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Existing home sales plunge 27%

Today’s report from the National Association of Realtors (NAR) shows that purchases of existing homes plunged 27.2 percent to a 3.83 million annual rate. The pace compares with the median forecast of a 4.65 million rate, according to a Bloomberg News survey.  The number of previously owned homes on the market rose 2.5 percent to 3.98 million. At the current sales pace, it would take 12.5 months to sell those houses, the highest since at least 1999 and compared with 8.9 months in June. The months’ supply of single-family homes at 11.9 months was the highest since 1983, NAR said.  Sales last month fell in all four U.S. regions.  Foreclosures are boosting the so-called shadow inventory, and competing with owners trying to sell properties.

Home seizures increased almost 4 percent in July from the previous month, with 325,229 properties last month getting a notice of default, auction or bank repossession, RealtyTrac Inc. said Aug. 12.  Residential real estate may keep struggling for the rest of this year, while into “2011 and beyond, it is difficult to determine,” Richard Dugas, chief executive officer at Pulte Group Inc., said in an Aug. 20 interview with Bloomberg Television. Pulte is the largest U.S. homebuilder by revenue.  “Demand is low across the country,” Dugas said. “You have record-low interest rates and excellent pricing, but consumer confidence eased. We really need the economy to improve and job creation to take hold before people feel comfortable stepping into a home.”

Credit card fees up

According to the market research company Synovate, the average interest rate on existing cards jumped to 14.7% last quarter, up from 13.1% a year earlier.  The jump created a dramatic spread of 11.45 percentage points between the average credit card interest rate and the prime rate — the largest margin in 22 years, according to Synovate.  Synovate study director Lauren Guenveur said the increase in interest rates was driven primarily by the Credit Card Accountability Responsibility and Disclosure Act of 2009. She said the so-called CARD Act gave credit card companies a limited amount of time to raise rates, “before they could no longer do so freely.” This put pressure on issuers to aggressively raise rates, she said.  Guenveur added that the recession and nation’s high unemployment were also driving the increase, because it was causing the default rate to go up.

“This is largely due to consumers still charging on their credit cards, but being unable to pay,” she said. “Default rates should remain high as long as unemployment remains high.”  Synovate reported that credit spending has increased, on average, by 6% in the first half of 2010 to $1,559, but still falls short of third quarter 2008 numbers, which Synovate describes as “the quarter prior to the financial meltdown.”  Offers for new cards reached a fever pitch last quarter. U.S. households received 640.3 million credit card offers in the second quarter, a surge of 83% from 349.1 million offers during the same period last year.  “Issuers are desperate to lock-in customers with good credit, so they will mail many offers to these households in order to gain their attention,” Guenveur said.

Real estate rip-off?

Many condo and townhouse dwellers are already familiar with resale fees — a fee due to the condo association or community when an owner sells. These charges fund common-area maintenance or provide a boost to reserve funds, which benefits the association’s homeowners.  But now, in some new developments, homebuilder contracts are including a 1% fee to be paid to them every time the house is sold — for 99 years. And the money doesn’t go for improvements or upkeep: It’s just money in the builders’ pockets.  That has the real estate industry and consumer protection groups up in arms. 

“It’s of no benefit to consumers,” said Kathleen Day, of the Center for Responsible Lending. “It’s another innovative way to price gouge. Every extra dollar they suck out of people’s wallets takes away from other spending. It’s not good for the economy.”  The issue has attracted the attention of Washington, where Rep. Brad Sherman, D-Calif., is leading a charge against the fees. “Consumers are not in a position to deal with another level of complexity, one that pits plain vanilla homes against ones that come with fees,” he said.  A coalition of real estate industry organizations and community groups recently sent a letter to Treasury Secretary Tim Geithner recommending that he not allow Freehold’s securitization plan to go forward.

It’s time to put grownups in charge

U.S. House Republican leader John Boehner is calling for the resignation of President Barack Obama’s entire economic team, including Treasury Secretary Timothy Geithner and White House economic adviser Larry Summers.  “It’s time to put grown-ups in charge. It’s time for people willing to accept responsibility,” Boehner declared in remarks prepared for delivery in a speech in Cleveland.   “President Obama should ask for—and accept—the resignations of the remaining members of his economic team, starting with Secretary Geithner and Larry Summers, the head of the National Economic Council.” 

