0% INTEREST RATES? (Fed’s New Plan to Crush US Economy)

“Fed Setting Long-Range Goal of 0% Real Interest Rates,” says Barron’s. With most pundits predicting that the Fed will raise bank rates by .25 percent in December, the Barron’s headline seems to be saying that rates are actually headed lower. Given that Barron’s is one of our leading financial journals how is this possible?

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If the Fed follows widespread — but not universal — predictions and raises rates in December then why would Barron’s say that the goal is zero interest rates?

The answer is both interesting and troubling.

Imagine that you’re an investor with $1 million in cash. You could take that money and invest it in any number of ways. However, in looking at risk and reward and the possibility that future interest rates could be significantly higher than what we see today you decide to put your money into shorter-term investments with a 2 percent yield.

shutterstock_133086971We could look at this transaction and see that the investor has a $20,000 per year cash return. We could also look at the same transaction and say that the inflation rate is 2 percent. What we now have is an investment which produces $20,000 per year but since the value of money has fallen by 2 percent the real return after inflation is zero because the investor’s buying power has not increased.

“Money for nothing sounds good and helps stocks and bonds,” said Barron’s, but it’s a symptom of the economy’s dire straits.”

According to Barron’s, “the long-anticipated rise in interest rates is likely to be far smaller and gentler than the conventional wisdom embodied in the forecasts of the great majority of economists and analysts. In actuality, the long-run real cost of money probably is zero percent, after inflation is deducted, according to a key Fed study discussed at the meeting.”

If we begin to think about wealth in terms of buying power instead of cash dollars then the economic picture becomes much clearer — maybe too clear.

Real Estate Profits

Look at real estate values.

The National Association of Realtors says “the median existing-home price for all housing types in September was $221,900, which is 6.1 percent above September 2014 ($209,100). September’s price increase marks the 43rd consecutive month of year-over-year gains.”

Not to be outdone, the Federal Housing Finance Agency (FHFA) says in August, the latest month available, saw home values rise to a point where they are now just .9 percent below their March 2007 peak.

In other words, in the next six months or a year it’s likely that home prices will reach new historic highs nationwide, at least on a cash basis. Politicians will crow and homeowners will have billions of dollars in new equity.

This sounds great, but what about those “dire straits” mentioned by Barron’s.

Let’s go back to the investor who is taking in that hefty 0 percent return. In that case we looked at the value of the asset, $1 million, figured the annual return, 2 percent, and subtracted lost buying power — 2 percent — to see what the investment really generated.

If we try the same approach with real estate pricing the numbers look like this:

Back in June 2007, the median sale price of an existing home was $229,000 according to NAR statistics. The Bureau of Labor Statistics says that because of inflation it will take $262,681 in today’s dollars to buy the same goods and services as $229,000 in 2007.

shutterstock_136265849Now, unfortunately, typical homes today do not cost $263,000 or anywhere close. This tells us that real estate remains a huge bargain both in terms of cheap pricing and mortgage rates, rates which are now about 4 percent.

If you’re an investor who purchased in 2007 for $229,000 and sell in 2015 for $262,681 then after closing costs and marketing expenses it would seem that you come out even. Your buying power is stable but the government, in its wisdom, taxes investor “profits,” that extra $33,681 in this example. Subtract the money paid for sale and depreciation recapture taxes and now you have a buying power loss. Hopefully, the investor did better than a break-even return.

Would it make sense to be a renter in a 0 percent economy? Owners generally have equity as a result of mortgage amortization over time and tax benefits, advantages unavailable to renters. Imagine that Smith and Jones both pay $1,500 for shelter. Smith owns and has a fixed-rate mortgage. Jones rents. After 30 years Smith owns his property free and clear while Jones has had to contend with decades of rising rental rates. Seen another way, the children of Smith have lots to inherit while the children of Jones do not benefit from real estate equity or the tax advantages of ownership.

