Real Estate Wealth Today

Paulson statement on Freddie and Fannie

2008-07-13T20:16:00.003-04:00

Three point Plan to save these two mortgage giants...

First, as a liquidity backstop, the plan includes a temporary increase in the line of credit the GSEs have with Treasury. Treasury would determine the terms and conditions for accessing the line of credit and the amount to be drawn.

Second, to ensure the GSEs have access to sufficient capital to continue to serve their mission, the plan includes temporary authority for Treasury to purchase equity in either of the two GSEs if needed. Use of either the line of credit or the equity investment would carry terms and conditions necessary to protect the taxpayer.

Third, to protect the financial system from systemic risk going forward, the plan strengthens the GSE regulatory reform legislation currently moving through Congress by giving the Federal Reserve a consultative role in the new GSE regulator's process for setting capital requirements and other prudential standards.

Boy what a week - does any wonder what all this power the Federal Reserve has grab this week - now they oversee all the investment banks and Fannie and Freddie - all this new power in the last 7 days

Mike Lautensack

Fannie and Freedie - Good Lord They Need $75 Billion to Stay Alive!!!

2008-07-07T21:26:00.000-04:00

Fannie and Freedie - Good Lord They Need $75 Billion to Stay Alive!!!

Can this be good for the real estate market - I believe Congress will have to come thier help and bail them out and that means massive write-offs - can not be good for the real estate prices

Do you want some great tips and stratergies on how to raise private funds to help fund your real estate deals go to http://www.realestatewealthtoday.com/

Apartment Rents Up 1%

2008-07-05T20:09:00.003-04:00

By Dan Levy

July 5 (Bloomberg) -- The vacancy rate for U.S. rental apartment buildings was unchanged at 5.9 percent in the second quarter as the housing slump and a weakening economy deterred people from buying homes, Reis Inc. reported.

The average monthly U.S. asking rent rose 1 percent to $1,047, the 25th consecutive quarter that rents increased or stayed the same, according to Reis, a New York-based research firm.

Home prices in 20 U.S. metropolitan areas declined in April by the most on record and new home sales fell 40 percent in May from a year ago.

The slumping housing market means apartment rents should remain steady even as gasoline prices rise and U.S. companies cut jobs, Sam Chandan, chief economist for Reis, said in an interview.

``Our projection is rent growth will moderate through 2009, but we don't think it will turn negative as it did in the early 2000s,'' Chandan said. ``The bias will be weighted toward rental, in our view. People fear home prices will fall further.''

The last time U.S. rents fell was the first quarter of 2002, when they declined by 0.2 percent, according to Reis.

The five-year housing boom that ended in 2006 attracted investment to homebuilding, so fewer apartment buildings were constructed, Chandan said.

``There has been very little apartment development because all the money was made in housing development,'' he said. ``We don't have a strong pipeline of apartments.''

S&P/Case-Shiller U.S. Home-Price Index Falls 14.4%

2008-06-24T20:00:00.003-04:00

The headline number is down by 14% but when you look at the details there is some good news (not much but some) - new home sales are up in April and Charlotte is actually up for the last 12 months - however the bottom is not in for the real estate market

Mike

By Bob Willis

May 27 (Bloomberg) -- Home prices in 20 U.S. metropolitan areas fell in March by the most in at least seven years, pointing to weakness in the housing market that will constrain economic growth.

The S&P/Case-Shiller home-price index dropped 14.4 percent from a year earlier, more than forecast and the most since the figures were first published in 2001. The gauge has fallen every month since January 2007.

Prices continue to slide as record foreclosures put more homes on the market and stricter lending standards make it harder to get loans. Falling home values are slowing consumer spending, threatening to halt the six-year expansion.

``There is excess supply, weakening demand, prices are falling and will continue to fall,'' said Kevin Logan, senior market economist at Dresdner Kleinwort in New York. ``Housing sales are still trending lower.''

Prices dropped 2.2 percent in March from a month earlier, after a 2.6 percent decline in February, the report showed. The figures aren't adjusted for seasonal effects, so economists prefer to focus on year-over-year changes instead of month-to- month variations.

New-Home Sales Rise

A government report showed new-home sales unexpectedly rose in April after readings for the prior month were revised down. Sales increased 3.3 percent to an annual pace of 526,000 from a 509,000 rate the prior month that was the lowest in 17 years, the Commerce Department said today in Washington.
Another report from the Conference Board indicated confidence among U.S. consumers fell this month to the lowest level in more than 15 years.

Treasuries fell, pushing yields higher. The benchmark 10- year note yielded 3.91 percent as of 10:09 a.m. in New York, up 6 basis points. Stocks were higher.

The index was forecast to drop 14 percent following a 12.7 percent drop in February, according to the median estimate of 9 economists surveyed by Bloomberg News. Estimates ranged from declines of 12.9 percent to 15.1 percent.

The group's 10-city composite index, with a history back to 1987, fell 15.3 percent in the 12 months ended in March, also the most ever.

Charlotte Up

Nineteen of the 20 cities in the index showed a year-over- year decrease in prices for March, led by a 26 percent slump in Las Vegas and a 25 percent decline in Miami. Charlotte was the only area showing a gain with a 0.8 percent increase.

Compared with February, homes in 18 of 20 areas covered dropped in value.
Prices remained under pressure in April, a report last week showed. The median price of existing homes sold last month fell 8 percent from April 2007, the National Association of Realtors said. Existing home sales fell 1 percent and were 33 percent below their peak in September 2005. The number of unsold homes rose to its second-highest level on record.

Most economists and investors say housing prices have further to fall after more than doubling in the early part of the decade to a peak in 2006.

``The decline in housing prices is still accelerating and is going to overshoot on the downside the same way it overshot on the upside,'' billionaire investor George Soros told a conference at the London School of Economics last week. ``We are not yet halfway in the decline in housing prices.''

Recovery in Demand

The slide in prices may have contributed to a recovery in demand in some areas. Sales in the San Francisco region jumped 29 percent in April from the previous month, the biggest March- to-April gain in at least 20 years, according to DataQuick Information Systems in San Diego. The median price was $518,000, down 22 percent from the $655,000 peak in June and July 2007, the real estate data company said.

The two-year housing recession has reverberated across the economy, hurting job growth, investments and consumer spending. Falling home prices leave Americans with less equity to tap for spending on appliances, cars or home-improvement projects.

Retailers have been hard hit. Home Depot Inc., the largest home-improvement retailer, last week said first-quarter profit fell 66 percent as consumers cut back on remodeling.

``The housing and home improvement markets remained difficult in the first quarter,'' Chief Executive Officer Frank Blake said in a statement. ``In fact, conditions worsened in many areas of the country.''