Bad U.S. economic data last week heightened concerns about a return to recession. Claims for new unemployment claims rose to a nine-month high and manufacturing activity in the U.S. mid-Atlantic region unexpectedly contracted.  Boehner has been a leading critic of Obama’s agenda, including his overhaul of the U.S. healthcare system, tightening of regulation on the financial industry and what Republicans’ denounce as his failed economic stimulus plan.  If Republicans take control of the House, he is in position to be elected as speaker, a post that would make him the chamber’s presiding officer and in charge of setting its agenda.

Stay away from MBS

Bank of America Merrill Lynch (BofAML) recommends investors remain underweight in agency mortgage-backed securities (MBS) although a widening of the option adjusted spread indicates otherwise.  Chris Flanagan, MBS/ABS strategist at Bank of American Securities, said the “continued bull flattening of the yield curve is the elephant in the room for agency MBS.”  Normally a widening of the option adjusted spread “makes the sector appear attractive,” but Flanagan said this “does not account for the substantial risk that we are on the cusp of a classic Fed-induced refinancing wave, where the magnitude of the wave once again surprises the MBS market to the upside and mortgages underperform.”  And an early indicator of this risk is this week’s break above 4000 in the Mortgage Bankers Association’s (MBA) refinancing index, according to BofAML. 

“Moves higher would be slower and more gradual than in the past, but we think investors should not underestimate the potential to move higher,” Flanagan wrote in the firm’s MBS: Securitization Weekly Overview.  Flanagan said with the Fed indicating the current ZIRP rate will remain in place for awhile, any flattening in the yield curve would require “a further, and still major, back-end rally.” And “by major, we mean something on the order of at least 100-150 bps,” he said.  “While we can think of a few, very good reasons that this scenario might play out,” Flanagan wrote. “We need to be clear that we are not making a rate call here. We are simply highlighting this as an asymmetric risk scenario for mortgages.”

Now for our real estate education section.. 

Does Your Marketing Use a Microphone or Megaphone?

Let’s face it, if you are like most real estate agents or investors, chances are your Internet marketing efforts either resemble a microphone or a megaphone. Both get the word out, but one does it a lot more effectively than the other. Find out if your message is loud and clear with this quick quiz:

1.Hub versus business card. Is your website a one stop shop for everything related to real estate in the area or a glorified business card?

Tip: A glorified business card may be sufficient for some endeavors but real estate is all about relationships. Even if someone isn’t able or willing to do business today, they might be tomorrow. Even more importantly, they probably know someone else who is ready to wheel and deal. Make your online presence felt by providing the information and tools needed to establish a long term relationship; become a central hub for communication.

2. Look Who’s Talking. What you say isn’t as important as what others are saying about you!

Tip: Find out what your reach is with social media and other websites. What good does it do to have a website if people aren’t sharing information with others? Make it simple to share and take the time to monitor what is being said about you from time to time.

3. Check the Pulse. Does your website even have a pulse?

Tip: Many people have no idea where their website or blog ranks, how many visitors they have or even who bothers to visit. Sign-up for some basic tracking software that provides some insight into who is visiting, when and what they are reading…then provide some more of it to keep them coming back. Add an RSS or other feed to allow users to get automatically updates without having to repeatedly visit.

4. What’s Your Grade?

Tip: If you have no idea where you measure up, visit www.website.grader.com (free) and www.37signals.com to see important details about your site or find terrific tools that are simple to use and have already been evaluated by others. Remember, the actual number of visitors isn’t as important as the sharing of information and long term relationships built online.

Make it easy for prospective clients to find you by expanding your total reach through a combination of blogs subscribers, social media websites, links to your site and of course…city specific keyword content.

See you at the top!

Chris McLaughlin
**************

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

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

http://www.smartrealestatenews.com (subscribe to this newsletter)

*************************************************
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
    * Join my Facebook Fan Page: http://www.mclaughlinchris.com
–

——–

“2 Careers That Boom in a Recession!”
I’ll tell you about one of these for fr*ee
in my no-charge, no-cost, no-obligation
webinar right here live on Thursday night at
8:30 PM ET, 5:30 PM PST:

https://www2.gotomeeting.com/register/995947853

Why would I do that for no charge?  Because
I want a chance to tell you about the other
high-income opportunity, too.

