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Land Flipping Finale … Tonight at 8:30 PM ET, 5:30 PM PST:
There was so much excitement about the new strategy in flipping land that we’re holding an encore tomorrow night at 8:30 PM ET, 5:30 PM PST. There’s also a three pay option as well to help with your cash flow needs.
Here’s the link to RSVP:
https://www2.gotomeeting.com/register/530226171
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WSJ sees foreclosure tidal wave
In a lead story, the Wall Street Journal (WSJ) paints a dismal picture of the housing market in 2010. Uncertainty over the extension of a home-buyer tax credit sent new-home starts in October crashing down a full 10.6% from September, and starts of single-family houses fell 6.8%. That’s the lowest level since April, the Commerce Department said. This news suggests that foreclosures are not only going to keep rolling in, but that they may actually increase. Richard Dugas, chief executive of Pulte Homes Inc., the nation’s largest home builder, warned investors: “As we look out to 2010, we are expecting difficult conditions to continue.” Wednesday’s data prompted some economists to revise their fourth-quarter forecasts down slightly. Macroeconomic Advisers moved its GDP estimate down to 3% from 3.2% and Nomura Securities predicts 3.4% growth, down from 3.6%. The data adds to the suggestion “that the recovery is a little bit rickety,” said Zach Pandl, an economist from Nomura. Given that 3.4% of U.S. households — or about 1.9 million homeowners — are 120 days or more overdue on their payments, and that millions of homes are expected to go through foreclosure over the next few years, adding to supply, it’s a fair bet that foreclosure problem won’t be gone anytime soon.
Unemployment claims flat
The Labor Department announced that initial claims for state unemployment benefits were flat at a seasonally adjusted 505,000 in the week ended Nov. 14 – about the same as analysts polled by Reuters had forecast. Applications have dropped significantly from March’s lofty levels, but remain above the 400,000 mark that analysts say would signal payrolls growth. The four-week moving average for new claims fell 6,500 to 514,000 last week – declining for the 11th straight week. The number of workers still collecting benefits after an initial week of aid dropped 39,000 to 5.61 million in the week ended Nov. 7, the lowest since March, and in line with market expectations for 5.60 million. continuing claims have fallen from a peak of 6.9 million in June and the drop is likely the combination of fewer new applications for unemployment aid and many jobless workers exhausting their benefits. The four-week moving average of continuing claims declined 83,500 to 5.71 million. The insured unemployment rate, which measures the percentage of the insured labor force that is jobless, was steady at 4.3 percent in the week ended Nov. 7.
Surprise! Administration’s job claims “flawed”
This can hardly come as a surprise after the recent fiascos of non-existent congressional districts and wildly inaccurate job estimates, but a new report from the Government Accountability Office (GAO) concludes that the Obama administration’s recent claims about the number of jobs saved or created by stimulus spending are flawed. The White House touted the Recovery Board’s report that claimed approximately 640,329 jobs had been created or saved through contracts, grants and loans in the stimulus package, and while the GAO has not issued corrective numbers, it found a slew of new holes in the data: 3,978 recipients reported jobs created or saved without actually receiving ANY Recovery Act funds, and 9,247 reports showed the receipt of money but NO JOBS were created or saved. In addition, there have been over 100 allegations of fraud surrounding Recovery Act funds, and more than half are still at various investigative phases. In the final analysis, the GAO concludes it has been a “lessons learned process”, and there should be changes to how jobs created and saved are defined, while continuing to work with recipients to accurately report the impact of Recover Act funds. Heck, it would be more accurate to just make up numbers.
Housing slump or not next year?
The National Association of realtors (NAR) expects house prices to rise 4 percent in 2010 with sales hitting 5.7 million units, slightly above the 2007 rate, and that about 15 percent of sales will be the result of the tax credit, which requires a contract by the end of April and closing by the end of June. It’s only fair to present the other side of the argument: “Most of it [the tax credit] is simply shifting sales from one period to another,” says Global Insight economist Patrick Newport. “It doesn’t get rid of the fundamental problem; there’s still a glut of houses.” David Crowe, chief economist at the National Association of Home Builders agrees: “We expect a little stall in 2010…I agree, you do advance demand, so you steal it for the future.” The builders’ group forecasts sales peaking at 5.60 million units in the first quarter and bottoming at 4.50 million in the third quarter, for a 2010 average of 5.15 million. That’s marginally above the 2008 rate of 4.91 million. Most economists see the jobless rate—now 10.3 percent—peaking around 11 percent sometime in early to mid 2010 and then creeping down to around 10 percent by the end of the year, and that certainly drags on both sales and prices too. However, any change in employment, even sentiment, will help sales in general, while a snapback in new household creation will mean the traditional supply of new buyers. Historically low interest rates—which may creep up a full percent over the next 14 months—will still be low enough to keep home affordability high.