Declining home prices also leave Americans with mortgage balances that are more than their houses are worth, pushing up new foreclosures to an all-time high at the end of 2007, according to the Mortgage Bankers Association. Record foreclosures threaten to drag out and deepen the downturn.

The government is seeking to reduce the foreclosures and limit financial losses. Lawmakers at the Senate Banking Committee last week approved legislation to create a program at the Federal Housing Administration to insure as much as $300 billion in mortgages for struggling borrowers after lenders agree to reduce the loan amount.

URGENT - REI Summit 2008 - I am Speaking

2008-06-15T11:48:00.001-04:00

I've got something special for you, but it's rather time-sensitive:

On June 19th, at approximately 9 PM (EST), my friend and millionaire real estate coach, Susan Lassiter-Lyons, is kicking off the 2008 REI Summit Teleseminar series… and it's going to be a real eye-opener.

To quote Susan:

"This is your once in a lifetime opportunity to listen in to the most profitable ways to position your REI business for massive success in 2008 from 11 of the world's foremost real estate investment strategists and authorities all FREE!"

---------------------------------------------------
Here's where you can
sign up:http://www.reisummit2008.com
---------------------------------------------------

You see, if you're like most of us, you've probably had your doubts about REI and the "state of the market" over the past 12 months.

Maybe you even "hung it up" and went back to your day job for a bit… until things settle down.

Well, I'm here to tell you…

+++THIS TELESEMINAR COULD CHANGE THINGS FOR YOU+++

Look, when you did your first deal, did you give up at the first sign of trouble?

Heck no.

And if you would have, you wouldn't be where you are today.

Well, it's the same with changes in the market.

You simply side-step the hurdles, and adapt to what DOES work. And thankfully, Susan has lined up 12 speakers (including ME) who are absolute experts in this market right now.

For YOU to learn from and "replicate"

---------------------------------------
Here's where it
all starts:http://www.reisummit2008.com
---------------------------------------

In addition to learning which REI strategies are working RIGHT NOW, you'll also learn:

+++ How to Eliminate the Banks in 2008...and Raise All the Private Money You Could Ever Need for Your Investments!

+++ How to Create a Continuous Flow of Motivated Sellers Online and Off for Your Real Estate Business for Next to Nothing!

+++ How to Pay Off a Mortgage in as Little as 3 to 9 Years, Without Increasing Your Monthly Expenses!

+++ How to Find Hundreds of Discounted, Competition Free Properties in Your Own City!

+++ How to Break Into Commercial Investing Without Fear! (and without cash or credit)

+++ And much MUCH more!

------------------------------------------
Head on over and
sign up now:http://www.reisummit2008.com
------------------------------------------

But you have to act TODAY …

Here's why:A similar email is being sent to 45,000 OTHER savvy real estate investors just like you.

So what's the big deal, you ask?

Well, unless something changes, there are only about 1,000 spaces available for each summit call, and that means you'll have to fight and kick your way over RIGHT NOW to make sure you get a spot.

--------------------------------
Here's the link
again:http://www.reisummit2008.com
-------------------------------

I hope you'll take this opportunity to join Susan (and myself!) on this one-time only event.

You can get the full details and list of speakers here:

http://www.reisummit2008.com/

I'll talk to you soon

Mike Lautensack
http://realestatewealthtoday.com/

Business Cards! Learn the 10 Secrets Every Successful Real Estate Investor Must Knows To Make An Ordinary Business Card Into A Marketing Machine!

2008-06-04T20:10:00.001-04:00

The purpose of any business card is to get potential sellers to call you. It is not to impress your family and friends, show off creative art work or flash an impressive title you gave yourself. But simply to get motivated sellers to call or email you that they are interested in learning more about how you may be able to solve their real estate problems.

Here are 10 things every real estate investor should include on their business card to be truly effective in getting motivated sellers to call.

1. Business cards should always be two-step marketing; offering a FREE Report or FREE Consulting in exchange for them calling, emailing or going to your website. You cannot make a direct sale with a business card. It is only the first contact in the sales process. You are simply trying to get the potential seller to call, email or visit your website where you can capture their contact information for future follow up.

2. The business card must feature your Unique Selling Proposition (“USP”) as a headline such as “We Buy Houses – FAST” or “How to buy a new home without bank qualifying or a large down payment.” Be compelling with the USP and it will attract attention. The worse thing you can do is to bore your prospect with your headline.
3. The FREE offer or FREE consulting should be of such value that the potential seller actually treats the card like a “gift card” versus a business card. If they do not take immediate action, they will actually make a mental note to save the card for later use if the offer is compelling enough.

4. Attract attention with a business card by making it stand out, such as a $100 bill or use bright fluorescent yellow or orange card stock. You can also make your card stand out by making it oversized, an odd shape or with rounded corners. Again, do things that make your card stand out from other business cards.

5. Tell people what you have to offer, such as a full price offer, quick sale or take over back payments – but always put it terms of benefits to the prospect. Tell them what’s in it for them, and not all about you and the awards you have won.
6. Provide multiple ways to contact you including cell phone, office, fax, toll-free, email, website and snail mail address. Not everyone prefers to communicate in the same way, so be sure to allow them their preferred method.

7. Add social proof by including testimonials from customers, sellers, tenants, or anyone in your network. Just be sure it shows a great customer experience and is clear and concise.
8. Do not waste space telling people how great you are, how long you have been in business, how you offer “great service”, announce an award you won or show a photo of yourself. These are all a waste of valuable space. People do not care about this stuff. They want to know how you are going to help them solve their own problems.
9. Tell people exactly what to do next. Do not assume they will figure it out on their own. Tell to them to “Call xxx-xxx-xxxx” or “Visit www.xxxxxxxx.com for your FREE Report!”. You can also add a post script such as P.S. Don’t forget to get my FREE Report!
10. Lastly, the single most important thing to do with business cards is to get them out to potential sellers. I have never seen a business card create any business sitting in its original box.

About the Author:

Mike Lautensack is a full-time real estate entrepreneur in Philadelphia, PA and creator of the Private Lender PowerPoint Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE Real Estate Wealth Newsletter go to Real Estate Wealth Today or visit our blog at Real Estate Investment Blog.

The Time Has Come - Rental Markets Are Back!!!

2008-05-18T09:15:00.002-04:00

For the last several years I have been saying that the foreclosure epidemic would be a good thing for real estate investors. Real estate investors have such a great opportunity when foreclosure rates go up. What opportunity exists? Real Estate investors can buy foreclosures, of course, and they can also rent to the displaced owners of the foreclosures. They now have “tenants” for their new purchases and their existing properties.