And I can’t do it in an email.

But if you’re finally ready to blast out of
this economic mess, then get a move on… I’d
hate for you to miss out, because we always fill
up a day or so early.  See if there’re any spots
left:

https://www2.gotomeeting.com/register/995947853
———

Interest rates will stay low

Economists predict Fed Chairman Ben Bernanke and his colleagues will hold the lending rate between zero and 0.25 percent for the rest of this year and for most, if not all, of next year to combat the recession we’ve been in since December 2007.  Of course with a lending rate this low, the Fed is just about powerless in the face of recession, but that’s not stopping them from meeting to talk about it.  The options still remaining are:  1) buying long-term Treasury securities, and 2) boost its purchases of debt issued or guaranteed by mortgage giants Fannie Mae and Freddie Mac.  Both options would help depress mortgage rates.  Hopefully they won’t adopt the latest fad on Wall Street as option number 3 — voting themselves bonuses.

Homebuyer tax credit now law

The homebuyer tax credit, one is one of 10 key provisions of the so-called American Recovery and Reinvestment Act, was signed by President Obama into law yesterday.  The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence between January 1, 2009 and December 1, 2009.  Home buyers won’t have to repay the credit, which they can apply dollar for dollar against 2009 taxes, and if there happens to be an unused portion of the credit, it will be mailed to the purchaser. 

Inflation rears its head

The Labor Department says gasoline prices and clothing costs leaped the most in nearly two decades in February, driving a rise in consumer inflation of 0.4 percent in February.  Core inflation, which excludes food and energy, rose 0.2 percent in February, slightly higher than the 0.1 percent rise economists expected.  Can anyone guess what it’s called when interest rates stay low while prices go up?

Mortgage applications jump – sort of

Mortgage refinancing applications jumped 30 percent in the week ended March 13 as the borrowing rate dipped 0.07 of a percentage point to 4.89 percent, tying the record low reached in early January in a survey that dates to 1990.  Of course purchase applications only rose 1.5 percent.  Refinancing requests represented about 73 percent of all mortgage applications last week.

Foreclosures up

Foreclosure filings are up 30 percent from a year ago.  The states with the highest foreclosure rates so far are Ohio, Oregon, Georgia, Illinois, Michigan, Idaho, Florida, California, Arizona, and Nevada, where a whopping 1 in every 70 households are in foreclosure.  Viva Las Vegas!

Merrill Lynch on the hot seat

As if AIG wasn’t enough, now Merrill Lynch is under the gun for $3.62 billion in 2008 year-end bonuses.  Rep. Edolphus Towns (D., N.Y.), chairman of the House Committee on Oversight and Government Reform, in an effort to determine whether the committee had been misled about the bonuses, sent letters to Bank of America requesting records of the incentive payments.

Now on to our real estate investing education section …

Top Ten Foreclosure States & Investing In Short Sales

Getting started in short sales and real estate foreclosures doesn’t need to take months; with a little help from your friends here at the ShortSalesRiches.com blog you can be making an offer on your first property in less time than it takes to open a new bank account to stash all that cash and big profits.  But should you focus your efforts on foreclosures or short sales? Does it really matter? Maybe more than you think.

First, let’s take a few minutes to find out where all the foreclosures are taking place. While every state has its fair share of foreclosures and potential short sale properties, according to Forbes, the top ten foreclosure states are currently:

1. California

2. Florida

3. Arizona

4. Nevada

5. Illinois

6. Michigan

7. Ohio

8. Texas

9. Georgia

10. Virginia

Now, back to the main question; foreclosures or short sales? While both may offer a real estate investor major profit potential, short sales provide the unique perspective of less competition. Never underestimate the hype and hysteria that takes over an otherwise sane buyer in the heat of the moment or during an auction. Fear and greed plus a good healthy dose of competition can drive a would be cash cow into the ground when dealing with auctions and foreclosure sales. Bidding wars are not unusual so be prepared well in advance. On the other hand, short sales often rely upon individual negotiations where time is on your side.

