john thain

Market News & Commentary by Chris McLaughlin, January 23, 2009
http://www.shortsalesriches.com/welcome.html

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It really isn’t as difficult as you might think it is … but it all starts with TAKING ACTION.  If you want something that you never had, you need to do something that you’ve never done, right?  So forget all the negativity, and forget all the turmoil.  More millionaires are created during times like these than any other time … so are you ready to make it happen?  If so, be one of the 18 spots that we have left for our Saturday webinar at 3PM EST / 12 PM PST entitled “Recession Proof Real Estate Investing: How to Buy Property with no out of pocket costs!”

The link is right here, so jump on this now:

https://www2.gotomeeting.com/register/859239149

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In real estate related market news today…

Shame. Shame. Shame.  The guy who seemed to have an unblemished reputation just got thrown out … for going on a absurd spending spree and concealing how bad things really were. 

Yes, if AIG’s parties weren’t bad enough (we’ve discussed those at extensive length, go to our blog and search AIG), Merrill Lynch’s former CEO, John Thain, was fired yesterday by his new boss, Bank of America’s CEO Kenneth Lewis.  There were several reasons for the firing, but chief among them was the fact that Thain spent billions of dollars in late December on employee bonuses.  The normal protocol was to pay the bonuses in January, but apparently Thain wanted them paid before the Bank of America merger closed.  It caught Lewis off guard, and he was ticked.

Why?  Well Merrill Lynch lost a whopping $27.08 billion dollars during 2008.  Yet their total compensation package was $15 billion, a reduction of just 6% from the year ago period!  Think about it folks … you lose $27 billion, sell your company to Bank of America for pennies on the dollar compared  to what you used to be worth, get billions in government aide, but still pay these morons billions in bonuses?  This is the epitome of the fleecing of America.

And it gets worse.  The quarterly loss was much more than Merrill executives had told Bank of America when they agreed to buy–Merrill Lynch lost $15.31 billion in just the fourth quarter.  And according to the Wall Street Journal, Thain jetted off to Vail, Colorado when it all hit the fan.  Way to lead, John Thain!

But then CNBC reported yesterday the absurd spending that Thain did throughout 2008.  What could be absurd?  Well, how about $800,000 to hire a decorator, Michael Smith (who happens to be decorating the White House for $100,000 right now), to decorate his office.  How about $87,000 for an area rug, four curtains for $28,000, and a pair of chairs for $87,000.  And my favorite: a commode on legs for $35,115! Enough said.  And kudos to Lewis for firing this guy when he did.  Had he not fired him, it probably would have been Lewis’ job on the line anyhow.

Now, on to our real estate investing section…

Poverty Mentality? Learn to Break the Bad Habit & Plan for Success

Is a poverty mentality keeping you from breaking into short sales? Learn how to break bad habits like a negative attitude, poor financial outlook and other self defeating behaviors that keep you in the poor house rather than planning for prosperity. Investigate your own money-mindset by answering the following items truthfully:

1.      Do you find yourself seeking the approval of friends and family on a regular basis?

2.      Do you find it difficult to separate fact from fiction especially when it comes to finances?

3.      Do you expect the government, insurance, benefits or someone else to “come to the rescue” when times get tough?

4.      Do you expect to fail or believe things are left to “fate”, “chance” or pure “luck” rather than hard work and informed decisions?

5.      Do you find it unusually difficult to invest rather than gamble with money? For example, are you more likely to buy a lottery ticket or go to Vegas than purchase an information product that can teach you how to profit from your time?

6.      Do you believe hard labor is the only way to get ahead in life?

7.      Do you think riches and wealth are just for those fortunate enough to have “connections” or be “born with a silver spoon”?

8.      Do you apologize or dismiss your success rather than gracefully accept the praise and credit?

9.      Do you find yourself getting excited by something only to feel stupid later once someone disagrees with your position?

10.  Do you fear change and find it difficult to leave the past behind?

If you find yourself answering yes to these statements, it’s time to set aside the negative attitude and begin replacing it with a positive mindset. Don’t allow fear and negativity to control your financial future. Success is a choice – not a simple random chance.

Because it is a choice – you can control your financial future by taking the time and energy required to educate and inform yourself about short sale investing then put together an action plan for success. In fact, you can change your life as rapidly or slowly as desired simply by putting an end to the defeatist mentality that keeps most people in poverty their entire lives. Instead, find out how easy it can be to transform your negative mindset into a positive force for your financial future.