For the most part, from 2000 until early 2007, if you could fog a mirror you could qualify for a mortgage. This easy qualification process lead to two things: 1) The tenant base decreased causing higher vacancy rates and lower rental rates and 2) it put so many people in a situation they couldn’t afford. Many people had no savings and barely squeezed into a home with minimal down. They couldn’t afford any blip in their lives or with their new home. Unfortunately, things happen in life. \ Also, many people got put into the interest only adjustable rate mortgages. They qualified when it was interest only or a negative amortization loan, but when it adjusted, they found themselves way over their heads financially.

The Wall Street Journal published an article on May 3, 2008 that addressed how rental homes are now going for a premium in many markets around the country. Many home owners that have gone through recent foreclosure are having a difficult time finding a rental home. There is now competition of renters added to the market.

The article also addressed how many renters are looking for a new place due to the foreclosure on the home they were renting (they didn’t know their landlord was in foreclosure). Many of them have little or no time to move. Some have only a few days notice, as they did not know the owner was loosing the property.

I have waited for this time with baited breath. I, personally, am excited that lending requirements have tightened. It keeps out many investors that can’t qualify for a loan, AND it keeps many of my tenants renting from me. For investors that can’t qualify for a loan, my lease option and subject to strategies will be key. Over time when the rental rates stabilize, it will drive up property values for landlords/investors. What does this mean for you?

BUY NOW!!!! What are you waiting for?

Wendy Patton

Is the Bottom in for the Real Estate Market?

2008-05-17T17:59:00.000-04:00

The US real estate market has been in free fall mode for so long, that many investors and homeowners have been looking for signs the bleeding is slowing down. While it's no guarantee that the market is yet ready to turn around, there is room for cautious optimism with the news that sales of existing homes unexpectedly rebounded in February. True, 2.9% isn't wonderful news; however, for an industry that has seen precious little good news, it's almost cause for dancing in the street.

According to the National Association of Realtors, this equates to a seasonally adjusted annual rate of 5.03 million housing units. In case you're not familiar with the definition of the word “units” – that's either a single-family home or a condominium.

Your reaction to these figures is probably related to the area of the country in which you live, because existing home sales continue their steep slide on the West Coast, following another 1.1% drop. Fortunately, the West Coast is the only region of the country that actually saw a decrease. Sales were up 2.1% and 2.5% in the South and Midwest, respectively. But the Northeast is the star, surging by an astonishing 11.3%.

As welcome as this news is, new home sales figures once again posted a loss for the fourth straight month to the lowest level since 1995.

I think that these figures will probably run hot and cold for awhile, but if you're investing – or thinking about it – the next year and a half or so represents a tremendous opportunity for any investor willing and able to capitalize on this unprecedented chance to buy property at rock bottom prices.

The reason for this thinking is because home prices for the moment are continuing to fall. The median price of a home is down to about $244,000 – down almost 3% in a year. Right now, about 8 million homeowners have negative equity. If prices drop another 10% as most analysts seem to think they will, that would push that figure up to 16 million.

With so many people with negative equity, people are going to continue walking away from their homes – leaving the door wide open for investors with ready access to cash to waltz in and reap the rewards.

Whether you're doing short sales or pre-foreclosures – whatever your specific market niche really doesn't matter – if you have the cash you can put these deals together. You might have the means to get some cash from your local bank, but increasingly lenders are tightening their purse strings and making it more difficult to borrow money.

If you don't have access to a pool of private money, it would be in your best interest to develop a pile of cash you can tap into at a moment's notice. When you see a hot property you can get at a great price, you have to be able to pull the trigger and move on it quickly, or you run the risk of losing it to an investor who can.

To learn more about how you can build a list of private money lenders, click here.

About the Author:Mike Lautensack is a full-time real estate entrepreneur in Philadelphia, Pa and creator of the Private Lender PowerPoint Presentation Kit. This kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your business. To learn more about this powerful step-by-step kit and receive your FREE Real Estate Wealth Newsletter go to www.RealEstateWealthToday.com.

Don Conrad, Author of How to Find That Quality Tenant, Discusses the Tenant Selection Process for Landlords on "Ideal Investment Radio"

2008-05-16T12:07:00.000-04:00

Don Conrad, Author of How to Find That Quality Tenant, Discusses the Tenant Selection Process for Landlords on "Ideal Investment Radio"

Noted expert on landlording will discuss his 5 step strategy for helping real estate investors make that crucial decision on who to rent to.

Carlsbad, CA, May 14, 2008 --(PR.com)-- Author and noted expert on real estate investing and landlording Don Conrad appeared on Ideal Investment Radio with hosts Suzanne Morris and JD Morris on Tuesday, May 13, 2008 at 12:00 Noon Pacific.

During this exclusive interview, Conrad discussed his 5 step strategy, including writing a high impact ad, what questions to ask during the telephone prequalification interview, preparing the property for showing and background checks.

Conrad wrote How to Find that Quality Tenant with the goal to develop and improve the tenant selection process.

Conrad has been a full-time real estate investor since 2000 and is currently the program director for Northwest Indiana’s Real Estate Investment Club.

About Ideal Investment Radio:Ideal Investment Radio is a weekly live internet-talk radio program on BlogTalkRadio that focuses on creative investment techniques and is produced by Ideal 4 Investors Online Creative Investors Association.

The show can be heard at: blogtalkradio.com/Ideal4InvestorsAn archive is available at the same link immediately following the show or listeners can subscribe to the archives via RSS feed located on the host page.

Ideal 4 Investors is an Online Creative Investors Association with a goal of providing the highest level of education, publications, products and resources for those interested in building wealth through creative investing. Founded in 1999 in Washington, D.C., Ideal 4 Investors has expanded to a 50,000+ double-opted in membership and is a member of the National Real Estate Investors Association. Our membership reaches all 50 states, as well as a growing international community. Membership is free to investors.For more information Contact:Suzanne Morris(760) 494-7887info@ideal4investors.comideal4investors.com

High Return Investments With Low Risks Is Possible If You Use Private Lending

2008-05-04T18:06:00.000-04:00

Higher returns require higher risks. You've probably heard that saying before. Well, the problem is that it's just not true in all cases. With the stock and bond market, that general statement may be true. But with private lending, that statement is false.

Here are three examples that demonstrate that you can have solid security and solid returns in the same investment.

1. Private lenders base their decisions on the asset first. Private lending is also called asset backed lending. The asset is the foundation that the investment is built upon. Most private lenders choose to use real estate as the asset that collateralizes their lending. So if you have a great asset and you structure your investment properly, your risk is substantially reduced.

2. Private lending gives you the protection of a bondholder and the returns of a stockholder. You can have greater protection than stocks while earning a higher return than most people think is possible.

3. Private lenders usually earn a better rate of return than institutions because they meet needs that a bank typically will not. For example, a real estate investor may find a property that they can purchase below market value but they may have to act quickly to secure the opportunity.When you solve problems for other people, you gain more rewards than those who do not realize the opportunity. The key to private lending is following a system that recognizes opportunities and protects your assets. You can have high returns with high security.