Additionally, buying a property prior to foreclosures results in reduced prices since the lender hasn’t been required to deal with months of unpaid mortgages, vandalism, paper-work and other problems. In general, the sooner you claim a property the more is saved – savings that pass directly to you. Short sales can sometimes generate greater profit potential than foreclosures although there are exceptions to every rule…and trust me, I’ve seen plenty of short sales end up as REOs after stubborn lenders refuse to drop their prices, only to see the property eventually sell for $100k less than was offered as a short sale!   Lucky for us banks are getting a little smarter.  But notice I said a “little” smarter.  They are still pretty dumb.

See you at the top!

Chris McLaughlin

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

P.S.

Don’t miss out webinar this coming Thursday night at 8:30 PM ET, 5:30 PM PST:

https://www2.gotomeeting.com/register/995947853

Copyright Loss Mitigation Institute 2009.
All Rights Reserved.

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

—

——
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

 —

——
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

———

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.

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

 —

Market News & Commentary by Chris McLaughlin, January 16, 2009
http://www.shortsalesriches.com/welcome.html

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This is your year, right??  Let’s make it happen!  Forget the headlines, 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 23 spots that we have left for our Saturday webinar at 4 PM EST and 1 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/783035902

———

Even before taking the oath of office President elect Barack Obama got what he wanted for Congress.  The US Senate voted yesterday to release the second half of the $700 billion TARP fund, and the incoming Obama group has planned to allocate between $50 and $100 billion toward foreclosure prevention.  In a positive sign for Realtors and investors looking for buyers, the new President’s team has signaled that stimulating buyer demand for homes is a priority, possibly by reducing interest rates even further is part of such a strategy.  We’ll have to wait for more information to come.

Bank of America announced its worst financial performance in 17 years today – they lost $2.39 billion.  Ouch!  The bank also announced that it would take on another $20 billion in TARP money.  Why?  Two words: Merrill Lynch.  As  Bank of America readies itself to buy the brokerage firm, the bank is discovering that the “mark to market” write downs, an accounting rule that requires Bank of America to write down assets to their existing market price, not the price that they might be worth if you took the time to sell them.  How does this accounting rule affect banks? 

Let me give you an example.  Let’s say Merrill Lynch has a billion worth of mortgage backed securities.  Let’s also say that 25% of those are now in default, but 75% of them are paying just fine and are on time.  You would think that the valuation of the securities would be $750 million or less, right?  Well, given how mad investors are with the rating agencies they just don’t want them on their balance sheets.  Period.  So what would be considered $750 million worth of good loans are now worth $100 million at today’s market value.  No one wants them: they are toxic at any price!

Now let’s assume the Merrill Lynch has to recognize these assets on their financials.  What used to be a billion is now $100 million in the current market.  So even though the securities would be worth a lot more than $100 million if they were to go through an orderly process of selling off the assets, the bank is required to report it based on what it is worth now—in an illiquid market.

Now understand that we got these new “mark to market” rules after the Enron scandal, and they do have validity, because without them banks can essentially lie about what their assets are.  But in this instance, when extraordinary circumstances have created tremendous illiquidity, many banks are frankly being forced to unfairly write down assets that will be worth much more than their current liquid valuation. 

If the new Congress wants to save some taxpayer money, they should modify the mark to market accounting rules to have an outside appraisal identify what they assets are really worth versus forcing banks to mark down assets that are viewed as toxic. 

Now on to our real estate education section…

Unemployment Claims Crashing Websites – Create Your Own “Safety Net”

As pink slips pile up, jobless claims have become so prevalent they are literally crashing websites and phone systems as workers rush to file unemployment claims. New York, Ohio and North Carolina were forced to shut systems down completely due to heavy volume; considering the average unemployment wages are less than $400 per week or roughly $1,600 per month (or less), one might wonder if there is a better way to create your own safety net.

As it turns out…there is! Short sales offer investors of any background the ability to take their financial future into their own hands rather than stand in line waiting for the government to provide minimal income replacement. It doesn’t require a lot of money, time or extensive training to create your own safety net with an income stream as high or low as desired.

In less time than you might spend on “hold” when applying for a Michigan unemployment benefits (average hold time of four hours according to some clients), you could be well on your way to submitting an offer on your first short sale transaction worth thousands – or even tens of thousands. With a straight 12 months of job losses, 2008 is shaping up to be the worst on record in over 50 years. 

