Understanding the credit crisis can be somewhat complex.
This short (11 minute) video explains what the credit crisis is and how it got started. It's a fun and informative way you will get a quick lesson in the economics and the impact that this economic crisis has from the home owner to the global economy. Enjoy this animated lesson in modern economics!
(Video created by Jonathan Jarvis.)
The IRS has begun targeting individuals with larger mortgage interest deductions in an effort to increase their tax revenues. They are currently sending out audit notices to DC residents as part of their test, but will quickly expand to the rest of the country once their audit systems are in place. If you're a real estate investor you need to be aware of this and plan accordingly.
You must meet three criteria in order to legally take the mortgage interest deductions:
The IRS may strike gold here. They will want to see where you spent the money from your refinances or new HELOC loans. It would be wise to show that the money was used for home improvements or business purposes.
With the economy in disarray and the federal government hungry for additional tax revenues, it’s more important than ever for you to be on top of the real estate tax law changes. Remember that a good tax advisor can help you achieve your real estate investing goals sooner by avoiding the pitfalls along the way.
A good real estate team is the way to assure your investing success. Failure increases when you tend to be a “lone wolf” and try to do too much by yourself.
In real estate, you need a good team of people you can trust and rely on. Here are some possible team members, and why they need to be on your team.
Mortgage broker or banker: A broker can offer you many loan options and shop your mortgage to find the best deal that meets your needs. A mortgage banker may be limited in the loan options they can offer you but they can make more decisions on your loan than a broker can. They each have their advantages and you should have both on your team. In either case, it's important that they understand your needs (i.e. fast closing, low interest, concession approval, etc.)
Property manager: Be sure that the company you hire has experience, is responsive, and will have time for you when you call. Good property managers can tell you what you should get for rent in a given area BEFORE you buy. Your property manager is one of your most important team members. Your real estate investments live and die by them.
Good real estate agent: An agent with experience in the area you invest in and access to the MLS (Multiple Listing Service) can be a great help. Even if they are a seller's agent, they can still ethically bring you the best deals once they know you're a serious investor.
Real estate investment firm: In addition to a real estate agent, you should work with a good real estate investment firm. These companies offer pre-screened investment properties in growth markets around the country. [Read more…]
You were hoping the worst was over, but then they release the latest stats showing that home prices tumbled by the sharpest annual rate on record ending the fourth quarter of 2008.
The widely watched Standard & Poor's/Case-Shiller U.S. National Home Price Index plunged 18.2 percent for the fourth quarter of 2008 compared to the same period a year ago. That makes it the largest year-over-year drop in its 21-year history. The index shows homes prices at levels not seen since the third quarter of 2003.
Home prices in the 20-city index have dropped by 27 percent from its peak in the summer of 2006, and the 10-city index has fallen more than 28 percent.
Again, Norada Real Estate Investments reminds investors that there is no “national” real estate market and the all real estate is local. Therefore, focus on local markets nationwide that offer great buying opportunities and make sense the day you buy them.
We just announced our latest real estate investment opportunity located in Ocean Springs, Mississippi.
Predicted by CNN Money to average 5% annual appreciation for the next 5 years. Forbes rated the Go Zone market as one of the Top 3 areas to invest, and Realtor.com rated the Mississippi gulf coast as the number one appreciating market of 2008.
This investment opportunity features a unique 30-month lease-back program that covers 100% of your mortgage payment, property taxes, homeowner association fees, management fees, maintenance costs, and utilities!
We also have several lending options available including some private financing options with 90% to 100% fininacing.
The investment is also Go Zone qualified for the 50% “bonus depreciation” provided by the IRS.
Visit our website and download the FREE Property Info-Pak for complete details, or just click here: Ocean Springs Investment Condos.
Our economy has been in a recession for over a year. It contracted rapidly towards the end of 2008, and is likely to continue contracting through the first half of 2009 and probably beyond.
What exactly is a recession?
The generally accepted definition of a recession is a country’s drop in gross domestic product (GDP) for two consecutive quarters. The U.S. based National Bureau of Economic Research (NBER) defines economic recession as: “a significant decline in the economic activity spread across the economy, lasting more than a few months, normally visible in real GDP growth, real personal income, employment (non-farm payrolls), industrial production, and wholesale-retail sales.”
United States Recessions
Since 1854, the U.S. has encountered 32 cycles of expansions and contractions, with an average of 17 months of contraction and 38 months of expansion. However, since 1980 there have been eight periods of negative economic growth over one fiscal quarter or more, and only four periods considered recessions: [Read more…]
Investors have clearly felt the pinch of a capital crunch and slumping U.S. economy. In fact, 60% of real estate investors cite availability of financing as their top concern in 2009 – according to a recent study conducted by Marcus & Millichap and National Real Estate Investor.