Using Private Money to Fund Your Real Estate Deals

2008-04-19T09:32:00.002-04:00

One of the most valuable abilities you can have at your disposal as a quick turn real estate investor is the ability to raise cash from private sources to meet any funding need. If you become an expert at raising private money you will have developed a skill that is highly valuable to you as well as to those you work with.

The potential uses of funds from private money are limited only by the bounds of your creativity, but there are some common scenarios where they can be applied to great effect. For rehab investors (you or your buyers) private funds can be used for purchase and repair costs and paid back when the property is sold or refinanced.

If a juicy deal is about to go down the tubes due to a premature foreclosure, you can use private funds to postpone the foreclosure and save the deal, paying the money back when it closes.

Another instance where fast private funding can come in handy is any time you want to execute a double closing and the title company requires that you have the cash on hand for the purchase.
This money can be borrowed and paid back extremely quickly, perhaps within a few days. There may also be a circumstance where an individual who can’t qualify for conventional financing has enough equity in a property to convince a private lender to lend money for a purchase or refinance.

Who are private lenders? Basically they’re ordinary people, with the qualifying feature that they have some sort of substantial savings or assets that are not earning them a significant return. This might exist in the form of cash in a savings account or CD, in the form of low yield bonds or stocks, or it might be held in the form of a self directed IRA.

It is important to realize that your private lender does not necessarily have to loan you the cash themselves, but can use their assets to secure a loan on your behalf from a conventional lending institution. For example, if your private lender owns some municipal bonds earning 6% which she is willing to pledge to secure a loan on your behalf, you could offer her a 6% return on the cash you borrow and she would double her earnings, since her bonds would continue to earn 6% while you are using the cash.

Knowing who private lenders are is important, but so is knowing how to acquire their contact information. If you handle your business appropriately finding these individuals should happen on a regular basis.

There are three techniques to build your list of private lenders.

The first is networking; as you talk to your colleagues and others in the business, make a habit of asking what private lenders they use and granting favors in exchange for referrals. The second is canvassing your existing wholesale buyers by asking them if they lend money for real estate transactions. The third is cultivating new private lenders by asking “Have you considered investing in real estate?” whenever you encounter a qualified individual.

Negotiating with private lenders should not be difficult. Simply offer them security with a low LTV and guaranteed repayment and an interest rate that will be better than what they’re already getting, and ask for reasonable terms in exchange: long term or short term amortization, a balloon note at the date of your choice, no monthly payments; these are all reasonable things to ask for if your deal is solid.

Omar Johnson is a successful real estate investor and author of the home study course “Secrets To Making Big Money In Real Estate With Little Cash and No Credit” For more info visit http://www.gettingrichinrealestate.com

Countrywide says it's not filing for bankruptcy - Bullsh**!

2008-01-08T22:52:00.000-05:00

Countrywide says it's not filing for bankruptcy - Mortgage lender slumps on concern it needs a big cash infusion to survive

By Alistair Barr, MarketWatch

SAN FRANCISCO (MarketWatch) -- Countrywide Financial Corp. said Tuesday that it's not filing for bankruptcy as speculation swirls about the mortgage lender needing billions of dollars in extra cash to survive.

Shares of Countrywide slumped 28% to close at $5.47, the lowest level in more than a decade.
"There is no substance to the rumor that Countrywide is planning to file for bankruptcy," the company said in a statement emailed to MarketWatch.

Countrywide also said that it's not aware of any leading agencies that are considering downgrading the company's ratings.

As the largest mortgage lender in the United States, Countrywide has been hit hard by the subprime-fueled credit crisis. The company has stopped offering many types of more-profitable, riskier home loans and is focusing on selling mortgages that conform to the standards of government-sponsored enterprises like Fannie Mae and Freddie Mac.

However, Fannie and Freddie have suffered big mortgage losses themselves in recent months.
"Countrywide is severely challenged and might falter if it does not receive an infusion of at least $4 billion within the next couple of weeks," Egan-Jones Ratings Co., a ratings agency, wrote in a note Tuesday. "The GSEs likely curtailing purchases have hurt Countrywide."
'Recreated' documents

Countrywide shares were also pressured after the New York Times reported that the company falsified some documents.

A lawyer for Countrywide told a judge recently that the lender "recreated" three letters related to the bankruptcy case of a Pennsylvania homeowner, the newspaper reported, citing court records.

Real Estate Investing

Real Estate Investment Prices - Three indexes

2008-01-06T20:51:00.000-05:00

The price of a home is generally a price comparison of like properties in a similar area, based on either a multiple of rent/income or comparison of cost square footage.

We are all familiar with the MLS, the traditional vehicle for listings. However, the internet has been able to offer us many more sources of price comparison.

Two other important sources for the health of the market and for price comparisons are:

1. Case-Schiller Index: A monthly index which measures the residential housing market, tracking changes in the value of the residential real estate market in 20 metropolitan region across the United States . The methodology captures repeat sales in homes. This shows up as price change up or down.

2. HPI home price index: Compiled by the OFHEO (Office of Federal Housing Enterprise Oversight). The HPI is a broad measure of the movement of single-family house prices which measures average price changes in repeat sales or refinancing on the same properties. The HPI is a quarterly report.

But, if you wanted to get a sense of price movement to buy sell or refi then a daily index, giving you absolutely current price information then you should look here:

3. RPX: The Radar Logic home page has a good explanation of how the daily numbers are created. The intended use is to try and establish an index that can trade in the stock market. However, the index is a good indicator for buyers and sellers as well. The Residential Price Index tracks 25 MSA's, or Metropolitan Statistical Areas from around the country. Individual index numbers are available for each, as well as a U.S. Composite number for the whole country. The index uses prices per square foot for its calculations, instead of gross sales prices of homes. A chart of price change in 25 major cities is produced daily.

Real Estate Investment

Private Lending: An Alternative Funding Source

2008-01-05T14:24:00.000-05:00

Private Lending: An Alternative Funding Source

From Lil Sawyer

Where do entrepreneurs go when the bank says "No"?It happens everyday. Well-prepared entrepreneurs are walking into the banks with brilliant business ideas with well developed business plans — and are walking out empty-handed. Many of these professionals are ultimately able to obtain financing from private lender, like Tom McKenzie through business capital brokers.

For individuals who do not want to give up a certain percentage ownership in the business as is often required by venture capitalist and deal with the angel investors who may demand a board position or significant day-to-day control, the private lender may be an alternative worth considering.

On the whole private lenders are looking for the same information and will conduct a similar due diligence as the banks to make a positive funding decision. They are looking for great business ideas, at the right time, with an airtight business plan, that includes contingency scenarios and realistic forecasts, backed by experienced and professional people with some financial stake in the business.

