I was going to NET $126,900.00 at the "fire sale" price. Yes, I would be making a nice profit for a flip that took me just 7 weeks. But, just wait till you see how the numbers work out for me. I've used realistic and representative dollar (I rounded) values so we all can see how this works. First, I would like to add a kind word here for my mentor. As my mentor said to me some time ago, "the way to get rich in real estate is to never sell, only buy". Yipes! He was right.

As you too will read from many other investors, "it's all in the numbers". So here is a table to reference and see where and how much I win. All of these numbers are proportional to the actual numbers. I just rounded to make it easier to demonstrate.

Description - Total Amount - Commission - Net before taxes
Property Purchase price $ 50,000.00
Property Improvements $ 50,000.00
Associated Additional costs $ 15,000.00
My Original sale price $ 165,000.00 $ 9,900.00 $ 155,100.00
My Reduced sale price $ 145,000.00 $ 8,700.00 $ 136,300.00
My Fire sale price $ 135,000.00 $ 8,100.00 $ 126,900.00
Description Monthly PMT 12 months
One year rental lease with 100% POC's $ 850.00 $ 10,200.00
Renter's purchase price $ 145,000.00 $ 4,350.00 $ 140,650.00
Monthly PMT
I Mortgage the property $ 125,000.00 $ 790.00

It's time to make lemonade
I decided to rent and offer 100% POC's (Purchase Option Credits) of the rent towards the purchase of the property at the end of the 12-month lease. At six months into the rental agreement I will start asking the tenant to think about the option and if they will be exercising it. I should note here that I am using a Property Management firm and within two weeks of contacting them they signed up a tenant and had them moved in. That means I have revenue at 4 months after I closed on the property.

Since I purchased the property with cash and funded the rehab I now need to get some working capital for my next project. At the six-month mark I will apply for a mortgage. To keep the cash flow positive I will go for $125k that I will put in my pocket to use for my next investment. Now, I do think that $125k amount covers my TOTAL investment of $115k. I can put the extra $10k aside and use it to make the monthly $790 mortgage payment or use the tenant's monthly rent for that purpose. It's all up to me.

Summary
Let's say the tenant exercises their option to purchase. I will then receive $145k minus the $10.2k Purchase Option Credit, minus the $4.35k commission, minus my mortgage of $125k, which comes out to $5.45k. I will wind up somewhere near $125k plus $6k for a total sales price of $131k. Now for the fun of applying depreciation, revenue, taxes and such. So, here you have just one "real" example of what will most likely occur for me. I hope they decide not to purchase as the house will most likely sell come early 2010 and I would expect somewhere between $155k - $195k.

From my point of view this lemonade sure tastes good to this person.

Good luck on your next investment.

Pete Milano is a real estate investor, rehabber, renovations and ...

Time Management For The Real Estate Investor

2009-06-22T12:52:00.000-05:00

New Video: Short Sale Package: Authorization to Release Information

2009-06-22T08:39:00.000-05:00

Ultimate No Money No Credit Strategy Subject To...

2009-06-15T09:49:00.000-05:00

Thank you for visiting the official blog of TheRealEstateDealer.com. If you are new here, you may want to subscribe to our RSS feed by clicking the link in the upper right-hand corner of this page that says, "Subscribe to this Blog". Thanks for visiting us!

By: Tom Bukacek

Regardless of your experience level or finances, the best type of real estate investment is the type where you invest as little of your own capital and risk as little of your own credit as possible. One of the best strategies out there that meets these criterions is known as 'subject to'.

Every purchase agreement has a subject to clause. A ‘subject to’ offer simply means that the buyer is willing to purchase a piece of property ‘subject to’ some specific circumstance. Usually that circumstance will be subject to an inspection, or subject to new mortgage or something of the like.

But for the sake of this article, the use of the term ‘subject to’ is in relation to purchasing a property "subject to the sellers existing mortgage remaining in place.” This phrase means that at closing, the property is titled in the buyer’s name, but the loan is still in the seller’s name. Therefore, you are buying the property ‘subject to’ the sellers existing mortgage payments.

This statement means that you are not assuming the loan. The terms you create with the seller are between the two of you as long as you follow to the letter the terms set up when the loan was conceived.

Why on Earth would someone just give you the deed to his or her home? Many motivated sellers are willing to trade EQUITY for Peace of Mind. If someone is finically strapped and doesn’t want a foreclosure on their record, or their job is being relocated and they don’t wish to be landlords from afar, or they are going through some other personal hardship, they may be willing to sell their home as quickly as possible in whatever way possible and as low a price as possible in exchange for the relief of not being responsible for the debt any longer.

For example, I recently purchased a property ‘subject to’ from a gentleman in Pflugerville, TX, for $126,000. The property value was $145,000. The house was less than 2 years old and was in immaculate condition. Why did he sell to me subject to? Because his job was transferring him immediately to Georgia. He did not feel comfortable being a landlord from afar. He also felt (accurately) that to sell his house quickly, he’d have to drop the price. After closing costs and fees, he’d probably be upside down. This method of selling his house to me ‘subject to’ the existing financing remaining in place achieved his goals of ridding himself of the property quickly without coming out of pocket.

Purchasing their house ‘subject to’ can provide the motivated seller with instant debt relief and help them out of their situation immediately.

Once you acquire the property in such a manner, what exit strategy should you use? The best strategy in this situation is to find a buyer and finance the transaction. You, as the investor, now become the BANK, and like a bank, you create multiple money making opportunities for your business.
How does owner financing work? Suppose you come across a family that has cash, a FICO score in the mid 600’s, and has been at their place of employment for 1 year. Can this family get conventional financing in this current market? No. Would YOU be willing to seller finance this property? Yes. So with this strategy, you can help a family who cannot purchase a home using traditional methods. Plus, your owner financing fee that you will charge them will be less than typical closing costs.

How do you as the owner of the property make money when owner financing? There are four ways:
1- Make money with the owner financing fee. Typically, as the owner, you can charge between 4-7%. This fee is non-refundable.
2- Make money with the monthly spread. When you take over a mortgage with a 5.25% interest rate, you are not going to charge a 5.25% interest rate to you new buyer. Rather, you will probably mark up the rate to 8-12%. On average, you will want to make a minimum monthly profit of $200.
3- Make money when you sell the property. If you purchased ‘subject to’ and the loan amount was $120,000 and then you sold for $150,000, when the buyer refinances the mortgage with another bank 2-3 years later, you will profit the difference.
4- Tax benefits such as depreciation and interest deductions.

So as you can see, purchasing subject to is a ‘Win-Win-Win’ for all parties involved. It is a ‘Win’ for the motivated seller because they have peace of mind. It is a ‘Win’ for the buyer because they can now move into their dream house. And this strategy is a ‘Win’ for the investor because they add a profitable transaction to their portfolio without using their own money or credit!

With Subject to, are you assuming the loan? NO. When a property owner sells his home ‘subject to’ the existing mortgage, the buyer must make the payments on the mortgage or get foreclosed on, like a traditional mortgage. However, since the buyer is not legally obligated to the bank to make payments, the foreclosure will not have a negative impact on the buyer's credit where it will have an impact on the seller’s credit.

Does this mean that the buyer has no pressure to make payments? Absolutely, unequivocally wrong! First off, if you purchase the property and sell it correctly, and manage each property as its own business entity, then you will never have any reason to miss a payment. But even more than the business reason, the investor has a moral obligation to both the seller he purchased from as well as the buyer to whom the property was sold to make those payments. Your word is the most important thing you have. Keep it.

Finally, the most common question asked by the investors is "What about the due on sale clause?" This one concern often times keeps numerous investors from purchasing properties using the ‘subject to’ method. So what does that due on sale clause actually say?

Typical due-on-sale language states that, “the Lender may, at its option, declare immediately due and payable all sums secured by the Mortgage upon the sale or transfer, without the Lender’s prior written consent, of all or any part of the Real Property, or any interest in the Real Property.”

First and foremost, people say that due to this clause, performing a ‘subject to’ is illegal. The due on sale clause is a clause in a contract. This is not a government statute! If the lender chooses to execute this clause, you will not go to jail. There is nothing illegal about purchasing a property ‘subject to’.
Second, the word that stands out is the word may. For a rule to be absolute, the language must be definitive. The due on sale using the word ‘may’ means that this rule is subjective and not absolute.

A reading of the language shows that the term, ‘due-on-sale’ is misleading. In fact, the mortgage may be called in if there is any transfer of any interest in the real estate, and not just a sale of the property.

For example, it is possible that even a long term Lease will allow the Lender to accelerate their mortgage, especially if the Lease contains an option to purchase. But any Lease that contains an option to purchase will be sufficient to call in the loan if it contains an option to purchase the property, regardless of the length of the Lease. Have you ever heard of a lender calling a note due because the owner was renting or leasing the property? Of course not. The same scenario holds true for purchasing properties ‘subject to’.

In reality, very few due on sales clauses are ever called in. Between my own deals and those of the people with whom I work, I have not heard of any instance out of over 600 transactions where the due on sale clause was invoked.
Why? Understand that the job of a lender is to collect payments. They loan out money at a higher interest rate then they are paying and create their cash flow from the difference on that spread. Why stop this profitable process?

Banks are not motivated to ever take a performing asset and turn it into a non performing asset. When an asset is performing, they are allowed to lend 9 times its value and collect interest on that amount. When the asset is not performing, they cannot loan out eight times the amount loaned.
Example. Let’s say you purchase a property ‘subject to’ the existing finance staying in place. The loan amount is $200,000. As long as the asset is performing, the bank can loan and collect interest on $1,800,000. Now, if they decide to execute the due on sales clause, then the bank would not only stop receiving money on that loan, but they would put it into the ‘bad debt’ category and not be able to loan out $1,600,000 until the bad debt is resolved.

As you can see, there is little motivation for the bank to ever evoke the due on sales clause.

In conclusion, purchasing homes ‘subject to’ is a creative, quick, low risk, and financially rewarding way to add to your real estate investing portfolio. Under current Fannie Mae guidelines, an individual may own up to 10 homes before being considered overleveraged. With this strategy, you may own as many homes as you can buy. I know and work with a gentleman in Austin, TX, who currently owns more that 90 properties, each cash flowing over $300/month. Would this passive cash flow change your life?

The ‘subject to’ method of buying homes allows the investor to achieve financial freedom with little risk and great rewards. It takes little money to get started buying homes 'Subject To' and, is quicker and easier to sell a home when the banks are not involved.

ABOUT THE AUTHOR: Tom Bukacek is a real estate investor with properties in both Arizona and Austin, TX. For more information on how to get started with Real Estate Investing as a business, please go to http://www.austinmillionaireblueprint.com. For more information on his real estate website, go to http://www.endurablesolutions.com.

TheRealEstateDealer.com Participates in the 16th Annual Chicago Cares Serve-a-thon

2009-06-13T21:47:00.008-05:00

The event was particularly gratifying to one of the team members, Richard Woodfork. Richard said, "I am always willing to give back in any way I can. This was a no-brainer for me because I went to kindergarten here. I remember 33 years ago sitting in this very classroom. It brings back memories."

That same day, the management team at TheRealEstateDealer.com proclaimed it will add a link to the website so that visitors can see what the team is doing in the community. Also, links to various charitable organizations will be added so that people can join and give back to their community.

The management team said the addition to the website should be completed during the first week of July, 2009.

If you would like more information about the Chicago Cares program, visit their website.

You can view additional photos from the event at our website.

The Crucial Steps All New Investors Need To Take

2009-06-08T09:46:00.000-05:00

Building Your Buyers List And Finding G.R.E.A.T. Buyers

2009-06-01T09:11:00.000-05:00

Thank you for visiting the official blog of TheRealEstateDealer.com. If you are new here, you may want to subscribe to our RSS feed by clicking the link in the upper right-hand corner of this page that says, "Subscribe to this Blog". Thanks for visiting us!

By: Matt Gerchow

Building Your Buyers List and Finding G.R.E.A.T. Buyers

Your goal as a Wholesaler is to find between 6-10 GREAT buyers. Go ahead and put your hand down, I know what your question is already. But Matt, shouldn’t we try to have as many buyers as possible? Shouldn’t we market all of our deals to everyone? The answer to both of these questions is no, but yes at the same time.

Let’s start by dissecting the word GREAT into the individual letters.
G is for Good
A GREAT buyer is good at what they do. They take their business seriously and want to succeed in real estate.

R is for Ready
A GREAT buyer is ready to buy. They will usually have two or three rehab projects going at a time. Paying one additional month of interest is merely a cost of doing business.

E is for Eager
A GREAT buyer is eager to close. They know that you don’t make any money unless you convert properties into dollars. The sooner they can close the sooner they can get their crew started on it.

A is for Accountable
A GREAT buyer is accountable to their word. You don’t have to wonder if they are going to disturb tenants or homeowners, will forget to order an appraisal or forget to show up for a closing.

T is for Timely
A GREAT buyer is timely and on time. If they say they will meet you there at 10am, they are there. If you schedule them to close at noon and your sellers at 2pm, there will not be a problem.

Now that we know what a GREAT buyer is, there are several reasons we want to work with a limited amount of buyers, many of which we learned the hard way.

You need to watch out for people that try to go around you on a deal. This has to be the lowest form of slime-ball that I have ever seen. If you are one of these people, put the book down and ask for your money back now. I really don’t want you becoming successful in wholesaling or any other type of real estate.