Learn how to create your own safety net with these short sale related resolutions for the new year:

1.      Do it daily. Each and every day do something toward growing your short sale empire. It doesn’t need to be a lot but you should get into the mindset of profit and success.

2.      Try something new. Once you master a formula that works (like the one provided by ShortSalesRiches) then continue to refine it and add to your portfolio of tools and resources.

3.      Expand. Begin small then build a base by incorporating new areas, different types of real estate or other potentially profitable relationships.

4.      Educate. Never stop learning. Find a mentor and learn from others as you go along. Share your knowledge with others along the way.

5.      Add a subscription. Find a source of reliable, pertinent and up-to-date information like that provided by the ShortSalesRiches.com/blog to keep a pulse on the trends.

6.      Query like crazy. Set a personal “outreach goal” for the next month to revitalize and jump-start this year’s success.

7.      Embrace the Internet. Learn how to use it then stick to it. If you don’t have the time to dedicate to doing it all yourself then hire someone to help. It’s an investment in success.

8.      Don’t be fearful. During tough economic times there is a tendency for people to run for cover and settle for less – often much less – rather than bet on their own skills and tenacity.

9.      Get organized. Stop procrastinating and take the time needed to put everything in its place, set up the tools you need and start using them.

10.  Be a bit of a brag! Yes, when you have a success it is important to pat yourself on the back…just be selective. While you are making thousands or tens of thousands of dollars on short sales, don’t expect your unemployed brother in law to be thrilled for you. Instead, teach him how to join you in creating a long term safety net and life you love.

See you at the top!

Chris McLaughlin

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

P.S.: Be one of the 23 spots that we have left for our Saturday webinar at 4 PM EST and 1 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/783035902

—

——
This is your year, right??  Let’s make it happen!  Forget the headlines, 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 42 spots that we have left for our Saturday webinar 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/783035902

————-

This shouldn’t be a surprise to anyone reading this real estate investing newsletter, but it is official: foreclosures jumped 81% in 2008 according to RealtyTrac.  The numbers are a little frightening when you consider the impact: one in every 54 homeowners received a foreclosure filing.  And over 2.3 million properties went into foreclosure last year.  “Clearly the foreclosure prevention programs implemented to date have not had any real success in slowing down this foreclosure tsunami,” stated James J. Saccacio, the CEO of RealtyTrac.

Shares of lending giant Bank of America were under pressure today, dropping over 16%, as the Bank readies itself to absorb Merrill Lynch & Co.’s losses.   The bank will receive an additional $10 billion on TARP funds, on top of the $15 billion it received in October, in order to provide adequate capital to absorb Merrill Lynch. 

And not all banks are losing money … at lease not JP Morgan Chase.  The bank, which purchased Washington Mutual last year, reported a profit of $702 million, which was down from $2.97 billion in the year ago period, or a 76% decline.  CEO Jamie Dimon said “If the economic environment deteriorates further, which is a distinct possibility, it is reasonable to expect additional negative impact on our market-related businesses, continued higher loan losses and increases to our credit reserves.”

Now on to real estate investing news…

News You Need to Know for 2009 – FHA Short Sales Easier than Ever!

As if increased minimum wage laws and ultra-low interest rates weren’t good enough, short sale investors will be downright delirious to learn about changes to FHA laws set to begin in 2009. On December 24^th, 2008 the Department of Housing and Urban Development (HUD) released “Mortgage Letter 2008-43”….despite the inconspicuous title, this is a powerful boon to every short sale investor in the nation.

For those of you who somehow managed not to be engrossed by this less than climatic title, here are the major changes coming soon to a FHA/HUD foreclosure near you!

1. Elimination of the clause calling for 63 percent or greater property appraisal versus debt. Now properties can appraise at any value and still be eligible for the program.
2. Increased Net. Instead of the former 82 percent net based upon appraisal value the new limits will be 88 percent if sold with 30 days, 86 percent if sold within 60 days and 84 percent thereafter.
3. Increased Closing Costs on Short Sales. Although not a lot – FHA will now allow up to 1 percent of closing costs rather than the former zero.
4. Increased Seller Incentives. Again, although not a lot this will at least allow sellers a reasonable down payment toward a rental home by putting up to $1,000 in their pocket at closing.
5. Increased Lien Allocations. Junior liens up to $2,500 are now allowed – just one more tool that helps sweeten the pot for short sale investors interested in pursuing FHA/HUD homes.
6. Removal of Repair Limitations. This is one change that could potentially add up to thousands depending upon the required maintenance on the home. This opens the doors to many homes that would otherwise be ignored due to excessive damage.
7. Exceptions to Non-Owner Occupant Requirements. This is on a case by case basis but opens to the door to rental properties formerly excluded from the program.

