Weekly Wisdom #228 – Your Unfair Advantage

October 23, 2014

Visit http://www.amazon.com/Dean-Graziosi/e/B002G0AYAI Welcome to Dean’s Weekly Video Blog as we talk about how to make profits in today’s real estate market…


Foreclosure Hurting Your Neighborhood and Home’s Value? — Buy It!

October 22, 2014


We’ve all heard many times the “making lemonade from lemons” quote. When life throws a negative at you, turn it around and make something good out of it. Of course, this isn’t possible in many cases, but it’s a nice thought and course of action if it works.

Recent news and data tells us that there are far fewer homes for sale in foreclosure than in recent months. In August 2014, foreclosure inventory plummeted 33 percent year over year. This marks the 34th consecutive month that this inventory has declined, and 19 straight months of 20 percent or greater declines. Home prices are improving, in part due to fewer price-depressing foreclosure sales.

All of this information is nice, unless you own a home in a neighborhood with a foreclosure in poor condition sitting there dragging down neighborhood home values. Actually, there is some lemonade to be made here. Of course, if there are a half-dozen of these foreclosures within a few blocks, this isn’t going to be a great opportunity. But, if there is one or maybe two, you can do your neighborhood a favor, help your home’s value, and generate some great cash flow in the process. You can help yourself and your neighbors as well, and make some money in the process.

Invest in Your Neighborhood for Profit

Why not buy that foreclosure and convert it to a rental? You’ll take it off the market as a deep discount property. You’ll improve the neighborhood when you fix it up. And, you can control not only its ownership but occupancy as well. After all, if an investor buys it, they may be less picky about renters, or discount the rent to keep it occupied. You, on the other hand, can control the rent, marketing for better quality tenants who can afford the home and will hopefully take better care of it.

Single family rental home investors will tell you that one of the things they must be disciplined about is checking their properties, at least with a drive-by, regularly. Making sure that your tenants aren’t violating exterior HOA rules and getting early warnings of problems are the goals. If the home is right there in your neighborhood, it’s almost a daily thing without any planning required. You may be driving by it every day to and from work.

There May be Help Out There

Some areas are aggressively working to avoid neighborhood blight by offering government-backed financing for distressed homes and/or repairs. Check your local tax assessor and city and county housing offices to see if there are programs to take foreclosures off the discount market and fill them with owners or tenants who will maintain the homes.

It’s a Great Investment

If you’re not upset with the tiny returns on your savings and certificate of deposit returns, that’s OK. But, with today’s miniscule savings rates and risky stock market investments, it’s nice to be able to generate double-digit ROI with special tax advantages as well. In most cases, you can deduct all expenses related to ownership of a rental property, as well as depreciation. You can wipe out a chunk of the tax liability, even while you’re enjoying depositing the rent income every month.

If your lemon these days is a foreclosure in the next block that’s vacant and losing ground on the curb appeal front, take action, squeeze that lemon, and sweeten the lemonade with some cash flow sugar.

Dean Graziosi

Weekly Wisdom #171 – Lurking Lies and Frustrating Fibs?

October 20, 2014

Weekly Wisdom #171 - Lurking Lies and Frustrating Fibs?

Visit http://www.phoenixmag.com/lifestyle/valley-news/201005/infomercial-man-dean-graziosi/ Welcome to Dean’s Weekly Video Blog as we talk about how to make …


Weekly Video Blog #24 – How To Buy A House For A LOT Less Than The Seller’s Bottom Line

October 16, 2014

Visit http://www.amazon.com/Dean-Graziosi/e/B002G0AYAI Welcome to Dean’s Weekly Video Blog as we talk about how to make profits in today’s real estate market…


Attitudes Alone Can’t Buy Houses — But We Can Hope

October 14, 2014

You can get opinions about Zillow.com ranging from extremely negative to rave reviews. The negative views are more weighted toward real estate professionals who view Zillow as a threat, while many consumers see a great online resource with lots of bells and whistles for real estate shoppers. It’s a little of both, and some of the data from Zillow can be off the mark when it comes to estimates of value.

One area in which Zillow seems to be gaining credibility is in surveys and housing study results. The Zillow Housing Confidence Index is an example. The index increased over the summer from 63.7 in January to 64.2 at the end of the summer. Housing confidence increased in 11 of the 20 metropolitan areas tracked. Anything over a 50 indicates positive sentiment. So, generally people are feeling better about housing overall.

Zillow’s data also indicates a cautious attitude about value appreciation moving forward. Zillow’s Home Value Forecast predicts only a 3.1 percent growth in value through next year, as compared to 6.6 percent over the previous year.

When 10,000 questionnaires were returned, there was a distinct differentiation of attitudes based on age group as to whether the respondents were confident they would be able to afford a home someday. The percentages were:
• 18 to 34 age group – 82% confident
• 35 to 49 age group – 64% confident
• 50 to 64 age group – 48% confident

It’s nice to see that the younger generation is generally positive about the economy and I suppose about their job prospects. It’s hard to see why, when the percentage of working age adults actually holding a job in this country has been steadily declining. Perhaps there is an enthusiasm in youth that looks forward to better times. Or, maybe there is just a burned-out attitude that accelerates with age, accounting for the dropping confidence.

The value appreciation question is of crucial importance. The chart below is from the St. Louis Federal Reserve Bank, and shows that price appreciation of existing homes may be peaking. A chart of median new home sales prices looks very similar, with multiple tops and a move downward in the latest data.


This is an important trend to watch, as many home buyers currently own a home and are unable to move or upsize unless they can see some more appreciation. They’re still either underwater on their mortgage or they don’t have enough equity to sell and take any cash away from the closing table to use for another home.

So, what does the future hold?

