—

We’re down to just under 10 slots left for our Recession Proof Real Estate Investing webinar tonight.  Jump on this now to claim your spot:

https://www2.gotomeeting.com/register/834885107

—-
Wow, that was just plain ugly yesterday, wasn’t it?  The Dow Jones Industrial Average plunged to a level not seen since 1997.  It was the focus on the financial sector, and struggling insurance giant AIG, that spooked everyone.  Today the market is essentially flat at 12:30 PM but had traded lower earlier in the day.

Let’s talk about some real estate investing news now…

The National Association of Realtors’ Pending Home Sales Index dropped 7.7% to 80.4 in January from a revised 87.1 in December.  This marks the lowest level the index has ever been at since tracking began in 2001.  Lawrence Yun, NAR’s chief economist, stated: “Even with many serious potential home buyers on the sidelines waiting for passage of the stimulus bill, job losses and weak consumer confidence were a natural drag on home sales … We expect similarly soft home sales in the near term, but buyers are expected to respond to much improved affordability conditions and from the $8,000 first-time buyer tax credit.”

In positive news, NAR’s Housing Affordability Index jumped 13.6% in January to 166.8, a record high.  This index indicates that the relationship between home prices, mortgage interest rates and family income is the best that it has ever been since the index began in 1970.

Citigroup announced that it would lower payments for those now suffering unemployment.  The bank, which is now 36% owned by the federal government, established the Homeowner Unemployment Assist program, which will modify those who are unemployed and are 60 days behind on payments to an average payment of $500 for three months.  Customers must have a loan that is owned and serviced by CitiMortgage to participate in the program. 

Now on to our real estate investor education section…

Set Point Theory and Short Sales

Set Point theory basically states there is a point beyond which things tend to gravitate toward the norm; radically alter the environment or prevailing conditions and a new norm will be established as quickly as possible. The underlying assumption is that most things tend to normalize or maintain a level of homeostasis; whether the human body, markets or even the environment there is an ever present tendency toward normalization.

Savvy short sale investors can learn a lot about the current real estate market and corresponding buying opportunities by applying the basics of set point theory to their own current environment. Let’s explain by using a common metaphor; weight gain and loss.

The human body inherently attempts to maintain homeostasis or a point of balance; when there is little available food or nutrition the body reduces caloric needs by decreasing energy levels. Likewise, when there is abundant food, the body tends to store a reserve in the form of fat.  In much the same way, during lean economic times, buyers reduce expenditures often by eliminating long term profit potential. During affluent economic periods buyers tend to spend more than necessary on items of excess – building up the economic equivalent of “fat.”

Unfortunately, the body and markets both self correct. Exercising discipline – in eating or investing – results in tremendous gains but allow too much or too little to enter the cycle and the results can be devastating. The body naturally tends to store a little additional fat rather than allowing the body to return to its former norm; instead, it creates a new norm from which it expects to operate at from that point forward. Anyone that has ever attempted to lose that last ten or twenty pounds when dieting understands this tendency all too well. The same situation takes place when investing; when it comes time to shed unnecessary expenditures there is a strong tendency for people to measure everything from the recent high rather than former high.

During a real estate bubble like that of 2006 or times of rising unemployment like that taking place during the beginning of 2009, it is easy to lose perspective. The reality is unemployment has been higher – much higher – in the past and the nation recovered…eventually. The 1970’s experienced double digit inflation combined with rapidly escalating rates of inflation that rapidly doubled and then tripled the cost of purchasing a new home within just a few years. Those investors able to keep their wits were able to purchase real estate for pennies on the dollar then reap the rewards for years to come.

Today, a similar scenario appears to be presenting itself for those willing and able to take the plunge. Low interest rates, tax incentives and once in a lifetime buying opportunities are here for the taking. Now ask yourself…are you willing to act on the information or sit on the sidelines and wait for Big Brother or Uncle Sam to take care of you and your family?

Make sure you jump on our webinar tonight to take action:

https://www2.gotomeeting.com/register/834885107

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 

*************************************************
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

*************************************************

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
—

—-
Recessions hit us all differently.  Al Capone
once complained that hard times forced him
to lay off 4 judges and 2 Congressmen.

Seriously, the results are always uneven in bad
times.  Most people lose money, but some actually
get rich.

But if you’re in the real estate business, then
you have one of two choices: feast or famine.