To learn more or read the release for yourself visit: http://www.brokencredit.com/wp-content/uploads/2008/12/fha-pre-foreclosure-short-sale-guidelines.pdf

New Year’s Resolutions for the Short Sales Investor

Admit it. Your New Year’s resolutions look a lot like last year’s list don’t they? If you are like most people then near the top of your list is “get in shape” followed by some type of ambiguous financial goals. The trouble with most New Year’s resolutions is they fail to energize, motivate – or even make sense. When was the last time you REALLY got excited about cutting back or doing without? Rather than emphasize the negative, it’s time to create a realistic list of positive goals designed to make a lasting difference in your life. Here are some more tips designed to transform wishful thinking into reality for the coming year.

1. Write it Down. Researchers have discovered the mere action of taking the time to write it down increases the odds of actually putting the plan to work.
2. Tell it to Others. Commit to the plan of action by making it known to others; whether in person, via telephone or simply as part of an online discussion. Let others know of your goals.
3. Be Specific. Get into the nitty-gritty details; duration, specific amounts, locations or other pertinent information should be spelled out in as much detail as possible.
4. Measure Continuously. Set a schedule to measure progress on a continuous – and frequent basis.
5. Work toward it Daily. Make it a regular part of your routine to do at least one item toward your goal on a daily basis throughout 2009.
6. Dare to Dream. Don’t discount your own dreams or ability to profit…it is what excites and motivates people to take action. While the rest of America is sitting on the side-lines while the greatest buying opportunity of a generation sits in front of them, those who dare to dream of a better life are capitalizing upon it.
7. Get a Mentor. It is important to banish negativity from your vocabulary and personal goals; while a healthy dose of constructive criticism is always warranted – that is quite different from negativity. Constructive criticism is born of information and experience while negativity stems from fear. Surround yourself with knowledgeable professionals who are successful in the short sales field rather than those to fearful to take action.
8. Educate Yourself. Information and education are key to growing in any field. In fact, common wisdom holds it takes a minimum of 1,000 hours to become fully informed about any given topic. To put this into perspective, 1,000 hours is the equivalent of 25 weeks of full-time work. Fortunately, you don’t need to start from scratch. Benefit from the wisdom of others that have gone before you and customize it to your own situation.
9. Invest in Success. Perhaps one of the biggest mistakes most real estate investors make is failure to invest in success. Whether it is your time, money or simply opportunity cost required to put short sales real estate to work – the fact is you must make up your mind to invest in your own success before anyone else will follow.

See you at the top!

Chris McLaughlin

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

P.S.: Be one of the 42 spots that we have left for our Saturday webinar 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/783035902

—

——
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

——

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

——
Tired of being sick and tired of this economy and all the negative news that goes along with it?  We have an amazing recession proof investing strategy that we’ll reveal to you on our webinar that we’re hosting tomorrow, yes SATURDAY at 2 PM ET LIVE.  This is your opportunity to learn about RECESSION PROOF INVESTING.  We’re going to share with you TRUE STORIES of investors who made over $80,000 and over $115,000 using the methods we’re teaching!  Go here now, there are just 18 spots left:

https://www2.gotomeeting.com/register/788305762

——

The good news keeps coming for mortgage rates: they hit a 4 year low at 5.47% and then dropped further to 5.33% yesterday, with no points or origination fees. The new rates have encouraged fence sitters to jump off and begin making purchases, and loan officers have reported a bounce in mortgage applications as well.

Bank of America announced late yesterday that it would be giving pink slips to over 35,000 employees as it finalizes its merger with Merrill Lynch.  The reduction will account for approximately 10% of the combined companies’ total employee base.  The announcement comes on the heels of a similar one from Citigroup, which announced last month that it would eliminate 52,000 jobs, or about 15% of its total workforce.