Renting is still the lifestyle of the younger generation, but they seem to believe they’ll move from tenant to owner status at some point. An interesting quote from Stan Humphries, Zillow’s Chief Economist:

“It’s heartening to see younger renters express so much confidence in their ability to buy a home in coming years, because today’s renters by necessity are tomorrow’s buyers. Cynics might argue that these results represent no more than youthful exuberance, or perhaps some naiveté, but that’s missing the point. We need this generation to be confident and wanting to buy, regardless of the difficulties they face.”

Actually, the same Zillow survey showed that fully a third of the youngest age group expected home prices to rise by 6 percent per year over the next decade. That’s a pretty upbeat attitude, but if they are trying to buy, they’re shooting at a moving target. And, if wages don’t begin to improve more or if inflation worsens, they’re fighting on two fronts. So being confident and wanting to buy is nice, but there still has to be a down payment, affordable mortgage payments, and a sustainable job to pay them.

We’ll just have to wait and see, but my thoughts are that renting is going to continue to dominate the younger generation’s lifestyle. For investors big and small, buying and properly managing rental properties is still a good strategy. After all, if the younger generations do begin to buy into the market, investors have an asset that’s grown in value and they can always take their profits with a sale.
Dean Graziosi

Weekly Wisdom #274 – Real Estate Enhancement Drugs?

October 12, 2014

The Only enhancement drug you need is already inside of you.. Watch this weekly wisdom and discover what breaking the 4 minute mile has to do with your real …


Weekly Wisdom #182 – Reality TV and Real Estate

October 9, 2014

Visit http://www.deangraziosirealestateevents.com/ Welcome to Dean’s Weekly Video Blog as we talk about how to make profits in today’s real estate market… …


Weekly Video Blog #119 – Success Lessons from… A Toddler?

October 5, 2014

Visit http://www.deangraziosi.net/ Welcome to Dean’s Weekly Video Blog as we talk about how to make profits in today’s real estate market… This week Dean h…


‘Fix & Stay’ Your Way into a New Home

October 4, 2014

We read about it everywhere, and millions watch the reality TV shows on multiple networks about fix & flip real estate investing. It’s fun to see an investor turn an ugly duckling home into a swan and make a profit doing it. As with any “reality” television show, there are some behind-the-scenes things going on that help them in their profitability, such as getting material discounts for mentioning where the materials were purchased. But, fix & flip is still a viable real estate investment opportunity, even if you’re not a TV star.

But, it’s getting a little more difficult these days, as foreclosure inventories are shrinking and prices are rising. The investor must sharpen their pencil, cut the very best purchase deal they can, and then really “work the numbers” in the rehab part of the job. Some are backing away from fix & flip and moving into rental property investing or other real estate opportunities. There is a big opening here for the retail buyer to use a “fix & stay” strategy to move into a home that’s customized for their needs and a bargain buy as well.

You’re going to become a self-investing home buyer by locating the right foreclosure or distressed home that needs work. You’ll be choosing a home in an area you like and with the basic features you want, but it is in need of significant work to make it a livable home. Regular mortgage lenders won’t finance homes unless they’re already repaired and ready for move-in, so you’ll need to take a different approach.

Funding with the FHA 203k Loan

First, you need to know that when you find the right home with the characteristics you want and in a neighborhood you like that you have a funding resource ready. The FHA 203k loan is designed for the home buyer who will live in the home, but they need to have some work done before the long term mortgage is funded. In other words, the repairs and rehab must be a part of the loan and the work done before move-in. The 203k is for this specific purpose and the details can be found at www.hud.gov. There are two levels of funding depending on the amount of work the home needs:

• Streamlined 203k: The amount available for repairs is between $ 0 and $ 35,000, and the process for application is more streamlined due to the lower repair loan amount in relationship to the overall value of the home.
• Full 203k: This loan has a minimum amount of $ 5,000 and no maximum limitation. So, the home that needs a lot more work is probably going to fall into this more detailed lending process.

There are plenty of details; after all it does involve the government. But, you can locate a home that other retail buyers cannot buy, have it rehabilitated to move-in condition, and end up with the purchase price and the renovation and repairs all wrapped up into one neat mortgage. The total of the purchase and the repairs loans will of course have to meet LTV, Loan-to-Value, requirements. There is some flexibility in this stage, as you can select materials and change specifications as necessary to bring the rehab costs into line with what the lender wants.

What you’re doing is getting a contractor involved in the early stages to provide not just estimates but hard bids for the work. The process requires that no payments be made as the work progresses until it is inspected and completed as specified. You’re getting the benefit of these inspections and quality controls because the lender wants to be certain that their investment is covered.

The Buying Competition

Research the 203k loan, get some of the pre-approval process out of the way, and you can start shopping in a market with no retail buying competition. You will be competing with local real estate investors, but you have an advantage. The fix & flip investor must buy at a price that allows them a nice profit for the rehab work and for their time and effort. They’re usually selling to another investor, many times a rental property buyer. That investor buyer doesn’t want to pay full ARV (After Repair Value) for the home. The discount that buyer wants, when added to the profit the fix & flip investor wants, must be subtracted from the After Repair Value to come up with the price the fix & flip investor can pay for the unrepaired home.

This means that you can pay more for the home than the fix & flip investor because their profit isn’t a part of the picture, and you can work with full value, not a discounted value the rental property buyer wants to pay. Your lender will be looking at ARV for the final loan total calculations. If you want to jump through a few hoops and take a couple to four months to go through a purchase and rehab process, a Fix & Stay purchase might be perfect for you.

Dean Graziosi

Weekly Video Blog #144 – Get Connected for Profit

October 1, 2014

Visit http://deansmedia.com/ Welcome to Dean’s Weekly Video Blog as we talk about how to make profits in today’s real estate market… It’s nearly impossible…


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