Market News & Commentary by Chris McLaughlin, October 1, 2008
http://www.shortsalesriches.com/welcome.html
The Dow Jones Industrial average traded sideways today, ending the day down 19.59 on the day. The U.S. Senate prepared to vote on a bailout plan tonight as vote getters added on lots of popular provisions to lure new supporters to the package. Chief among the new provisions will increasing FDIC insurance to $250,000 from $100,000; the bill prevents the FDIC from charging its member banks more in order to cover the increase as well and enables the FDIC to borrow directly from the Treasury should it need additoinal capital.
The Oracle of Omaha, Warren Buffett, went on a buying spree again today, buying $3 billion in General Electric with a buy price of $22.25 along with a 10% dividend. The goodwill the Buffett brings will enable General Eletric to sell $12 billion of stock. Buffett said, “GE is the symbol of American business to the world…I am confident that GE will continue to be successful in the years to come.”
Car makers plunged today, as tight credit and gas prices are keeping customers away from showhomes. Ford Motor’s sales plunged 34 percent, and Toyota, the manufacturer of the popular fuel efficient Prius Hybrid, still had sales tank 32%.
Now, on to real estate and investor education …
When it comes time to present an offer on a short sale, learn to recognize these unhealthy home traps then either walk away or use this “Housing Hit List” to further (and often dramatically) reduce the price of the home. Remember, once identified, even “as-is” homes must disclose known defects so taking the time to perform a few inexpensive tests can result in saving thousands or even tens of thousands of dollars from already reduced market rates.
The Unhealthy Home Hit List…
1. Lead. Prior to 1978, most homes used lead based paint. Since lead is known to cause mental retardation and health issues among children, it is federal law that all rental units notify potential occupants of the possible existence of lead in homes built prior to 1978. De-leading can be done but may be expensive especially if the home also used lead pipes. Other potential sources of lead contamination include the soil surrounding the home. If in doubt – test paint, water and soil samples for lead.
2. Radon. This colorless, odorless gas is frequently found in some areas of the country especially in newer homes that tend to be tightly sealed and “weatherized”. Purchase an inexpensive radon test kit to find out if a potential property is impacted.
3. Mold/Mildew. Insurance companies hate it, consumers fear it and most savvy investors realize how easy it can be to remedy. Prior water damage from flooding, roof damage, pipe problems or other humidity control issues can lead to the presence of mold and mildew.
4. Air Quality. The Environmental Protection Agency has recently released studies indicating the air quality in some homes to be worse than the smog of Los Angeles…quite a feat if you think about it especially when you realize the worst culprits are not toxic waste dumps or super fund sites but rather indoor pollutants. In most cases things like air deodorizers, cleaning agents, carpeting and other common materials contribute to degraded air quality issues. Test the air then search for the source. In most situations, air vents, enzymatic treatment and other simple solutions fix the problem.
5. Water Quality. Although not always as simple to fix as air quality, water quality issues aren’t always a deal breaker; iron, sulfur and calcium build-up might be unsightly but presents little real health risk. Homes with private water sources are particularly susceptible – and can often be corrected with the addition of a professional filtration system.
6. Asbestos. Used in everything from roofing tiles to fireproof surrounds, asbestos was a favored building material for years. Unfortunately, it is also a known carcinogen that requires specialized handling and disposal.
7. Meth and Other Drug Lab’s. From flop houses to full blown meth labs, sooner or later most short sale investors will come across a foreclosed home contaminated by drugs. It is important to understand the local, state and federal guidelines required to properly recondition the home prior to making a bid.
More tomorrow…
Chris McLaughlin, J.D., M.B.A.
web: http://www.shortsalesriches.com/welcome.html
e-mail: info@shortsalesriches.com
Phone: (800) 452-7627
P.S.:
So we’re going to do it again this Thursday at 7PM ET. I received lots of e-mails from the East Coast begging for an earlier time, so here you have it! We’re hosting a Webinar (you need a computer and a phone to participate). Last night’s webinar was nearly sold out, so if you’re interested in learning how to make money in this market jump on this now and register while we still have openings:
https://www2.gotomeeting.com/register/779139540
P.P.S.: If you want to have a great laugh, check out this latest YouTube video about some hate mail that Nathan and I received! Here’s the link to our YouTube site:
http://www.youtube.com/shortsalesriches
and if you like what you see in the video, then go here and take action:
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