Time is Money – Keeping Track of Time to Improve Your Bottom Line

You have heard it said “time is money” and no place does that hold more true than when investing in short sales real estate.  Have you ever stopped to calculate the cost of your actual time? What about the value of that same time? Most people sell their time in exchange for as little as $7.15 per hour (minimum wage). Take time to really let that set in…envision the last day of your life with your loved ones by your side. Would you trade that last hour for $7 – pre-tax!?! Of course not. Yet each and every day people shuffle to and from work, spend hours each week in traffic and plow through jobs that leave them mentally and physically exhausted in exchange for a few dollars per hour.

Let’s work in reverse and assume you want to generate an additional $1,000 per month or $12,000 per year – after tax. What are your options? Well, if you are in the lowest income bracket (currently 15 percent) and went to work for yourself – you would need to earn an additional $$1,400 per month to bring home just under $1,000 per month. At $20 per hour (roughly the average hourly income) that would require an additional 70 hours per month or the entire year …assuming it didn’t push you into a higher tax bracket!

What about short sales? Is it possible to make $12,000 from just one deal? Of course! That plus much more is entirely possible – in fact, it is done on a regular basis. How much time does it take to find, place a bid and purchase your first short sale property? Probably less time than it would require in your first month of part-time work above….and the first time is the toughest! Once you understand the process and your financing is in place, each subsequent deal becomes easier and easier.

What would happen if you just turned one solid short sale deal each year? For ease of numbers let’s just call it $10,000 a year. For less than one or two week’s worth of work you could reduce household debt, afford a great vacation, save for retirement or pay for the kids college without having to spend all your time away from home.

Finding the time to begin investing in your financial future is as simple as 1-2-3.

1.      Cut the cable and invest 3 months worth of the savings into education. Now you have the time and money required to educate yourself on the basics of short sale investing. Simply transfer the money you would normally spend on those premium cable channels into information that will transform your financial future.

2.      Set aside the time to get started. If you normally watch television every night for an hour or two; replace it with short sales prospecting. If you are more of the weekend football warrior than trade an off-season for a new financial future by spending your days scouting real estate. Whatever works best is the right method for you – just do it!

3.      Stop dreaming and start doing. Seriously, take action. Planning only goes so far but action is where the rubber meets the road. Make it a priority to fill out the paper work and put what you have learned into practice. Commit to doing at least one short sale deal then make up your mind whether or not it was worth it. Chances are you will wonder why it ever took you so long to begin!

See you at the top!

 

Chris McLaughlin

http://www.shortsalesriches.com/welcome.html  

P.S.: Be one of the 18 spots that we have left for our Tuesday night webinar Saturday at 3 PM EST / 12 PM PST entitled “Recession Proof Real Estate Investing: How to Buy Property with no out of pocket costs!”

The link is right here, so jump on this now:

https://www2.gotomeeting.com/register/859239149

Copyright Loss Mitigation Institute 2009.

All Rights Reserved.

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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 5 different
     offices, supporting nearly 500 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

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Mid-Day Market News & Commentary by Chris McLaughlin, December 22, 2008
http://www.shortsalesriches.com/welcome.html

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Yes, Virginia … there is a Santa Claus!  And he loves to represent buyers in foreclosure and make a ton of money.  So check out this amazing youtube video…Santa definitely showed up in Tennessee this year, early!  You have to see this!!

http://www.youtube.com/watch?v=XTvvi311YDg

and then make sure you register for our upcoming Recession Proof Investing webinar!  There are 17 slots available, first come first serve:

https://www2.gotomeeting.com/register/732240980

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Mortgage applications continue to be on the rise given the low interest rate environment, and one prominent CEO signaled a turning point, according to the Wall Street Journal.  Bank of America CEO Kenneth Lewis said that mid-2009 would be the stabilizing point for house prices, and the bank recently reassigned over 300 loan processors from the home equity division to the mortgage division.  The good joy was also at several other lending institutions. Loan applications were up 300% at Regions Bank, and applications at U.S. Bancorp surged from 11,000 to 30,000 in comparable period in December.  Why all the excitement?  Rates on a 30 year fixed mortgage now hover around 5%, representing the lowest level since reporting began in 1971.