In a 0 percent economy there has to be a way to accumulate additional buying power and there is. For instance, if a real estate investor picks wisely and is rewarded with higher rental rates and appreciation above the rate of inflation then it becomes possible to generate significant profits which increase buying power and thus real wealth. (http://www.realtytrac.com/news/company-news/are-0-interest-rates-ahead/) 

Less Than Zero

The Federal Reserve and other central banks use their ability to set interest rates as a lever to move the economy. The stated goal is to obtain full employment while limiting inflation, but in practice central planning inherently creates winners and losers. The Fed’s “zero interest rate policy” — ZIRP — has quashed retirement accounts and demolished bond returns while at the same time elating homeowners in search of a mortgage and corporate borrowers who want to expand.

obama-shhhhhhhhBut with interest rates so low, the Fed does not have much room for manipulation. The ability to move rates higher is limited by the reality that an estimated $3.6 trillion overseas is now invested at negative interest, a by-product of the policies of other central banks. Alternatively, the Fed might press into uncharted territory and actually adopt NIRP – a negative interest-rate policy.

“Central banks,” explains a an October paper co-authored by John C. Williams, the President and CEO of the Federal Reserve Bank of San Francisco, “could aim to reduce nominal interest rates below zero, as has been done to a limited extent in several European jurisdictions. Even though a number of institutional hurdles may make it difficult to reduce nominal interest rates to levels that might be called for in response to a major recession, negative short-term interest rates in combination with forward guidance and asset purchases would provide central banks with a potent set of tools to respond to undesirably low inflation and economic weakness.”

The catch is that interest rates in the U.S. have essentially been at zero since 2008 and the definition of “short term” may be a lot longer than many people expect.

Bill Gross, the lead portfolio manager at Janus Capital explained in his November 2015 commentary that if “bond investors become increasingly convinced that policy rates will remain close to 0 percent for an ‘extended period of time’, then yield curves flatten; 5, 10, and 30 year bonds move lower in yield, which at first blush would seem to be positive for economic expansion (reducing mortgage rates and such). It would seem that lower borrowing costs in historical logic should cause companies and households to borrow and spend more. The post-Lehman experience, as well as the lost decades of Japan, however, show that they may not, if these longer term yields are close to the zero bound.”

Gross adds that “when our modern financial system can no longer find profitable outlets for the credit it creates, it has a tendency to slow and begin to inhibit economic and profit growth in the overall economy. With a near zero interest rate policy, central banks zero out the cost of time, bidding up existing asset prices, but failing to create sufficient new assets in the real economy.”

If Gross is correct we could be in for a decades-long period of financial inertia, a time when interest rates are stuck around zero and maybe below. It’s the financial equivalent of giving a party and nobody comes only in this case we have huge amounts of capital at low rates that no one wants to borrow.

In such an environment owning real estate at least presents the opportunity to convert debt to equity through amortization, tax benefits and the possibility of appreciation. That may not seem like a great return when compared with past decades, but hanging on in the new era is likely to be a far-better strategy than renting and no equity at all. (http://www.realtytrac.com/news/company-news/are-0-interest-rates-ahead/)

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Real Estate Investor, and friend to the Real Estate Freedom community, Rob Swanson just released a training video that goes through a probate investing scenario, step-by-step.

In this video you’ll learn:

Learn how to get probate leads that no one knows about by getting the houses released from the probate early — the families will love you. SEE THE FULL TRAINING VIDEO HERE!

**********************************************************************************

Why do 97.4% of Real Estate Investors FAIL?

This new video by Matt Andrews reveals why most Investors are dead before they complete their first flip and how you can insure that you are one of the 2.6% who profit on EVERY DEAL. The Secret is… SEE THE VIDEO HERE

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REAL ESTATE FREEDOM is a member of Community Buying Group, which entitles you to free benefits, such as their Lowe’s program. You save 5%+20% every day at Lowe’s, Sherwin Williams, and many others. The average user saves more than $1,600 a year.

CLAIM YOUR FREE MEMBERSHIP!

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HOW TO FLIP REO’S FOR MAXIMUM PROFIT: Part 2 – {Elite Investor Series}

Bank Owned Properties still represent one of the greatest opportunities for saavy Real Estate Investors in the market today. See how it works from the inside out. This 5 part series is an entire REO Investing Course in disguise, so take advantage of these implementable strategies! 

