short sales real estate

Mid-Day Market News & Commentary by Chris McLaughlin, November 11, 2008
http://www.shortsalesriches.com/welcome.html

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Now I’m madder than I’ve ever been at bureaucrats. You owe it
to yourself to read this, and then forward it on.  Because the
word needs to get out about these clowns.

Did you see the latest joke from the government
about the so-called foreclosure bailouts?  Yeah, clients
have to be 90 days behind on their payments, and Fannie
and Freddie may push their mortgage out from 30 years to
40 years! 

Does our taxpayer money pay for such stupidity? They just
extended the foreclosure mess by another 2 years
with such an absurd proposal.

Think about it.  You’ve got a buddy who’s underwater on his
house but can probably afford to carry the mortgage.  Now he
hears all about the government bailout, and he’s madder than
hell that some folks are gonna get a free ride.  So what does
he do?  He stops making his payments in order to qualify for
the 90 day behind rule. 

The government proposal actually will INCREASE, not DECREASE, loan defaults.  Do any of these people who make these rules have a clue how real estate works?   Do they know how mad people are about bailing out Wall Street and leaving Main Street hanging?

I bet the executive from AIG doesn’t have to wait 90 days to
get help, huh?  He’s got $150 billion reasons to thank Uncle Sam,
meanwhile Realtors are struggling and the bureaucrats don’t
understand basic economics about supply and demand. 

So what was a huge problem…with 4 million people behind on
their payments…is now a catastrophic problem.  All due to
outright government stupidity.

In the worst economy since the Great Depression, this is what
the government offers us?  Pushing loans from 30 to 40 years,
adjusting interest rates?  Please…

Hasn’t anyone ever told these morons that the only way to solve
this crisis is to stimulate DEMAND for homes.  By focusing
on supply, all they are doing is creating more problems and
giving more false hope to millions of homeowners.

How about a $7,500 tax credit that doesn’t need to get paid
back?

Ok, enough of my rant. It is time to take action, and that’s
just what I’m doing.  I’m going to explain, in detail, just
how you can forget about the government’s stupidity, and make
serious cash in this market.  Frankly what would have been over
in 2 years just got pushed out to at least 4 years.

But I’m limiting this webinar to just 30 people.  That’s it. 
The personal attention will let people ask questions about the
bailout, how they can do even more short sales, and how they can
make serious cash in the worst economy since the Great Depression.

The title of the webinar:

“Government Morons Just Made the Foreclosure Crisis Worse. 
How You Can Profit From Their Stupidity.”

So go now to register for the webinar that’s held on Thursday night at 9 PM EST, 6 PM PST, while there’s still room:

http://www.thursdaynightwebinar.com

Now, on to our real estate investing education section…

Asset Classes that Outperform Inflation

Now that Senator Obama has become President Elect Obama, short sale investors would do well to take note of the risk of increased inflationary pressures; after all, the funds to finance broad economic stimulus packages and other spending programs must come from somewhere. With the federal government already running record-breaking shortfalls, the risk of inflation continues to be a major source of concern.

In a search for asset classes that outperform inflation, the average investors doesn’t have unlimited resources like those of Buffet to purchase underperforming (but highly volatile) corporate stocks or bonds. Likewise, gold, silver and other assets are known to be equally volatile in the short term. Thanks in large part to favorable tax treatment and the use of leverage afforded by mortgage loans, real estate remains one of the most accessible asset classes historically known to outperform inflation over the long term.

With media pundits calling for deflation followed by inflationary – or even hyper-inflationary pressures that result in the eventual index of the dollar – every short sale investor should take note of the long viability of investing in real estate. Not only does real estate provide an inflationary hedge but if the dollar is eventually indexed, hard assets are one of the few ways to retain purchasing power.

When speaking of inflationary pressures it is a good idea to keep a few basics in mind including:

1.     CPI – Consumer Price Index is the notorious “basket of goods” used to determine the official rate of inflation for the nation at large.

2.     Personal Rate of Inflation. Many “real” people have a different personal rate of inflation due to individual or family situations such as health and medical expenditures, sending a child to college or other life events.

