If you have tried to get your mortgage note modified and opted to short sell the family home, this may be for you.

In the case of a short sale two facts remain constant.  First, you will sustain damage to your credit rating for at least 24 months.  Second, you will have to move.

There has traditionally been a third inevitability and that is that you would become a renter again.  The latter is least preferable as it means the loss of some distinct tax advantages that come with home ownership.  These will be discussed in a later article.

In the meantime, the question is whether it is possible to maintain homeownership status with severely handicapped credit?  The answer is: “possibly.”  With private money many doors can open up to families with a solid household income.

Financial loans are financial opportunities in disguise.  It can provide the private lender a great return on their money while securing their funds with a note in first position on your new home at a loan-to-value of 65-70%.  In this down market property values present a terrific opportunity for securing retirement funds as well.  Free information on that subject can be obtained by calling 1-888-380-INVEST and requesting a CD on self-directed IRAs.

Private funds also allow for flexible terms.  Maybe your “sweat equity” and a partner’s cash can make a winning combination together.  Either way, the sky’s the limit.

Don’t underestimate the power of the human heart.  People have a nearly inborn need to feel as though they are making a difference in the lives of others…especially those whom they care about.  You may be surprised to find others are more than a little enthusiastic to help you realize your dreams.  Why not share these hopes and dreams with those in your life?  It may prove to be the best financial move you make this year!

Be prepared to provide the “complete picture” for any prospective investor.  Make sure you have accurate numbers and all available facts about the new property.  This will make their decision much easier….and you look better.  As with any business transaction:  Put it in writing!  Provide your lender with a Note and Deed of Trust and have it recorded with the county.  It is best, too, to have your lender named as “additional insured” to protect them against any catastrophic losses.

In conclusion, as the banks get weirder and weirder, it will become increasingly more necessary to get creative with financing.  Private money is a great vehicle to make deals happen.  You will likely pay a higher rate of interest but it may make the difference between having the deal and not having it.  Here’s to home ownership!

In previous articles I have commented on the many avenues to wealth that real estate investment affords.  Even when it comes to one’s personal residence, it’s good to think like an investor.  Since a healthy percentage of U.S. voters also own their homes, it stands to reason that many laws would be in place that protect and assist these homeowners.  And that is exactly what has occurred!

Federal tax laws do favor those with a mortgage.  Why over 90% of each typical mortgage payment is fully deductible, while personal rent is not.  In most cases, this will far exceed the standard deduction and provide the homeowner with significant tax savings.  That is simply money in your pocket!

Added to that, take the depreciation factor.  Congress allows you to deduct the “improved value”(often 75% of the purchase price)from your taxes over a period of several years.  Again, that is significantly more money in your pocket each year.

Another exciting shelter the government provides is the exemption homeowners are allowed upon sale of their primary residence.  This is my favorite.  Every couple of years or so, you may sell your home and move.  Any gains(profit)realized from the sale can be yours tax free. 

Here is the stipulation:  You must have lived in the property at least two out of the last five years to qualify.  This can be done to the tune of $250,000.00 each time.  Married couples can go up to $500,000.00 without paying any gains taxes. 

How about that?!  There really isn’t much more one has to do to qualify for these advantages.  This is a sure way to financial independence if one follows the “buy low, sell high” principle.  Today’s real estate market is positively the best in decades for doing just that.

So, the wisdom of homeownership is clearly measured in dollars and cents.  Pride should not be a consideration in making decisions that will affect your financial future.  However, if you like, be proud that you had made your single best economic move when you decided to buy your home.

That was the hope of the U.S. government when they decided to “bailout” the banks.  Some of the money that went to these troubled banks was allocated for helping approximately 750,000 troubled families to save the family home.   The idea was to reduce the monthly payment to an acceptable level….maybe even some of the principle.  All would work well if everyone cooperated and tried to do the right thing.

Well, guess what?  Out of that huge number only 7,000 got modifications to their mortgages.  What happened to the rest of these unfortunate homeowners.  They ended up getting the “short end of the stick.”  Even now, it takes 4 months just for an applicant to get a reply.