 

HOW TO EVALUATE THE PROPERTIES

After you absorb this educational blog you will be able to:

  • Qualify a property as a deal in 5 minutes or less
  • Determine the rental cap rate return of a property
  • Determine the ROI for any property
  • Understand CASHFLOW
  • Educate your investor buyers on various investment strategies

 

HOW DO I KNOW IF ITS A DEAL?

This is the question I get more than any other from aspiring real estate investors. It’s also the thing that new investors run from more than any- thing else. Maybe it’s an inherent fear of math. Trust me, I understand. Whatever the reason, people tend to avoid true, objective evaluation of property deals. In doing so, you are avoiding the one thing that can separate you from “a dime a dozen” Realtors and “wanna-be investors.” Don’t be that guy!

I hear it all the time from bird-dogs that bring me properties. “Matt, this property is a great deal. It will make you a lot of money. It will be easy to fix up and flip. It will be a great rental return.” I always laugh to myself when someone attempts to qualify the investment value of a property by using descriptive terms like “great deal”, “a lot of money”, or “easy to flip”. These terms are totally subjective. They tell me nothing about the property and let me know that you have no idea what you are talking about.

Here’s a tip: If you don’t know what a good deal is, you can’t point it out to others. If you don’t know how to determine why a property is a good investment, why would anyone buy it from you?

Look at those inadequate descriptive terms above and ask yourself, “Would I put my hard-earned money into a property described like that?” I seriously doubt it. Here is what I would want to hear from a trusted real estate partner:

“Matt, I have a property that I think will meet your buying criteria. This property can be bought and renovated for around 65-70% of its after-rehab value. I calculated the ARV using real comps of similar homes sold within the last 90 days. You are looking at a 20-25% ROI.”

Or if it’s a rental investment I would want to hear:

“Matt, this rental property will yield a cap rate of 13% after all expens- es, which include insurance, taxes, property management, vacancy and maintenance reserves.”

Do you see the difference between the first examples and these last two? The last two clearly show a knowledge of the real estate investments that you are attempting to sell. You are saying to your prospect, “I am not just hawking prop- erties. I analyze and qualify true investment potential.” This kind of knowledge and understanding of real estate fundamentals will separate you from the crowd and bring real value to your investors.

 

This next section will be a little challenging, especially for those of you who are as mathematically challenged as I am. But trust me, if I can get it, anyone can! At the end of the section, I will give you some tools and some short cuts, so don’t worry. Okay, put on your analytical hat, because here we go!

shutterstock_185901971Return on Investment (ROI)

Sometimes known just as RETURN, ROI is the ratio of money gained or lost on an investment relative to the amount of money invested. ROI is a measure of investment profitability, not a measure of investment size. The amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or net income/loss. The money invested may be referred to as the asset, capital, principal, or the cost basis of the investment. ROI is usually expressed as a percentage and indicates cash flow from an investment to the investor over a specified period of time, usually a year. If someone says that they made a 20% return, they usually mean that the investment made them a 20% gain that year.

In general, the higher the investment risk, the greater the potential investment return, and the greater the potential investment loss.

So, what is a good return on investment for a property that you will buy, fix, and flip? You will get many different answers depending on whom you ask, but here is my general rule of thumb:

After renovations, I want to be into a property for 65-70% of its current val- ue. For example, if a property is worth $100k, then I do not want to have any more than $70k invested in that property. Assuming I pay Realtor fees, buyer concessions, and closing costs totaling $10k, my profit will be $20k — roughly a 30% return on investment. I arrived at that percentage by dividing 20 (my profit) by 70 (my invested capital). Make sense? Good. Now you should be able to use the same process to quickly calculate the investment return for any flipped property you are selling. Your investor buyers will love you for being able to explain how this is done and they will value your input greatly.

NET OPERATING INCOME 

Generally, NOI is defined as the yearly gross income less operating expenses.

CAP RATE

When someone says that a property is a 10 cap, what they mean is the prop- erty will produce 10% return. Basically, cap Rate is the ratio between the net operating income produced by an asset and its capital cost (the original in- vestment amount). commit this simple formula to memory.