3.     Investment Time Horizon. The level of inflationary risk you are able to tolerate largely depends upon your retirement time line and long term anticipated spending needs. For example, assume you plan to retire at age 60. According to government statistics, you can expect to live another 25 years…without a paycheck.

The historical average rate of inflation is typically 3.5 percent with the current government rate approaching 6 percent. Clearly, inflation remains a major concern when it comes to retirement planning. Now consider the advantages to short sales:

1.     Instant Equity

2.     Favorable Tax Treatment

3.     Inflationary Hedge

4.     Ability to earn long term income and appreciation

 

More tomorrow…

See you at the top!

 

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

 

P.S.: You are going to be on our next Webinar tonight aren’t you?  As Jim Rohn said: “If someone is going down the wrong road, he doesn’t need motivation to speed him up.  He needs education to turn him around.”  Get that education now:
http://www.thursdaynightwebinar.com

Mid-Day Market News & Commentary by Chris McLaughlin, November 7, 2008
http://www.shortsalesriches.com/welcome.html

I hoped you noticed.  For the last two months, the smart money started to cut its losses.

Notice how Kirk and his company “Tracinda” dumped all those shares of Ford stock last month?  Seems he bought at over $6 a share, yet shortly thereafter, he dumped it at a little over $2 a share.  It trades for around that price right now, a month later.

He took a huge loss and walked away. Now, we all know that a smart guy like him would not take a loss like that unless he thought that he’d take an even bigger loss in the future.

So that points out the obvious: there are few high growth opportunities today for investors, yet everyone keeps watching the Dow every day, waiting for that chance to line up like a lemming, and leap off the cliff.

Sorry, that’s a little too risky for my tastes.   And I’m a guy who actually sold his company to Jim Cramer of CNBC fame.  I sold SmartPortfolio.com to TheStreet.com back in December 2000.  I took the chips off the table, and I was glad I did.

Instead I’ll stick with the shifting real estate market.  Real Estate has actually turned into the biggest investment opportunity we’ll ever see in our lifetime.

This “down market” has changed everything.

See, buying and flipping pre-foreclosure houses is now in the “mainstream.”  That was the first step towards making real estate the best investment today.

The next step was making it possible to turn real estate investing into a structured BUSINESS.  That little stroke of genius led to the next step:

Automating a short sale system so it could run by itself at a high sales volume, allowing many small sales to add up to huge profits.

It was like a blessing.

Now, anyone willing to work 3 – 6 months on their short sales business may never have to “work” again!

But don’t take my word for it.  Check out the details here:

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

Now, on to our real estate investor education section …

Lender or Servicer?

Here’s a little tip that should help short sale investors when working with owners facing foreclosure or default; few homeowners actually try to negotiate a deal or settlement even when facing financial ruin. Of those that do, most don’t understand the difference between negotiating with the lender or servicer. Here is how to explain the benefits and limitations of each when working with homeowners:

Servicer

Since most home loans are not kept ‘in-house’ but rather sold and serviced by a third party, the first point of contact is often the servicer. The servicer often has limited capacity to extend payment terms – usually up to two or three months. They often send “workout packages’ of forms that require the homeowner to fill out information on their current situation and then establish a temporary intervention with repayment arrangements.

The majority of homeowners that have fallen behind on mortgage payments have already contacted the servicer and may have even attempted a temporary reprieve or loan repayment program. Once the temporary provisions “run out” they homeowner often believes there is nothing more that can be done…to an extent they are correct since servicers do not have the authority to approve more extensive modifications to the terms of the loan. This is where the lender comes into play.

Lender

The lender actually owns the loan and will be the final approval for all major negotiations related to repayment terms or short sale offers. Most homeowners fail to distinguish between a lender or servicer. Tracking down lenders isn’t always straightforward especially when a loan has been sold multiple times (a common practice). Servicers are required by law to provide full contact information for all lenders upon request. Since few homeowners even know to ask it’s not surprising they have never been in contact with their lender. Lenders are often more responsive than servicers since they have the final authority required to negotiate more stringent “deals’.

When negotiating a short sale offer, investors will typically work with lenders. By taking the time to explain all available options, it may be possible to convince current owners to consider a short sale rather than other more punitive or damaging choices.