A “Go-Around”, happens when someone approaches the seller of the property, usually with your email in hand and attempts to undercut your assignment fee by offering them a few thousand more than you did. This started happening especially after we allowed people to automatically enroll themselves as one of our buyers through our website. The more people you advertise to, the better chance you have of this happening.

Here’s a way to fix this in a jiffy. Send an email blast to your entire group about one of your rentals. If you don’t have any rentals, advertise a friend’s house who works from home. If you don’t have any friends, well, that’s a different book.

Here’s what you do. Blast out a real juicy deal with lots of equity that will be hard for them to pass up. Make very clear instructions, “Do Not Disturb, Owner Living in House.” Instruct your tenant or friend to act like the owner and listen to everyone that stops by and tries to intervene in “the contract.” Pay them $20 for every name, phone number and email that they get. For a hundred bucks you’ll weed out your list in a matter of a week.

In addition, to “go-arounds,” working with many buyers requires you to educate each new buyer on how you do business. When I first got started Paul would hammer home the fact that whatever terms we agreed to on the first deal would set the precedent for every deal that followed with that Investor. This would include; the percentage of the assignment fee up front, who held the escrow and which title company conducted the closing.

Where else can you find GREAT buyers?

The County Courthouse

Try going to your local courthouse auction and see who is buying. Chances are they have a boatload of bank and private finds behind them. Keep in mind I said “buying.” The newbie Investor that has their heart set on Aunt Jenny’s condo that is in foreclosure is not your buyer.

Your Email Inbox

Search your email inbox for the person that originates an email about new properties. You have to be careful because a lot of these people are wholesaling everything and don’t have any real money for a closing.

Hard Money Lenders

Call every hard money lender you know. Ask them who currently has money and is looking for properties. Incentivize them by telling them you will direct the hard money loan back their way. They may not want to release the information but they can find out what they are looking for on your behalf.

Bandit Signs

We used to put signs out all over town that are totally different from the ones that you normally see. Most signs are yelling at you that they want to “’Buy Houses for Cash!” We have signs that say “We Sell Distressed Properties”. They then call a phone number and are instructed to enter their fax number and a list will be sent to them. Here’s a bit of logic to think about. The people we buy properties from usually do not live in the neighborhoods where we buy properties. They are landlords and what we term “don’t-wanters.” Investors are the ones driving these neighborhoods looking for properties that have the usual distressed markings, such as: overgrown grass, busted windows, bad paint, etc.

Website
You take your pick on how you want to gather the information, but the best way I have found so far is to direct them to a website. The reason being is you can squeeze them for information before they see any properties for sale.

Let’s face it in this day and age if someone does not have internet access, they probably are not your Buyer. Even as I write this I am sitting in a hotel room two hours outside of Bogota, Colombia and my high speed access is working just fine.

If you want to include a phone number, I recommend you using Kall8 for 800 numbers as you can reroute them very easily with an internet connection. This way you can easily transfer the calls to an office when your business starts to grow and you won’t have wasted a ton of money on advertising to your cell phone. Trust me on this one, I learned the hard way.

Fax-On-Demand or FaxBack
Another service that is great for building a buyers list is Fax-On-Demand. If you use a service to send them the current list of properties they enter their fax number or “opt-in” and then you are able to send them faxes in the future as well. Although I do not use this service any longer, here is a link where you can see a real example of a faxback. Use your bandit signs to promote this number.

Here are a few sites that offer this service. Corporatefax.com, Globalfax.com and Mast-ent.com are a few of the companies that can provide this service for you. This list is just to get you started. Try and find one where you upload a computer file vs. faxing in your ad copy, the quality will be MUCH better.

Direct mail to high end apartment complexes

These folks are usually on the cusp of buying their own home. They might have moved to a new location temporarily and have now accepted that they are going to be living in this new location and would like to start earning equity every year rather than dumping it into rent. I am a perfect example of this having lived in Seattle, New York, Miami and Bogota. Each time I move I like to rent before deciding on a property to buy.

This strategy is usually applied once you have implemented several other marketing techniques first.

Craigslist.org

Placing ads for investment partners is another great way to build your Investors list. Try something like this:

“Investment company seeks partner for several properties in the [your county] area. We have secured special access to non-listed properties that are direct to seller.

WHAT TO ASK FOR

So what type of information should you collect from a potential buyer? If you have visited several investor sites, you already know what to ask for. If you are like me and are ambitiously lazy, here is the information in concise format.

• Email address
• Company Name
• First and Last Name
• Company Address
• Preferred Phone
• Fax Number
• Type of property they are interested in: Single Family, Multi-Family, Commercial
• Approximately how much capital are they working with?
• Are they interested in loaning money on mortgages?
• What level of Rehab are they comfortable with?
• How many transactions have they completed in their career?

Remember... you only need 6-10 G.R.E.A.T. buyers to have a very successful career as a Real Estate Investor. Finding these 6-10 buyers is the challenge.

If anyone has any additional questions regarding the creation of their buyers list, please feel free to post them on this thread.

Hope this helps,

Matt Gerchow
Currently In S. America for 4-Months...Next Stop, Thailand for 6-Months

www.Real-Estate-Investing.com - Learn to Invest, set your business on auto-pilot and start traveling the world full-time. Your lifestyle could completely change, in a lot less time than you think.

1Q home prices fall by 19.1 pct to 2002 levels

2009-05-27T05:21:00.001-05:00

The Most Common Wholesaling Mistakes

2009-05-25T09:02:00.000-05:00

Wholesaling Properties: 7 Costly Mistakes Of Newbie Investors

2009-05-18T09:06:00.001-05:00

RealtyTrac: April foreclosures rise 32 percent

2009-05-13T19:33:00.001-05:00

Median home prices fall in 88 percent of cities

2009-05-12T17:13:00.000-05:00

The Basics Of Wholesaling For Beginners

2009-05-03T20:50:00.001-05:00

Thank you for visiting the official blog of TheRealEstateDealer.com. If you are new here, you may want to subscribe to our RSS feed by clicking the link in the upper right-hand corner of this page that says, "Subscribe to this Blog". Thanks for visiting us!

By: Tom Bukacek

One of the best strategies to use for beginning real estate investors is Wholesaling. Why is this technique a great beginning? Because wholesaling properties does not require the investor to use any of his or her credit or money to complete the deal (as long as you know what you are doing).

So what is wholesaling? Here is how it works: An investor finds a property well below its market value, gets the property under contract, and then assigns or sells the CONTRACT to another investor or buyer to complete the purchase!

You do NOT improve the property; just get it under contract and SELL the contract to another investor who is looking for a house in need of repair. That’s it! It’s as simple as that! You can typically sell a CONTRACT for anywhere between $500 - $10,000+ profit!

Your basic end buyer will be someone who enjoys fixing up a house. People who like to do “fix & flips” and “rehabs” are typically working on properties and they don’t have time to look for their next deals. These investors use wholesalers to find cheap deals so they can purchase the contract and get right back to their next project. Fix & flip investors love to work with wholesalers since they do not have to take the time to find the next the project and they can have their repair crew’s move from one project to another without any down time between projects.

Some people have the genetic makeup or skill set in which to fix properties. In some peoples’ hands, tools are objects of creation. In others hands, like my own, tools are weapons of mass destruction. If you do not possess the skill set, desire, or the finances to fix up a property, then read on.

The challenging part of wholesaling is finding the property at a discount. How many people do you know willing to sell their house for 50% of market value? Searching for these discount properties takes a great deal of time, research and leg work. However, once you get a property under contract for the right price, you will all almost always be able to find a buyer. Note the phrase ‘right price’. So what is the right price?

Generally, you will be able to sell a property to an end buyer at between 60-70% ARV. Therefore, you want to be able to find a property at 50 – 65% of Market Value. Properties that are available at this price range have two things in common: 1- they need repair and 2- you will be dealing with a motivated seller. A motivated seller may not have the cash to get his house in necessary condition to sell it by conventional standards and may sell at steep discount to someone who can fix it up.

Sellers can be motivated for some of the following reasons:
• Probate property (out of state family member passed away and left property that needs repair to unexcited heir)
• Moving (person doesn’t want to be a landlord or own multiple houses)
• Job loss (cannot afford to continue making payments or fix up to get to market value)
• Vacant house
• Burned out landlord
• Divorce

Let’s look at an example. Suppose you find a motivated seller who is moving out of state. The home needs some repairs, such as carpet, paint, roof, and landscaping, but is structurally sound. They are moving in 2 weeks. The sellers have no desire to fix up the property or be a landlord from afar.

What would be the steps necessary to complete a successful transaction?

Step 1- Determine the After Repair Value (ARV). The best way for beginners to determine ARV is to utilize the services of a Realtor. You will want to know the comparable price per square foot of similar houses (within 10% of size) in the subdivision. Analyze a set of the lowest comps in the area and the highest comps of the area. For your purposes, when making an offer, seek out the lowest comps in the subdivision.

Step 2- Calculate the repairs. Do a quick drive by, look the property over, and determine what repairs may be needed. As a rule of thumb, it is a good idea to figure in a set amount as repairs when making an offer. If the amount of repairs turns out to be significantly higher than you originally set, then you may need to walk away from the deal. If lower than you thought, then you may increase the assignment fee. For the purpose of this example, during the drive by, the foundation looked fine, so we will assume $10,000 in repairs. It is ultimately up to your buyer to do the due diligence and determine the actual amount.

Step 3- Make an offer. Understand that you are making offers that will benefit your business, so your asking price will be lower than what most people’s expectations are. Expect 90% of your offers to be emphatically declined, 10% of your offers to be countered, 5% to be interesting, and 1-3% to accept. Also, it is a good idea to construct an offer that will allow your end buyer to profit. Many new wholesalers make the mistake of not caring about the end buyer. If the end buyer cannot sell to someone else, then they will not be in business long and you will have lost a good partner. Losing partners will cut your career short in this business.

Determine how to construct an offer taking into consideration what repairs they will have, an assumed profit (generally the same amount as the repairs), the estimated holding costs for 6 months, and the estimated closing costs. For the holding costs, most fixers acquire money from a money lender. The cost of acquisition of this money is expensive. Generally, I figure 65% loan to value of the property at an 18% interest rate for 6 months.

The following is how I construct an offer
* Know the conservative ARV $100,000
* Determine Repair Costs -$10,000
* Fixer’s profit (gen same as costs) -$10,000
* Est holding costs (6mo @18%) -$5,878
* Est closing costs -$9,000
* Total Costs ($34,878)
* My PROFIT or assignment fee -$5,000
* Maximum Asking price $60,122

The asking price of $60,122 would be a offer of about 60% ARV. This would fit into your criteria. Should you then offer $60,122? No. I would submit an offer between 45-50% ARV and go from there. If you start with your maximum asking price, then you will not leave yourself with any negotiating room. For the sake of this example, let’s say the eventual purchase price is $55,000.

Step 4- Get a Buyer. The ideal situation is to have a buyer in mind by the time you have a property under contract. But for many starting out, this may not be the case. When making him an offer, add your assignment fee to the sales price. So in this example, you would add $5,000 to the $55,000 and offer them $60,000. Have a stipulation in your contract that states the buyer will need to buy with cash within 5 days. After the fixer agrees to purchase, then you go to the final and most important step.

Step 5- Collect $5,000!

How many homes do you think you can sell for $.60 on the dollar? No matter what market or economic condition, if you purchase at the right price and sell at the right price, you will find buyers!

Now, before you get into any strategy or put your name on any contract, you need to know what you are doing. You need to get educated, get your real estate team set up (lawyers, Realtors, title agents, & buyers) and get others around you that have done wholesaling to assist you with the fist few deals. You will want to have an experienced real estate attorney who has solid contracts (or addendums to existing state contracts) that will allow you to do what is in the best interest of your business. There is a lot of time that goes into building your team for wholesaling, however, it’s still a great way to get into real estate with no money or credit, since you are just using your time and knowledge of the market!

For beginners looking to get started, I highly recommend networking with others who are more experienced than you. This mentorship will allow you to learn from others mistakes. Having the support of others will also assist you in overcoming any fears that may be holding you back from taking action. Find a local Real Estate investing Club and get our there and network with others to advance your career!

Tom Bukacek is a real estate investor / mentor located in Austin, TX. For more information on how to get started, visit my website at http://www.austinmillionaireblueprint.com.

US Postal Service Rate Increase Effective May 11, 2009

2009-05-01T21:22:00.003-05:00

Expenses While Investing In Real Estate

2009-04-27T08:49:00.000-05:00

Flipping Houses: Can A Real Estate Investor To Make Money?

2009-04-20T08:44:00.000-05:00

Bankruptcies surge despite law meant to curb them

2009-04-13T19:16:00.002-05:00

Bankruptcies surge despite law meant to curb them

2009-04-13T19:16:00.000-05:00

Short Sale Real Investing

2009-04-06T09:32:00.000-05:00

MakingHomeAffordable.gov

2009-04-03T10:10:00.001-05:00

Insurance Issues For The Re Investor

2009-03-30T07:09:00.000-05:00

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By: Tim N.

If one of your single-families caught fire last night, are you certain it is insured properly? If a spring storm blew the roof off of your 12-unit apartment building, would you have coverage for your loss-of-rents? Is your subject-to exposure protected? When it comes to insuring your investment properties, it is best to know what protection you have, or don’t have, before a claim! It is always nice to save a few dollars to add to your net income, but make sure you are aware, and more importantly, comfortable with your coverage levels and options.