Meanwhile, mortgage modifications continue to fail.  In the latest report by the Office of the Comptroller of the Currency, 37% of mortgages that were modified in the first quarter of 2008 were more than 60 days delinquent.   And for those modified in just 3 months another 19% were also 60 days behind.   John Dugan, who oversaw the preparation of the report, said:  “One very troubling point is that, whether measured using 30-day or 60-day delinquencies, re-default rates increased each month and showed no signs of leveling off after six months or even eight months.”

The implosion in modifications means two things: there will be a ton of short sales and REOs in 2009.  Are you ready for them?  Go here to make sure you’re ready:

https://www2.gotomeeting.com/register/732240980

And the outrage over fat cat executives continues.  The Associated Press analyzed several of the bonus and pay structures from Wall Street execs who took bailout money.  Who was the most outrageous?

Well, there’s Merrill Lynch CEO John Thain, which took a nice $10 billion of taxpayer money.  Thain got earnings of $83 million last year, with a $15 million signing bonus when he came on last year.  And let’s not forget JP Morgan Chase’s CEO Jamie Dimon, whose bank took a cool $25 billion from Uncle Sam.  He managed to spend over $200,000 on private air travel commuting from Chicago to New York.  And then there’s Robery Kelly, the CEO of Bank of New York Mellon Corp, who spent over $178,000 on his personal car and driver.  And the madness continues …

Now, on to our real estate investor education section…

Dollar Cost Averaging and Short Sale Investing

Stock market investors are accustomed to using dollar cost averaging but the concept is relatively new to real estate and short sale investing. In part, this is due to the typical rise of real estate over time. Unlike stocks or bonds that tend to be highly volatile, real estate is usually quite steady and predictable over long periods of time. However, during periods of fluctuations and volatility, dollar cost averaging works exceedingly well for short sale investing.

In a Nutshell…Dollar cost averaging is an investment method where a constant amount is set aside to purchase whatever amount is available at that sum. So for example, when purchasing stocks an investor might decide to invest $5,000 per month rather than deciding to buy 100 shares per month. By emphasizing the dollar amount rather than number of shares, the investor will tend to purchase some shares at higher prices and some shares at lower prices with the eventual result of an “average” price per share taking place over time.

Likewise, real estate investors can do the same. Rather than worry whether or not you are purchasing at the bottom of the market, simply set aside a dollar amount which suites your budget to cover down payment, closing costs etc… then spend that amount of money rather than focusing only on the number of homes or properties purchased.  What you will notice is that over time, the average price per property tends to drop creating a solid rate of return on your overall investment portfolio.

How to Use…

This modified dollar cost averaging method is a great way to demonstrate a total rate of return on your entire short sale investment portfolio when dealing with banks, lenders or loan officers…especially if you are marginal on a specific property. It also assists in highlighting underperforming properties which can be quickly eliminated to increase the total performance of the portfolio as a whole.  Simply eliminate the least profitable property and then re-evaluate your portfolio performance…you will often be surprised at how much impact one property can make on the entire performance.

How to Calculate…

Calculating dollar cost averaging for short sale investments is similar to that of stocks or bonds. Simply make a list of all real estate purchases and the total priced paid then divide by the total number of investments to obtain an average purchase price. Do the same for the selling price.

Alternatives….

Other alternatives include performing the same calculations including the selling price, average transactional costs associated with each property and even holding fees. Better yet, learn how to set-up a series of spreadsheets to automatically generate this information on each property throughout every stage. It is the perfect way to spot areas in need of improvement or where work (and profits) get bogged down. If you notice a troublesome area, consider hiring an expert or teaming up with someone. It’s a fast, simple and effective manner to showcase your real estate portfolio and demonstrate a positive track record when working with lenders or others.

See you at the top!

 

Chris McLaughlin
http://www.shortsalesriches.com/blog

P.S.:   Don’t miss our webinar tomorrow, Tuesday, at 9 PM EST!  We’re holding this Recession Proof Real Estate Investing webinar once again on a weekend to accommodate all those who are unable to join us at night!  Click here, there are only 17 spots available:

https://www2.gotomeeting.com/register/732240980

Join us Tuesday, October 21^th (Tuesday) at 9 PM EST, 6 PM PST:

https://www2.gotomeeting.com/register/196317932

RSVP early as spaces are limited!

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You asked.  We delivered.

 

A comprehensive guide to short sale coaching that is incredibly affordable.  Choose between three short sales coaching plans that begin at less than $7 a day!  Visit us right now at http://www.shortsalescoach.com to jump start your bank account!