Exploring All Options: Count the Cost

When working with homeowners in financial distress it is often helpful to explore all their options while listing the time and cost associated with each choice. Not only does it help the short sale investor demonstrate why their offer is more attractive to the bank and owner but helps formalize the benefits in the mind of the seller.

1.     Bankruptcy. Not only does bankruptcy ruin their credit score and limit their ability to obtain a new mortgage for several years but it is costly and time consuming. The average cost of filing for Chapter 13 is $3,000 to $4,000 while Chapter 7 typically runs between $500 to $2,500.

2.     Refinancing. Although most homeowners considering a short sale will not qualify or be interested in refinancing the home for a variety of reasons, there may be a few situations where they might. In addition to understanding the current market value of the home, it is important that homeowners understand the full cost of refinancing a home including extended payment plans, closing costs and other fees frequently “wrapped’ into the loan. In many cases, the monthly payment might be lower but the long term cost of keeping the home is equal to much more than the current value of the home.

3.     Foreclosure. Walking away is easy unless you live in a state that allows the lender to sue you for deficiency; then it can become a homeowner’s worst nightmare. While there may be short term financial benefits to be derived from saving up mortgage payments and then simply walking out on the home, the long term consequences easily offset any short-term gains.

4.     Short Sales. Short sales often create a win-win for the current owner and new buyer; understand the current needs of the seller then work with them to create a contract that takes their most urgent and pressing concerns into account. From lease-backs to the ability to financially recuperate from the short sale in a fraction of the time of other options most people will be relieved to learn they still have options available.

 

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.: Are you going to the National Association of Realtors Convention this weekend?  Look for us!  We’re at booth #2054!

Mid-Day Market News & Commentary by Chris McLaughlin, November 5, 2008
http://www.shortsalesriches.com/welcome.html
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Want to learn how a 27 year old kid with no formal education makes over $100k a month flipping short sales?  Check out our system now to http://www.shortsalesriches.com/welcome.html
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I know, I know … you’re a Republican and you just saw the headline “Election Means Housing Recovery” and you want to delete this e-mail, right?   Guess what?  I’m a Republican… but whoever won last night the headline would have been the same. Why?  We’ve finally taken uncertainty out of the equation.  People know who is President for the next four years. 

Everyone understands that the Democratic Party is now in charge.  There will be accountability – the blame game is basically over for the next two years: the Democrats must deliver or there will be lots of angry folks 2 years from now during the mid-year elections. 

And guess what?  The only way they can improve this economy is by improving housing demand and stabilizing prices.  That means that coming up with more incentives for homebuyers is the key: you can’t just focus on the supply side of the equation, if there aren’t adequate incentives such as significant tax credits and low interest rates, buyers won’t come out as strongly.

So assuming that all the lobbyists hired by builders and Realtors have working the halls in Congress, what is most likely to get done? 

First, huge tax incentives must be given to buyers without strings attached.  Right now they offer $7,500 for first time home buyers, but then they require the homeowner to reimburse the government $500 over the next 15 years.  Look for the strings to be eliminated, the tax credit to be a true nonrefundable tax credit, and I wouldn’t be surprised if it didn’t increase to $10,000 or more.

Second, interest rates must be lower.  Sure they are great at 6.5% historically, but we’re talking about stimulating demand—and to do so, buyers need something that gets them off the fence.  Look for the government to either buy down the rate or provide a guarantee whereby the lender, or Fannie/Freddie, is able to provide even lower interest payments. 

Third, incentives must be given to investors, not just homeowners.  There are plenty of short sales and REO properties out there … we need to turn these into rentals owned by investors quickly, as the less supply we have on the market the better for price stabilization.  So if Congress does provide a low interest rate environment, it needs to extend that not to just first time homebuyers but to the investor community as well.

Do I think all this will happen?  Probably not.  But something will happen, and that’s great news for investors and Realtors! 

Now on to our investor education section …

Low Cost Asset Protection: Umbrella Insurance

One of the least expensive and most versatile forms of insurance every short sale investor should be aware of is the humble and often overlooked umbrella policy. For many real estate investors, tax advantages are one of the main reasons they decided to begin purchasing real estate. Unfortunately, for those investors with significant personal or professional assets the decision to hold real estate in their personal name can create excess liability and risk which reduces the overall benefits derived from buying and selling short sales.