However, most private lenders are “specialists” who engage in higher risk ventures because they clearly understand both the opportunity and risk associated with selected business types or market segments. Private lenders will not only fund project the banks rejects, they will creatively structuring loan repayment and sometimes be a helpful resource.

For example, Mr. McKenzie has a background in the automotive market; accordingly he has funded projects such as automobile dealerships, transportation and trucking businesses and manufacturing for the automobile sector. While he does not have a professional background in medicine, he has also developed an interest in providing capital to medical practices because of the doctor shortage and because doctors on the whole are responsible debtors. Additionally, businesses like wineries are attractive because they are high asset based and offer more security. He will also provide funding in emergency and rescue situations.

When asked how he makes the decision to fund a project, Mr. McKenzie laughs and said, “you do the best due diligence you can and then it’s just like gambling at a slot machine. You put your money in and take the risk and hope for the best. Knowing that statistically some of the businesses will do well and others will fail. You learn the most from failures.” After twenty years of investing in both winners and losers he has developed an evaluation methodology to help him select the businesses with the highest probability to be profitable and succeed long-term.

Given the relatively low profile of most private lenders, Mr. McKenzie says that a significant number of the best projects come to his attention via business capital brokers. “The brokers screen the projects, giving me a wider selection of projects that match my specific parameters”. Business capital brokers will normally develop relationships with hundreds or thousands of lenders and investors, so the key is to sell the broker on your business plan and get him or her sufficiently excited about your project to recommend it to the right lenders or investors.

Lil Sawyer is Managing Director with FundingLinks, a business capital broker company in Toronto that assists entrepreneurs and businesses to secure capital worldwide. She can be reached at 905-427-9726 or by email at lil AT fundinglinks.com.

Private Lending

Real Estate Investing in 2008: Are You Crazy – Well Maybe Not!

2007-12-28T15:26:00.000-05:00

The latest data from the real estate industry shows a marketplace in steady decline and no bottom in sight. Residential home sales are in freefall mode with an expected 25% decline in the total number of home sales in 2007 versus 2006. Additionally, homes sales are currently off by more than 35% from the record year of 2005 when over 7.0 million homes sold.

Industry analysts estimate that we're on track to sell only 5 million houses nationwide for the entire 2007 year, which is the slowest pace since 1999. Equally sobering is the fact that at any given time there are about 4.4 million unsold homes for sale. Based on the number of available houses, it would take about 10.5 months to sell all the houses on the market right now.

It's not just the number of homes sold that is falling; it's also the sales price. The median, or average, home sales price is expected to dip below $211,000 for the year, which represents the first time since records have been kept that the year-over-year price of a home fell.

While home sales are plummeting and sales prices are falling, the only thing that seems to be rising is the number of foreclosures. During the first ten months of 2007, the foreclosure rate nationally surged by about 94%, which puts about 573,000 homeowners at risk of losing their homes.

As bad as things are right now, we might just be at the tip of the iceberg, because more than 2.2 million home loans are going to reset in the next year and a half as introductory and teaser rates end. Homeowners are faced with payments that are considerably higher than they had banked on – or budgeted for. Bush’s new homeowner bailout plan will save some, but will excluded most of the homes that are close or already in the foreclosure process.

Aright enough of the doom and gloom. With all financial bubbles there are many losers but a few big winners. Despite all of the above, now is the time to consider real estate investing. With prices down and motivated sellers everywhere real bargains are popping up and the long term returns on real estate should be outstanding in the coming years. Much of the risk has been taken out of real estate investing.

The housing market has undoubtedly changed, but I still think real estate is one of the best long-term investments you can make. I also think if you know what you're doing, there’s a whole lot of money to be made right now by investing in real estate.

The key to this opportunity is the ability to raise cash or credit quickly to make low all cash offers. The ability to have a combination of cash, credit lines and access to private lending will allow you to make low and compelling offers. In many cases, buyer will forced to accept any reasonable offer.

If you do this, you'll discover that this is possibly one of the best times in more than a generation in which to make tens of thousands of dollars -- or more -- by playing your cards right and timing your real estate purchases in a way guaranteed to help you build a fat real estate portfolio.

About the Author:

Mike Lautensack is a full-time real estate entrepreneur in Philadelphia, Pa and creator of the Private Lender PowerPoint Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE Real Estate Wealth Newsletter go to Real Estate Wealth Today or visit our blog at Real Estate Investment Blog.

2007-12-26T18:50:00.001-05:00

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Home Prices Down 6.1% in Past Year!

2007-12-26T17:17:00.000-05:00

Home prices in 20 major U.S. cities were down 6.1% on average in the past year as of October, according to the Case-Shiller price index released Wednesday by Standard & Poor's.

Since October 2006, prices in 10 cities fell 6.7% -- a record drop. The prior largest decline was 6.3% in April 1991.

"No matter how you look at these data, it is obvious that the current state of the single-family housing market remains grim," said Robert Shiller, chief economist at MacroMarkets LLC and co-developer of the index.

Eleven of the 20 metro areas posted a record low annual growth rate, and six of the metro areas posted double digit declines. Also, all 20 metro areas declined from the prior month.
San Diego posted the largest decline of 2.6%.

Miami sustained the largest drop over the past year, with a decline of 12.4%. Next came Tampa, with a drop of 11.8%; Detroit, with a drop of 11.2%; and San Diego, with a drop of 11.1%.
Home prices are going to decline "considerably further" in coming quarters, likely reaching a double-digit pace on a year-over-year basis, according to Joshua Shapiro, chief economist for MFR Inc.

"Given conditions relating to mortgage financing, and the number of unsold homes that is piling up, all regions are likely to continue on a negative trend in the months ahead, and those with the greatest oversupply (at the bottom of the pack at the moment) will continue to fall by the most," wrote Shapiro in a research note.

Three areas -- Charlotte, N.C., Seattle, and Portland, Ore., -- were the only ones still experiencing positive annual growth rates in home prices, according to the report. Charlotte gained 4.3%, Seattle gained 3.3% and Portland gained 1.9%.

Both the 10-city and 20-city composites declined 1.4% from September -- their single largest monthly decline on record.

October's results mark the 10th consecutive month of negative annual returns, and the 23rd consecutive month of decelerating returns, according to the report.
Ruth Mantell is a MarketWatch reporter based in Washington.