Both are available.  Which one have you chosen?
Click here to learn about our Recession Proof Real
Estate Investing webinar tonight:
https://www2.gotomeeting.com/register/628859068

–
The National Association of Realtors reported that existing home sales declined by 5.3% to a seasonally adjusted annual rate of 4.49 million units.   Some analysts believe buyers wanted to learn more about the incentives they might be given in the Obama stimulus package before making a purchase.  Lawrence Yun, NAR chief economist, said there was hesitation by some home buyers. “Given so much stimulus package discussion in January, some would-be buyers simply sat out for clarity and certainty on the nature of housing stimulus,” he said. “The housing market will soon get a lift from very favorable buying conditions – not only from improved affordability, but also from the stimulus of an $8,000 first-time home buyer tax credit, and higher conforming loan limits that will allow more people to tap into 50-year low mortgage rates.”

To rent or to buy?  That’s the question raised by the Wall Street Journal in an article today by Nick Timiraos.  The article notes that for the past 18 years after tax mortgage payments have averaged 26% more than rent payments, but with the decline in home prices that number has moved to 24%.  And if mortgage prices continue to drop to 4.5%, as many expect, the gap will close to just 14% more than rental payments.

And in some metro areas the rent gap is becoming a lot closer.  Between 1990 and 2008, Los Angeles mortgage payments used to average over 60% more than rent payments but now they are just 30% more than rent.  When adding in the mortgage interest deduction on one’s taxes that gap narrows even further. 

The Mortgage Bankers Association said that mortgage applications dropped last week by 15.1% to 743.5.  But the decline should be viewed in the context of the prior weeks’ surge in applications to 45.7%.  The four week moving average was up .4%. 

Now on to our real estate educational section …

Who You Goin to Call?

One of the most common complaints that keep short sale properties on the market is the lack of maintenance and/or outright vandalism taking place in vacant homes across the nation. While this is a very real concern, many of the problems are less costly and time consuming to repair than you might expect. Short sale investors searching for fast and affordable ways to makeover their latest purchase don’t need to spend a fortunate to increase curb appeal and demand a higher price; instead, they only need to pick up the phone to schedule the following fast and affordable help:

1. Call a Landscape Company. First impressions matter but overgrown hedges, dead flower beds and large dry patches scattered throughout the lawn are commonly encountered short sale problems. Rather than spend your hard earned time doing lawn maintenance, simply call a company to handle it all for you. Pay over the phone via credit card and remember, it is a tax write-off. Within a day or two you can transform even the worst landscape into a veritable Garden of Eden.
2. Call a Painter. Once the yard is taken care of it is time to invest in a few pails of paint. Both the interior and exterior will typically benefit from a fresh coat of clean, color neutral paint. Call a company to have it done for you – or if you only need a quick refresh, a handyman service often costs less than a professional paint company. Be sure to save the receipts for tax purposes. Those on an extra tight budget can purchase “oops” paints and either remix or get creative in the color scheme.
3. Call a Handyman. Every home has a few areas in need of attention; simply schedule a handyman to take care of those broken locks, sticky windows and other minor irritations that make a home appear old and uncared for. A handyman will also be able to assist in debris removal or other odd jobs that might remain.
4. Call a Cleaning Company. Make sure they are a full service cleaning company able to take care of the carpets, air ducts, tile and wood floors plus regular maid services all at once. Negotiate a big price break for having all work performed at one time and insist upon the use of non-toxic “green” cleaners that use the latest in enzymatic odor removal.  The cleaning company is also able to provide carpet repairs and other services to restore everything from unsightly grout to resealing the concrete around a pool. Ask for quotes before investing in replacements.

See you at the top!

Chris McLaughlin

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

P.S.

Don’t miss out on Thursday’s amazing webinar on Recession Proof Real Estate investing:

https://www2.gotomeeting.com/register/628859068

Copyright Loss Mitigation Institute 2009.
All Rights Reserved.

http://www.shortsalescoach.com
http://www.shortsalesriches.com
http://www.reomillionaireclub.com 

*************************************************
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

*************************************************

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
—

——
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 40 spots that we have left for our Tuesday webinar at 8:30 PM EST / 5:30 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/323668815

———

In real estate related market news today…

The National Association of Realtors reported that existing home sales jumped 6.5% to a seasonally adjusted annual rate of 4.74 million units in December versus November’s seasonally adjusted 4.45 million units.   The results are still 3.5% below the 4.91 million units in December 2007.   The year over year period was not as kind, however.

