Real Estate News & Commentary by Chris McLaughlin, March 2, 2009
http://www.shortsalesriches.com/welcome.html
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You know the drill. Hey mom, can I have another dollar? Well, it wasn’t quite like that, but the folks over at insurance giant AIG are coming back and asking for more, and the fact that the government gave the insurance behemoth $150 billion and still needs to up its allowance has investors panicked.
The financial stock got hammered today – Citigroup down 11%, Bank of America down 14%, and Wells Fargo was down 13%. So they hit the panic button and began to SELL. And the Dow Jones Industrial Average now stands below 6,900 for the first time in over a decade. The Dow has been cut in half – in October 2007 it stood over 14,000 and today is below 7,000.
AIG had received a whopping $150 billion from the government so far (Uncle Sam owns 80% of AIG), but it needs more – to the tune of $30 billion more. After all, AIG lost $61.7 billion in its fourth quarter. And its CEO, Edward Liddy, told CNBC that he can’t rule out having to come back for more: “It really depends on what happens to the capital markets from here,” he said. “Back in September we had a liquidity crisis of unbelievably large proportions, and that’s been stabilized. Our cash liquidity is fine right now, but now because the capital markets are in such a freefall we’re fighting another issue, which is do we have enough equity to support the debt that we have.” That’s CEO speak for heck yes we’re coming back for more!
Now, let’s back up for a little reflection on where we stand today with our nation’s economy, and its impact on the overall real estate market…
Let’s first thank President Obama.
He’s the most popular president since Reagan. Or Kennedy.
And I just love the guy! He’s making me and my students millionaires. And his latest budget proposal is going to make it even easier for you to have the same success that we’ve been having.
So let’s talk about how his new budget proposal’s going to make you rich…
See, this economic mess starts and stops with toxic mortgages. It’s that simple. It’s what caused the chain reaction that took down banks, credit, consumer spending, and even the Wall Street hedge funds that bought “commoditized” mortgages.
Here’s the facts: any government spending that does not address fixing bad mortgages will not fix the economy. You cannot spend your way out of debt. It’s that simple!! So let me repeat it for any politicians who may be reading: You cannot spend your way out of debt.
If you don’t believe me, try it!
Understand this: if any bill coming from “Disneyland on the Potomac” doesn’t address bad mortgages, it’s only going to divert money away from the problem. Waste precious resources. And deepen the recession.
Onward.
Now comes our commander in chief, bless his heart, to make matters worse. And before you accuse me of Obama bashing, hear me out…
He’s proposing reducing mortgage deductions on your income tax return. Simply put, he’s raising your taxes if you have a mortgage. The National Association of Realtors, the National Association of Builders, and the Wall Street Journal all say it will cause housing values to slump further. Granted, the tax boost is only on the so-called “rich,” but all three sources unanimously agree that it will slam the middle class too.
Call it trickle-down poverty.
So know this: Obama’s course of action only means more foreclosures, more short-sales, more BPOs, more REOs… can you see why I’m loving it?
Yep, the worse the housing market gets, since we have the absolute best foreclosure and pre-foreclosure systems available, the richer my student’s get.
Easy money, that’s what it is.
Find out for fr*ee how they’re doing it here, and why it’s easier than you may think…
https://www2.gotomeeting.com/register/834885107
By the way, I wasn’t kidding when I used the “m” word. There are actual millionaires being made with our strategy. You can see why our fr*ee webinars are jam-packed. I keep hoping that we will have more lines available. But after a move like his latest one, I’ve got an open $500 bet that any openings will fill up even earlier than usual. Any takers?
I hope so … now on to our real estate investor education section…
What’s Better – Short Sale Real Estate or a 401-k/Other Retirement Account?
Common wisdom says you should work 30 or 40 years, participate in a corporate retirement plan and then hope and pray you have enough funds set aside to carry you through retirement and into old age. Unfortunately, fewer people than ever have access to a defined benefit plan leaving them alone in the fight for future profits.
In addition to the ever declining defined benefit plan, job stability is a increasingly viewed as a relic of a bygone era. In fact, recent research finds most workers remain on a job for less than 5 years….a number of importance since many vesting programs take 5 to 7 years. Against all odds, some Americans make it to retirement while working at the same company but even then, retirement benefits may not be the big help expected.
Given the prospects of spending ones retirement years in poverty, reliance upon Social Security benefits and pension plans or investing in real estate what is the best course of action? Let’s compare the pro’s and con’s of each starting with what can (and does) go wrong with traditional retirement accounts.
Risk #1 – Corporate bankruptcy. Beginning with Enron, millions of retirees and other workers have watched in despair as their former nest eggs shrink due to economic stressors or even outright fraud. Worse, corporations are beginning to shed high cost benefit plans by filing bankruptcy on non-profitable portions of the operation. Restructuring that places non profitable segments of the corporation into subsidiary status is on the rise in order to salvage the company while allowing future obligations to float.
Compare short sales where you control when to hold, when to fold, when to sell and even how often to buy and at what price. Why rely upon others for the financial security needed during retirement when you can count on yourself instead?
Risk #2 – Future Taxation. While many retirement plans are tooted as the best way to reduce the tax hit by deferring taxation into the future when you are likely to be in a lower tax bracket, there is no guarantee that tax brackets will remain the same. In fact, most experts agree the current trend toward inflated debt is likely to result in increased taxation many years into the future. Even worse, discussion surrounding “means testing” is already taking place leading some experts to predict high taxation on future retirement withdrawals well into your retirement years.
Consider your short sale options where you can buy or sell at any time without pre-payment penalties, early withdrawal fees or other costly options designed to part you from your hard earned profits.
Risk #3 – Redundancy. Workers with company invested retirement plans suffer a double risk in the event of a job loss; not only does their income suffer but so does their retirement plan. How many times have you been told to diversify your retirement? It’s a cornerstone to minimizing risk – yet millions of Americans are at greater risk than ever due to the economic downturn by working and investing with the same company.
Short sale real estate provides a much needed diversification for workers worried about how an economic down turn may impact their employer or sector of the industry. Consider the benefits of investing in short sale real estate as a way to increase profits, reduce risk and protect your financial future.
See you at the top!
Chris McLaughlin
http://www.shortsalesriches.com/welcome.html
P.S.
Don’t miss this great video testimonial about short sale coaching:
http://www.youtube.com/watch?v=CFp0ylr3mQI&feature=email
Copyright Loss Mitigation Institute 2009.
All Rights Reserved.
http://www.shortsalescoach.com
http://www.shortsalesriches.com
http://www.reomillionaireclub.com
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About the author:
Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.
* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month
* Long-time authority on real estate investing
and rapid flipping of distressed homes. Owns
portfolio of nearly 100 high-value, high-profit
properties
* Owner and Supervising Broker of one of Florida’s
largest Real Estate firms, running 4 different
offices, supporting nearly 450 agents, uniquely
positioning him to help thousands of investors
make money in the biggest market opportunity ever!
* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
in Real Estate Investing, Entrepreneurship, and
Wealth Building
* On twitter: http://twitter.com/mclaughlinchris
* On facebook: http://www.facebook.com/addfriend.php?id=709199143
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