The Top 10 Real Estate Sites for Novemebr 2007

2007-12-24T17:12:00.000-05:00

These are the top 10 real estate sites for Novemeber 2007 and thier respective volumes

Realtor.com 6,915,000
Yahoo Real estate 4,847,000
MSN Real Estate 2,734,000
Rent.com 2,556,000
HomeAgain.com 1,997,000
Apartments.com 1,972,000
Zillow.com 1,827,000
HPC Interactive 1,688,000
Homes.com 1,640,000
Remax.com 1,429,000

Bush Signs Mortgage Tax Relief Into Law

2007-12-21T17:09:00.000-05:00

President George W. Bush signed legislation into law on Thursday that will ease the tax burden for home owners who have had debt forgiven on a mortgage due to a foreclosure, short sale, or deed in lieu of foreclosure. The bill — Mortgage Forgiveness Debt Relief Act — has been supported by NAR since the 1990s.

"The president offered a Christmas present to many people who have suffered the agony and humiliation of losing their home," said NAR President Dick Gaylord in a statement. "Today's bill will ensure that any debt forgiven on a mortgage secured for a principal residence will not be taxed. This is very significant legislation."

The tax code used to require a lender who forgives debt to provide a Form 1099 to the IRS stating the amount the borrower had been forgiven. If the property was sold at foreclosure or was sold for less than what was borrowed, that difference was considered income and subject to the tax.

"We have always believed that it is clearly an issue of fairness and of not kicking people when they are down," Gaylord said. "By making the forgiven debt taxable income, individuals in already unfortunate situations most likely faced IRS actions because they did not have the money to pay the additional taxes. This legislation will relieve that additional burden and may also encourage families to work with their lender to negotiate terms, knowing they will now not be subject to an IRS bill."

Other Legislation Making Its Way to the President

Also, this week, the U.S. House passed two other bills — which have already passed the Senate — that could have a big impact on the real estate industry.

The bills are:

Mortgage Insurance Tax Deductibility. This bill makes mortgage insurance premiums tax deductible for all mortgages originated for the next three years. Mortgage insurer Genworth Financial estimates that this tax break is worth $350 to the average taxpayer who has purchased a home with less than 20 percent down.

Terrorism Risk Insurance Act. Federal backstops for terrorism insurance, passed initially after the Sept. 11 attacks, have been extended for another seven years. The bill also expands the program's protection by including domestic terrorism. The insurance and real estate industries have pushed for an extension, saying federal guarantees to help cover catastrophic losses are crucial to stimulating the investment needed to spur economic growth.

Bush Housing Plan Summarized

2007-12-09T17:06:00.000-05:00

The Bush administration Thursday unveiled a plan designed to slow a wave of mortgage foreclosures. The architects of the plan say it could help 1.2 million troubled borrowers hold onto their homes.

The initiative, put together by the Treasury Department and the mortgage industry, sets detailed terms to identify homeowners who qualify for aid.

Here's how it will work:

The plan will focus on subprime, first-lien, adjustable-rate mortgages, and particularly once-popular 2/28 and 3/27 loans.
Under such plans, mortgage rates were fixed only for the first two or three years of a 30-year loan.
Loans originated between Jan. 1, 2005, and July 31, 2007, whose interest rates will reset for the first time between Jan. 1, 2008, and July 31, 2010, would be eligible for a five-year interest-rate freeze.
Only owner-occupied homes would qualify for a rate freeze.
The plan is not binding on all mortgage industry players, but would stand as a set of best-practices and guiding principles.
Some plan provisions might be applicable to troubled prime and Alt-A loans, though not second liens.
Plan says target borrowers should be contacted about the program four months prior to the date their interest rates are set to be increased.
Borrowers must be making timely payments at present and not have missed two months of mortgage payments in the previous year to qualify for a rate freeze.
Borrowers eligible for rate-freeze may have a loan-to-value ratio greater than 97 percent and must be facing an interest rate spike, typically 10 percent or greater.
The Borrower must be current on all payments.
The borrower can not have a FICO score over 660 to be eligble.
Mortgage servicers will help borrowers refinance in a way that avoids costly pre-payment penalties for abandoning the loan early.

The program identifies three general classes of troubled borrowers according to their ability to pay, two of which potentially would be eligible for relief:

Strong borrowers facing a rate-reset. They will be shepherded into conventional, fixed-rate mortgages, such as those available under the Federal Housing Administration.
Borrowers who may be eligible for a rate freeze. A formula comparing a borrower's current credit score with a score assessed at loan origination will help determine whether a borrower can get a "fast-track" rate freeze. Borrowers with credit scores of less than 660 that have not increased by 10 percent or more since the origination of the mortgage will be fast-tracked for a modification. Borrowers whose credit scores have climbed may still qualify for a freeze if they meet other tests.
Struggling borrowers who are deemed not able to afford even a modified loan. They would face foreclosure

Please tell me what you think the plan will do - if anything

Paulson's reveals more details about a national mortgage-rescue plan

2007-12-05T17:04:00.000-05:00

WASHINGTON — Treasury Secretary Henry Paulson revealed more details about a national mortgage-rescue plan and proposed Monday to help state and local governments issue tax-exempt bonds to pay for mortgage refinancing. He also confirmed that he seeks to freeze temporarily the rates of tens of thousands of home loans that are about to adjust to higher rates.

Paulson told a national housing forum that Congress should authorize state and local governments to broaden their tax-exempt bond programs temporarily. Currently, states have authorization to issue tax-exempt bonds only to aid first-time homebuyers in designated distress zones. Paulson proposed to expand this to allow state and local governments to issue tax-free bonds to help in mortgage refinancing.

He also confirmed that he's trying to craft a plan that would prevent massive foreclosures when roughly 1.5 million adjustable-rate mortgages, or ARMs, reset to higher monthly rates next year. The affected ARMs involve subprime loans — those given to borrowers with weak credit histories.

The Treasury Department hopes to target holders of subprime ARMs who aren't yet behind on their payments but could be next year after their loans reset to higher interest rates.

Paulson stressed that there would be no government subsidy to borrowers or lenders.

The approach assumes that lenders will go along with making less money than they would have once the adjustable-rate mortgages reset — if borrowers were able to pay the higher rates.

The same holds true for investors who purchased the loans on the secondary mortgage market, where they were bundled together with other loans and sold as mortgage bonds.

The incentive for lenders and investors is to keep troubled loans from falling into foreclosure and to come up with an industry-wide plan that will keep losses at a minimum and allow the slumping housing sector to recover.

Paulson's plan seeks to rescue from ARM resets the borrowers "with steady incomes and relatively clean payment histories who could afford the lower introductory rate but cannot afford the higher adjusted rate," he said.

Just who these borrowers are and how they would be identified is still under discussion. It's a thorny issue because as lending standards deteriorated in late 2005 and 2006 at the tail end of a nationwide housing boom, many borrowers took out "no doc" loans — no documentation — for which they didn't reveal their income or inflated their stated income.

Speaking at the same forum, sponsored by the Office of Thrift Supervision, the heads of Countrywide Financial and Washington Mutual Inc., which have among the largest exposures to problem mortgages, publicly supported Paulson's plan.