For all of 2008 there were 4,912,000 million existing home sales compared to 5,652,000 sales in 2007, a decline of 13.1%. 

Lawrence Yun, NAR chief economist, said home prices continue to drop. “It appears some buyers are taking advantage of much lower home prices,” he said. “The higher monthly sales gain and falling inventory are steps in the right direction, but the market is still far from normal balanced conditions. Buyers will continue to have an edge over sellers for the foreseeable future.”

In other positive news, housing inventory dropped 11.7 percent to 3.68 million existing homes, representing a 9.3 month supply, which is down from an 11.2 month supply in November.   The national median home price in December was 175,400, which is 15.3% lower than December 2007’s $207,000.

And if you saw our blistering report on former Merrill Lynch CEO John Thain’s spending spree (he spent over $1.2 million on his office renovation last year), you’ll be glad to know that Mr. Thain stepped forward today and said he’ll personally pick up the tab.  Thain said it was a mistake “in light of the world we live in today” and that the renovations, which were incurred in early 2008, were “in a very different environment.”   Thain also said that the media was mistaken about Merrill Lynch’s bonuses, which he claims were 41% lower than 2007.

Now, on to our real estate investing section…

What’s Better – Silver or Short Sales?

When it comes to investing in alternatives designed to “hedge” your risk against the market, silver is a popular choice especially among many contrarian investors. Considered the “poor man’s” precious metal investment, silver has a long history of being used both as money and as an industrial metal. It’s also portable, easily liquidated and easy to store…but is it a solid investment? Given the choice, where would one rather invest their hard earned cash…short sales or silver? Let’s take a look and consider the evidence for and against each.

Common wisdom holds that both real estate and silver provide important protection against inflation…while it may be true that silver reached a high in excess of $50 (not adjusted for inflation) after the inflationary era of the 70’s, in large part it was due to a major move by the Hunt brothers in an attempt to dominate the market. Once that episode was put to rest via legislative intervention, silver experienced a continuous decline for the next 30 years…reaching a low of approximately $2.50 – NOT adjusted for inflation! Clearly, anyone holding silver and was forced to liquidate during that period of time would have lost money…in fact, silver recently reached a high of $21 during 2008 only to drop by over 40 percent just months later. However, silver requires no maintenance, upkeep, taxes or insurance to support so buyers can hold it for years without experiencing high transactions or holding fees.

On the other hand, real estate has also been considered a long term hedge against rising rates of inflation. While real estate does require maintenance, insurance and property taxes to be paid on an annual basis it is also possible to offset or support the property through income generating activities such as rentals – without having to liquidate the property itself. While real estate also experienced major gains during the inflationary era of the 70’s…and a corresponding drop in many areas of the nation during the early 80’s…the majority of real estate holdings held their own during the interim years.

To compare silver against short sales, let’s take a long term outlook of what would have happened to $100,000 invested into each during 1980…

Average price of silver in 1980 was $48 which would purchase 2,083 ounces of silver. Today, the price of silver…NOT adjusted for inflation…is $11.30. That same 2,083 ounces of silver would be worth $23,538. Adjusted for 29 years of inflation and the actual purchasing power would be substantially less. Clearly the silver investor would not be pleased by the ‘hedge’ provided by silver.

Now let’s take a look at $100,000 invested in real estate during 1980. The average cost of a brand new home was $68,700 so you could have purchased 1.5 new homes or approximately 2 average sized re-sale homes. Even accounting for the dramatic declines in housing prices experienced throughout 2008, the average cost of a home still stands at roughly $180,000 or nearly 3x’s the original selling price of a home. Take time to calculate the numbers for yourself; any way you work it, short sales come out on top. Decide for yourself which is the wisest path to profit for the coming years: silver or short sales? Remember, all that glitters isn’t gold or silver…sometimes it’s real estate.

 See you at the top!

Chris McLaughlin

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

P.S.: 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 40 spots that we have left for our Tuesday webinar at 8:30 PM EST / 5:30 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/323668815

Copyright Loss Mitigation Institute 2009.

All Rights Reserved.

http://www.shortsalescoach.com
http://www.shortsalesriches.com
http://www.sevenfigurereo.com (sold out!)
http://www.youtube.com/shortsalesriches
*************************************************
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
*************************************************

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

 —

——
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

——

The National Association of Realtors reported that existing home sales dropped 8.6% to 4.49 million in November, from a revised rate of 4.91 million in October.  This represents a 10.6% decline below the 5.02 million in November 2007.  Lawrence Yun, NAR chief economist, expected the decline. “The quickly deteriorating conditions in the job market, stock market, and consumer confidence in October and November have knocked down home sales to another level. We hope the home sales impact from the stock market crash turns out to be short-lived, as was the case in 1987 and 2001,” he said.