ACV vs. Replacement Cost:
Make sure that you understand the difference between the two options. Also understand what a coinsurance penalty is, and how it may apply to your units. Every property, and property owner, for that matter, is different. Your comfort with how these options affect your coverage is vital for you to make an educated decision on which option to carry per property. ACV may be “cheaper”, but could cost you when depreciation is applied to a claim.

Liability Limits:
Always carry as much liability protection as you can afford. As a minimum, you should carry $1,000,000 per occurrence. The larger your portfolio, the more liability protection you should have. Surprisingly, there is a minimal premium charge in most cases to double your protection. An umbrella policy is a method to provide liability coverage beyond the standard $1,000,000 or $2,000,000 limits. An umbrella is usually more cost-effective when you have more than one type of liability exposure.

Other Structures and Personal Property Coverages:
Don’t forget to protect against loss of detached structures, such as garages, sheds, and outbuildings. Some policies automatically include limits for these. Also remember to protect items in the units such as refrigerators, stoves, and window air conditioning units. Again, some policies may automatically provide built-in protection for these items.

Ordinance and Law Coverage:
This provides protection for additional costs you may occur in order to bring your damaged property “back to code”, as it is repaired from a loss. As time passes and building code changes, most properties are “grand-fathered”. However, the repairs that are inspected by the governing municipality are required to be to current code. Hard-wired smoke detectors and handicapped accessibility are two such examples. Without the Ordinance and Law endorsement, such work is typically not covered under your policy. Older properties and multi-unit properties are more at risk for this situation.

Loss-of-rents, or Business Income Coverage:
This provides coverage for your lack of rental income, if your tenants are forced out of your property due to a covered loss. Some policies have built-in coverage to a certain time limit, such as 12 months. Other policies may have an endorsement you must purchase at specific levels of coverage. Either way, this is protection all property owners should have.

Deductibles:
Simply stated, the higher your deductible, the lower your premium. If you are a multi-property owner, and your units are insured under separate policies, your deductible will apply, per location, if you are on what is typically referred to as a “package” or “blanket” policy, your deductible usually applies per occurrence. This could be a big difference, out-of-pocket, in the event of a local catastrophe such as a tornado.

Earthquake, Water Backup and Flood Coverage:

Most policies have exclusions for such losses. You can buy these coverages back through endorsements. Make sure you understand how each coverage may apply, respective of your chosen insurance carrier. This will ensure you can make an educated decision on whether you should have any or all of these coverages.

Insuring the Proper Entity: Make sure you protect YOUR (or your entity’s) interests. It is not worth sacrificing the proper protection to avoid the dreaded “due-on-sale” clause. The entity that owns the property should be the first-named insured. The first-named insured is the primary recipient of policy benefits. Additional insured and loss-payee endorsements may suffice in certain situations. However, as a general rule always aim to be the first-named on the insurance contract.

Always work with an Agent you can trust, regardless if they are “captive”, or “independent”. An Agent that is familiar with our business and willing to take the time and explain your protection needs for your situation, even if they can’t offer the policy themselves. We all like to save money, but you purchase insurance for protection. Make sure you understand how it works, before you need it!

Tim Norris National Real Estate Insurance Group, LLC www.nreinsurance.com 2008

Home prices post 6.3 pct annual decline in January

2009-03-24T21:01:00.000-05:00

Creative Financing For Real Estate Investing: Hard Money Lenders

2009-03-23T07:07:00.000-05:00

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By: Iman Y.

When Fast Cash is Needed

There will be instances during your real estate investing career when you will need up-front cash quickly on a short-term basis. Because of the short time span, it is not practical to go the conventional route which usually takes 30 to 40 days. That’s why there are hard money lenders available. Loans through a hard money lender typically will be more expensive than other financing strategies. The most important aspect of using a hard money lender is the quick availability of the cash. Sometimes you can have the money in hand within 72 hours of receiving the final docs from the title company.

The name “hard money” is due to the strict parameters that come into play when you enter into such a loan. Interest rates can run anywhere from 10% up to 18% which makes it a costly option. The cost of the money, however, can become secondary when you need cash fast to close a viable deal.

Little or No Red Tape

Perhaps you’ve located a great property to renovate quickly to turn around for profit. You may need the loan fast because you already have a buyer lined up for the house when it's completed. The hard money loan will be in place much faster than a conventional loan and without all the red tape.

These hard money loans are usually written for a period of three months up to a year. The time depends on your needs and the lender’s criteria. Obviously the longer you hold the loan, the more expensive it becomes.

The LTV (loan to value) on a hard money loan may be lower than other loans. Usually it runs 70% or lower. This will be based on a professional appraisal of the property and calculation of the needed repairs.

Remember you will need a title policy, insurance and an appraisal which could amount to several hundred dollars. Most hard money loans will require origination points ranging from 2 points to 10 points. These closing costs must be paid up front.

Does Credit Rating Matter?

Don’t make the mistake of thinking you can use a hard money loan to override your bad credit rating. While there is sufficient collateral involved, still and yet these lenders want to know they are working with someone who has a track record of paying – and paying on time. They will look for bankruptcies, foreclosures, charge offs and collections. Whether or not there will be a credit check in your case will depend on the individual hard money lender. Some investors are able to procure hard money loans without ever having their income or their credit verified. Again, it will depend on the policies of the particular lender.

If you are borrowing for the express purpose of rehabbing a property, most of these lenders will offer what is called a “draw request” form. This will be filled out to identify the repairs that have been completed – usually taken from copies of invoices from the contractors. The draws are dispersed following a satisfactory inspection.

A Last Resort

When it comes to hard money loans, they should always be used as a last resort – after you have tried other methods of raising needed capital. Never go after this type of loan unless you are completely confident that you have a great bargain property on your hands. And you must be sure of your exit strategy.

In dealing with hard money lenders make sure you are working with credible lenders. There are loan sharks out there who will purposely set you up to fail so they can take over your property. Double check credentials and ask for references.

One last tip, if your credit allows it, you might consider securing your investment property with a hard money loan for a short period of time and then refinancing it into a conventional loan.

Which ever way you choose, know that creative financing abounds for you to grab that bargain property you found. All you have to do is keep on thinking outside the box.

Using a marketing system that allows her to find some of the very best 'below market' deals around the country, Iman Yusef-Yahya's system has enabled her to assist other real estate investors looking for simple, high profitable deals. Get instant access to these profitable deals at http://www.ImanAndJoesWholesaleProperties.com

Handyman Special - Owner Financing Available with $2500 Down

2009-03-20T13:28:00.005-05:00

This won't last long! Two bedroom, 1 bath single-family home in Chicago. $2500 down will get you started! After repaired value is about $85k. Asking only $31k.

We will pay $300 for a referral that leads to a purchase.

For more information, go right now to TheRealEstateDealer.com.

Creative Financing For Real Estate Investing: Using Options

2009-03-16T07:04:00.001-05:00

Buying Real Estate Subject To The Existing Mortgage Part 3 Of 3

2009-03-09T07:02:00.001-05:00

Buying Real Estate Subject To The Existing Mortgage Part 2 Of 3

2009-03-02T07:00:00.001-06:00

Home sales sink unexpectedly, lowest since 1997

2009-02-25T21:13:00.005-06:00

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Wednesday February 25, 4:43 pm ET

By Alan Zibel, AP Real Estate Writer

Home sales sink unexpectedly in Jan. to lowest level since 1997; rebound hinges on jobs, banks

WASHINGTON (AP) -- Sales of existing homes sank unexpectedly last month to the lowest level in nearly 12 years as potential buyers worried about their jobs and awaited details of President Barack Obama's plans to stabilize the housing market.

But the banking industry's teetering fortunes and mounting job losses could stall any recovery. Falling prices and low mortgage rates don't make much of a difference for people who are out of work -- or fearful of losing their jobs.

The most optimistic outlook is for a spring revival as home prices plummet. Government officials, hoping to spur demand, on Wednesday rolled out the details of a new $8,000 tax credit for first-time buyers. About 40 percent of all home sales last year were from first-time buyers.

Treasury Secretary Timothy Geithner said the tax credit should help provide an "immediate response to the current crisis."

The government response may help, but many consumers are still in wait-and-see mode.

"Buyers are sitting back," said real estate agent Sandra Lipmann of Prudential Centennial Realty in Westchester County, N.Y., home to the upscale properties of many Wall Street workers. "They don't have the full story of what's going to happen in this economy."

Find real estate bargains now!

Sales of existing homes fell 5.3 percent to an annual rate of 4.49 million last month, from 4.74 million in December, the National Association of Realtors said Wednesday. It was the weakest showing since July 1997. And some analysts don't see sales bottoming out until later this year as prices sink further. Economists had expected sales to rise to an annual pace of 4.79 million homes.
Without adjusting for seasonal factors, sales nationwide fell 7.6 percent from a year earlier. The West was the only region to show increased sales.

The median sales price in January plunged to $170,300, from $199,800 a year earlier and $175,700 in December. It was the lowest price since March 2003 and the second-largest drop on record.

And the Mortgage Bankers Association said Wednesday that applications for new loans and refinances both fell last week as rates inched up.

Sinking home prices and soaring foreclosures have forced major banks like Citigroup Inc. and Bank of America Corp. to record huge losses on the value of their mortgage-related assets.

On Capitol Hill for a second day, Federal Reserve Chairman Ben Bernanke warned lawmakers that the big glut of unsold homes could "put us in real danger" of even sharper declines in home prices.

The Fed chief fielded tough questions about bank-rescue efforts and again spurned speculation that the government may seize control of Citigroup or other large financial institutions.

Find real estate bargains now!

Asked about Citigroup Inc., Bernanke said nationalization "is when the government seizes the bank and zeros out its shareholders ... we don't plan anything like that."

Wall Street ended an erratic session with a loss. The Dow Jones industrial average fell about 80 points, and the Standard & Poor's 500 index and the Nasdaq composite index also declined.

Some hopes for the long-awaited housing market rebound had returned last month after the Realtors group reported a surge in sales for December. But economic fears are now paramount in the minds of many consumers, and lending standards remain tight.

John Seidensticker, 37, has been trying to sell a two bedroom, roughly 1,100 square foot condominium north of Miami's downtown. He started out asking for $279,000 and has lowered his price by $90,000 but still hasn't found a buyer.

"I can't buy until I sell this one," Seidensticker said. "Half the buyers can't qualify, and there aren't that many buyers out there."

The number of unsold homes on the market fell almost 3 percent last month to 3.6 million, the lowest inventory level in two years, the Realtors group said. But due to the slumping sales pace, it would still take 9.6 months to rid the market of all of those properties, up from 9.4 months in December.

The number of properties languishing on the market likely would be even higher if sellers weren't so reluctant to list their properties as prices sink rapidly, Joshua Shapiro, chief U.S. economist with MFR Inc., wrote in a note Wednesday.

"With supply overhang still huge and mortgage financing difficult to obtain, home prices are likely to decline considerably further in the quarters ahead," he wrote.

Prices have been falling as thousands of Americans lose their jobs every week. Employers took an especially large ax to their payrolls last month, the Labor Department said Wednesday, and the cuts are likely to get worse over the next few months.

Mass layoffs, or job cuts of 50 or more by a single employer, increased to 2,227 in January, up almost 50 percent from the same month last year. More than 235,000 workers were fired in last month's cuts.

The labor market pain persists this week. The NFL said Wednesday that commissioner Roger Goodell has taken a 20 percent pay cut and the league dropped 169 jobs through buyouts, layoffs and other reductions. Spartanburg, S.C.-based textile maker Milliken & Co. said it would cut 650 jobs at facilities worldwide, and jeweler Zale Corp. said it will close 115 stores and eliminate 245 positions.

As layoffs mount, foreclosures have swamped the housing market -- especially in particularly distressed states like California, Florida, Nevada and Arizona. About 45 percent of sales nationwide are foreclosures or other distressed properties.

Joel Rodriguez, owner of Global Investments Realty in Miami, estimates that 70 percent of his business comes from foreclosures, but says sales are picking up. "The banks have finally gotten realistic and started accepting some of the offers," he said.

Lawrence Yun, chief economist for the Realtors, predicted that the new tax credit would help boost home sales by late spring or early summer. Buyers "did not want to jump into the market until they were certain" what the government would do to resuscitate the housing market and that clearly dampened January sales, he said.

But other analysts say the government's actions will provide a far more modest boost, largely because the economic picture remains so gloomy.

Patrick Newport, an economist with IHS Global Insight, said sales are likely to sink further and not stabilize until the summer. Prices aren't likely to hit bottom until the first quarter of 2010 and should remain flat for another year, he said.

"At some point, prices will drop so much that sales will start to pick up," Newport wrote in a note Wednesday. "So far, this has yet to happen."

Find real estate bargains now!

AP Business Writers J.W. Elphinstone, Adrian Sainz, Martin Crutsinger, Christopher S. Rugaber and Jeannine Aversa contributed to this report.

Buying Real Estate Subject To The Existing Mortgage Part 1 Of 3

2009-02-23T08:30:00.000-06:00

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By: Donna R.

A "subject-to" offer simply means that the buyer is willing to purchase a piece of property "subject-to" some specific circumstance. Usually that circumstance will be the sellers existing mortgage. It can also be a variety of other things.

One of the most common "subject-to" clauses in real estate contracts is "subject-to" buyers inspection. But for real estate investors, the most common use of the term "subject-to" is in relation to purchasing a property "subject-to" the sellers existing mortgage. This means that at closing, the property is titled in the buyers name, but the loan is still in the sellers name. Therefore, you are buying the property "subject-to" the sellers existing mortgage payments.

What are the advantages of "subject-to"?