As a result, attorneys are working to protect families across the country from the predatory practices of many banks.  Now banks, attorneys and others cannot accept money from homeowners seeking a loan modification until one has been successfully obtained.  But what about the many who have helplessly been relying on their lender for some relief?

One terribly wrong practice that has become commonplace is for a bank officer to suggest that the homeowner must go into default if they want the bank to “buy” their hardship story.  Imagine if you had stopped making your payments, received a N.O.D. (Notice of Default) and 4 months later get notified that you’ve been turned down for your loan modification?  In some cases, families have even gotten their notice of foreclosure auction while patiently awaiting a reply from the mighty bank.  Now their credit is shot, they will have to move and they are further away from a resolution than before applying.

Suppose, though, that a family took the short sale route.  They call a qualified short sale consultant and chose to stop making their payments, all the while saving every dollar for later.  Yes.  They will have to move…..eventually.  But in 24 months their credit can be repaired.  In addition, they will have gotten out from under the burden of debt that loomed over them relentlessly.  Honestly, we have to acknowledge that the banks have brought this on themselves by their greed and insensitivity.

Of course, each case is different and each family must decide for themselves which direction to go.  Nonetheless, the notion that the banks will be true to their fiduciary responsibility to the consumer has been dispelled.  Protect yourself!

There is always strength in numbers.  That is why I have long stated the need to attach oneself to a solid, stable REI group, if possible.  The better organized the group, the bigger the benefit to the individual REI businessperson.

Take, for example, marketing.  If an individual decides to start advertising his business he will have to go through all the same steps that a larger conglamorate may perform.  Yet, the larger group will enjoy more “bang for their buck” because of sheer volume.  In the virtual world of the internet the same tasks are performed for both large and small businesses.  Why not pool efforts so as to keep costs to a minimum?

It really bothers me to see so many sincere folks spend their last dollar on another REI program in which they are still left to their own devices.  Imagine if they had connected with a group of experienced, motivated entrepreneurs in a non-competitive environment?  Their time and money would be put to much better use while they hunt for those illusive “killer deals” we all salivate over.  An example of one such group is found at www.invesdoor.com/mentor.htm.

Suppose you decide to start a list of cash home buyers for wholesale deals you wish to “flip.”  You hunt high and low for someone with all cash to purchase your house for sale.  The deals just don’t come often enough.  You have nothing for them and you lose touch with your prospective customers.  This is a sad scenario when we weigh in on the hard work it takes to secure cash home buyers.

Imagine, though, that you were part of a network that kept your buyers interested via the internet and maintained your relationship until you do have another cheap home for sale.  This is just one way that networking can maximize the effectiveness of one’s marketing budget.

Another advantage of such a group is the constant input of new methods and techniques.  The website referred to earlier is a non-competitive group under a mentorship program in which each member manages his own territory.  Thus, no two real estate investors can use any of the proprietary systems in the same area.  There are, of course, other fine networks out there.  National is always best in the long run.  Do your research.  No two are exactly alike.

The important thing is the results.  Remember this:  Efficiency is great, but effectiveness is better.  Look for the network that is enjoying results while growing their individual small businesses.  You’ve chosen the right industry at the right time.  Now go out there and make it happen!

Let’s take an example from the many sincere folks losing their homes and selling them short.  It’s no secret that their credit will take a hit broadside for no less than 2 years…and they will be required to work hard to heal the damage done during that ensuing 24 month period.  No one wants to talk to them.  Landlords are skeptical about renting to them and banks refuse to acknowledge their very existence.

The gnawing question is:  Is there any hope for the millions of homeowners nationwide in this predicament?  Thanks to the ingenuity of some highly savvy, creative entrepreneurs, the answer is:  “probably.”

The grim truth is that without good credit, institutional lenders have traditionally turned their proverbial noses up at folks like the foregoing.  Therefore, the answer lies outside of the traditional “box.”  Yes.  Banks are not the answer.  Rather, they are the problem.  If a sincere family wishes to become or even remain a homeowner, with the subsequent tax advantages, they must break convention and seek financing elsewhere.

Tighter restrictions on bank lending have crimped the styles of real estate investors as much as they’ve hurt wannabe homeowners.  Nonetheless, the investment-capital vacuum has sucked in a strong stream of private money, including the retirement funds of ordinary people.