For example, if you bought a house for $100,000 and it produces $10,000 in annual net operating income, then:

The asset’s capitalization rate is ten percent; one-tenth of the property’s cost is paid by the year’s net proceeds.

A Word about other Wholesalers: In any decent investment market, there will be opportunists tak- ing advantage of the foreclosure crisis. FIND THEM. See what they are selling and for what price. They may be your competi- tion, but they are also the best way of gauging the underground bank-owned fluctuating price line. Subscribe to their lists, talk to them, keep an eye on their inventory at all times. See what moves and what they get stuck with. Like I said, they’re your competition, but they can also be your best source for determin- ing the ever-changing value of your property market. USE THEM!

shutterstock_78123298How to Get Good Comps:

www.Zillow.com: If you don’t have access to the MLS, this is the next best thing. This is what I use to quickly search properties when I am on the road. Not surprisingly, there’s an app for that. Enter your property address and it will bring up a variety of information. The most important thing to look at is the “zestimate,” their valuation of the property. These values aren’t always 100% accurate, but they are a good starting point. The other thing to look at is found halfway down the page on the right side. “Similar homes for sale” will show you a sample of comparable homes on the market. “Nearby similar sales” will show you all available similar homes that sold in the last year. You will want to focus on the properties that sold in the last 90 days.

www.Eppraisal.com : This is a good secondary source for property value estimate, but doesn’t have a fraction of the info you find on zillow. It’s still good for a comparison though.

www.Redfin.com: Not available in all areas of the US, but a good source for property info and val- ues. (These guys are mostly out west right now. Sorry, east coasters!)

MLS Comps/Realtors:  This is the best source there is. However, it can only be accessed by Realtors. This is the source for the most accurate property details and real-time compara- ble sales. However, it is limited to listed (actively or previously) properties. This won’t help you see properties sold privately between owners, auction properties, or properties bought directly from the bank without a broker involved.

 

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Real Estate Investor, and friend to the Real Estate Freedom community, Rob Swanson just released a training video that goes through a probate investing scenario, step-by-step.

In this video you’ll learn:

Learn how to get probate leads that no one knows about by getting the houses released from the probate early — the families will love you. SEE THE FULL TRAINING VIDEO HERE!

**********************************************************************************

Why do 97.4% of Real Estate Investors FAIL?

This new video by Matt Andrews reveals why most Investors are dead before they complete their first flip and how you can insure that you are one of the 2.6% who profit on EVERY DEAL. The Secret is… SEE THE VIDEO HERE

**********************************************************************************

REAL ESTATE FREEDOM is a member of Community Buying Group, which entitles you to free benefits, such as their Lowe’s program. You save 5%+20% every day at Lowe’s, Sherwin Williams, and many others. The average user saves more than $1,600 a year.

CLAIM YOUR FREE MEMBERSHIP!

**********************************************************************************

HOW TO FLIP REO’S FOR MAXIMUM PROFIT: Part 1 – {Elite Investor Series}

Bank Owned Properties still represent one of the greatest opportunities for saavy Real Estate Investors in the market today. See how it works from the inside out. This 5 part series is an entire REO Investing Course in disguise, so take advantage of these implementable strategies! 

 

When I started in this business in 2000, the majority of the real estate deals were coming to us through distressed owners. We would market to the homeowner directly and attempt to negotiate a deal that would help all parties. We would advertise in the Yellow Pages, newspapers, and put out bandit signs to get the homeowner to call us directly. There was a very human element to it as many of those deals were made at the seller’s kitchen table. It’s called Buyer to Seller Direct. This is still a great method to use in today’s market.

In 2007, when the bottom dropped out of the market and the foreclosure crisis started, acquiring bank-owned homes proved to be the greater opportunity. Sud- denly, there were more properties on the market than ever before at prices lower than they had ever been before. Smart investors started scooping up ridiculous deals. In Florida, we started paying $30k for properties that would have sold for $125k just a few months earlier. Today, there are a ton of properties available, but limited financing and lending available. This leads to a “perfect storm” for cash investors able to scoop up good deals.