The most common advantage is the can buy without the need to qualify for a new loan. When you purchase a property "subject-to" the existing mortgage, the seller is basically agreeing to allow a buyer to take possession of their property, and pay their existing mortgage payments. Since the buyer is not qualifying for a new loan, and the existing loan is in the sellers name, it is the sellers credit that is at risk. This means that a buyer does not need to worry about having good credit.

Why would a seller agree to allow you to take over a loan that is in their name?

There is definitely some risk involved for a seller who agrees to sell a property "subject-to" the existing mortgage. For one thing, if the buyer decides to walk away from the deal, or fails to make those mortgage payments, the seller is the one who will suffer. A sellers credit rating could be ruined by a buyer who fails to make the mortgage payments on time. So the buyer should consider the commitment being made, and do proper due diligence to insure that the deal makes sense.

This is also an excellent way for today's credit challenged home buyers to buy a home to live in. With the housing meltdown and the resulting credit crunch, sellers must look at creative ways to sell that will allow for a win-win transaction. So subject-to transactions can be used to solve problems for both buyers and sellers.

I once did a "subject-to" deal with a seller who was getting married and moving out of state. She had been trying to sell her property for several months, with no takers. It was in a great area, in a nicer neighborhood, but the house needed some general updating of colors and carpet.

For the seller, time was running out. The wedding was only weeks away, and the she was planning to take up residence with her new husband in his house. Because of this she was motivated to sell the property any way she could.

She accepted an offer to buy her property subject-to the existing mortgage, for two years. That meant that we had two years to get new financing and pay her off. She understood the risk to her credit and was concerned, but we were able to produce references and other documentation that made her feel comfortable doing this deal with us.

Had she not been in the position she was in, she likely would never have agreed to accept a sale that would leave the mortgage in her name, so motivation was the primary factor in this deal. But, that being said, it was still a great way for the seller to solve her problem, and create a win-win for both parties.

We updated the house, and sold it a few months later to a buyer who was able to qualify for a new mortgage. The seller got her money about a year and a half earlier than expected.

The seller discounted the property about 20% from her asking price. While the buyer made good on the promise to renovate and resell the property. Compromise and Commitment were the two key components to this deal getting done right.

The "subject-to" arrangement allowed the seller to solve her immediate problem. It also allowed us to buy the property without having to qualify for a new loan. Everyone was happy.

In part 2, we'll discuss the components that go into writing an offer to buy a property "Subject-To" the existing mortgage.

Donna Robinson is a licensed agent, real estate investor and real estate consultant, located in metro Atlanta, GA. She is a respected authority on the subject of real estate investing and property evaluation. Get Donna's free newsletter for real estate investors at http://www.REIUonline.com

A New Source Of Funds For Foreclosures

2009-02-16T06:55:00.001-06:00

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By: David C.

Are you getting your piece of the incredible profits available from foreclosure opportunities?

Wholesaling, Fix and flip, rentals however you decide to make money, right now the investment window has never been better.

However, it takes money to make money…

Have you thought about using your IRA, 401k, 403b or other retirement monies?

You have no doubt heard that you can do this but did you know that the old fashioned IRA is NOT real estate friendly?

Congress recently created a much better plan to use, a self administrated (SA) Defined Contribution (DC) plan. This type of retirement plan is very friendly for real estate investing.

Here are 3 examples of the flexibility of this state of the art plan.

Number One:

Steve and Jenny want to use their IRA’s to invest in bank owned properties.

The IRA tax code says "Oh no you don't because you are related to each other"

The real estate friendly SA-DC plan does away with this problem because ALL of the retirement monies for both Husband and Wife are pooled together into a specialized checking account at their favorite local bank.

So, now the Steve and Jenny may have enough money to pay cash for the house and having cash may even negotiate a better price with the bank?

Number Two:

Steve and Jenny decide that they want to be full time real estate investors. Where will the seed capital come from?

The SA-DC plan to the rescue!

Both Steve and Jenny can borrow from their plan...up to 50% of their individual account balances to a max of $50,000 each. Now they have their very own credit line and can use these monies to snatch up that deeply discounted bank owned properties.

Number Three:

As a part of their plan Steve and Jenny have a Tenants in Common legal agreement. This will allow them to invest their own funds into the same property as the SA-DC plan

So let’s assume that they split ownership with the plan 50/50. When the property sells the profits will be distributed half to them and half to their plan.

Why is all of this possible when it absolutely forbidden to do these things in an IRA?

Because the SA-DC plan is governed by a totally different section of the tax code and that folks is very good news for real estate investors!

As a real estate investor if you are serious about applying your experience and skills to building massive wealth for your future security you need to work with a professional who can structure a real estate friendly retirement plan that has the right features for your situation.

David Cole is President of Financial Design Group, LLC and for the last fifteen years has advised tax professionals, Realtors and investors on the pros and cons of using retirement monies to invest into real estate. You can visit his website at http://www.personalinvestorshield.com

Fannie Mae Raises Loan Limits for Investors

2009-02-09T20:47:00.001-06:00

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FNMA has announced on their website that the four loan limit has been removed, and, under certain circumstances, will allow an investor to have up to 10 loans. This is great news for investors who are picking up foreclosures and keeping them for rental or selling on lease-to-own.

More info at FNMA's website: https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2009/0902.pdf

Turbo Charged Foreclosure Investing Strategies Explained!

2009-02-09T07:00:00.000-06:00

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By: Dan O.

At some point in every foreclosure investor's career, they are going to knock on a house in foreclosure and be told by the homeowner that the bank made a mistake and there really is no foreclosure happening.

Banks make mistakes all the time. Maybe the homeowner is telling the truth, maybe not. Sometimes it doesn't really matter.

I'll give you my 2 cents on the topic but before I do, I have a couple of questions for you.

What do you do after the homeowner tells you it's a mistake or that they have it taken care of? Maybe the million dollar question is... what do you before you knock on the door or make any kind of contact?

Me? I do a quick and dirty Ownership & Encumbrance Report (O&E) using my own proven system to see if there are any junior liens before I even leave my driveway or pick up the phone. You see, if there's a deal to be made there, I want to make it happen asap.

If I can buy a junior position with plenty of room for profit, it doesn't really matter if the homeowner is cooperative or if they tell me to go pound sand because I'm already looking at a potential payday.

The homeowner cuts a deal with another investor or cures the default? Fine...pay me full value of my Note, judgment, etc. It goes to sale and gets bid up? Great...I'm looking at collecting the overbid without ever touching the house.

If I'm dealing with a property in a state without a redemption period and there's serious money on the line, either I'm at the sale or I have someone there on my behalf to make sure the bidding goes as planned.

What if I buy a junior lien and then drive by the property and see a For Sale sign in the yard? Awesome...they're making a valliant effort to sell the place and I might stop and chat with the homeowner (for a number of reasons). If there's a Sale Pending sign visible, I'm definitely calling the agent to ask if it looks like it's really going to close or if they're taking back up offers to see how close I am to that payday.

Lots of different angles to play in that situation. Personally, I just want be somewhere around the intersection of a couple of them.

I suppose that's a little different from how you've probably been approaching the whole homeowner rejection thing but...it works really well for me.

Does it work 100% of the time? Nope, but it doesn't have to...if that makes sense to you. Even if this killer strategy only worked a handful of times per year (which it's actually much more!), Your bank account will grow exponentially with minimal effort...oftentimes without even seeing the house!

To discover how to create your own profitable push button house buying system that never fails and to claim your FREE CD of Dan O'Connor's renowned audio lesson titled "The 7 Golden Keys To Creating A Multi-Million Dollar Real Estate Investing Empire" - Go here now: http://www.ProInvestorSecrets.com

Not All Foreclosures Are Created Equal

2009-02-02T06:48:00.000-06:00

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By: Glenn P.

Within the realm of real estate investing each type of investing has its good and bad times to buy. Understanding not only what market you should be investing in, what area within the category you should look to specialize in, and when to buy in the cycle will be critical to maximizing the potential of your investment while reducing the risk to the lowest possible level

So you are brand new to real estate investing (or not) and you have heard that foreclosures will offer you your best way to gain instant equity in real estate. That all could be very true. But the term foreclosure covers a very wide area with many sub-groups within it. It will be of the utmost importance to have an understanding of the different types of foreclosures there are, where in the timeline the foreclosure stands and which type of foreclosure is hot at what time and why. This way you can concentrate on the area that will meet your goals as an investor.

Within the circle of foreclosures there are three basic categories to recognize, the first of these categories has investors buying before the foreclosure auction. The second area is buying homes directly at the auction. The third and final group is to buy after the auction is over, from the bank or an auction company. These bank owned properties are referred to as (REO’s) real estate owned.

Let us take a look at each of these three segments to see which area is hot right now and which is not. This way we can save you lots of time and trouble and fast track you to look at the best segment of the foreclosure market. First we will define what parts make up the segment. Then we will look at the reasons why this is a good time or not to be in that segment.

The first segment of foreclosures, buying before the auction, is an area were home owners are getting in to trouble but not yet foreclosed on. This area will include listed properties from the multiple listing service (mls), short sales, notice of defaults (NOD’S) and notice of trustee’s sales (NOTS). Because of the sluggish nature of the housing picture at this time, the excess inventory of existing foreclosures on the market, the restriction of lending, and the anxiety of home owners and investors willing to sit on the sidelines till something breaks, this is not a good time to be selling retail. In fact it could be one of the worst times ever to be attempting to sell your home retail. Sellers cannot compete against foreclosures so unless they too become a foreclosure they have no viable way to sell their home. Meaning we as investors have no way to be able to buy a home, with equity in it, at this stage of the foreclosure process.

There is one segment within this first stage that we should address here, that being short sales. A short sale is where an owner is in trouble and has a buyer come in and negotiate with the bank to let the home go for a value less than the loan amount owed on the home. This is but one solution to the home owner and a method for an investor to get a home at below market value. Note that home sellers may suffer tax consequences in selling the home involved in a short sale. In general short sales are taking way too long to complete (4-6 months on average), the banks are understaffed to handle the huge volume of short sales at this time (with many more coming in the future) and investors impatient for a good deal are dropping out of deals before they close. Some figures have only about 20% of short sales actually closing. Now don’t get me wrong as there are many companies, realtors, and investors that are quite successful in short sales but the niche is not one most are successful with.

The second step of buying a foreclosure involves buying directly at the auction. Note that some states have judicial proceedings while others like California and Nevada have trustee’s sales that are held on the courthouse steps. On the positive side the competition is not all that much however in trust deed states you must have cash or the equivalent of at the time of the auction to be the winning bidder. This eliminates a huge majority of potential buyers as most folks do not have a $100,000 or more easily accessible to be buying at the auction. Because REO properties are now selling for levels under amounts owed on comparable properties in the (NOTS) stage, buying at the trustee’s sale is not a viable way to buy in most situations. Most properties are reverting back to the banks and becoming bank owned REO’s. Again there are professionals that are buying good properties all the time at trustee’s sales auctions but it is not an easy way for a beginner to break into the foreclosure arena and it is a very small segment of the market at this time.

By far the best, easiest, safest, and most lucrative way to buy foreclosure properties at this time in the cycle is to be buying at the third and final stage of the process, that being bank owned properties (REO’s) after the auction is over. Because of the huge volume of foreclosures now on the market at record levels, the huge number that will be coming in over the next 12-18 months, banks are lowering their prices daily just to move inventory. Banks are placing homes with listing realtors that specialize in listing REO homes. If homes do not sell in a 60-90 day period after price discounting from the original listing price many homes are going back to the bank and relisted with an auction company or potentially sold off in a bulk portfolio to much larger investors that have the ability to take down packages of $5 million and up. This secondary after REO auction scenario has major issues that make it an undesirable way to buy real estate at this time. One must be very experienced if attempting to buy homes at any type of auction.

Markets like Southern California, Las Vegas, Phoenix, and Florida are seeing prices that could drop to 50% of highs of just 2 years ago. Cash buyers are now coming in and taking properties at near 50 cents on the dollar. What makes it exciting is that because of the new lower prices homes will once again cash flow positively with 20% down fully amortized investments. As many first timers are out of the market or sitting on the sidelines the pros will be setting themselves up with tremendous appreciation on homes they are acquiring at this time.

Buying a bank owned property is also much less risky than investing your life savings in trying to buy at a trustee’s sale auction. The process is much faster than that of a short sale and negotiations are generally done within a week or two vs. the 4-6 months for a short sale. Bank owned properties are almost always vacant making it easy to get inside, inspect and run the numbers to see what amount of time or money the home may need to get it up to speed. I would encourage every investor to get a good home inspection on any property they are looking to buy. Every good investor should always have an exit strategy in mind before you even buy and having the most amount of information available to you will help you in making the best decision possible.

As an investor and licensed realtor that has bought homes in all stages of the foreclosure process, for myself and my investors and clients, I am directing my clients to take full advantage of what could be one of the best foreclosure buying markets we will ever see. Based in the Las Vegas market for the last several years I have seen this market go from the number one hottest market in the nation in 2004 to one of the slowest in 2007 back to one of the best and busiest markets in the U.S. this year. All because of something we like to call the foreclosure.

Glenn is a full time real estate investor in the hot Foreclosure market in Las Vegas. Homes now can be picked up for about 50 cents on the dollar. To view clips from Glenn’s Real Estate Insider Club go to http://www.youtube.com and type “real estate clubs” gsplantone@gmail.com (702) 405-6480

Nation's economic mood darkens as more jobs vanish

2009-01-27T20:33:00.003-06:00

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Tuesday January 27, 5:51 pm ET
By Anne D'Innocenzio, AP Retail Writer

Consumer confidence hits record low as Americans worry about withering job and housing markets

NEW YORK (AP) -- This is one recession Americans aren't going to spend their way out of.
Americans are in no mood to spend their way out of this recession.