And in a sign of the greedy times on Wall Street, get this: the former Chairman of the Nadaq Stock Market was arrested for what investigators have described as a “stunning fraud that appears to be of epic proportions.” The fraud is estimated to be a “50 billion Ponzi scheme,” where the assets that Mr. Madoff would tell his investors about actually didn’t even exist.   I wonder whether Madoff will ask the Treasury for a bailout?  Think about it … banks lied about the value of their mortgage bank securities and induced people into loans they weren’t suited for, so why given them money and not Madoff?  Ok, I’m just kidding but you get the point!

And in the latest on the Big 3 Bailout, it appears that Congress hit a snag and can’t come to agreement … so the Bush Administration is reversing course and now suggests that the money might be able to come from the $700 billion TARP.  “Under normal economic conditions we would prefer that markets determine the ultimate state of private firms,” White House press secretary Dana Perino stated. “However, given the current weakened state of the US economy, we will consider other options if necessary, including use of the TARP program to prevent a collapse of troubled auto makers.”

Now, on to our topic of the day: Recession, Depression, Inflation, Deflation…What’s it all About and How Does it Impact Real Estate?

Ronald Regan once stated “A recession is when a neighbor loses his job. A depression is when you lose yours. If we were to apply the same logic to the real estate market, then the nation has been in the midst of a recession for some time as people have been steadily losing (or walking away from) their homes. In fact, there is a great deal of recent debate on whether the nation is already in a recession and heading for a depression or whether the easy money economics of the Federal Reserve will prevent a depression at the risk of creating further inflation…or perhaps world-wide deleveraging will actually result in massive deflation instead. Let’s take a few moments to examine real estate in each of the above scenarios’…

Recession. Unlike employment figures (or stocks), real estate doesn’t act the same as jobs during a recession. When a worker loses a job the position may be completely eliminated (or the stock completely wiped out). When someone loses a house it reverts back to the prior owner, heirs, bank or local government. Short sale buyers realize the inherent value in the home or property and act like a middle man to obtain a percentage of that value for themselves in the form of resale, rentals or retained equity.

Depression. During a depression the entire economy may slow down so much that little to nothing is being produced. Job loss often runs rampant as prices drop below the cost of production. Unemployment drives labor costs down – creating a downward spiral as unemployed workers are unable to afford more than the basic necessities. Again, jobs and stocks alike may all but disappear during a depression but a house remains standing. Housing is a basic necessity and tends to take top priority even during the most critical economic crisis.

Inflation. Inflation tends to drive the price of all commodities and assets higher as the replacement cost rises; real estate is no exception. With the Federal Reserve practically printing money out of thin air, the ability to own or control physical assets with a fixed rate of interest is often the best way to preserve wealth during periods of escalating inflation. On the other hand, the increased cost of production and labor often leads to more work for less pay among employees.

Deflation. Falling assets prices and world-wide deleveraging tend to drive down the price of commodities and assets including real estate. However, short sale buyers are often purchasing property at or near the fully depreciated value. Even those who experience further price drops still have other options available to bridge the gap until the market recovers; rentals, owner financing and factoring may each help raise needed capital or reduce individual debt repayments until the property has regained full value. 

More on Monday!

See you at the top!

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

P.S.:

Are you ready to crack the law of the lid?  Are you ready to get serious about your business and wealth heading into 2009?  If so, you have to go now and watch Nathan’s youtube video!  Leave some comments on it …this is AMAZING to watch, and all TRUE:

http://www.youtube.com/watch?v=KQu75ne01Vg

After you’ve watched it go here and learn how to make serious money in a recession:

http://www.webinarwizards.com/custom/index.cfm?id=169716

P.P.S.:

If you missed the amazing Web2.0 webinar, the replay is available right here:

http://www.realestateinvestor.com/nathanspecial

Mid-Day Market News & Commentary by Chris McLaughlin, October 20, 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 Tuesday, October 21^th (Tuesday) at 9 PM EST, 6 PM PST:

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

RSVP early as spaces are limited!

—-

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!

—–

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:

http://www.shortsalescoach.com

And I know what you’re thinking.  “What’s it going take to fix this mess?”

I have the answer … and if you’re reading this, you are probably part of the solution.  Read on …because the answer might surprise you!