“It is, therefore, imperative to provide incentives for homebuyers to get back into the market. It also depends on how effectively Congress and the new administration can help facilitate the short sales process and unclog the mortgage pipeline – impediments remain for some buyers with good credit,” Yun said.

The Associated Press reported late yesterday that Representative Barney Frank, the Chair of the House Financial Services Committee, wants the final $300 billion installment released before President-elect Obama takes office.  Frank is looking to stiffen disclosure related to lending for banks that received TARP money that seem to be hoarding the money now.  In addition, Frank wants to allocate about $24 billion to back FDIC Chair Shelia Blair’s plan to encourage more lenders to modify loans.  And finally, Frank is supporting using government money, along with Fannie Mae and Freddie Mac, to buy down long term 30-year mortgage rates to 4.5% or below, an effort widely seen as stimulating housing demand.

Frank’s buy-down effort is certainly good news for most real estate investors and Realtors.  And if comes on the heels on a shocking statistic about the failed government-backed loan modification called “Hope for Homeowners.”  This ridiculous program, which I’ve spent many an e-mail lambasting in the past, was supposed to help at least 400,000 homeowners.  Guess how many have bothered to even apply when it was launched on October 1^st?

312.

No, that’s not a typo.

Three hundred and twelve.

What a joke!  At some point the government is going to figure out that the key to solving the foreclosure crisis doesn’t rest solely with the supply side of the equation – they MUST stimulate demand with goodies like tax credits, accelerated depreciation, low interest rates, and government-backed loans.  Once you have demand, then guess what happens?   Prices begin to not only stabilize … but move up!  And when prices move up, less people go into foreclosure, and less people walk away from homes that are under equity.

Ok, enough of my soapbox.  You get the picture!  The Hope for Homeowners Program is truly hopeless.  Let’s hope they start focusing on where the focus needs to be: encouraging new buyers of homes and investment properties!

Setting Up for a New Year: Maintenance and Repair Index

This year make it a priority to set-up your books and other financial record-keeping to run smoothly and on auto-pilot. One useful measure is the maintenance and repair index. This shows how much maintenance and repair was required for each direct hour of labor invested.  It is an excellent alternative measure for short sale investors or real estate agents who need to track productive hours in relation to a given property. As every real estate investor knows, the 80-20 rule applies to real estate just as it does any other business situation; roughly 80 percent of your profit will come from 20 percent of your clients or holdings while 80 percent of your problems will come from only 20 percent of your holdings. Reducing those time-consuming properties and increasing those profitable properties is the key to building wealth.

How to Measure

Computing the Maintenance and Repair index is easy;

Maintenance and repair hours/Total direct labor hours = MRI

Example

Let’s assume you have two properties called A and B.

Maintenance and repairs for property A = 20. Total direct labor hours = 100. Total MRI = 20.

Maintenance and repairs for property B = 60. Total direct labor hours = 94. Total MRI = 60.

Obviously property B requires extensively more time for upkeep, maintenance and repairs. By calculating the MRI then assigning a dollar value to invested hourly time required, you can assure a reasonable return on time and opportunity cost while avoiding or eliminating poor performers.

How to Use

At least once per year, every short sale investor and real estate agent should take stock in their best and worst performers then cut the bottom 10 percent. Yes, it can be frightening to eliminate clients or inventory during tough economic times but the reality is you need to work smarter – not harder –when times are tough. Think of it this way, you only have x hours in any given day so they must be the most product possible. Clients or holdings that require unusual amounts of time, energy or maintenance actually detract from your full potential by causing you to miss other more profitable endeavors.  By continually maximizing your efficiency and reducing expenses –both in terms of time and money – you will be better positioned to take advantage of new opportunities as they arise.

See you at the top!