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The US financial markets were in positive territory around noon today.  The Dow Jones Industrial Average was up 136.44 to 8988.66 and the Nasdaq was up 11.22 to 1,722.51.   The S&P 500 was up 16.80 to 957.35.

 

Federal Reserve Chairman Ben Bernanke was grilled by members of Congress this morning before the House Budget Committee and signaled that more stimulus might be needed to keep the recession less severe.  “With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate,” Bernanke said.  The Fed Chairman said that consumers needed access to credit: “If the Congress proceeds with a fiscal package, it should consider including measures to help improve access to credit by consumers, home buyers, businesses and other borrowers.”

 

US Treasury Secretary Henry Paulson said that the equity stakes the US government has taken in banks “won’t cost taxpayers anything” and might also give taxpayers a nice return over time.  The former CEO of Goldman Sachs noted that the government will be receiving a reasonable return on its money and that the banks have a vested interest in paying the government back since the preferred dividend to the government increases over time. 

 

The CEO of Merrill Lynch, John Thain, indicated that the banking industry still has a rough road ahead.  “It is likely to take multiple years to repair the damage that has been done… This is not going to get better in three to six months,” he said.  Thain said the merger with Bank of America was still on track to close by the end of 2008.

 

Now on to our real estate investing educational section…

 

Why the Melt-Down isn’t Done and How Short Sales Might Save your Assets

Common investment wisdom goes something like this…buy a diversified basket of stocks, store a little away in savings and bonds then sit tight for 20, 30 or even 40 years and let the market work its magic. If the past several weeks haven’t demonstrated the folly of this strategy then perhaps it is time to take off the rose colored glasses and face the cold hard facts.

1.     For every winner in the market there must be a loser. Plain and simple – the money must come from somewhere. A lot of people “won” big money for many years and now the price must be paid. Beginning with the sub-prime mortgage crisis the Wall Street pundits proclaimed the worst was over only to meet the current liquidity and credit crisis head-on. Unfortunately, the biggest problem of all is still looming in the not so distant future. At 50x’s the size of the subprime mortgage mess, the credit derivative crisis is likely to dwarf everything else to date.

2.     Inflation isn’t just predictable – it is inevitable. The Fed has been printing money out of thin air for weeks; money that isn’t based upon production or the exchange of goods or services. Money that didn’t exist just weeks before. Money that will be difficult to repay with a rising rate of unemployment. Money that represents more debt.

3.     Risk has reared its ugly head. Although the market supposedly prices risk into the equation on a regular basis, the past few weeks have demonstrated how false that supposition really is; now that real risk has reared its ugly head banks don’t want to loan money and people are afraid to invest. Of course, the longer you hold a stock, bond or even insurance policy the greater the risk. Banks are going bankrupt. Insurance companies are getting bailed-out and trying to time the market only adds risk. On the other hand, buying real estate through short sales utilizes leverage while minimizing risk. You can sell right away, hold and rent, improve then resell or any combination in between.

4.     Boomers Want to Cash-Out. Think the stock market is due to a correction then things will get back to “normal”? The Baby Boomers want to cash-out their stocks and bonds in order to begin enjoying the good life and avoid unpleasant surprises like the stock market losing 20 percent in the first few weeks of October. The great sucking sound you hear is the sound of money leaving long term investments and being put into retirement and vacation homes, visits to the grandchildren and a lifestyle they love.

5.     Going Global. Capitalism has spread but foreigners are no longer as willing to support our standard of living here in the states at the risk of their own. In fact, they are becoming increasingly non-tolerant of bad debt, a falling dollar and low interest rates on the money they have been loaning us as a nation. Rising interest rates will only make our domestic problems more painful but we don’t dare play too hard or they may just cut our supply line entirely. Either way – the day has come where we must learn to share the wealth…even if it denominated in declining dollars. Get into hard assets while the getting is good. Chances are you will be glad you did for many years to come.

 

More on Tuesday…

 

 

See you at the top!

 

 

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.: 

Interested in learning how to make over six digits a month flipping real estate short sales on autopilot? 

 

Join us Tuesday, October 21^th (Tuesday) at 9 PM EST, 6 PM PST:

https://www2.gotomeeting.com/register/196317932

RSVP early as spaces are limited!

 

P.P.S.: If you really want to get started building your wealth, then take action today! A journey of a thousand miles begins with a single step. Take that step right now by clicking here:

 

http://www.shortsalesriches.com/welcome.html

and clicking here:

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