The Conference Board said Tuesday its Consumer Confidence Index edged down to 37.7 this month, a record low, from a revised 38.6 in December. It stood at about 87 just a year ago.

Americans are battered by headlines about massive job cuts, including thousands at Home Depot, Corning, General Motors and Caterpillar in just the past two days, and are still watching the values of their homes and retirement funds dwindle.

"Virtually, there is no confidence out there," said Bernard Baumohl, chief global economist at The Economic Outlook Group LLC. "Household anxiety has reached a point that we can count them out to get us out of the recession."

Economists believe Americans will remain in a financial funk until they start seeing fundamental improvements in the economy, including a turnaround in the housing and job markets. And two other reports Tuesday suggested that's unlikely to come soon.

The Labor Department announced that state unemployment rates shot up nationwide in December, with Indiana and South Carolina racking up the largest monthly increases. South Carolina's jobless rate bolted to 9.5 percent, more than 2 percentage points above the national rate.

And the Standard & Poor's/Case-Shiller 20-city housing index dropped by a record 18.2 percent in November from the same month a year earlier -- the sharpest annual rate since the index's inception in 2000.

The gloomy news initially sent the Dow Jones industrial average lower, but by mid-afternoon it took heart from some positive earnings reports, finishing up about 58 points at 8,174.

President Barack Obama and Congress are scrambling to enact a $825 billion package of increased federal spending, including money for big public works projects and for states, as well as tax cuts to revive the economy.

That could encourage Americans to spend more, but Baumohl believes the relief would be only temporary unless financial institutions become healthy enough to revive lending. Tighter credit has been a challenge for shoppers and businesses alike.

Federal Reserve policymakers are gathering this week to examine what other tools they can use to help ease a recession that started in December 2007. They are all but certain to leave the benchmark interest rate at its current record low.

But without the help of consumer spending, which accounts for more than two-thirds of economic activity, the economy faces a slow recovery. In past recessions, consumers had helped the economy dig itself out of its funk.

Americans "are feeling extremely bad about jobs -- both current and expected," said Lynn Franco, director of The Conference Board Consumer Research Center.

The Conference Board survey showed fewer people expect to get raises over the next few months, or for jobs to be plentiful.

Nationally, the unemployment rate, which stands at a 16-year high of 7.2 percent, could hit 10 percent or more later this year or early next year, according to some analysts' estimates. Michigan and Rhode Island already had unemployment rates in double digits last month. And the pink slips keep coming.

Corning Inc. said Tuesday it is cutting 3,500 jobs, or 13 percent of its payroll, as demand slumps for the glass used in flat-screen televisions and computers. A day earlier, tens of thousands of layoffs were announced by Pfizer, GM, Caterpillar, Texas Instruments and Home Depot.

The consumer confidence survey, which sampled 5,000 U.S. households through Jan. 21, showed Americans remain pessimistic. Nearly 48 percent now say business conditions are "bad," while less than 7 percent say conditions are "good."

Shoppers' splurges on everything from sweaters to pillows in recent years have kept factories humming in China and have fueled store expansions and hiring in the United States.

Now the most severe spending pullback in decades is sending a number of stores into liquidation, with Circuit City and discount clothing chain Goody's Family Clothing among the biggest names. The merchants that manage to survive are slashing inventories and closing stores, sending pain to all corners of the economy.

Stores limped through the weakest holiday period in four decades by one measure, and retail sales appear to be only deteriorating in January. The National Retail Federation, the world's largest retail trade group, predicts that retail sales will fall 0.5 percent this year, well below the meager 1.4 percent gain last year.

AP Real Estate Reporter J.W. Elphinstone in New York and AP Economics reporter Jeannine Aversa in Washington contributed to this report.

Borrow From Your Retirment Plan Tax Free

2009-01-26T08:00:00.001-06:00

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By: David C.

Hot foreclosure deal and you need the money now?

Don't look to your IRA as it can't do much to help you out since you cannot borrow from your IRA.

Just so you know, there is an IRA provision that will allow you to “withdraw” any amount you choose for any purpose.

NOTE: This may be done only once every consecutive twelve months and you must replace the monies within 60 days.

There is NO compromising these requirements. Failure to adhere to these two rules will result in those monies being deemed distributed with the resulting taxes and/ or penalties.

Most people find that 60 days is far too short a time frame in which to accomplish their project or goal.

Does this mean that you are out of options when trying to tap into your pile of IRA money?

Not at all, it just means you are trying to use the wrong type of retirement plan. You need a real estate friendly plan!

With the help of an experienced professional you can transfer your IRA into a self administrated Individual 401(k) plan where both 100% checkbook control and personal loans are allowed.

You may borrow from your self directed Individual 401(k) plan:

• For any purpose whatsoever, personal or investment
• Up to 50% of plan assets
• $50,000 is the maximum aggregate amount of the loan(s)
• No more than five (5) loans can be outstanding at any given time

Loan repayment requirements:

• The money must be paid back to the plan within a five (5) year period
• The payments must be with interest (rate set at loan inception)
• The loan payments are calculated using level amortization
• Payments must be made at least once every quarter
• Huge exemption: Should you use the loan to help you purchase your primary residence the repayment period is lengthened to thirty (30) years and the interest you are paying your plan is tax deductible to you!

This liquidity (loan provision) privilege enables you to use tomorrows money TAX FREE to create more cash flow for today!

David Cole is President of Financial Design Group, LLC and for the last fifteen years has advised tax professionals, Realtors and investors on the pros and cons of using retirement monies to invest into real estate. You can visit his website at http://www.RE401Kplan.com

Mobile Notary Public Service for Your Real Estate Investing Needs

2009-01-21T10:18:00.006-06:00

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TheRealEstateDealer.com would like to introduce a NEW FEATURE to help you in your real estate investing - MOBILE NOTARY PUBLIC SERVICE!

How many times have you been sitting at a seller's house and the seller was ready to sign the documents? You then pulled out the documents to have the seller sign it but then you realized that it has to be notarized! You then try to take the seller to a local currency exchange and found out that they "don't notarize those types of documents". You then decided to take the seller to a bank, but the BANK WAS CLOSED!

No more will that happen to you. We have experienced notaries public to help you get that paperwork signed. The rates are reasonable and we are available 24 hours a day, seven days a week.

For more information, visit our page at TheRealEstateDealer.com.

Fannie to help renters stay in foreclosed homes

2008-12-15T20:08:00.003-06:00

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Monday December 15, 11:42 am ET

Mortgage giant Fannie Mae unveils plan-in-works to help renters stay in foreclosed properties

NEW YORK (AP) -- Fannie Mae said Monday it's finalizing a plan to help renters stay in their homes even if their landlord enters foreclosure.

The mortgage giant said it's working on a national policy to allow renters living in foreclosed properties -- and who can make their rental payments -- to sign new leases with Fannie while the property is up for sale or get cash to help move into a new home.

Last month, Fannie and sibling company Freddie Mac suspended foreclosure sales on occupied single-family homes and evictions from those properties through the holidays until Jan. 9, 2009. Fannie said these actions helped an estimated 7,000 to 10,000 families to remain in their homes.

The company said the new renter policy will go in effect before Jan. 9.

Last week, New Haven Legal Assistance Association Inc. in Connecticut, which represents several tenants facing eviction on properties held by Fannie Mae, raised the concerns about renter evictions and discussed the situation with Fannie on Friday.

"Fannie Mae had the tendency to empty these properties with no attempt before or after the foreclosure to contact these tenants," said Amy Marx, an attorney at the legal aid group. "A lot of these renters are low-income and an eviction wreaks havoc on their lives due to moving costs and the lack of affordable housing."

Despite the suspension on foreclosure sales and evictions, some Fannie evictions were still going forward, Marx said. Fannie said Monday it contacted its lawyer and broker network to halt those evictions.

Fannie and sibling company Freddie Mac own or guarantee about half of the $11.5 trillion in U.S. outstanding home loan debt. The government seized control of the pair in September.

Company spokesman Brad German said Monday that Freddie Mac also aims to have a similar plan in place by early January.

"Clearly, renters are caught in the crossfire," German said. "The goal is to provide them some stability and not evict them as a result of another's foreclosure."

FREE Advertisement for Your Real Estate Related Business

2008-12-10T10:53:00.004-06:00

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Hello everyone! We hope your are having a safe and prosperous holiday season. We would like to share some of our blessings from this year and provide you with a gift... FREE advertisement on our web site. You read it right... FREE!

For a limited time only, we will allow your business to advertise on our site. There are a few simple rules:

The listings will be filled on a first-come, first-served basis.

You may list your business' contact information and a brief description of it.

You may not provide links to your web site.

Only 10 businesses will be listed in the various categories -- contractors, real estate agents, appraisers, private lenders, hard money lenders, etc.

We will determine who the first 10 are by the time and date stamp in the e-mail.

Your listing will appear on our site for one year FREE of charge.

If you would like to take advantage of this free resource to get more exposure for your business, send an e-mail to us at customercare@therealestatedealer.com. Please include "List my business on your site" in the subject line. Provide the following information:

Type of business

Business name

Business address including city, state, and ZIP Code

Contact phone number

Fax number

E-mail

Brief description of your business

Obama: Economy to get worse before it improves

2008-12-07T13:59:00.001-06:00

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Sunday December 7, 11:23 am ET By David Espo, AP Special Correspondent

Obama says economy to get worse before it gets better; priority is on recovery plan

WASHINGTON (AP) -- President-elect Barack Obama said the economy seems destined to get worse before it gets better and he pledged a recovery plan "that is equal to the task ahead."

Obama also said in an interview broadcast Sunday that the survival of the domestic car-making capacity is important, yet any bailout must be "conditioned on an auto industry emerging at the end of the process that actually works."

Less than six weeks before he takes office, Obama said that help for homeowners facing foreclosure is an option as part of his plan. He sidestepped a question about when he plans to raise taxes on wealthy Americans.

Obama's interview on NBC's "Meet the Press" was his most extensive since winning the White House more than a month ago.

In the intervening weeks, the economy has showed clear signs of worsening. Employers said they eliminated more than 500,000 jobs in November alone and retailers reported disappointing holiday-season sales.

"The economy is going to get worse before it gets better," he said twice in the early moments of the interview, taped Saturday in Chicago.

The president-elect announced on Saturday he would call for the most massive spending on public works since the creation of the interstate highway system a half-century ago. In a word of caution to powerful lawmakers, he said the first priority would be "shovel-ready" projects -- those that could create jobs rights away.

"The days of just pork coming out of Congress as a strategy those days are over," he added.

Obama said repeatedly that his economic advisers are at work on an economic aid package, but he has largely stayed out of the public debate over bailout aid to the Detroit automakers. Congress and the Bush administration are at work on a plan for roughly $15 billion for General Motors Corp., Ford Motor Co. and Chrysler LLC. Congressional leader hope to pass the measure this week.

Obama suggested he would support such a plan, so long as it was accompanied by conditions to "keep the automakers' feet to the fire in making the changes that are necessary" for longer-term survival. He also indicated he did not believe bankruptcy is an acceptable course of action for any of the companies.

The president-elect sidestepped a question about the pace of a troop withdrawal from Iraq, saying he would direct U.S. generals to come up with a plan "for a responsible drawdown." He said in the campaign he wanted most U.S. troops withdrawn within 16 months, but did not say then, nor has he now, how large a deployment should be left behind.

Obama also spoke about his latest Cabinet selection, retired Gen. Eric Shinseki to head the Veterans Affairs Department. Shinseki was forced into retirement by the Bush administration after he said the original invasion plan for Iraq did not include enough troops.

"He was right," Obama said.

The president-elect declined to comment on the possible appointment of Caroline Kennedy to New York Sen. Hillary Rodham Clinton's seat in the Senate. Obama tapped Clinton recently as his secretary of state.

Dow plunges on news recession began in Dec. 2007

2008-12-01T22:20:00.001-06:00

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Monday December 1, 9:11 pm ET
By Jeannine Aversa and Martin Crutsinger, AP Economics Writers

WASHINGTON (AP) -- Most Americans sorely knew it already, but now it's official: The country is in a recession, and it's getting worse. Wall Street convulsed at the news -- and a fresh batch of bad economic reports -- tanking nearly 680 points. With the economic pain likely to stretch well into 2009, Federal Reserve Chairman Ben Bernanke said Monday he stands ready to lower interest rates yet again and to explore other rescue or revival measures.

Rushing in reinforcements, Treasury Secretary Henry Paulson, who along with Bernanke has been leading the government's efforts to stem the worst financial crisis since the 1930s, pledged to take all the steps he can in the waning days of the Bush administration to provide relief. Specifically, Paulson is eyeing more ways to tap into a $700 billion financial bailout pool.

On Capitol Hill, House Speaker Nancy Pelosi, D-Calif., vowed to have a massive economic stimulus package ready on Inauguration Day for President-elect Barack Obama's signature.

That measure -- which could total a whopping $500 billion -- would bankroll big public works projects to generate jobs, provide aid to states to help with Medicaid costs and provide money toward renewable energy development. Crafting such a colossal recovery package would mark a Herculean feat: Congress convenes Jan. 6, giving lawmakers just two weeks to complete their work if it is to be signed on Jan. 20.