More healthcare taxes on the way
Meanwhile, back in never-neverland, while the economy is hobbling along and banks are burning, the government is still fiddling with healthcare. U.S. Senate Democratic leader Harry Reid released a 2,074-page bill, which quickly set off what promises to be a lengthy and bitter debate over President Barack Obama’s top domestic priority. Democrats said the Congressional Budget Office pegged the plan’s 10-year cost at $849 billion — below Obama’s $900 billion goal (well that’s a relief – oh, wait, I missed the “Democrats said” part). The actual analysis from the Congressional Budget Office had not been released by mid-evening on Wednesday, but at least the Senate bill is less expensive than a more than $1 trillion healthcare measure passed on Nov. 7 in the House of Representatives.
Republicans criticized tax increases included in the bill to help pay for the expanded insurance coverage, including a new tax on elective cosmetic surgery they dubbed a “botox tax.” The bill would also raise the Medicare payroll tax on high-income workers, which is used to finance the government health program for the elderly, and impose a tax on high-cost “Cadillac” insurance plans. “This bill has been behind closed doors for weeks. Now, it’s America’s turn, and this will not be a short debate,” Republican Senate leader Mitch McConnell said. “Higher premiums, tax increases and Medicare cuts to pay for more government — the American people know that is not reform.” If the Senate passes a bill, any differences with the House version would have to be reconciled before a final bill can be voted on again in both houses and sent to Obama to sign.
HAMP not working
Only a tiny percentage of troubled homeowners have received permanent modifications under President Obama’s Home Affordable Modification Program (HAMP), raising concerns about the effectiveness of the $75 billion effort. Fewer than 5% of the trial modifications on loans owned or guaranteed by Freddie Mac were converted to long-term adjustments as of Sept. 30. More broadly, the figures are even lower. As of Sept. 1, only 1.26% of all trial adjustments were made permanent after three months, reported the Congressional Oversight Panel, which monitors the government’s use of bailout funds. The preliminary data, which has not been widely reported, underscores the next big problem facing the government’s effort: Officials have leaned on banks to offer more homeowners trial modifications, but the real test will be whether homeowners will receive lasting help.
“No one is really sure why the conversion rate is so low,” said Mike Zoller, assistant economist at Moody’s Economy.com. “We’re concerned these loans will eventually become foreclosures.” Guy Cecela, publisher of Inside Mortgage Finance, a trade publication, says, “Everyone is going to be shocked at the low conversion rates from trial modifications to permanent modifications.” The president’s program “won’t result in a significant number of loans being modified and won’t put a significant dent in foreclosure rates.”
Now on to our real estate investing educational arena …
Finding Cash to Get Started in Foreclosure Investing
One of the most common complaints voiced by those that have never tried a short sale is that they don’t have the funds needed to get going. The reality is that short sales and REOs are within the reach of most average investors – far more so than other funds that can bring a fortune into your life. Here are just a few ways to find the cash to get started in short sales investing:
1. Banks. This is the most common way but of course, it often requires at least a little out of pocket to get going. Keep reading to learn more ideas of where that might come from…
2. Hard Money Lenders. This is a viable option especially for those that intend to re-sell or flip a property quickly. It’s often worth the higher than average interest rates to turn a quick profit the finance your own from that point forward.
3. Line of Credit or Credit Cards. Personal lines of credit or “signature loans” are a super convenient method of obtaining cash for closing costs or repairs. Likewise, credit cards can be quite helpful – just remember to use responsibly.
4. Savings Account. Remember those? Plenty of people still have them and right now, the interest is dismal. Put that money to better use by investing in a short sale. Once the property is re-sold you can stash the cash away for safe-keeping or even add to it.
5. Bonds. Much like savings accounts, these under-performing assets are downright depressing. Consider the opportunity cost then put that money to work.
6. Insurance Loans. If you have whole life insurance it is often possible to borrow from your policy for a fraction of the cost associated with other credit terms. It’s a great way to make your money work for you without reducing liquidity requirements.
7. 401-k. Another popular option for generating quick cash at a relatively low cost.
8. Home Equity Loans. Although more difficult to obtain than in the past, those with good credit are still able to tap into equity. Other options include reverse mortgage loans or loans made with other secure collateral.
9. Friends and Family. While doing business with friends and family can be risky business, borrowing from them need not be if you write up the proper contract. It is often a win-win since you obtain needed funds and they get better than average returns on their money.
10. Join a Professional Group. The “big boys” of investments have used syndicates for a long time but small investors rarely have been able to generate the same types of returns. Today, there are a multitude of options for those seeking the temporary use of funds from others.
See you at the top!
Chris McLaughlin
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Copyright Loss Mitigation Institute LLC 2009.
All Rights Reserved.
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Finally, a blog for Real Estate professionals
that want up-to-the-minute news, & how it impacts
us and our market…
http://www.shortsalesriches.com/blog
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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 reselling of distressed homes. Owns
portfolio of nearly 100 high-value, high-profit
properties
* Owner of one of Florida’s largest Real Estate firms,
running 4 different offices, supporting over
400 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
* Follow me on Twitter: http://twitter.com/mclaughlinchris
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