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

P.S.:   Don’t miss our webinar tonight, 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

Mid-Day Market News & Commentary by Chris McLaughlin, December 9, 2008
http://www.shortsalesriches.com/welcome.html

——
Let’s be Frank!  Yes, Frank is a real client who made REAL money with the Short Sales Riches System … over $115,000 in one deal!  And he only had $30 in his bank account.  Think this can’t be true?  Find out for yourself!  We’re holding this again because of the tremendous demand that jammed up our servers last week … Right now there are only 8 spots left for tonight’s webinar:

Recession Proof Investing Webinar (Tuesday, 9 PM EST, 6  PM PST):

https://www2.gotomeeting.com/register/848641949

—–

Good news for Realtors and investors … Home sales in October weren’t off as much as expected.  The National Association of Realtors Pending Home Sales Index dropped .7 percent to 88.9 versus 89.5 in September.  Economists had been expecting a drop of 3.2 percent versus the .7 percent.  “Despite the turmoil in the economy, the overall level of pending home sales has been remarkably stable over the past year, holding in a generally narrow range,” said Lawrence Yun, the NAR’s chief economist.

And if you thought REOs and short sales would slow going into 2009, you better think again.   According to the Office of Comptroller of the Currency, which evaluated loan modifications made in the first half of 2008, 36% of borrowers had re-defaulted by being more than 30 days late.  Furthermore, after 6 months, the rate was 56%. 

What does this mean?  It means that there is a lot of legitimacy to the argument that the government should not throw good money after bad and provide loan guarantees for loan modifications; rather they should use that money to create jobs for new purchasers.  As Office of Thrift Supervision John Reich said:  “I do have a concern about money for loan modifications, particularly with such a high range of re-default.”  Reich further stated that “[f]ocusing on job creation is a better way to focus federal dollars than on a loan modification process may be only partially effective.”

All eyes were on Congress today as Fannie Mae and Freddie Mac officials defended their actions, or at least tried to spread the blame around for the current housing crisis.   But House Oversight and Government Reform Committee Chairman Henry Waxman (D., Calif.) said that” the CEOs of Fannie and Freddie made reckless bets that led to the downfall of their companies…[t]heir actions could cost taxpayers hundreds of billions of dollars.

“But it is a myth to say they were the originators of the subprime crisis. Fundamentally, they were following the market, not leading it,” he continued.

Now on to our real estate educational section…

Safe Money Moves for Unstable Economic Times

Searching for save money moves during these unstable economic times? Chances are you drive by one of the best investments every day; short sale real estate remains one of the best places to park your cash. Not convinced? Keep reading to find out why short sale investors are taking in more profits than ever despite the downturn in the economy.

1.     Inherent Value – Not an I.O.U….unlike other forms of paper-backed investments, real estate has an inherent value rather than simply an I.O.U. issued in exchange for debt. Stocks, bonds and other financial instruments are no better than the paper they are printed upon when the economy takes a turn for the worst. When confidence fails, there is little more you can do with them than use them as fuel for a fire. On the other hand, real estate provides shelter, food, entertainment, natural resources and more.

2.     Indexing “Hedge”. The media is beginning to talk about the possibility of devaluation of the dollar. Should this type of “worst case” scenario take place, all dollar denominated investments are likely to be impacted. Historically, tangible assets fair well during even the toughest economic times.

3.     Contrarian. Investing is a numbers game; by definition for there to be winners there must be losers. As harsh as it may sound, savvy short sale investors recognize this reality and take steps to protect the financial future of themselves and their family by buying when others are selling and selling when others are buying. Ask yourself – what is the real estate market doing right now?

4.     Diversify. Concerned about putting all your eggs into one basket? Short sale investors have a plethora of choices including types of property (single family rentals, condos, farm, timber, natural resource rich land, apartments, commercial, retail, office, fixer-uppers,), locations, amenities (age restricted, waterfront, luxury, golf etc) plus so much more. Rather than look outside of real estate, simply seek alternative forms of investment properties.

5.     Plan for Prosperity. Even during the worst economic era there were those who managed to make fortunes by realizing the potential in every situation. Today is no exception. Rather than follow the masses worrying whether or not the government will have enough money to bail-out their company or fund their beleaguered retirement account, take your financial future into your own hands by planning for prosperity. Find out how easy it can be to automate your short sales investments and build a prosperous financial future by joining in for one of our seminars.

More on Wednesday!

See you at the top!