Foreclosures Skyrocketing! Now is the Time to Get into the Real Estate Game

2007-12-02T16:55:00.000-05:00

According to RealtyTrac, foreclosures have skyrocketed during the first ten months of this year by almost 94%, and if the current trend holds true it's possible that up to 2 million homeowners stand to lose their homes in the next year and a half. That's bad news for the homeowners, bad news for the economy, and a devastating reality for the banking industry that must take back all these homes.

Imagine Banks Having To Own And Maintain 2 Million Homes!

Does this create opportunity? Savvy real estate investors have the potential to realize unprecedented profits if they play their cards right by investing in bank owned properties commonly know as Real Estate Owned (“REO”). As banks continue taking more and more homes back into inventory, their level of desperation is rising. The truth is, they can't afford to keep these houses on their books indefinitely. They need to move these houses and they need to move them quickly. This is where you come in!

A lot of people make the mistake in assuming that they are out of luck when trying to negotiate with the bank, because banks typically bring in their own appraiser. Banks also try to stipulate that the house must sell for more than “fair market value”.

Too many investors with limited experience negotiating REO sales with banks decide to walk away from the table at this point with the mistaken assumption that there is no way the bank would accept their offer. A savvy real estate investor knows that this is when things are just beginning to get interesting!

You can win the REO negotiation game with the bank, but you have to sell the bank on why it makes sense for them to accept your offer. As part of your offer package to a bank, be sure to include a list of low comparative sales that fully support your offer price. There may be other higher sales in there area, but you are not required to included these in the list of comparable sales. Remember the bank can do its own homework, but you must present real sales that support your offer price.

Another really good way of getting banks to accept your offer is by providing them with a complete list of the extensive and costly repairs required to the house to bring it up to “sellable” condition. By casting the house in its most negative light, you dramatically improve your chances of getting the bank to accept your offer.

Another key to getting your offer accepted is to offer all cash and close in 30 days or less. The last thing the bank wants is to agree to a sale with you and then have to do the same thing over again because you could not get a mortgage. Banks are generally very motivated to get things off their books before the month ends so they can show their bosses and boards how good they are at moving real estate owned and solve the bank’s problems. So an offer that closes within the month is viewed very positive by a bank

In today's market, it's relatively easy to get a lender to go along with a REO sale for a discount of 15% to 30% off of fair market value. If you're a new investor and have limited cash and capital, this may be an outstanding way to buy at below market prices.

You can pick up a house at a good price, make a few repairs, and flip it pretty quickly for a pretty good profit or hold long term as a rental.

If you have a large line of credit with ready cash, or can plug into a network of private investors or hard money lenders, you can buy blocks of REO directly from the bank – I’m talking about 10, 15, or even 20 properties at a time – and get them for about $.50 on the dollar. You can see how quickly a good investment can turn into a great investment.

The unprecedented number of homes going back into inventory has banks scrambling to unload these properties as quickly as possible. By having access to cash you can grab as many of these money-making REO as you can get your hands on before they’re all gone.

Regardless of what route you take, there’s never been a better time to buy a property at a steep discount. If you're ready, willing, and able to do what it takes to capitalize on current market conditions, you can make a lot of money investing in REO.

About the Author:

Mike Lautensack is a full-time real estate entrepreneur in Philadelphia, Pa and creator of the Private Lender PowerPoint Presentation Kit. This kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your business. To learn more about this powerful step-by-step kit and to receive your FREE Real Estate Wealth Newsletter go to www.RealEstateWealthToday.com.

How to Use Post-it Notes to get Sellers Calling You

2007-11-29T16:50:00.000-05:00

Dear Guys:

I was having lunch today with an associate and he was complaining about there being "no deals" anywhere and was frustrated he could not find profitable real estate deals. I was stunned to hear this when most of our students are doing very well and deals are everywhere - so I thought I take a moment and show everyone one of the best ways to get sellers calling you with real deals.

Post-it Notes are the answer

One of the top ways of getting really motivated sellers to call is to use post-it notes - if you are not familiar with these they are the small yellow sticky notes that 3M puts out in packs of 50 or
100 and people use for small notes or to book mark pages of book - but most people do not know that you can get post-it notes preprinted with your sales message on them for a very reasonable price - usually about 2 or 3 cents per page - you then get kids or friends to stick them on the doors of neighborhoods where you want to buy houses - they can typically put out 200 per hour if they are moving good - get two people for four hours and you have 1600 pieces delivered to 1600 homes - we typically pay about 10 cents per delivered post it note - total cost is about 12 to 15 cents per post-it note - that is about $200 to $250 dollars.

Now you may get as high as a 1% response rate or about 16 calls for $250 - now imagine getting just one deal for this amount and netting $5,000 to $15,000 - these are the kinds of numbers you should be getting.

This is one of the best ways to get sellers calling and is very targeted to the exact neighborhoods you want to buy in or even the exact street. I have attached two samples of post-it notes we use and you can modify for your purposes - once you have it adjusted to fit your needs simple go to Goggle and type preprint post it notes and select a printer - most of them you can upload your file for them to print onto the post it notes.

Please try and you will be amazed at how powerful this method is.

Also if you any marketing that is working and you want to share with the groups please email back to me and I will include a summary of it a future newsletter.

Thanks
Mike Lautensack
http://realestatewealthtoday.com/

Housing Prices Down 4.5% - Where is the Bottom??

2007-11-27T16:46:00.000-05:00

Here is article about the continued drop in prices - where is the bottom?

WASHINGTON (MarketWatch) -- U.S. home prices were falling in every region of the country in September, according to a closely watched index of home prices released Tuesday.

Home prices fell in September in all 20 major cities covered by the Case-Shiller price index, even in cities that had been holding up before the August freeze in mortgage markets, Standard & Poor's reported.

"There is no real positive news in today's data," said Robert Shiller, chief economist at MacroMarkets LLC, and the co-developer of the index. Shiller said it's nearly impossible to forecast when the market could turn around.

For the national Case-Shiller home price index, prices fell 1.7% in the third quarter compared with the second quarter, and were down a record 4.5% in the past year. It was the largest quarter-to-quarter price decline in the 20 years covered by the index.

For the first time in this housing cycle, prices in all 20 cities dropped from the previous month, with the biggest declines in the former bubble cities of Miami, Phoenix, San Diego, Las Vegas, Los Angeles and Tampa.

For the 20 cities, prices fell a record 4.9% year-over-year.

Meanwhile, prices were down 5.5% year-over-year in the original 10-city index, the largest drop in the 10-city index since 1991.

The last time prices fell so much, it took more than eight years for home prices to return to their peak level.

"We judge the recent decline in home prices to be the beginning of an extended decline," wrote Drew Matus, an economist for Lehman Bros., who said prices would probably fall 15% from peak to trough nationally.