The cost and availability of capital remain top concerns for investors as illiquidity in capital markets continues to drag down investment real estate sales. Most respondents are not optimistic that access to capital will improve anytime soon. Nearly 40% of respondents expect debt financing to be more difficult to obtain a year from now, while 37% expect financing to be about the same, and 23% expect it to be easier to obtain.
Refinancing could pose some added challenges to an already cash-strapped market.
Nearly 40% of respondents say they need to refinance at least a portion of their portfolio in the coming year. The greatest hurdles to refinancing cited by respondents are underwriting terms (45%), economic factors (44%), and higher cost of capital (36%). [Read more…]
The U.S. and world economies are about to suffer through some of the worst recessions in the postwar period. Most measures of economic and financial activity look like they fell off a cliff in September and October, and have been deteriorating at an alarming rate ever since. The United States is now officially in a recession that started in December 2007. Japan and many European countries are in the same boat. At the same time, growth in most emerging markets is faltering. IHS Global Insight now believes that global growth will be in the 0.0 – 0.5% range during 2009, compared with 2.7% in 2008.
Speaking in general terms, we may be far from a bottom in the national real estate housing market. Perhaps the government bailout plans and lower interest rates will help, but I remain skeptical that we will reach a bottom by the second quarter of 2009 – today's general consensus. Why?
The Mortgage Bankers Association reported that 10% of American homeowners are either behind on payments or in foreclosure. This data has been tracked for over 29 years, and we are at an all-time high, as you might have guessed.
These high numbers suggest that loans to sub-prime borrowers, who perhaps shouldn't have gained approval, are only part of the problem. The sub-prime market got the ball rolling, but now unemployment is making that ball accelerate at a frightening speed.
The U.S. economy lost 1.55 million jobs in the last 6 months. That's the biggest loss of jobs in 30 years. To put this in a little more perspective, 1.55 million is nearly the number of jobs that were lost in the 2001 recession including the months following September 11, 2001 terrorist attacks.
Unfortunately it gets worse.
637,000 people were not counted in the official jobless numbers because they've stopped looking for work, effectively removing themselves from the employment pool.
Another 621,000 people have apparently settled for part-time work because they can't find full-time work. These people count as employed, but it's pretty obvious they will not be contributing much to the GDP by way of spending.
Where's the bottom?
We will reach a bottom of the housing market once we have Stabilization.
Stabilization means the end is in sight. The day will come when the rate of layoffs will slow down and corporate cost-cutting has been done. However, the latest employment numbers suggest we are a long ways off.
What should you do?
As mentioned in our blog post, “Is it a Good Time to Invest in Real Estate?“, there is an abundance of good real estate deals all over the country today. With real estate values and mortgage rates at historic lows, finding property with neutral or positive cash flow is not difficult to do.
Again, be sure to do your research and buy in markets with the strongest economic fundamentals, then hold on for the long term in order to gain the highest returns.
As we watch the U.S. economy head for its deepest and longest recession since World War II, we ask ourselves if this is a good time to invest in real estate? Especially now as mounting job losses take their toll on consumer confidence and spending.
Last month, U.S. employers cut payrolls at the fastest pace in 34 years as the unemployment rate rose to 6.7%, the highest level since 1993. The 533,000 drop brought cumulative job losses to 1.91 million this year according to the Labor Department in Washington.
Keep in mind that the actual U.S. unemployment rate may be as high as 11% to 13% since the rate published by the Labor Department excludes people who have been unemployed longer than 12 consecutive months.
Additionally, U.S. stocks fell for the fourth time in five weeks as the worsening job market added to concern the recession is deepening.
John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina, said the jobs report suggests that the economy shrank at annual rate of 5 percent in the final three months of the year. That would be the biggest contraction since the first quarter of 1982.
So, with all the negative news about our economy is this a good time to invest in real estate?
The short answer is an absolute YES! Why?
The answer was clearly stated by Sir John Templeton, the legendary investor and mutual fund pioneer. He said, “The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.”
There is an abundance of good real estate deals all over the country today. With real estate values and mortgage rates at historic lows, finding property with neutral or positive cash flow is not difficult to do.
Be sure to do your research and buy in markets with the strongest economic fundamentals, then hold for the long term in order to gain maximum returns.
Remember that people will always need a place to live!