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

P.S.:   Investors who truly leverage the power of Internet and “Web 2.O” strategies BEFORE everyone else jumps on the bandwagon will have an opportunity to set themselves up for a lifetime.  I’m not talking about you being able to do a few more deals this year… I’m talking about a complete lifestyle change.  We promise to blow your mind!  This Wednesday at 9 PM!  Implement “Web 2.0″ strategies in a way that will have a profound impact on your business.  Just register here today:

https://www1.gotomeeting.com/register/264492432

Mid-Day Market News & Commentary by Chris McLaughlin, November 24, 2008
http://www.shortsalesriches.com/welcome.html

——
It is up for one more day … if you missed this amazing fr’ee webinar, now is the time to check it out:

http://www.shortsalesricheswebinar.com

Don’t miss it – everyone that has watched it says it is perhaps the most useful tool in understanding what’s going on in the real estate market, and how to make money in today’s environment!
—–

So what’s happening today?

Just another massive government bailout.  This one for the ridiculously bloated Citigroup.  Yes folks, Citigroup announced that it would be laying off 53,000 of its employees a few weeks ago.   But did you know that at its peak, Citigroup had 375,000 employees? 

Has anyone been into a Citibank branch lately?  Have you been into your bank’s branch?  Heck no, we hate going on there … we want ATMs, drive thrus, and minimal hassle.  We want online banking, not “wait in line banking.”  And for those banks that didn’t get it, and are now bloated with over 300,000 employees, never fear – Uncle Sam is here!

So our government stepped in, yet again, and said Citigroup was too big to fail, just like AIG.  I guess the lesson here is get big, get fat, and then you’ll be too big to fail, huh?

The US will give Citigroup another $20 billion and it will guarantee up to $306 billion in risky loans that the company has taken on.   The government gets $7 billion in preferred stock and warrants on 254 million shares with a strike price of $10.61 (the stock trades at half that right now).

Thought: Citigroup is a global company.  It has offices everywhere in the world.  More than half its revenue comes from outside the U.S.   Why on Earth is the U.S. government on the hook for this entire bailout?  What aren’t other governments stepping up as well?  Will this not affect Japan?  Will this not affect Europe? 

We’re doing the bailout simply because … we’re use to it.  We bail out everyone that screws up.  Everyone that wastes taxpayer money.    Everyone that runs a bloated business so top-heavy with bureaucracy that no one can breathe.

I don’t know about you … but if you think these constant bailouts are a good thing, just start wondering what message we’re sending.

Screw up, and we’ll bail you out.

Ok, enough of my rant … let’s move on to some other news. 

The National Association of Realtors announced today that October sales dropped 3.1% to 4.98 million, down from 5.14 million in September.   Median sales price slid 11.3% to $183,000, a level equal to that of March 2004.  Lawrence Yun, NAR chief economist, said consumer hesitation is understandable. “Many potential home buyers appear to have withdrawn from the market due to the stock market collapse and deteriorating economic conditions,” he said. “We have favorable affordability conditions, but we need more than that to give buyers with jobs the confidence they need. This is why a housing stimulus is so critical now to encourage more buyers to draw down the inventory and stabilize home prices. Without home price stabilization, there will not be an economic recovery.”

And now on to our real estate education section…

Understanding New Mortgage Rules

In an effort to make it easier for borrowers to save money and understand the paper-work they are singing, the Department of Housing and Urban Development (HUD) has released the first major reform to mortgage rules in more than 30 years. Here is what short sale investors and others need to know about the new guidelines:

1.     The new Good Faith Estimate (GFE) and revised HUD-1 are not required to be used until January 1, 2010…not 2009 as many have reported.

2.     The new GFE will be three pages long instead of four and must clearly answer the following “key questions”:

·        What is the term of the loan?

·        What is the interest rate of the loan?

·        Is the interest rate fixed or variable?

·        Is there a pre-payment penalty?

·        Is there a balloon payment due?

·        What are the total closing costs?

3.     The new GFE will be designed to co-ordinate to the HUD-1 Settlement Statement and is likely to require a “closing script” be read to borrowers. Fees are to be broken down into major categories with total estimated charges displayed prominently on the front page. HUD is also likely to limit the types and amount of fees that can be changed with Yield Spread Premiums to be “disclosed in a more meaningful way”.

4.     Loan originators will not be able to request tax returns or other verification of information until after an applicant has received the GFE and has made a decision to continue the process.

For More Information

To download or preview the new HUD Good Faith Estimate form(s) visit:

http://www.hud.gov/content/releases/goodfaithestimate.pdf

To download or preview the new HUD-1 Settlement Statement visit:

http://www.hud.gov/content/releases/goodfaithestimate.pdf

More on Tuesday!

See you at the top!