President George W. Bush, in an interview with ABC's "World News," expressed remorse about lost jobs, cracked nest eggs and other damage wrought by the financial crisis. "I'm sorry it's happening, of course," said Bush. The president said he'd back more government intervention.

None of the pledges for more action could comfort Wall Street investors. The Dow Jones industrials plunged 679.95 points, or 7.70 percent, to close at 8,149.09.

It was another white-knuckle day, punctuated by grim economic reports. An index of manufacturing activity sank to a reading of 36.2 in November, a 26-year low, the Institute for Supply Management reported. Construction spending fell by a larger than expected 1.2 percent in October, the Commerce Department said.

Adding to the gloom, the National Bureau of Economic Research, a group of academic economists, concluded Monday that the country has been suffering through a recession since December 2007.

With NBER's decision, the United States has fallen into two recessions during Bush's eight years in office. The first one started in March 2001 and ended in November of that year.

The economy jolted into reverse in the final three months of last year. After a short spring rebound, it contracted again in the summer. Economists say it is still shrinking and will continue to do so through at least the first quarter of next year.

Unlike past recessions, consumers are bearing the brunt of this one. Clobbered by job losses, hard-to-get credit and hits to their wealth from sinking home values and plunging portfolio investments, consumers have cut back sharply on their spending, throwing the economy into chaos.

Watching customers' appetites wane, employers have throttled back on hiring. The unemployment rate in October zoomed to 6.5 percent, a 14-year high. So far this year, 1.2 million positions have disappeared. The jobless rate is likely to climb to 8 percent or higher next year.

Against that backdrop, many economists believe the current recession will be the worst since the 1981-82 downturn.

To help ease the pain, Bernanke said additional interest-rate cuts are "certainly feasible," but he warned there are limits to how much such action would revive the economy, which is likely to stay mired in weakness well into next year.

The Fed's key interest rate now stands at 1 percent, a level seen only once before in the past half-century, and many economists predict Bernanke and his colleagues will drop the rate again at their next meeting on Dec. 15-16.

The Fed can lower its key rate only so far -- to zero -- and it's getting ever closer. Given that constraint, Bernanke said there are other ways to bolster economic activity.

The Fed, for instance, could buy longer-term Treasury or agency securities on the open market in substantial quantities, he said. This might lower rates on these securities, "thus helping to spur aggregate demand," Bernanke said.

Because the Fed can go only so low in reducing interest rates, the central bank over the past year has resorted to a flurry of other radical and often unprecedented actions with the hope of busting through credit jams and getting financial markets operating more normally.

The bracing impact of the Fed's aggressive rate reductions, however, has been somewhat stymied by the credit and financial crises, Bernanke said. Despite lower borrowing costs, skittish banks have been reluctant to lend money to people and businesses, a vicious cycle that has seriously hobbled the U.S. economy.

"Even if the functioning of financial markets continues to improve, economic conditions will probably remain weak for a time," Bernanke warned.

Paulson, meanwhile, has been working closely with the incoming administration, including New York Fed President Timothy Geithner, Obama's pick to be the next treasury secretary, to pave the way for a smooth transition.

"We are actively engaged in developing additional programs to strengthen our financial system so that lending flows into our economy," Paulson said, referring to tapping the $700 billion bailout fund. "When these programs are ready for implementation, we will discuss them with the Congress and the next administration," he added.

Paulson did not provide specifics on what type of programs the administration was weighing other than to say that it was looking at ways to boost capital injections into financial institutions.

Associated Press Writers Andrew Taylor and Deb Riechmann contributed to this report.

Private Mortgage Program Frequently Asked Questions

2008-11-15T13:47:00.011-06:00

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Many people have been asking about our private mortgage program. It is a wonderful opportunity to receive a 10-15% annual yield on your investment secured by real estate. Below are answers to the most frequently asked questions regarding our private lender program. If you have a question that is not answered, please e-mail us at customercare@therealestatedealer.com for a prompt response.

Question: What is the process for doing a private lender transaction?

Answer: The process is very simple. The first thing we do is find our property that meets our investment objectives. The next step is to secure a mortgage on the property. The purchase is then closed via a closing conducted by a title company and/or an attorney. The mortgage is given to you. We then make payments to you.
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Question: What documents secure your investment?

Answer: We secure your investment with an appraisal or comparable sale report, title report, promissory note, and hazard insurance.
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Question: Can I use the funds in a 401(k) or IRA to invest?

Answer: Yes you may. There are regulations governed by the IRS that require a third party to act as a custodian to take advantage of tax-free and/or tax-deferred gains. Also, you would want to set up a self-directed account. For more information, go to Equity Trust Company's we site at www.trustetc.com.
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Question: How much do I need to invest?

Answer: The minimum needed to invest in our program is $5,000. However, you may invest more to receive a higher return on your money.
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Question: Do you pool these investments?

Answer: No we don't. Each investor gets their own note and mortgage. Your funds will be kept separate from other investors.
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START RECEIVING A SECURED 10-15% RETURN ON YOUR MONEY NOW!

Questions: How long will my money be tied up?

Answer: The term of the mortgage is up to you. You may request to have your money invested from one to over ten years.
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Question: Will I be a landlord?

Answer: No. When you invest in a private mortgage, you are acting like a bank. Banks do not field calls from tenants. Banks do not mow lawns. Bank do not fix leaky faucets.
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Question: Do I have to collect payments?

Answer: No. Payments will be made to you our your IRA account.
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Question: Can I invest for my child's college education?

Answer: Yes you may. Please go to Equity Trust Company's web site at www.trustetc.com for more information on self-directed Coverdell Education Savings Accounts.
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Question: Can I do more than one deal at a time or am I limited to one?

Answer: You may invest in as many deals as your comfort level and financial resources allow.
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Question: What if I get short on cash and I need to liquidate my investment?

Answer: We prefer you keep your investment going. However, if you need the funds from your investment, contact us and we will help you convert your investment into cash.
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If you have a question that is not answered, please e-mail us at customercare@therealestatedealer.com for a prompt response.

START RECEIVING A SECURED 10-15% RETURN ON YOUR MONEY NOW!

Disclaimer

Nothing contained in this website shall be considered an offer or solicitation to sell security and is not directed to any person or group, and specifically not to any resident to the Commonwealth of Pennsylvania. These securities have not been registered under the Securities Act of 1933, as amended, or the securities laws of any state and have not been approved or disapproved by any state or federal regulating authority. An offer to see securities can only be made by prospectus after determination of investor qualification, and any registration requirements or available exemptions. The information contained herein, is general in nature. Neither www.TheRealEstateDealer.com nor any of its affiliate entities is engaged in rendering legal, accounting, or other professional services. The user of such information and materials is solely responsible for complying with all applicable state and local laws and ordinances regulating the subject matter covered. Any person who uses the information, products or services referred to herein expressly acknowledges and agrees that said use and purchase is subject to the foregoing disclaimer.

Nine Traits You Need For Success

2008-10-27T07:38:00.002-05:00

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By: Jason H.

The biggest problem I see with new investors is that they know the “technical side of the business”, but not the deal closing side. These investors own dozens of courses on wholesaling and can tell you everything you would want to know about assigning a contract, however, they don’t know how to go to a sellers house and close the deal.

All of that knowledge is useless if you can’t walk into a seller’s house and have the self-confidence and sales skills to walk out with a signed contract in 30 minutes or less. Lack of sales skills also means you are wasting a ton of marketing dollars. You can mail 10,000 postcards a month, but if you don’t have sales skills then those leads are absolutely worthless. I hear from investors all the time who claim this business is too tough or that they got 100 leads last month, but every seller they met with wouldn’t do a wholesale deal or a subject to deal with them (I bet I know why).

So how do you gain self-confidence and sales skills and stop throwing away money? First, you should be investing in your sales education. I highly recommend the following books:

1. Zig Ziglar - Selling 101: What Every Successful Sales Professional Needs to Know

2. Brian Tracy - Advanced Selling Strategies: The Proven System of Sales Ideas, Methods, and Techniques Used by Top Salespeople Everywhere

3. Tom Hopkins - Selling for Dummies

4. Jeffrey Gitomer - Little Red Book of Selling: 12.5 Principles of Sales Greatness

5. Dale Carnegie - How to Win Friends & Influence People

Second, learn your scripts and objections. When you walk into a seller’s house they are always going to have a lot of questions and objections. (Why should I work with you? How do I know that when you take over my payments that you are going to make the payments every month? Can you explain to me what a due-on-sale clause is? What happens if we do a lease option and the tenants destroy the house?) If you can’t immediately respond to these questions and calm their concerns, then the sale is lost. There should be no hesitation when you respond to a seller’s objection. In fact, you should love these objections and questions because it means the seller is seriously considering working with you.

All deal closing champions have the following nine traits (if you don’t posses any or all of these traits, get working on them now):

1. High level of self-confidence - All sellers want to work with confident individuals. They want to feel that you are the right person to help them get out of their situation. They also want to feel that you have been doing this for years and helped hundreds of sellers before them.

2. Be Enthusiastic - Enthusiasm shows sellers that you love your job and that you will do everything in your power to help them out of their difficult situation. When a seller asks you a question you should answer with; absolutely or certainly (assuming you can take care of their question.)

3. Invest a lot of time in education and self-improvement - This is one of the traits that people find the most difficult to master. There are areas in your life to be cheap and education is not one of them. Don’t spend $30,000 on a brand new car, and don’t buy a $5,000 flat screen TV (those are depreciating assets and will not help you earn money.) You should constantly attend seminars, purchase courses and work with mentors and coaches. I know that not every investment you make will be worth your money, (I think all of us have been ripped off by a less than informational course) however, in the long run this will cut your learning curve by several years. Also, all serious investors are always looking for a “slight edge”. If a course or seminar shows you how to buy an extra house this year, or fill a house faster with a tenant, it is worth thousands of dollars over your lifetime.

4. Smile - Sellers want to work with friendly and warm individuals. You should have a great big smile as you shake their hand and first meet them.

5. Be positive - This trait goes along with being enthusiastic. You want to assure your sellers that you can help them out of their situation and that their difficult rental property (or whatever problem they face) will be a thing of the past.

6. Dress well - Image is everything and people do judge a book by its cover. When you meet with a seller, show up in business casual attire. Never show up in jeans and a ratty t-shirt. Also, when you dress well you feel more confident and better about yourself.

7. Treat everyone with respect - You may not like a seller or a tenant, or you may disagree with their lifestyle. However, treat everyone like they have 100 houses they want to sell to you (you never know, they may not have 100 houses, but their aunt, uncle or brother might!)

8. Use Showmanship - You should have a deal closing kit that you give to sellers when you meet with them. This should include the following:

- Cost to sell worksheet, which shows the seller’s much money they will save by working with you. - Testimonials which show how you are the world’s greatest real estate investor and how you have helped many people just like them.
- Coupons that the sellers will receive at closing as courtesy from your company (such as an expensive dinner, or one nights stay at a fancy hotel.)
- Letter which describes why you are superior to other real estate investors
- Special reports that show them how you can buy their house fast or take over their payments immediately.

9. Be an excellent listener - There is the old saying that God gave us one mouth and two ears and we should use them proportionately. Listening is so important in this business because you will discover a seller’s true motivation for wanting to sell a house and then you can structure your presentation accordingly.

Every time you prepare to meet with a seller you need to “pump” yourself up so you have high self-confidence and you feel ready to go. On the way over to the seller’s house, you should be listening to music that will get you motivated. I love to listen to “Eye of the Tiger” by Survivor to get in the deal closing mood. Then, as I sit in front of the seller’s house, I will repeat to myself “I am the greatest”, “I am going to close this deal”, “I am a deal closing champion”. (If you think this stuff is mumbo jumbo, then I bet you are not a deal closing champion and you have a long way to go to become successful.)

Once the seller opens the door, you better have a firm handshake and you better “act as if”. Act as if this is your 1,000 deal. I know this is not easy to do. When we start out in this business we are all terrified. The thought of meeting a seller will make your legs tremble and cause you to break out into a cold sweat. You better not let a seller see this fear or lack of self-confidence. This is because sellers are like wild animals. They can smell the fear in you and this will subconsciously make them not want to work with you. I mean, would you want to work with a car salesman who was shaking as he was trying to sell you a car? Or would you want to even work with another investor who you could tell didn’t have the foggiest clue in the world what he was doing?

So, after you have built a rapport and answered all of their objections, how do you close the sale? One of my favorite closes is the “yes or yes” close. This is where you give the seller multiple offers so they have more choices on how you can assist them. For example, you could give a seller a cash offer of $125,000 or a subject-to offer of $151,000. Then when you are getting ready to close the deal you could say, “Mr. Seller, would you rather have $125,000 cash now or $151,000 and we take over your payments and give you more cash when the house sells?” You can also use the “yes or yes” close when setting the terms of the deal. “Mr. Seller, would you rather close on June 30 or July 10? Which works best for you?” “Mr. Seller, we can either set up our visit for Thursday at 7:00 or Friday at 6:00, which is best for you?”

Please take the time to learn how to become a deal closing champion. Stop losing thousands upon thousands of dollars every month because when you meet with a seller you never seem to walk out with a signed contract. Or even worse, your skills are so bad that you can’t even get an appointment and persuade a seller in the first place that you are the person who can help them get rid of their property problems. Becoming a deal closing champion is one of the most important skills that you will learn. You will be able to walk into a seller’s house and walk out with a signed contract in 30 minutes or less and do this on nine out of ten appointments. If you aren’t closing nine out of ten, then you aren’t screening properly over the phone, or your sales skills need lots of improvement.