But you can’t just choose any old property. You have to know what you are doing. To be successful in identifying, acquiring, and selling these properties you need to have a system. This book will equip you with a proven system and set you on the path to success.

1_123125_123073_2207907_2226910_090922_exp_fmj.jpg.CROP.original-originalConsider this your Investment Boot Camp.

You need to jump into this thing full force. Tackle one obstacle at a time and take it down hard. This isn’t the fun part (that comes later when you start cashing checks), but developing a solid knowl- edge base is crucial to your success. Bust through this information, memorize it, and then move forward.

 

 

Terms and Definitions:

I know vocabulary was your favorite part of grade school, right? Well, you are in luck (at least I won’t make you spell them)! It’s important that you don’t skip over this section. You may even want to go back and review these terms a few times. You want them to become part of your vernacular. Memorize these terms and you will drastically reduce the number of times you look stupid in front of more seasoned professionals. Nothing is worse for your business than clearly not knowing what you are talking about. Don’t be that guy! I have boiled it down to the most common and important terms for you. Here we go!

APPRAISAL:

Professional service provided by a registered, licensed, or certified appraiser or real estate licensee to produce an estimate of value.

ASSESSED VALUE:

Worth established for each unit of real property for tax purposes by a county property appraiser.

ASSIGNEE:

Person to whom a right or interest is transferred.

ASSIGNMENT:

Written instrument that serves to transfer the rights or interests of one person to another.

ASSIGNOR:

Person who gives his or her legal rights or interests to another person.

BUYER’S MARKET:

The supply of available properties exceeds the demand.

CAPITALIZATION RATE:

The relationship between the net income from a real estate investment and the present value.

CLOSING:

Final settlement between the buyer and seller; the date on which title passes from the seller to the buyer.

CLOUD ON TITLE:

Any defect, valid claim, or encumbrance that serves to impair the title or curtail an owner’s rights.

COMMISSION:

compensation paid to a broker or sales associate for successfully concluding a real estate transaction.

COMPARATIVE MARKET ANALYSIS (cMA):

An informal estimate of market value performed by a real estate licensee for the seller to assist in arriving at an appropriate listing price. Or if working with the buyer, an informal estimate of market value to assist the buyer in arriving at an appropriate offering price.

CONVENTIONAL MORTGAGE:

A real estate loan that is neither FHA-insured nor VA-guaranteed.

COUNTEROFFER:

A rejection of the original offer by proposing a new offer, thereby terminating the original offer.

DEED:

A type of conveyance; a written instrument to transfer title to real property from one party to another.

DEPOSIT:

Earnest money or some other valuable consideration given as evidence of good faith to accompany an offer to purchase or rent.

DOCUMENTARY STAMP TAX ON DEEDS, STATE:

Tax required on all deeds or other documents used as conveyances. The charge is based on the total purchase price. Also called Doc Stamps.

FEDERAL HOUSING ADMINISTRATION (FHA):

Insures mortgage loans made by FHA-approved lenders on homes that meet FHA standards in order to make mortgages more desirable investments for lenders

FORECLOSURE:

A court process to transfer title to real property used as security for debt as a means of paying the debt by involuntary sale of the property.

FREDDIE MAC:

A secondary mortgage market institution that buys and sells conventional, FHA, and VA loans

FREE AND CLEAR:

Title to real property that is absolute and unencumbered, no mortgage

INTEREST:

The price paid for the use of borrowed money.

LEASE:

An agreement that does not convey ownership but does convey possession and use for a period of time and for compensation.

LIEN:

A claim on property for payment of some obligation or debt.

LIMITED LIABILITY COMPANY (LLC):

An alternative, hybrid business entity with the combined characteristics and benefits of both limited partnerships and S corporations.

LOAN-TO-VALUE (LTV) RATIO:

Relationship between amount borrowed and appraised value (or sale price) of a property.

MARKET VALUE:

The most probable price a property will bring from a fully informed buyer, will- ing but not compelled to buy, and the lowest price a fully informed seller will accept if not compelled to sell.

MULTIPLE LISTING SERVICE (MLS):

An arrangement among members of a real estate board or exchange that al- lows each member broker to share listings with other members so that greater exposure is obtained and a greater chance of sale will result.