But first, let’s recap.  The Dow Jones Industrial Average tanked again today.  It wasn’t pretty.  It lost 449 points, or 4.09% of its value.  And Uncle Sam came to the rescue again.

This time, however, it is serious.  Helping Bear Stearns out was one thing.  Giving investor confidence to Fannie and Freddie was another.  But all of a sudden, the perfect storm developed and Merrill Lynch and Lehman Brothers were is trouble.  The bull lost its horns and is now a cow, out to greener pasture somewhere…with plenty of foreclosures around the farm to boot.

Merrill was saved by Bank of America, but Lehman is done and sold some assets to Barclays today.  Now the bloody streets get even worse … Morgan Stanley tanked 25% today.  Goldman Sachs plunged 17% today.  All my buddies from Georgetown are crying.

Why?  Well, the AIG mess is quite a mess.  We’re talking over $1 trillion in assets that almost went on the auction block for pennies on the dollar.  That would spell financial ruin the likes we haven’t seen in a century.  It would make AIG’s 74 million clients a little panicky, too, don’t you think?  AIG still will be selling its assets, but in this case they’ll be doing so to pay Uncle Sam back, rather that giving folks a free to all in a liquidation.   So thanks, USA, for backing AIG with $85 billion.

What happened in real estate today (of course everything that’s happening is related to real estate).  Housing starts for August dropped to 17 ½ year low the U.S. Commerce Department reported today.  The seasonally adjusted annual rate was 895,000, which is off from the estimated 950,000 and represents a 6.2% drop.

But, as long as you are not a homebuilder, we in the real estate world know that this is actually a good sign… meaning that in order to recover, this is the medicine we need.  We need less new home inventory so that we can move more of the existing inventory we have, and to create an equilibrium of supply and demand.  A new house just isn’t going to compete against a bank-owned 2007 or 2006 house that is 30% less than the cost of construction.   Starts on single family homes were 33% below August 2007 levels at 630,000.

Ok, but Chris … you’re the guy that’s screaming that this is the biggest opportunity ever.  So where’s the silver lining you ask?

The Mortgage Banker’s Association reported that loan applications jumped 33.4% to 661.7 just last week, its highest level since May 9, 2008.  This shouldn’t be too much of a surprise because the government bailout of Fannie and Freddie gave more confidence to the market for mortgage backed securities.  So rates dropped.  This is good news for Realtors, good news for lenders…and perhaps good news for new home builders going forward.

And guess what?  When equity markets are awful, and investors are looking for hard assets, where do you think they are going?   Well, precious metals that’s for sure (gold had its best day ever today, up 11% to $80/ounce).  But don’t forget about bricks and mortar.  Some investor pulls out $500,000, does a self-directed IRA into real estate, and gets a 10% return on the cash just based on rents alone.  Then they get the upside.

I’m telling you.  Read me loud and clear: when financial markets plunge, the real estate market will be the beneficiary.  Just watch.  Or better yet, start taking action!

So who gets us out of this mess?  You do.  If you’re reading this, you’re probably a real estate agent or investor.  Once you get going, and do your thing, and start telling people that the real estate market is A LOT more stable than the stock market, you’ll begin to make sense.

And guess what else?  Banks are tanking.  They have to unload nonperforming assets. So short sales will become easier.  REO’s will become plentiful.  And realtor bank accounts will start filling up, not depleting.

So hang in there.  Sure it is painful for your 401(k), but you better be able to make it back in spades with the opportunity you’ve got in front of you.

Go for it!

Chris McLaughlin
Web: http://www.shortsalesriches.com/welcome
(800) 452-7627

P.S.: Thanks to many of you who have e-mailed us giving glowing reviews for including the CDs in the Short Sales Riches packet you recently got.  Yep, we threw that in at no extra cost because we want you to be able to not only read it, but live it.  And when you hear Nathan and I talking about how to make money in this market it all starts coming together, doesn’t it.

P.P.S.: Nathan just told me he thinks he’ll make $160,000+ this month.  Not bad for a kid that was home schooled with no formal education, huh?  All the guys with the fancy education work(ed) at Lehman, Bear Stearns, AIG, Fannie, Freddie, and other banks .. hmm… kinda ironic ain’t it?  Check him out at: http://www.shortsalesriches.com/welcome