Remember that practice makes perfect and nobody starts out as a deal closing champion. If you invest in your sales education, learn your objections and consistently meet with sellers, you will eventually join the top 5% of real estate investors and close several deals a month.

Jason R. Hanson is the founder of National Real Estate Investor Month, author of “How to Build a Real Estate Empire” and mentor to students all across America. To get a FREE copy of Jason’s Special Report “The Insider’s Guide To Buying Your First Investment Property in 83 Days or Less!” visit http://www.PrimoCoach.com or call 800-865-1702.

Unlimited Tax Deductions For Pros

2008-10-20T07:31:00.000-05:00

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By: Niman S.

What makes real estate such a great tax shelter is the fact that real estate owners can deduct losses from rental properties (causing them to have a smaller tax bill) even when they are making a profit and there is no actual loss.

Property owners can deduct rental property losses against their regular income as long as their Adjusted Gross Income is less than $150,000. They can deduct up to $25,000 yearly if their AGI is less than $100,000.

AGI (Married Filing Joint): Less than $100K Yearly Loss Deduction Limit: Deduct up to $25K

AGI (Married Filing Joint): $100K to $150K Yearly Loss Deduction Limit: Deduct up to ($150,000 – AGI)/2

AGI (Married Filing Joint): More than $150K Yearly Loss Deduction Limit: Deduct $0

If rental losses exceed the deduction limit, they are carried forward (up to 15 years) until they can be deducted in another year or offset with future rental income.

In other words, the loss that you can deduct is limited. The more you make, the less you can deduct – and if you and your spouse’s combined AGI is more than $150,000 – you are unable to deduct the losses from your rental property.

“Real estate professionals” are not subject to this limitation. They can deduct unlimited losses against their income regardless of how much money they or their spouse earns. Many property owners at high tax brackets become real estate professionals so they can take advantage of unlimited loss deductions.

For example, a couple at a high income level cannot deduct rental losses because their AGI exceeds $150,000. However, over 50% of one spouse’s time is spent managing the couple’s real estate investments, and the total time spent throughout the year is greater than 750 hours. This qualifies the spouse as a “real estate professional,” and allows for the couple to deduct unlimited rental losses against their income.

A person qualifies as a "real estate professional” by satisfying both of these conditions:

1. Throughout the tax year, more than 50% of the personal services performed by the individual were performed in real property trades or businesses in which the individual materially participated.

2. Throughout the tax year, more than 750 hours of the personal services performed by the individual were performed in real property trades or businesses in which the individual materially participated.

Keep in mind that the “real estate professional” status has been getting challenged by the IRS recently, and an increasing number of real estate agents are facing audits in the state of California.

Be sure to consult with a tax advisor to evaluate your specific circumstances.

Niman Singh is the Director of Community Relations for http://www.TReXGlobal.com - the creators of Simplify'em, Defer'em, Depreciate'em, & RealTaxTips.com

10 Reasons You're Not Rich

2008-10-12T13:24:00.002-05:00

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Here is an interesting article we read recently about ten reasons people don't get rich. Enjoy!

10 (More) Reasons You're Not Rich
by Jeffrey Strain

Many people assume they aren't rich because they don't earn enough money. If I only earned a little more, I could save and invest better, they say.

The problem with that theory is they were probably making exactly the same argument before their last several raises. Becoming a millionaire has less to do with how much you make, it's how you treat money in your daily life.

The list of reasons you may not be rich doesn't end at 10. Caring what your neighbors think, not being patient, having bad habits, not having goals, not being prepared, trying to make a quick buck, relying on others to handle your money, investing in things you don't understand, being financially afraid and ignoring your finances.

Here are 10 more possible reasons you aren't rich:

You care what your car looks like: A car is a means of transportation to get from one place to another, but many people don't view it that way. Instead, they consider it a reflection of themselves and spend money every two years or so to impress others instead of driving the car for its entire useful life and investing the money saved.

You feel entitlement: If you believe you deserve to live a certain lifestyle, have certain things and spend a certain amount before you have earned to live that way, you will have to borrow money. That large chunk of debt will keep you from building wealth.

You lack diversification: There is a reason one of the oldest pieces of financial advice is to not keep all your eggs in a single basket. Having a diversified investment portfolio makes it much less likely that wealth will suddenly disappear.

You started too late: The magic of compound interest works best over long periods of time. If you find you're always saying there will be time to save and invest in a couple more years, you'll wake up one day to find retirement is just around the corner and there is still nothing in your retirement account.

You don't do what you enjoy: While your job doesn't necessarily need to be your dream job, you need to enjoy it. If you choose a job you don't like just for the money, you'll likely spend all that extra cash trying to relieve the stress of doing work you hate.

You don't like to learn: You may have assumed that once you graduated from college, there was no need to study or learn. That attitude might be enough to get you your first job or keep you employed, but it will never make you rich. A willingness to learn to improve your career and finances are essential if you want to eventually become wealthy.

You buy things you don't use: Take a look around your house, in the closets, basement, attic and garage and see if there are a lot of things you haven't used in the past year. If there are, chances are that all those things you purchased were wasted money that could have been used to increase your net worth.

You don't understand value: You buy things for any number of reasons besides the value that the purchase brings to you. This is not limited to those who feel the need to buy the most expensive items, but can also apply to those who always purchase the cheapest goods. Rarely are either the best value, and it's only when you learn to purchase good value that you have money left over to invest for your future.

Your house is too big: When you buy a house that is bigger than you can afford or need, you end up spending extra money on longer debt payments, increased taxes, higher upkeep and more things to fill it. Some people will try to argue that the increased value of the house makes it a good investment, but the truth is that unless you are willing to downgrade your living standards, which most people are not, it will never be a liquid asset or money that you can ever use and enjoy.

You fail to take advantage of opportunities: There has probably been more than one occasion where you heard about someone who has made it big and thought to yourself, "I could have thought of that." There are plenty of opportunities if you have the will and determination to keep your eyes open.

Chicago Home Prices Fall Less than US

2008-09-30T22:46:00.001-05:00

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(Reuters) — Prices of single-family homes plunged a record 16.35 percent in July from a year earlier, according to the Standard & Poor's/Case-Shiller Home Price Indices.

The Chicago area didn’t do as badly, with prices down 10 percent in July compared with July 2007, according to the S&P/Case-Shiller numbers. The S&P/Case-Shiller composite index of 20 metropolitan areas fell 0.9 percent in July from June, S&P said in a statement Tuesday. Since the peak of the housing boom in July 2006, the index has dropped 19.5 percent, it said.

In the Chicago area, prices were down 0.35 percent in July compared with June. S&P said its composite index of 10 metropolitan areas declined 1.1 percent in July for a 17.5 percent year-over-year drop. From two years ago, the index is down 21.1 percent. However, the pace of home price declines has slowed in the past three months, S&P said.

House and Senate Contact Information

2008-09-28T22:35:00.002-05:00

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Hello, everyone. There has been much talk about the $700 billion bailout package. One cannot turn on the television or radio or connect to the Internet without hearing about it. The decisions that will be made will have an effect on us all.

Whether you agree with the decisions that will be made or not is an issue that should be taken up with your local Congressmen and/or Senators. The contact links for these politicians can be found at www.house.gov and www.senate.gov respectively.

Transcript - President Bush's address to the nation about the $700 billion bailout

2008-09-25T10:18:00.008-05:00

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Below is a transcript of President Bush's address to the nation about the $700 billion bailout:

WASHINGTON -- "Good evening. This is an extraordinary period for America's economy.

Over the past few weeks, many Americans have felt anxiety about their finances and their future. I understand their worry and their frustration.

We've seen triple-digit swings in the stock market. Major financial institutions have teetered on the edge of collapse, and some have failed. As uncertainty has grown, many banks have restricted lending, credit markets have frozen, and families and businesses have found it harder to borrow money.

We're in the midst of a serious financial crisis, and the federal government is responding with decisive action.

We boosted confidence in money market mutual funds and acted to prevent major investors from intentionally driving down stocks for their own personal gain.

Most importantly, my administration is working with Congress to address the root cause behind much of the instability in our markets.

Financial assets related to home mortgages have lost value during the house decline, and the banks holding these assets have restricted credit. As a result, our entire economy is in danger.
So I propose that the federal government reduce the risk posed by these troubled assets and supply urgently needed money so banks and other financial institutions can avoid collapse and resume lending.

This rescue effort is not aimed at preserving any individual company or industry. It is aimed at preserving America's overall economy.

It will help American consumers and businesses get credit to meet their daily needs and create jobs. And it will help send a signal to markets around the world that America's financial system is back on track.

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I know many Americans have questions tonight: How did we reach this point in our economy? How will the solution I propose work? And what does this mean for your financial future?
These are good questions, and they deserve clear answers.

First, how did our economy reach this point? Well, most economists agree that the problems we're witnessing today developed over a long period of time. For more than a decade, a massive amount of money flowed into the United States from investors abroad because our country is an attractive and secure place to do business.

This large influx of money to U.S. banks and financial institutions, along with low interest rates, made it easier for Americans to get credit. These developments allowed more families to borrow money for cars, and homes, and college tuition, some for the first time. They allowed more entrepreneurs to get loans to start new businesses and create jobs.

Unfortunately, there were also some serious negative consequences, particularly in the housing market. Easy credit, combined with the faulty assumption that home values would continue to rise, led to excesses and bad decisions.

Many mortgage lenders approved loans for borrowers without carefully examining their ability to pay. Many borrowers took out loans larger than they could afford, assuming that they could sell or refinance their homes at a higher price later on.

Optimism about housing values also led to a boom in home construction. Eventually, the number of new houses exceeded the number of people willing to buy them. And with supply exceeding demand, housing prices fell, and this created a problem.

Borrowers with adjustable-rate mortgages, who had been planning to sell or refinance their homes at a higher price, were stuck with homes worth less than expected, along with mortgage payments they could not afford.

As a result, many mortgage-holders began to default. These widespread defaults had effects far beyond the housing market.

See, in today's mortgage industry, home loans are often packaged together and converted into financial products called mortgage-backed securities. These securities were sold to investors around the world.

Many investors assumed these securities were trustworthy and purchasers of mortgage-backed securities were Fannie Mae and Freddie Mac.

Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk.

The decline in the housing market set off a domino effect across our economy. When home values declined, borrowers defaulted on their mortgages, and investors holding mortgage-backed securities began to incur serious losses.

Before long, these securities became so unreliable that they were not being bought or sold. Investment banks, such as Bear Stearns and they could not sell. They ran out of money needed to meet their immediate obligations, and they faced imminent collapse.

Other banks found themselves in severe financial trouble. These banks began holding on to their money, and lending dried up, and the gears of the American financial system began grinding to a halt.

With the situation becoming more precarious by the day, I faced a choice, to step in with dramatic government action or to stand back and allow the irresponsible actions of some to undermine the financial security of all.

I'm a strong believer in free enterprise, so my natural instinct is to oppose government intervention. I believe companies that make bad decisions should be allowed to go out of business.

Under normal circumstances, I would have followed this course. But these are not normal circumstances. The market is not functioning properly. There has been a widespread loss of confidence, and major sectors of America's financial system are at risk of shutting down.

The government's top economic experts warn that, without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold.

More banks could fail, including some in your community. The stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet. Foreclosures would rise dramatically.

And if you own a business or a farm, you would find it harder and more expensive to get credit. More businesses would close their doors, and millions of Americans could lose their jobs.

Even if you have good credit history, it would be more difficult for you to get the loans you need to buy a car or send your children to college. And, ultimately, our country could experience a long and painful recession.

Fellow citizens, we must not let this happen. I appreciate the work of leaders from both parties in both houses of Congress to address this problem and to make improvements to the proposal my administration sent to them.

There is a spirit of cooperation between Democrats and Republicans and between Congress and this administration. In that spirit, I've invited Senators McCain and Obama to join congressional leaders of both parties at the White House tomorrow to help speed our discussions toward a bipartisan bill.

I know that an economic rescue package will present a tough vote for many members of Congress. It is difficult to pass a bill that commits so much of the taxpayers' hard-earned money.
I also understand the frustration of responsible Americans who pay their mortgages on time, file their tax returns every April 15th, and are reluctant to pay the cost of excesses on Wall Street.
But given the situation we are facing, not passing a bill now would cost these Americans much more later.

Many Americans are asking, how would a rescue plan work? After much discussion, there's now widespread agreement on the principles such a plan would include.

It would remove the risk posed by the troubled assets, including mortgage-backed securities, now clogging the financial system. This would free banks to resume the flow of credit to American families and businesses.

Any rescue plan should also be designed to ensure that taxpayers are protected. It should welcome the participation of financial institutions, large and small. It should make certain that failed executives do not receive a windfall from your tax dollars.

It should establish a bipartisan board to oversee the plan's implementation, and it should be enacted as soon as possible.

In close consultation with Treasury Secretary Hank Paulson, Federal Reserve Chairman Ben Bernanke, and SEC Chairman Chris Cox, I announced a plan on Friday.

First, the plan is big enough to solve a serious problem. Under our proposal, the federal government would put up to $700 billion taxpayer dollars on the line to purchase troubled assets that are clogging the financial system.

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In the short term, this will free up banks to resume the flow of credit to American families and businesses, and this will help our economy grow.

Second, as markets have lost confidence in mortgage-backed securities, their prices have dropped sharply, yet the value of many of these assets will likely be higher than their current price, because the vast majority of Americans will ultimately pay off their mortgages.