"With supply overhang growing and mortgage financing tougher to obtain, home prices are going to soften considerably further in the quarters ahead," wrote Joshua Shapiro, chief economist for MFR.

The Case-Shiller index, which tracks multiple sales of the same homes, is considered by many observers to be the best gauge of national and metropolitan-area real-estate values.

Falling prices make it more difficult for homeowners to tap the equity in their homes or refinance their mortgages. Millions of homeowners who took out adjustable-rate loans in 2005 and 2006 face sharply higher mortgage payments this year and next, with foreclosures having already soared as the result of payment resets.

"It is surprising that the weaker housing market so far has had such a limited effect on U.S. household spending," wrote Gabriel Stein, an analyst for Lombard Street Research. "However, if house prices do continue to fall at their recent pace, it would be astonishing indeed if this did not badly hit consumer confidence and hence spending."

In a separate report, the Conference Board reported a sharp drop in the consumer confidence index in November, largely because of worries about the near-term outlook for energy prices and the stock market.

Plunging home prices will also be felt on Wall Street, where banks and other money managers have leveraged untold billions in complex securities based on increasingly risky mortgages.

Boom goes bust

Former boom towns in Florida and Southern California have now passed Detroit for the dubious honor of having the largest price declines in the past year. Prices are still up in the Pacific Northwest and in areas of the South, but they're rising at a slower pace.

Fifteen of the 20 cities tracked in the index have seen prices fall in the past year, led by Tampa, Fla., with an 11.1% decline, followed by Miami with a 10% loss and Detroit with a 9.3% loss.

Indeed, eight of the 20 cities recorded their largest-ever year-over-year price declines in September.

On a year-over-year basis, prices were up in five cities, led by Seattle and Charlotte, N.C., with 4.7% increases. After adjusting for inflation of 3.7% in the past year, real prices were up in just two of 20 cities.

Here are the year-over-year nominal price changes for the 20 cities covered by the index:

Tampa, down 11.1%; Miami, down 10%; Detroit, down 9.6%: San Diego, down 9.6%; Las Vegas, down 9%; Phoenix, Ariz., down 8.8%; Los Angeles, down 7%; Washington, D.C., down 6.6%; San Francisco, down 4.6%; Minneapolis, down 4.5%; Cleveland, down 4%; New York, down 3.6%; Boston, down 3.2%; Chicago, down 2.5%; Denver, Colo., down 0.9%; Dallas, up 0.2%; Atlanta, up 0.4%; Portland, Ore., up 2.2%; Charlotte, up 4.7%; and Seattle, up 4.7%.

Another Way to Invest in Real Estate

2007-11-18T16:43:00.000-05:00

Guys:

In addition to buying and selling hosues, I follow the general real estae market very closely and have rcently started to buy home builder stocks - I am slowing adding to my holdings of the ITB iShares index which trades at around 18 to 20 now - this is down from a high of 45.
This is high risk stuff but I beleive that the hosuing stocks have been so beaten down thier downside is very low.

I do beleive that housing prices probably have another 10-15% to fall on average before this cycle ends. I bet there will be more bankruptcies among homebuilders before all of this is done.

When the cycle is done I thick we see many of the following signs:

Surviving builders trade at 50-75% of written-down book value.
Earnings are negative, but no longer getting worse.
Early value investors will have given up on the sector.
Old standards will return for loan underwriting.
Financial magazines will talk about prudence in borrowing against residential real estate, and how it is not a “one way ticket” to riches.
Inventory levels decline 20% from their peak levels

This is an interesting additional way to play the real etate market

Thanks

Mike

Investing Secrets in the Post-Bubble Real Estate Era

2007-11-15T16:34:00.000-05:00

Attention Real Estate Investor: Learn the New Investing Secrets in the Post-Bubble Real Estate Era

You would have to be living in a cave or tucked away on a deserted island somewhere in the middle of the Pacific Ocean not to know that the American real estate market has effectively fallen apart. Real estate investing techniques and strategies that have worked so well and for so long are no longer effective. If you want to continue making money in real estate today, you'll have to adjust your strategies accordingly, or risk being left behind in today's post-bubble market.

One such strategy is the short sale.

A short sale is nothing more than convincing the lender to accept an amount less than the current loan payoff amount as full payment for a property. Because real estate as we know it has changed so dramatically so quickly, banks are more motivated than ever to quickly unload these properties and get them off their books as soon as possible. The reason for this is really quite simple: Most banks are required to maintain cash reserves of up to six times the retail value of each real estate owned (“REO”) on hand. Because an REO is actually a liability and not an asset – and there are so many of them – you have an unprecedented opportunity to simultaneously help a friendly banker as well as yourself.

Here's how it works.

Once you've located a distressed property owner and have convinced them that letting you solve their real estate problem is in their best interest, you'll need to prepare a real estate sales contract (signed by you and the homeowner) reflecting the amount you wish to offer the bank.

In addition, you’ll also need some additional documentation for the bank’s Loss Mitigation Department: A cover letter that fully explains your offer and the reasons why you simply can’t offer full price for the property. If you’ve properly done your homework, the accompanying documents will help build your case. I’m talking here about area comp sheets, photos of the property that highlight the negative aspects of the property, a hardship letter from the property owner explaining the severity of their current financial situation, as well as a HUD-1 net sheet showing the lender exactly how much money they’ll be left with after all expenses – closing costs, taxes, etc. – have been paid.

One last item you’ll fax to the lender is critical to your offer. You need to send them a list detailing all needed repairs – and the associated costs – to help your offer seem even more practical. You don’t have to tell the lender that the property is falling down. The estimate will do that for you.

Keep in mind: the lender doesn’t want property back. You’re doing them a favor by taking it off their hands. Because they’re in business to make money from interest and not owning real estate, they’re not going to try to get as much money as they possibly can from the property. Banks are far more interested in getting REO’s off their books and freeing up the cash reserves requirement.

While the bank could conceivably finance the property for you, don’t count on it. So be prepared to provide your own financing source either through your own bank or an alternative lending source that you’ve already lined up.

The new reality in real estate is that there is plenty of money to be made by investors who are prepared to seize the opportunity. Short sales are a great way to do this. As long as the foreclosure rate is rising faster than gas prices, you stand to have an almost unlimited profit potential. You can capitalize on these opportunities when they present themselves by lining up a ready supply of private lenders that are able to provide the cash you need at a moment’s notice. Then you can truly build your American Dream.

About the Author:

Mike Lautensack is a full-time real estate entrepreneur in Philadelphia, Pa and creator of the Private Lender PowerPoint Presentation Kit. This kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your business. To learn more about this powerful step-by-step kit and receive your FREE Real Estate Wealth Newsletter go to http://www.realestatewealthtoday.com/