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Total Housing Starts Dive 12.8% in April to Record Lows

May 19, 2009 by Marco Santarelli

Housing starts dived downward in April, falling 12.8% compared to the previous month, to a new record low and a seasonally adjusted level of 458,000, according to data released today by the U.S. Census Bureau. On an annual basis, that qualifies as a 50.2% drop.

The drop was driven primarily by the volatile multifamily sector, where starts for buildings of five units and more dropped 42.2% to a seasonally adjusted pace of 78,000 last month. Starts for buildings with two to four units also declined 62.5% to a level of 12,000 units. Combined, the two represent a 46.1% reduction in multifamily activity last month, to 90,000 units.

“The market for multifamily homes is in a deep slump,” observed Patrick Newport, U.S. economist for IHS Global Insight. “Multifamily starts and permits both fell to all-time lows in April. The recent drops have been mind-blowing. Multifamily starts averaged 380,000 over the first half of 2008; in June 2008, they jumped to a 423,000 annual rate. They have dropped steadily since, and [last month] plummeted to 90,000 units. This sharp decline is related to financing. Some builders are overwhelmed with debt. Others cannot find funding to finance projects with positive net present values.”

In contrast, single-family starts picked up 2.8% on a monthly basis to a seasonally adjusted level of 368,000 units. On an annual basis, that figure represents a 45.6% slide, but this second monthly increase for single-family starts appears to be generating optimism in some industry watchers.  Additionally, single-family permits showed a small gain in April, increasing 3.6% to a seasonally adjusted pace of 373,000 units. (That’s 42.3% below April 2008’s numbers.) [Read more…]

Filed Under: Economy Tagged With: Housing Starts, Real Estate Market

Ten Tips for a Rock Solid Agreement

May 13, 2009 by Marco Santarelli

In times of stress, communication can get out of whack quickly. It's never been more important to get your agreements in writing, not because you expect the other party is not going to honor their word, but because you need to make sure you both know what the agreement is.

Here are my 10 practical tips for creating a agreement that both of you can agree to.

( 1 ) Get it in writing.

You can technically have an oral agreement and in many cases they are still legal. But memories fade. Save yourself a lot of hassle and get an agreement right at the beginning. The last thing you want to do is try to come up with an agreement when both sides are fighting.

( 2 ) Keep it simple.

You don't need a bunch of legalese to make it legal. Use language you both can understand. Oh, and make sure you number the paragraphs so you can refer back and forth.

( 3 ) Make sure agreement is signed by the right person.

Although technically a representative of a company can make and sign an agreement, it's much easier to make sure you've got the right person and their company title on the agreement. [Read more…]

Filed Under: Real Estate Investing Tagged With: Real Estate Agreements

Bank Stress Tests are Now a Joke

May 5, 2009 by Marco Santarelli

The Treasury's stress tests are now, officially, a joke…

First, the outcome looked as if all banks would need to raise capital. Then it was reduced to just three. Now it “might” be “about 10” of the 16 banks subjected to the Treasury's toothless stress tests that may need to raise additional capital to withstand further weakness in the economy.

And the report isn't even supposed to be out until Thursday. The Obama administration is doing its level best to make sure the market is perfectly prepared for the results of the stress tests.

While it's probably wise to consider the impact of the stress tests on the financial markets, I can't say I approve of rigging the tests to achieve a preferred outcome.

The New Bailout

Bloomberg reports that financial stocks made their biggest gains in a month yesterday on “optimism about the tests.”

That “optimism” is better described as the realization that the stress tests are fundamentally flawed and the government is prepared to handle the capital issue by letting the banks convert the preferred stock the government owns from TARP loans into common stock.

[Read more…]

Filed Under: Economy, Real Estate Investing

Setting Your Financial Real Estate Goals

May 1, 2009 by Marco Santarelli

I bet you wrote down your goals in January 1st this year.  Is that all?  Did you re-think them this month and write it down again?  If you don't know what your goals are, how are you going to measure whether you've reached them.  And, I would bet that if you didn't write them down at all, you are in the same financial position as you were on January 1st.  Ouch!

Is it time for a change of strategy?  Maybe so, read on…

Take the most accurate archer, the best in the world. I guarantee that I can do a better job of shooting than he can…IF…you first blindfold him and turn him around a few times. You might think, why that is ridiculous. How is he supposed to hit a target he cannot see? Here's a better question: How are YOU supposed to hit a target you don't even HAVE?

When investing in real estate, in order to succeed, you need to set financial goals. Here's how to go about it.

[Read more…]

Filed Under: Real Estate Investing

Asset Protection for Real Estate Investors

April 28, 2009 by Marco Santarelli

During the early years of my real estate investing I ran my business as a sole proprietor because I was confused about asset protection. All the books and expensive courses only added to the confusion, and the subject of asset protection only became more frustrating for me.

Luckily, I survived with only minimal damage, but there comes a point when it is time to assess the best legal structure to use for real estate investing. This becomes increasingly important as your net worth grows.

Consider this scenario. You are sued for an accidental injury that occurred on one of your properties where you held title in your name personally. You are sued for $2,000,000.Your insurance only covers $1,000,000. That's a very bad day.

The biggest mistake you can make in real estate is to hold title on your property in your own personal name. Title to property is public record. Anyone can look up what you own, determine its market value, and deduct what you owe to determine what they can attempt to sue you for. It's like painting a bulls-eye on your back for prying eyes such as attorneys, creditors and even your tenants.

So what entity provides you the best asset protection? How do you limit your liability exposure? [Read more…]

Filed Under: Real Estate Investing, Taxes Tagged With: Asset Protection, Real Estate Investing

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  • New Home Sales: Report, Charts, Forecast 2023
    June 10, 2023Marco Santarelli
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    June 10, 2023Marco Santarelli
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    June 9, 2023Marco Santarelli

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