The government is the one institution with the patience and resources to buy these assets at their current low prices and hold them until markets return to normal.

And when that happens, money will flow back to the Treasury as these assets are sold, and we expect that much, if not all, of the tax dollars we invest will be paid back.

The final question is, what does this mean for your economic future? Well, the primary steps -- purpose of the steps I've outlined tonight is to safeguard the financial security of American workers, and families, and small businesses. The federal government also continues to enforce laws and regulations protecting your money.

The Treasury Department recently offered government insurance for money market mutual funds. And through the FDIC, every savings account, checking account, and certificate of deposit is insured by the federal government for up to $100,000.

The FDIC has been in existence for 75 years, and no one has ever lost a penny on an insured deposit, and this will not change.

Once this crisis is resolved, there will be time to update our financial regulatory structures. Our 21st-century global economy remains regulated largely by outdated 20th-century laws.
Recently, we've seen how one company can grow so large that its failure jeopardizes the entire financial system.

Earlier this year, Secretary Paulson proposed a blueprint that would modernize our financial regulations. For example, the Federal Reserve would be authorized to take a closer look at the operations of companies across the financial spectrum and ensure that their practices do not threaten overall financial stability.

There are other good ideas, and members of Congress should consider them. As they do, they must ensure that efforts to regulate Wall Street do not end up hampering our economy's ability to grow.

In the long run, Americans have good reason to be confident in our economic strength. Despite corrections in the marketplace and instances of abuse, democratic capitalism is the best system ever devised.

It has unleashed the talents and the productivity and entrepreneurial spirit of our citizens. It has made this country the best place in the world to invest and do business. And it gives our economy the flexibility and resilience to absorb shocks, adjust, and bounce back.

Our economy is facing a moment of great challenge, but we've overcome tough challenges before, and we will overcome this one.

I know that Americans sometimes get discouraged by the tone in Washington and the seemingly endless partisan struggles, yet history has shown that, in times of real trial, elected officials rise to the occasion.

And together we will show the world once again what kind of country America is: a nation that tackles problems head on, where leaders come together to meet great tests, and where people of every background can work hard, develop their talents, and realize their dreams.

Thank you for listening. May God bless you."

After the Fall -- What Happened, What's Next

2008-09-24T06:24:00.002-05:00

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I read this article recently on Yahoo! Finance. Enjoy!

--------------------------------------------------------

by Gregory Zuckerman and Karen DamatoTuesday, September 23, 2008

Back from the brink.

The U.S. financial system last week was rocked by the biggest crisis since the 1930s -- and the federal government responded with a multi-pronged intervention that is the most sweeping since the New Deal.

Over the course of just three days, Americans were shaken to see venerable investment bank Lehman Brothers Holdings file for bankruptcy protection, Merrill Lynch abruptly sell itself to Bank of America and the U.S. hurriedly launch an $85 billion bailout of American International Group, one of the world's largest insurers. Just one week earlier, the government had bailed out mortgage giants Fannie Mae and Freddie Mac.

The turmoil has people worrying about the safety of their brokerage accounts, their insurance policies and even their "safe" stashes of cash -- as the problems at Lehman produced losses for investors in at least one money-market mutual fund.

In the midst of the financial-industry carnage, the Dow Jones Industrial Average was down more than 8% for the week at one point midweek.

But stocks soared Thursday and Friday as the government announced a massive effort to try to keep the financial system from unraveling. Key components: a plan to help financial institutions unload toxic mortgage assets and new federal insurance for money funds.

How did all this happen and where do we go from here? We tackle those questions and others below:

Q: What's behind the financial crisis?

A: The latest woes are a continuation of the housing meltdown and the resulting "credit crisis" that have been bedeviling the U.S. Home prices have been tumbling and foreclosures soaring since the bursting of the housing bubble just over a year ago -- and the effects extend throughout the economy.

Banks have taken huge write-downs on bad mortgages and become stingier with new loans. Moreover, many problem loans were sliced up and resold to investors as mortgage-backed securities and other products, producing losses for a host of banks, securities firms and insurance companies.

Other companies, including AIG, have suffered big losses on contracts they sold providing insurance against losses on mortgage-related investments.

Q: How could conditions deteriorate so quickly that companies rushed to sell themselves or couldn't survive without U.S. help?

A: Part of the problem has been a crisis of confidence. Lending markets that form the backbone of the capital markets froze up. Many financial firms had become so big and their holdings so complex that no one was sure what their exposure was to the mortgage market. In recent weeks, fear that housing-related losses would sink even large firms made it impossible for some companies to raise the cash needed to support their operations.

In recent years, many companies, like many families, loaded up on debt -- which magnifies profits when times are good but also increases losses when things go sour.

Recently, giant financial firms have tried to get their houses in order by "deleveraging" -- selling off assets, reducing debt and building up capital. But widespread efforts to sell distressed securities only push prices down further, leading to further write-downs that leave companies desperate for even more capital.

Q: What does this financial-industry meltdown mean for the broader economy?

A: "Companies and consumers alike are finding it more difficult to borrow," which likely will crimp business activity, says Jeff Fishman, who runs JSF Financial, a Los Angeles-based financial-advisory firm. "This could lead to an uptick in bankruptcies, which we've already seen, and the attendant job losses, cuts in consumer spending and confidence."
And remember that the recent crisis on Wall Street follows months of debate among economists on whether the U.S. economy is already in a recession or on the verge of entering one.

Q: How would the government's new plan stem the crisis?

A: The plan likely will involve spending hundreds of billions of dollars to buy distressed mortgage investments from financial institutions at deeply discounted prices. That should add a dose of confidence to frozen lending markets by assuring participants that at least one large investor -- the U.S. government -- stands ready to buy these assets. Congress has signaled that it is open to working with the administration; approval could come this week.

Q: Will that intervention turn things around?

A: The hope is that it will prevent the crisis from spinning out of control and will thus buoy the economy.

A revival of the credit markets and a bottoming of the housing market are keys to a revival. The government's debt plan may reduce the level of fear in the market, enabling the credit markets to operate properly. But such a plan wouldn't do anything about the excess supply of homes and the large number of mortgage borrowers in dire straits.

Q: So what's the outlook for the economy and the stock market over the next few months?

A: Housing could take many months to bottom, and then rebound, analysts say. Meanwhile, economies around the globe could weaken dramatically, something many investors aren't counting on.

Still, investors shouldn't get too gloomy.

The stock market's decline of about 20% from last fall's peak is close to the average fall for the market in periods of recession, notes Citigroup strategist Tobias Levkovich. "One can suggest that a bottom is near," he says.

Adds Peter Brodie, director of investments at a unit of Bryn Mawr Trust: "History has shown that it is crises such as these that create the extreme pessimism required to set the stage for meaningful market recoveries -- and we feel that the resiliency of our economy will again be exhibited as we enter '09."

Q: Is there any other good news out there?

A: Yes. The recent collapse of energy and commodity prices will make it easier for consumers to fill up their gas tanks and heat their homes. It also will reduce pressures on many companies.
At the same time, inflation fears are subsiding, as the consumer price index fell 0.1% in August, the first monthly fall in almost two years. That all makes it virtually certain that the Federal Reserve won't raise interest rates any time soon, and might even cut them.
Moreover, hard as it is, investors should work to see the bright side of low stock prices. "Only those who will be sellers of equities in the near future should be happy at seeing stocks rise," famed investor Warren Buffett noted in 1997. "Prospective purchasers should much prefer sinking prices."

Handyman Special - Won't Last Long

2008-09-07T21:47:00.003-05:00

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Location: Chicago, IL (South Side)
Asking: $48,000 or best offer
After Repaired Value: $110,000
Square Footage: 755
Special Note: Owner financing available with $5,000 down!

For more information, go right now to www.therealestatedealer.com/wb16

Government may soon back troubled mortgage giants

2008-09-06T01:22:00.003-05:00

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By ALAN ZIBEL, AP Business Writer

WASHINGTON - The government is expected to take over Fannie Mae and Freddie Mac as soon as this weekend in a monumental move designed to protect the mortgage market from the failure of the two companies, which together hold or guarantee half of the nation's mortgage debt, a person briefed on the matter said Friday night.

Some of the details of the intervention, which could cost taxpayers billions, were not yet available, but are expected to include the departure of Fannie Mae CEO Daniel Mudd and Freddie Mac CEO Richard Syron, according to the source, who asked not to be named because the plan was yet to be announced.

Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson and James Lockhart, the companies' chief regulator, met Friday afternoon with the top executives from the mortgage companies and informed them of the government's plan to put the troubled companies into a conservatorship.

The news, first reported on The Wall Street Journal's Web site, came after stock markets closed. In after-hours trading Fannie Mae's shares plunged $1.54, or 22 percent, to $5.50. Freddie Mac's shares fell $1.06, or almost 21 percent, to $4.04. Common stock in the companies will be worth little to nothing after the government's actions.

The news also followed a report Friday by the Mortgage Bankers Association that more than 4 million American homeowners with a mortgage, a record 9 percent, were either behind on their payments or in foreclosure at the end of June.

That confirmed what investors saw in Fannie and Freddie's recent financial results: trouble in the mortgage market has shifted to homeowners who had solid credit but took out exotic loans with little or no proof of their income and assets.

Fannie Mae and Freddie Mac lost a combined $3.1 billion between April and June. Half of their credit losses came from these types of risky loans with ballooning monthly payments.
While both companies said they had enough resources to withstand the losses, many investors believe their financial cushions could wither away as defaults and foreclosures mount.
Many in Washington and on Wall Street hadn't expected Paulson to intervene unless the companies had trouble issuing debt to fund their operations.

This summer, Congress passed a plan to provide unlimited government loans to Fannie and Freddie and to purchase stock in the two companies if needed.

Critics say the open-ended nature of the rescue package could expose taxpayers to billions of dollars of potential losses.

Supporters, however, argue the Bush administration had little choice but to support Fannie and Freddie, which together hold or guarantee $5 trillion in mortgages — almost half the nation's total.
Representatives of Fannie and Freddie declined to comment on the government assistance plan.
Treasury spokeswoman Brookly McLaughlin said officials "have been in regular communications" with Fannie and Freddie, but refused to comment saying, "We are not going to comment on rumors."

Concern has been growing that a government rescue of Fannie and Freddie could not only wipe out common stockholders, but also be costly for scores of investment, banking and insurance companies that hold billions of dollars in their preferred shares.

Paulson has been in contact in recent weeks with foreign governments that hold billions of dollars of Fannie and Freddie debt to reassure them that the United States recognizes the importance of the two companies.

The two companies had nearly $36 billion in preferred shares outstanding as of June 30, according to filings with the Securities and Exchange Commission.

Mudd, the son of TV anchor Roger Mudd, was elevated to Fannie Mae's top post in December 2004 when chief executive Franklin Raines and chief financial officer Timothy Howard were swept out of office in an accounting scandal. Syron was named Freddie Mac's CEO in 2003, replacing former chief Gregory Parseghian, who was ousted in after being implicated in accounting irregularities.

He formerly was executive chairman of Thermo Electron Corp., a Waltham, Mass.-based maker of scientific equipment, served head of the American Stock Exchange and was president of the Federal Reserve Bank of Boston in the early 1990s.

Fannie Mae was created by the government in 1938, and was turned into a shareholder-owned company 30 years later. Freddie Mac was established in 1970 to provide competition for Fannie.
A government takeover could cost taxpayers up to $25 billion, according to the Congressional Budget Office.

But the epic decision highlights the size of the threats facing the housing market and the economy. On Friday, Nevada regulators shut down Silver State Bank, the 11th failure this year of a federally insured bank. And earlier this year, the government orchestrated the takeover of investment bank Bear Stearns by JP Morgan Chase.

U.S. House Price Decline Could Be Worse than Great Depression, Economist Shiller Says

2008-09-04T19:27:00.002-05:00

Posted Sep 04, 2008 01:36pm EDT by Henry Blodget in Newsmakers, Recession

Eight years ago, Yale superstar professor and MacroMarkets chief economist Robert Shiller famously called the top of the stock market in his book Irrational Exuberance. Then, a year before the housing bubble peaked, he predicted the colossal bust we are now experiencing.If you recognize Shiller's name, it’s because the Standard & Poor's/Case-Shiller home price indexes, which he developed with Wellesley College economist Karl Case, have become the nation's most authoritative source for home price trends. In part one of my one-on-one with Shiller, we discuss the grim outlook for U.S. housing, which he tackles in-depth in his new book The Subprime Solution. Highlights of our first discussion include:

*Home price declines are already approaching those in the Great Depression, when they plunged 30% during the 1930s. With prices already down almost 20%, it's not a stretch to think we might exceed that drop this time around.

*There are about 10 million homeowners whose debt is higher than their home value, which has broad implications for how Americans feel about their wealth and spending habits (read: more pressure on consumer spending).

*The current hopeful consensus -- that house prices will bottom soon and then begin to recover -- is most likely a dream. Housing markets don't usually have "V-shaped" recoveries. And even if house prices stabilize in nominal terms, after adjusting for inflation, most homeowners will continue to lose money.

Chicago Home Sales Drop Over 25%

2008-08-26T22:34:00.002-05:00

This continues to be a great time to buy real estate! The National Association of Realtors reported another hit to the Chicago real estate market. Home sales in the metropolitan Chicago area fell 25.2 percent, and median prices slipped 2.9 percent in July from a year earlier, the Illinois Association of Realtors said Monday. They also reported close to a 3% drop in existing home sales as people are buying properties at a discount. Read on...