The best of both worlds – upside potential and a healthy interest rate – is the reason for a hybrid investment vehicle that will be offered by Invesdoor Corp. after the first of 2010.  For te most part, money is coming in from private investment accounts known as IRAs which many Americans have, but don’t manage to their benefit.  These funds, while filtered via a 3rd party custodian, cannot be physically handled by the owner.  They can only be allocated to their designated use in which a much higher return is enjoyed, thus growing the retirement account at an accelerated rate.

For about 15 years the number of unmarried women owning homes has risen dramatically.  In fact, the latest NAR profile of homebuyers and sellers now has the figure at twenty-two percent.

There are, of course, several factors that have lead to this increase.  Certain demographic trends are responsible.  For example, improved education has enabled more women to pursue careers and seek financial independence.  As a result many young women have delayed marriage.  The increase in purchasing power has not gone unnoticed either.

Women own and operate 38% of all businesses in America and comprise 40% of the business school graduates.  Now add to that, interest rates at history-making lows along with home prices that are making their own history.  What do you have?  It’s a perfect storm.

As if that’s not enough reason, there are others factors, too.  The supply of housing is incredibly high and continued government attempts at stimulating the economy further fuel the increase of single women homebuyers.

Women by nature tend to do more research, spending a longer period of time in their home searches.  Interestingly, they will more likely make needed home repairs.  You might be surprised to know that nearly half of all the  purchases made in the “big box” home-improvement stores are made by women.   In the last 5 years, ninety-four percent of women who own homes claim to have completed a home improvement project during this period.

So, if you want to tap into this growing market you may wish to consider the following:

·         Try condos as women find a sense of security in this type of community

·         Deal with homes that lend to a home office

·         Aim for low maintenance yards

·         Allow for ample storage

·         Natural light is important, especially in the master suite

Finally, if you are a female real estate investor you may do better with these buyers/sellers.  Women traditionally trust other women a little more.  Don’t feel bad, men.  They just feel better understood by another woman.  Go get ‘em, ladies!

You worked harder than you ever thought possible to get through college and land that corporate dream job.  Life was good….until reality set in.  Right?  The grim reality is that for most, their chosen careers meant very hard work and inadequate compensation for their time.  So one day you made the decision to stop working for ‘the man’ and break out on your own.  Start your own business. 

Your decision to start your own real estate investment business is one that you will not regret…provided you do it right!  Unfortunately, most start-up businesses fail a short time after they start.  The reasons are many and varied, but the truth remains that it just doesn’t pay to try and go it alone!  Remember the old adage: “No man is an island.”

Today we are going to discuss the advantages of working with a group in your own Real Estate Investment business. Isn’t it true that one person simply cannot wear all the hats in a working business?  So why try?   There is strength in numbers.  And the best way to grow and be profitable is to work with skilled people in each area of business management.

For example, there is sales, marketing, accounting, office/personnel management, advertising, website development/maintenance, ongoing education, etc.  We could go on and on about the many facets of a business.  What kind of accountant do you suppose a salesperson might be, vice versa?  Certain personality types lend themselves to certain patterns of thought.  Wouldn’t it be unfair to ask your accountant to handle your sales as well?  Usually so.

Now imagine yourself associated with a group of investors in a sort of network.  You share a common buyers list.  Perhaps you all have access to the same training materials.  What if you all used a shared internet marketing machine developed and managed by some of the best in the industry?  And let’s say you had someone experienced with whom to discuss your deals and seek advice whenever you felt the need?  Each of the foregoing questions address some of the areas in which private investors have longed for support. 

One fear that independent real estate investment professionals have is that of competition.  As with any industry, competition exists and can kill deal we work so hard to put together.  If one is to work with a group as discussed earlier, he/she would have to have assurance that their privacy and autonomy was respected.

Imagine if you could enjoy all the benefits of an investment group or network without fear of competition from your associates.  What if you had a designated territory that was owned and managed solely by your private business, but carried the power of a much larger brand than you could exert?   That kind of opportunity exists today at one national company.  There the training, materials, mentoring, marketing, etc. is all provided for the private business person seeking to sell house cash deals to cash home buyers.  In turn they joint venture with the company.  This type of business model has great potential because it allows the individual business to operate at their own pace while providing all the support in each of those vital areas already mentioned.

