wealth building

Market News & Commentary by Chris McLaughlin, January 9, 2009
http://www.shortsalesriches.com/welcome.html

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Are you a Realtor looking to make serious money in 2009? The Holy Grail of REO is coming to an end, as the last of 50 Seven Figure REO Wealth Building Systems will be sold this weekend. The other 450+ systems flew off the shelves this week. The product was developed by Chris Guldi, one of the TOP REO Agents in 2008 with GCI from foreclosures over $1.5MM. If you want his secret list of asset managers and tricks to making more money than ever in real estate, go here now to be among the final 50 to listen to Chris LIVE on Saturday at 5 PM ET:

https://www2.gotomeeting.com/register/693464027

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There was a little bit of news that dampened the New Years’ good spirits today, as the Labor Department reported that the nation’s unemployment rate is now 7.2%, the highest level in 16 years. For the full year in 2008, there was a net loss of 2.6 million jobs. And the news is expected to worsen, as a lot of companies that put off layoffs due to the December holidays are now in full-blown layoff mode. In another sign that incomes are dropping, corporate America also reduced the American workforces’ hours to an average of 33.3 hours, the lowest level since records began on the subject in 1964. President elect Barack Obama stated that “Today’s jobs report only underscores the need to move with a sense of urgency and common purpose.”

Now on to real estate investor education …

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.

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.
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.
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.
Measure Continuously. Set a schedule to measure progress on a continuous – and frequent basis.
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.
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.
Get a Mentor. It is important to banish negativity from your vocabulary and personal goal’s; 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.
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.
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.

Cram-Downs Could Hurt

If some members of Congress have their way, one aspect of the foreclosure prevention plan formerly shunned by lawmakers may be revived. It could spell bad news for banks should it come to pass: mortgage cram-downs. Essentially, the legislation would allow judges the right to rewrite a mortgage in order to make it more affordable to the current homeowner. While initially that may appear to be a good idea, critics point to several potential pitfalls:

Increased losses among banks. Currently, loan modifications among homeowners demonstrate dismal rates; in fact, nearly half are already falling behind. Critics point to a worsening of the current housing crisis that could spread on for years rather than putting the worst behind us and getting on with the future by selling the homes to those willing and able to make them profitable.
Restructuring may increase long-term competitive interest rates. By allowing a judicial mortgage modification on a “per case basis” there is fear it could slow the long term recovery of the housing market by driving prevailing market rates higher. Banks will no longer be able to justify mortgages on individual risk and will be required to offset losses in much the same manner as healthcare increases rates to compensate for write-off’s.
Decreased lender incentives. Currently many banks are willing and able to negotiate new terms based upon individual situations but federal oversight could standardize what is/isn’t expected.
Increased down payments. If passed, reform measures are also likely to increase the down payment requirements, PMI and other associated costs of obtaining a new mortgage in addition to the increased long term interest rates. Once individual assessments are not able to be adequately measured and predicted, lenders will be forced to compensate by adjusting all rates to the potential risk of under-writing less qualified individuals and homeowners.
Negative Incentives. To date, most mortgage modification programs have worked with current homeowners to restructure the interest rate, duration and other terms of the mortgage without impacting the principle owed. Increasingly, cram-down advocates are calling for the ability to totally re-write both the terms and principle amount of the mortgage owned creating the potential for a negative incentive. Because of this potential problem, advocates are also urging Congress to consider implementing more aggressive bankruptcy reform measures aimed to prevent both foreclosures and associated bankruptcy proceedings.

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See you at the top!

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

P.S.:

My good friend Mike Collins is dead serious about
this “Get the People Educated” mission he’s on.

He promised you hard-core real estate investment videos
to jump start your 2009.

https://rehablist.infusionsoft.com/go/smash/NJur1

P.P.S.:

Are you a Realtor looking to make serious money in 2009? The Holy Grail of REO is coming to an end, as the last of 50 Seven Figure REO Wealth Building Systems will be sold this weekend. The other 450+ systems flew off the shelves this week. The product was developed by Chris Guldi, one of the TOP REO Agents in 2008 with GCI from foreclosures over $1.5MM. If you want his secret list of asset managers and tricks to making more money than ever in real estate, go here now to be among the final 50 to listen to Chris LIVE on Saturday at 5 PM ET:

https://www2.gotomeeting.com/register/693464027

Mid-Day Market News & Commentary by Chris McLaughlin, October 20, 2008
http://www.shortsalesriches.com/welcome.html

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

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

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

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

Now on to our real estate investing educational section…

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

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

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

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

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

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

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

Unemployment at 16 Year High, 2.6 million jobs lost

Short Sales Might Save Your Assets

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