Archive for the 'General' Category

Oct 29 2009

Market Stabilization vs. Home Buyer Assistant

Published by under General

Okay so everyone is aware by now that the housing bubble was created by people borrowing more than they could afford. Money was easy to come by and you could buy a home, sell it for a profit. People thought they were geniuses. Prices rose. Even better, people now had money for serious down payments to buy the dream homes they “deserved”, or more likely thought, hey prices are going up by 4-8% a year, I can buy a more expensive one, live like a player for a few years, then sell it. A more expensive “investment” home would yield a higher return. Take the profit from that and buy a home outright, retire at 38 and live the good life.

Then reality set in, buyers became scarce. Owners couldn’t keep making mortgage payments, home repairs, and everyday living expenses. Banks started foreclosing so they looked at their loose lending policies and tightened them up. Resulting in even fewer buyers. The market adjusted, prices returned to realistic and even bargain levels.

In short people who shouldn’t have had money to play with, and little experience with housing, bought houses. Creating a Market Bubble.

In Georgia, in my favorite area, you can buy a 3 bedroom 2bath for $185,000. And if there’s a little bit of repair work needed, you can cut that price by a third. Now if you’re smart and ambitious, you’ve got money saved up, you can figure out cost of owning, repairing and living, you can capitalize on this in a big way. Using a few simple calculations you can even see if its smarter to rent it out generate a tax sheltered cash flow, or live in the home.

If you have no money to purchase, and more importantly have no experience owning a home. The government will give you $8,000 tax credit for buying a new house. You’ll also qualify for for 1st time lender rates, and even with somewhat questionable credit, FHA secured loans. Now if this is a second home, or a rental property, you are exclnded from these bonuses.

In short, people with limited cash and no experience are now encouraged and able to buy homes.

Now, I know, I’ve seen this approach before…

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Mar 05 2009

The American Recovery and Reinvestment Act

Published by under General

I just received a handy little article from Steve Friedman, one of the mortgage brokers I’ve used. Here’s some info I thought my fellow San Francisco Bay Area Real Estate Rehab and Investors may appreciate.

On February 17, President Barack Obama signed into law a $787 billion economic stimulus plan. That package includes many provisions that may directly benefit you:

New Housing. First-time homebuyers are eligible for an $8,000 tax credit, which does not have to be repaid unless you sell your home within three years. The credit is available for purchases between January 1, 2009, and before December 1, 2009. The credit phases out for individuals with AGI of $75,000 to $95,000 and married couples with AGI of $150,000 to $170,000.

Green Homes. New tax credits are now available for green home improvements on a principal residence starting January 1, 2009, through December 31, 2010. The credit covers 30% of qualifying upgrade costs, or a maximum amount of $1,500. Qualifying modifications must meet a certain efficiency level to be eligible for the credit. For record keeping, experts advise that you retain all receipts.

Steve’s always sending me timely info, saving me from information overload. Visit his site or contact him at:

Mortgage Planner
Prospect Mortgage Company
5825 Glenridge Dr.,Bld. 4,Suite 106
Atlanta, GA 30328
Office: (678) 244-5416
Cell: (404) 803-1300
steve.friedman@prospectmtg.com

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Sep 20 2008

What a sell to close stock stop order does

Published by under General

Okay expensive lesson learned today. My PCL Options (.pcljj) sky-rocketed from yesterdays purchase at 2.20 to close at 5.7. I placed a stop order to close at 5.5, and a limit sell of 6.5, selling off two thirds of the purchase. The option won’t come due for about thirty days and I expected and still expect the timber reit’s stock price will continue to climb, so I figured cash if it rises sharply and protect myself with the stop order at 5.5 and hold a third no matter what for expected monthly gains.

However opening price to day was 2.65, which triggered my sale. Ouch. Team Bush/Paulson, tauting economic stability, threw a curve ball by agreeing to purchase all illiquid assets held by the financial companies. Serious? We’ll help the economy by purchasing things that are worthless with your tax dollar? I suspect that was why the sudden decrease from closing price of PCL at 56 to current flat line at 51. Taking the price of my options with it. But its all an illusion. Financial stocks C, GS, MS, SNV are up today 24% to 18%.

Lessons learned. Capitalize when you can. Put a limit order when the value has doubled, as soon as you buy the stock. (One triggers other?) As for security? Stop limit orders should end at close of day.

Clearly I’m still learning things. Just as I see a philosophy, it gets turned. Yesterday they announced no fed rate cut, and my silver and commodities increased, contrary to what should have happened. Today they announce a huge spending of the American Tax dollar, which should push up silver, yet it only increased .5 points (5%).

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May 20 2008

Market Analysis Tool

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2500% ROI??

20k passively into 13.4 Million in 26yrs? Get outta here.

 

What if you knew that home values, in a particular area were expected to increase 22%?

As a smart investor, you’d leverage yourself to get your name on as many properties in that area as soon as possible.

And if you knew that home values were expected to take a dive where you like to invest, you might decide to cash in your property, or at least be wise enough scrutinize any new properties purchases.

Its called market timing. Buy low, sell high. If you’re familiar with the term technical analysis, you’re probably into stock trading. Stocks can be volatile. Invest twenty thousand dollars in stocks today and next thursday, it could be higher, it could be lower. Successful traders read stock charts, look at the industry sector in general, compare moving averages and act accordingly. Historically you just couldn’t easily do that with home prices. You can’t go to google finances and plug in your zip code and quickly see what home prices will do. And since you can’t do that, you can’t compare other markets to find out what the better investment is.

But now you can. I’ll let you see who has developed this tool and how you can get access to charts like the following.

Home Prices

If you’re not a registered member of Stanhope Investments please take the time to register, it gives me a stronger negotiating leverage. After that, check out this innovative tool.

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May 07 2008

Lease Purchase Agreements

Published by under General

I went to my regular monthly meetup group hosted by Antoine Pirson of Wells and Bennett. It was a small group which was great, lot of my questions were answered. Guest speaker Debbie DeSousa was as a another investor put it, “a smart cookie”. She was extremely helpful and a firm believer in real estate as a sound investment. I questioned how to come up with the cash necessary to do more deals. The answer of finding a low debt-to income partner was brought up. She also turned me onto the idea of taking my existing, negative cash-flowing property and selling it with a lease option to my tenant. I’d reduce the overhead of the property management and increase the income. Not to mention I’d have the added benefit of a signed lease, which would make lenders happy.
I think she also liked my marketing ideas although she and Antoine were decidedly against the internet.

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