Remember this:  There is no longer a need to go it alone.  Help is available to serious private business people with a determination to succeed.  Why not investigate the available networks that you can join.  There are groups for every level of involvement out there.  Don’t let the ominous economic climate deter you from your objectives.  You can do it with a little help from your friends.

There is a storm of epic proportions brewing as we speak.  While the government is in crises, the largest market of the century is passing their peak spending years and a record number of these are heading into retirement.  America is traditionally driven by consumer spending.  Over 70% of the nation’s Gross Domestic Product (GDP) is represented by consumer spending.  So, how people as consumers spend their money is the largest influence on our economic report card.

Spending patterns are very predictable, at very predictable times in one’s life.  Thus, at ages 46-50 we usually see families earning the most and putting their kids through college.  They will likely spend the most during these years.  Whereas, during their 50s, couples become “empty nesters” and significantly reduce their expenditures.  Once they reach age 60 they are moving into retirement, which for all intents and purposes, is when people traditionally spend the least.  Hence, the boom in consumer spending from the “Baby-Boomer” is coming to an end.

The point is that trends can accurately be predicted years in advance based purely on demographics.  The age and stage of life determine spending patterns.  As financial expert, Keith Springer of Capital Financial Services states:  “As we move through stages of life which correspond with different ages, we change our spending in very predictable ways.  What we buy at each stage is predictable and consistent.”

Now, consider something we call the “adjusted birth index.”  Fewer babies were born during the great depression than either before or afterward.  Thus, we would expect that 48 years later (the stagnant 1970s) there would be less middle age people.  Alternately, “Generation X” represents the children of the “Baby-Boomer” (born 1946-1964).  Alarmingly, “Generation X” cannot physically keep up the pace of spending set by the “Baby-Boomers.”

We must acknowledge that great busts generally follow great booms and the bubbles they create.  The most likely situation would be with a decline in the real estate sector.  We have already seen the effect on real estate, which likely will not rebound for quite a while when the “Echo Boomers” begin to buy their first homes.  There simply are not enough people to absorb the homes of the current generation, coupled with the ridiculous pace of building during the first seven years of the new millennium.  Clearly, there is just too much housing “inventory” on hand and not enough people to occupy these homes (consult my recent article on Supply and Demand).

In conclusion, it pays to be well-informed before launching out into real estate investment.  If you buy for cash flow, it can work to your advantage as values have finally come down to favorable level.  If you wish to “fix & flip,” this too can prove profitable provided you do not plan on holding onto the property for an extended period.  Avoid involved remodeling projects and stick with simple rehabs when you buy houses and you should do quite well under these prevailing stormy economic conditions.

A number of realtors across the country can be heard making claims that we are ‘finally in a recovery.’  They like to site the summer’s sales figures as evidence.  Let’s examine the facts so we aren’t mislead by, for all intents and purposes, the sales people.

The labor Department has reported consumer prices rose 0.2% in September.  For the year, consumer prices are down 1.3%.  This provides the Federal Reserve incentive to hold interest rates at record-low levels with the idea of giving the economy a needed boost.

In the week ending October 10, initial claims for unemployment benefits fell by 10,000 to 514,000.  This figure came in a little lower than expected.   The number of people still claiming jobless benefits in the week of October 3 fell by 75,000 to 5.99 million which is the lowest number since last March.  Sound encouraging?  First consider this:

From National Association of Home Builders:  “The pending expiration of the $8,000 first-time buyer credit made for a disappointing 1 point dip in the October housing market index to 18, according to the NAHB.  All components dipped in the latest report especially traffic which fell 3 points to 14. The results hint at a step back for housing which had been on the rebound thanks to government stimulus.”

From Associated Press:  “The Commerce Department released its monthly report on housing starts Tuesday, saying they increased in September by a modest 0.5 percent to an annual rate of 590,000 new homes and apartments. Applications for new building permits, however, fell by 1.2 percent to an annual rate of 573,000 units.”