In order to reduce personal liability and exposure, many short sale real estate investors opt for LLC’s or other forms of ownership; however, the cost and complexity often discourages beginning short sale investors from taking proper steps to protect their interests. One easy method for those new to short sales is simply to purchase an inexpensive umbrella insurance policy.

Typically, an umbrella policy picks up where your personal liability insurance (homeowners, car or other) leaves off. A $1-million dollar policy usually costs less than $300 annually and is available through most insurance agents.

The added benefit of using an umbrella policy not only reduces the overall risk of losing your personal home and assets in the event of an accident or injury on the property itself, but it also protects the property and other short sales investments from other claims arising from auto accidents or other sources of potential liability including teens or other young adults still living at home (remember, parents are legally responsible for teenagers including auto accidents or other situations that can place all of your hard-earned assets at risk in the event of a claim above and beyond your insurance coverage).

To determine the amount of liability you need simply add up your net worth and compare to your current liability coverage for auto, homeowners, professional and other policies. Purchase an umbrella policy in an amount at least as high as the excess asset amount.

Don’t let fear of lawsuits or personal liability exposure limit your decision to invest in short sale property; it’s inexpensive and easy to get started without exposing your other assets to increased risk simply by purchasing an umbrella policy.

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
Phone: (800) 452-7627

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

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RSVP early as spaces are limited!

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You asked.  We delivered.

 

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The market was up today after legendary investor Warren Buffett said that now is the time to buy.  In a rare op-ed in the New York Times, Buffett said: “I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: ‘Put your mouth where your money was.’ Today my money and my mouth both say equities.”

 

In real estate news, home construction took another downturn after the Commerce Department announced a 6.3% decline last month in new construction, a surprise to many analysts that were expecting a decline of just 1.6%.   Not since January 1991 has new home construction been this slow.  The drop was most significant in the Northeast, which was down 20.9%, compared to a slight increase of .5 percent in the South and a 5.6% increase in the Midwest.  

 

Now on to our real estate investing educational section …

 

Why Lenders Like Short Sales

Although many brokers may try to persuade short sale investors against making low-ball offers on potential properties, the fact is there are a variety of reasons why lenders actually like short sales. Understanding how short sales benefit banks – as well as homeowners – is the first step in building your own real estate empire.

1.     No need to fix. Banks are not in the rental business so the goal is to sell a foreclosed property as soon as possible. Unfortunately, distressed homeowners are not always able to keep up with needed repairs required to make the property desirable for resale. The last thing banks want to do is put more money out of pocket on a property that is already under-performing.

2.     Vacancy and Vandalism. Empty homes are prime targets for vandalism or even potential lawsuits should a child or other individual be hurt while playing on the vacant property.

3.     Taxes, HOA & Maintenance Fees. Just because the home or condo is empty doesn’t mean the bank is off the hook for property taxes, homeowner association fees, yard and pool maintenance or other common costs. Every month the property sits empty continues to cost the bank more in additional upkeep and expense.

4.     Foreclosures & Legal Fees. Banks are experiencing a double-whammy when it comes to foreclosures; missed mortgage payments combined with court challenges that result in missed mortgage payments for 6 months to a year. Homeowners eventually stop paying the mortgage and then challenge foreclosure proceedings in court. Bad documentation has led to a situation where it may take several more months for banks to demonstrate the proper ownership required to file foreclosure proceedings.

5.     Eviction. Once a bank finally forecloses on the property they now must actually evict tenants or the former owners from the property. Depending upon the state, eviction can take several weeks or even months and has to take place after the foreclosure in most states.

6.     Commissions. The property is now finally available for sale…along with hundreds or even thousands of other properties. The real estate agent and broker must be paid a commission to show and sell the property. So why not go ahead and pay it now if you have to pay it later anyway.

When presenting a potential short sale offer to a bank take time to run the numbers. Knowing how much a bank is likely to spend on each of the above will help short sale investors come up with a competitive price likely to result in a win-win for banks and buyers alike.

 

More on Monday…

 

 

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) 452-7627P.S.: 

 

Interested in learning how to make over six digits a month flipping 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

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