Chris McLaughlin, J.D., M.B.A.
web: http://www.shortsalesriches.com/welcome.html

P.S.:

This is hilarious!!!  You have to go watch this RIGHT NOW:
http://www.youtube.com/watch?v=gq3jHJuJz6E 

Nathan gets his hair cut … but he has a short sale closing scheduled at the same time … what does he do?   Click to find out.

See our other entertaining videos at: http://www.youtube.com/shortsalesriches

P.P.S.:

You did go to our webinar, right?  Here’s that link again:

http://www.shortsalesricheswebinar.com

Mid-Day Market News & Commentary by Chris McLaughlin, October 24, 2008
http://www.shortsalesriches.com/welcome.html

The BEST fr’ee webinar that you’ll ever attend on real estate short sales & wealth building in this market:

Join us NEXT WEEK on Tuesday, October 28th (Tuesday) at 9 PM EDT, 6 PM PST:

https://www2.gotomeeting.com/register/656685734

Spaced are limited … log on now to claims yours!

—-

Stocks continued their dizzying seesaw today, with the Dow Jones Industrial Average plunging more than 400 points at the open.  The drop was due in part to nervousness over a possible severe global recession and the battering various stock markets had taken in overnight trading.  In Japan the Nikkei dropped 9.6 percent as shares of Sony, the electronics manufacturer, slid more than 14%.  Germany’s DAX index slid 8 percent as Britain’s FTSE 100 dropped 8.5%.   At noon the Dow Jones had recovered a bit and was down 267.47 to 8,428.49, the Nasdaq was down 34.54 to 1,569.37 and the S&P 500 was down 26.96 to 881.15. 

But some investors were pleased about the positive news from the National Association of Realtors this morning.  Existing home sales rose 5.5% to 5.18 million from 4.91 million in August and were up 1.4% from the 5.11 million in the year ago period.  Lawrence Yun, NAR chief economist, said a broader range of markets are seeing improvement over the prior year. “The sales turnaround which began in California several months ago is broadening now to Colorado, Kansas, Minnesota, Missouri and Rhode Island,” he said. “The South was hampered by much lower home sales in Houston in the aftermath of Hurricane Ike.”

Yun echoed the call by many Realtors and investors to remove the repayment of the $7,500 tax credit and bring more stimulus to help jump start housing.  “Additional housing stimulus would stabilize prices more quickly, which in turn would bring faster stability to Wall Street. Removing the repayment feature on the first-time buyer tax credit and permanently raising loan limits would bring more buyers into the market and further reduce inventory,” the economist stated.

Now on to our real estate investor education section …

Back to the Future Part II

Yesterday we took a little trip down memory lane to look at how home prices have held up over the years. The results were impressive to say the least. Critics would argue that hindsight is 20-20 and it is impossible to predict the future. While that is technically true, it is also important to understand three things:

1.     Inflation is caused by the expansion of the money supply and we can track how much money is being created.

2.     Inflation can work for or against you. Those that put it to work for themselves can create millions. Those that don’t will find themselves in the poor house at the end of their lives.

3.     Inflation has been constant for decades- it goes up or down but hasn’t gone negative.

The evidence is obvious. A median priced home in 1973 sold for $28,900. By 2007 a median priced home cost nearly $220k. Gasoline went from 35 cents to $3.50 a gallon. Prices for other goods and services did the same. Short Sellers understand the ravages of inflation and how to use it to build wealth. Wish you had a way to predict what homes will cost in the future? You can get a good idea by using a little simple math:

1.     Determine the average rate of inflation. You can use the federal estimate for CPI but realize the limitations. A more reliable indicator is provided by ShadowStats which tracks inflation via historical measures rather than the new limited model. Today, the government CPI is an estimated 5.5 percent while the alternative measure indicates something closer to 9 percent.

2.     Use the rule of 72 to calculate the cost of goods or real estate in the future. The rule of 72 is typically used to determine how long it will take an investment to double at a specific interest rate but you can easily modify for your own needs.

3.     Take the inflation rate (for example 9 percent) then divide into 72 [72/9 = 8]. This means at the current rate of inflation prices will double in 8 years.  Let’s say you want to know an approximate value of a property if you held it for 16 years instead…the entire amount would double again. For example, if you purchased a short sale property for 100k then it could double to 200k in 8 years and reach 400k in 16 years. Of course these are estimates since some years go up much faster than others…

More next week—have a great weekend!