The facts tell a bit of a different story!  In the light of the current economic trend many savvy, educated and well-employed families with 6-figure household incomes are assessing the damages and opting out of their homes now.  This will clearly fuel the foreclosure fire for some time yet.  Luxury homes will be – in fact, already are in default like never before in our lifetime!  That’s right.  The next wave of foreclosures will bring a flood of higher-end properties!

I have stated for some time now in my blogs, speeches, webinars and on my website, that this thing isn’t over yet – far from it.  I do not see millions of educated, well payed Americans all taking the housing value implosion sitting down!  The American way has historically been to take more than you give.  Most people will not accept this short fall of hundreds of thousands of dollars.  They will wrestle with the moral dilemma for a while but, in the end, will do their best to sell their home short and cut their losses.

In the long run, they will have taken a hit on their FICO scores that will be sustained for at least 2 years. Once their credit has reached an acceptable level they will purchase again – this time, at a much lower price.  Do the math.

At this juncture I must interject the personal note that I do not agree with reneging on any contractual arrangement and I will not encourage anyone to default just for the sake of escaping their obligations.  Nonetheless, my company had aided many families to find solutions once they are already in default.  This means even providing them the opportunity to remain homeowners even when they have had to short sell their home.  Remember this, it took America years to get to this point and it is not going to suddenly correct itself unless we learn to discipline ourselves and control our spending habits.  Don’t hold your breath waiting for that to happen!

It is amusing to me to hear the variety of opinions on the economy.  It’s funny how “experts” seem to emerge onto the scene while people grope for answers that would, hopefully, reveal a ray of hope.  Nonetheless, our economy will do what it will do regardless of what the pundits predict.

Earlier this year many housing markets across the country saw a 60% decline in retail values before the summer.  Then the typical occurred.  The 2nd and 3rd quarters enjoyed a slight gain in some markets while in others at least a slowdown in falling prices.  Now some realtors are so bold as to predict a slow steady rise in home values.  Yes, they will have us believe that it will be smooth sailing in the housing market from here on in.

Let’s examine this line of thought.  Better yet, we will look at the facts and see whether or not these guys are really in touch with reality.  Most of us have heard of the principle of “supply and demand.”  It’s really very simple.  Price is predicated upon the demand for a product balanced by its availability.

Back in spring 2007 potential buyers began to hold back after observing a winter where over-inflated home prices were no longer inflating.  When the seasonal market opened in the 2nd quarter buyers were now reluctant to pay prices without regard for the usual cautionary considerations like before.  It was a bit of a sobering time for many.  Since then deflation has been the trend.

Now, traditionally families prefer to move during the school summer break.  How many are content to transfer their family’s residence once school is back in?  Not most.  Hence, there is greater demand during this time and prices are logically driven upwards…….even if only a little.

Recall the federal mandate to banks temporarily holding up the flow of foreclosures hitting the market.  This occurred nationwide during this time of greater demand.  Where was the supply now?  With a sizeable percentage of all listings on the market held back (foreclosures), the falling values across the board would naturally slow if not reverse slightly.  And that is exactly what the market experienced.  The supply was lower while the demand was higher.

What, then, does this spell for the near future?  Well, peak season came to an end and September brought a new flood of foreclosures hitting the streets.  The tables had turned once again and now supply grew while demand diminished.  The massive number of foreclosure files yet to be processed is an indication of a steady supply from desperate sellers.  Thus the trend will likely continue in a downward direction at least till next spring.

Furthermore, the profiles of families in default have evolved from the subprime arena to “A paper” loans to families who could, in fact, stay in their homes but will opt out for financially sound reasons.  These are folks who are a bit more sophisticated and may have larger household incomes than the prior group.  Many could still make their payments but choose to get out from under the huge debt that the market has dealt them.  Many families see a quarter million dollar sink hole (or more) and will choose to short sell the home, wait 2 years and buy the same home for much, much less.  Notwithstanding the moral dilemma, many find that it just makes good economic sense.

The foregoing scenario presents some interesting real estate investment opportunities for the cash home buyer.  That’s why we buy homes all over the United States during these market conditions.  While the market trend may not be as favorable for the retail buyer, cash homes buyers in most U.S. markets are making insane profits by skillfully applying the simple principle of “supply and demand.”