Your Premier Source for Real Estate Investments

Real estate has always been the fastest and safest investment vehicle to acquire wealth and reach millionaire status.  But without a down payment your real estate investment goals will be difficult to achieve.

Every year that you don’t invest will cost you money in lost opportunity.  So where do you get your down payment?  How do you do it?    Continue reading »

The bill designed to rescue the nation’s troubled financial system was voted down today in a stunning vote of 228 to 205.

The rejected bailout shocked the capital and worldwide markets even after warnings from President Bush and congressional leaders that the economy could continue to suffer and possibly nosedive if not passed soon.

The stock market plunged even before the vote to reject the bill was officially announced on the House floor.  The decline for the day surpassed the 721-point previous record on the day after the September 11, 2001 terror attacks.  In percentage terms it was well short of the drops on Black Monday in October 1987 and at the start of the Great Depression.

Although we as a country will work our way out of this financial mess, credit will continue to stay tight in the meantime.  Conventional and “A” paper loans are still available to borrowers with good credit, but don’t expect to find many options if you are looking for a sub-prime loan or have poor credit.

Let’s continue to stay glued to our TV’s and radios and watch the drama unfold…

Back in 1999, Fannie Mae introduced a pilot program that lowered the credit requirements on loans that it would purchase from banks and lending institutions.  The program was is intended, in part, to increase the number of minority and low income home owners who tend to have lower credit ratings than non-Hispanic whites.

The pilot program started with 24 banks in 15 markets and expanded nationwide in less than one year.  However, even back in September 1999 there was concern that Fannie Mae, a government-subsidized corporation, could run into trouble in an economic downturn.  And if that happened it would prompt a government rescue similar to that of the savings and loan industry in the 1980’s.

With the recent problems in the financial markets and the government’s proposed $700 Billion bailout package, it looks like history may be repeating itself like it did with the savings and loan crisis of the 80’s.

What can you do as a real estate investor today?  Well, if you have good credit and the funds to invest, now is a good time to find all kinds of great real estate deals coupled with low interest rate financing.  If you’ve been sitting on the fence then take action today.

If you stop and think about it, it was the housing market collapse that pulled these large financial institutions down over the last several weeks.

Fannie Mae and Freddie Mac owned or guaranteed one-half of the $12 Trillion mortgage market.  Lehman Brothers had over $60 Billion in mortgage related assets on its books.

This has all led to a credit bubble burst in the shadow of the housing “bubble”.  So what happens if credit tightens even more because money isn’t available to the financial system?  Simply put, we may see house prices fall even further in most parts of the country because those who want to buy won’t be able to.

If the housing market doesn’t stabilize, then the financial market won’t either.  Are we talking a year or two from now?  There is strong evidence that the worst hasn’t even happened yet – particularly in states like California and Florida.  You can expect to see banks taking back and unloading a lot of inventory over the next twelve months or more.

In the meantime, focus your real estate investing in markets that have strong economic fundamentals to maximize your short and long term appreciation and overall return on investment.

In just the past week the US experienced the largest bankruptcy filing in history, the stock market fell over 500 points, the largest drop since the markets reopened after September 11, 2001, and recovered almost as much with the government’s announcement for a federal bailout.

Lehman Brothers, a company that has been around for over 100 years and survived the Great Depression, is one of the latest in a series of unprecedented implosions in the financial sector.  The magnitude of the Lehman Brothers collapse dwarfs the combined failure of WorldCom and Enron by several times.

Other casualties include IndyMac, Bear Stearns, the Freddie Mac & Fannie Mae bail out by the federal government, CountryWide’s likely buyout by Bank of America, and now Merrill Lynch which may layoff up to half of its 60,000 employees. Continue reading »

Your next mortgage may be risk adjusted!

Up until now your mortgage rate was based on the type of mortgage you chose and your credit profile.  But lenders have already started to assess up-front fees based on an individual’s credit score, and in the future this change may begin to resemble pricing similar to homeowners insurance factoring in many more variables.

If your credit score is under 720, you may be paying anywhere from a half point (0.5%) to as much as 2.75% in extra fees as your score gets lower according to Freddie Mac.  While some lenders assess a higher interest rate on your mortgage instead of charging you upfront fees.

The good news for those with exceptional credit may be lower than average rates and better loan terms.  The bad news is that those with below average credit score will be paying more for their loans than previously before.

In addition, shopping for a loan may become more time consuming because these risk adjusting fees may vary widely among lenders and mortgage brokers.

In the future, spending more time shopping for your mortgage loan will be time well spent.

The short answer is “extremely unlikely”.  The reason is that a small increase in some costs (like gas) only creates a marginal shift towards other costs (not a decrease in those costs).

One of the most important commodities in a first world economy such as ours is gas and other energy sources.  If there is a rapid rise in energy costs, it could lead to a significant increase in overall prices – this is known as inflation.

The question now becomes: Is the rise in gasoline prices strong enough to create an inflationary trend that will stall growth in consumer spending?

While millions of households feel the pinch of decreasing discretionary income due to higher gas prices, the fact of the matter is that this will only be a hiccup in the U.S. economy.  Overall spending and consumption will continue at a similar pace.

At the end of the day, if we walk away with long term gains in energy efficiency then the next generation of households will benefit from their own increase in discretionary income.

The 2007 annual ranking of the nation’s leading tourism destinations compares domestic and international tourism spending, tourism job creation, and the degree to which each city’s economic vitality is dependent upon visitors. The results show that a significant gain in international visitors propelled New York City to the top spot in 2007.

The U.S. City Tourism Impact, recently released by Global Insight, combines domestic and international travel volumes and spending data from D.K. Shifflet & Associates, as well as the U.S. Department of Commerce’s Office of Travel and Tourism Industries with metropolitan area economic data and models from Global Insight to rank the most popular tourist destinations in the U.S.

Last month resales jumped 3.1% to the highest level in half a year.  Additionally, new home sales jumped 2.1% according to the Commerce Department.  This came as a mild surprise to Wall Street.

Resales were up all around with the West leading the country with a  solid 9.7% increase.  Following that was the Northeast with a 6% gain, the Midwest with a 1% gain and the south with a minor drop of 0.5%.

New home sales showed a similar pattern with the Northeast gaining a 39% increase, the West with a 10% increase and the Midwest with an 8.2% jump.  The south had a drop in new home sales with a 2.5% drop.

Can this be another sign of a market turnaround?  Although this is very good news, we must keep some facts in perspective.  A large number of these sales come from first time home buyers and real estate investors sitting on the fence waiting for a clear signal that prices may have bottomed.

Continue reading »