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 next week on Tuesday, October 28th (Tuesday) at 9 PM EDT, 6 PM PST:

https://www2.gotomeeting.com/register/656685734

Spaced are limited … log on now to claims yours!

P.P.S.: If you already have the system, are you ready to really take it to the next level?  Go to http://www.shortsalescoach.com to learn how.

In real estate news, the National Association of Realtors (NAR) announced that national home sales dropped 15% in August from the year ago period and the median price declined 9.5% to $203,100. There was a 2.2% decline for the August over July period. Lawrence Yun, NAR chief economist, noted that interest rates rose in August from July, but the recent bailout of Fannie and Freddie has led to a significant drop in interest rates, which should help housing affordability.

“However, home sales will be constrained without a freer flow of credit into the mortgage market. The faster that happens, the sooner we’ll see a broad stabilization in home prices that in turn will help the economy recover,” Yun said.

Now for our educational tidbit today … we’re going to focus on things that show up at the last minute when doing short sales…

When it comes to short sales, there are a few lions and tigers and bears for the buyers to be aware of but with a little planning and preparation you will have nothing to fear. In fact, use this quick checklist to stay alert to potential profits while walking away from common pitfalls that trip the unsuspecting.

1. Taxes. Taxes come in all shapes and sizes when it comes to short sales, bankruptcy and foreclosure; from property taxes to Federal Income tax liens, the property may be encumbered by a variety of taxes which could impact the deal. While property taxes are relatively easy to deal with, large Federal income tax liens may not be worth the hassle and headache required to clear the property, although we have done several where the US Treasury was willing to do a lien release (and partial lien release). Do your homework to determine the viability of the project and be sure to set aside funds to cover any taxes that become your responsibility with the transfer of the property.

2. Liens. Make no assumptions when it comes to liens; even brand new homes may have mechanics liens from builders or developers that failed to pay sub-contractors. Homeowners may have contracted improvements or work ranging from simple repairs to full blown upgrades. Other common liens include HOA fees, utility assessments, etc… Liens often become the responsibility of the buyer so take time to investigate potential liens when negotiating for the purchase price of the home. And I can tell you one thing about HOAs: they are a pain! Think about it: these typically are retirees with way too much time on their hands. They will spend $2,000 in legal fees putting a lien on a property for a $350 lien. I’ve seen it time and again. Recently we faced a situation where the HOA wanted to charge $200 for a payoff letter that would be given to our title company. I always advise my clients that if they are able, PLEASE STAY CURRENT on HOA fees, they are more trouble than they are worth when it comes to eliminating them at closing.

3. Permits. Improper work permits, zoning violations and other irregularities have resulted in higher than anticipated expenses for more than one buyer; understand what work was done, by whom and in accordance to what standards before making an offer. Work performed without proper permits or out of accordance to modern building standards should be considered a liability rather than an asset in today’s competitive market.

4. Easements & Restrictions. Know what you are buying before making an offer. Although it sounds simple enough, irregular parcels, easements and other restrictions can be tough to track down especially in rural areas or when property was transferred within a family. Homeowners associations frequently place restrictions on the use or transfer or property which may also impact your plans – take time to understand what is and isn’t allowed before making an offer.

5. HELOC’s, 2nd’s and Other. Distressed homeowners may have Home Equity Lines of Credit, 2nd or even 3rd mortgages plus a host of other potential liabilities that could impact the deal. Make a point of understanding – and explaining – how each is likely to impact the outcome of the deal for you and the current owner. Not only is it the right thing to do but it also increases the likelihood of a successful closure. I know of one sad situation where a homeowner was unable to make their first payment but had enough to make their payment on the 2nd. Not understanding the priorities of lien, the homeowner stayed current on their 2nd mortgage but not on their first! It is important that you NEVER tell any client to not make their payments, but in a situation like the one described you can explain lien priority and the client can draw their own conclusions.

More tomorrow…

See you at the top!

Chris McLaughlin, J.D., M.B.A.
web: http://www.shortsalesriches.com/welcome.html
e-mail: info@shortsalesriches.com

P.S.: Did you hear about our amazing Webinar that we’re doing tomorrow night at 9 PM ET (6PM PST)? It is f.ree of charge to you! Nathan Jurewicz and I will be live on the web explaining the Top 5 Traps to Short Sales Investing, and we’ll have some new information that you won’t want to miss out on. We only have room for 20 more seats, so if you’re interested please go now to: https://www2.gotomeeting.com/register/798484502