NET INCOME:

Profit from property or business after expenses have been deducted; effective gross income less operating expenses.

NET OPERATING INCOME (NOI):

The resulting amount when all operating expenses are subtracted from effec- tive gross income.

OFFER:

An intentional proposal or promise made by one party to act or perform, pro- vided the other party acts or performs in the manner requested.

OWNER’S POLIcY:

Title insurance issued for the total purchase price of the property to protect the new owner against unexpected risks.

SELLER’S MARKET:

The demand for available properties exceeds the supply.

 

shutterstock_201575579The Cycle of an Reo Property

Now that you understand the terms, this will help you understand how the REO process flows:

Every REO was at one point owned by an individual or an entity other than the bank. The owner was likely unable to make the mortgage payment and so went into default. (At this point many people decide to pursue a short sale in order to avoid foreclosure.)

After the owner misses several payments (how many depends on the lender), the property is offered at auction. If the property does not sell, the bank takes possession of the property and assigns it to an asset manager. The asset manager typically works directly with the REO Broker, a Realtor who special- izes in foreclosures. The REO Broker lists the property and makes it available to the general public, including investors.

Move onto the next blog in the series here!

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Real Estate Investor, and friend to the Real Estate Freedom community, Rob Swanson just released a training video that goes through a probate investing scenario, step-by-step.

In this video you’ll learn:

Learn how to get probate leads that no one knows about by getting the houses released from the probate early — the families will love you. SEE THE FULL TRAINING VIDEO HERE!

**********************************************************************************

Why do 97.4% of Real Estate Investors FAIL?

This new video by Matt Andrews reveals why most Investors are dead before they complete their first flip and how you can insure that you are one of the 2.6% who profit on EVERY DEAL. The Secret is… SEE THE VIDEO HERE

**********************************************************************************

REAL ESTATE FREEDOM is a member of Community Buying Group, which entitles you to free benefits, such as their Lowe’s program. You save 5%+20% every day at Lowe’s, Sherwin Williams, and many others. The average user saves more than $1,600 a year.

CLAIM YOUR FREE MEMBERSHIP!

**********************************************************************************

How to Calculate Cash on Cash Return (New Infographic)

It’s one of the most important numbers for any investor to know. Check out the infographic below…

 

Cash on Cash Return

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Why do 97.4% of Real Estate Investors FAIL?

This new video by Matt Andrews reveals why most Investors are dead before they complete their first flip and how you can insure that you are one of the 2.6% who profit on EVERY DEAL. The Secret is… SEE THE VIDEO HERE

**********************************************************************************

Ready to take the next step in your Real Estate Investing business?

Register for our free Training here!

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REAL ESTATE FREEDOM is a member of Community Buying Group, which entitles you to free benefits, such as their Lowe’s program. You save 5%+2% every day at Lowe’s, Sherwin Williams, and many others. The average user saves more than $1,600 a year.

CLAIM YOUR FREE MEMBERSHIP!

**********************************************************************************

 

Flip_Houses_Now_00

The “Freedom Files” is the Single Easiest Way to get started in Real Estate Investing.

We teach you how to implement our strategies step by step so you can start Flipping Properties and making money NOW! 

 

It’s starts with detailed trainings that cover…

  • Creating your Real Estate Investing Business Plan
  • Market Research: How to Assess deals & Identify Comps
  • Assembling Your Real Estate Team
  • How to Find Exclusive Below Market Properties
  • How to Locate Serious Buyers for Your Investment Deals
  • Putting the Deal together (From Contract to Closing)

 

The Freedom Files also includes all the tools you need to succeed!

*** Freedom Files Contracts & Documents Package: The Actual Contracts & Documents that we use daily in our Real Estate Business to Flip Houses.

*** Freedom Files Email & Phone Scripts: These are our personal templates that have been optimized over hundreds of conversations negotiating deals with Investor Buyers, Distressed Sellers, and Private Lenders.

*** Freedom Files Black Book of Contacts: Our personal business contacts become yours to work with as you scale up your business. Enough said!

We teach you how to implement our strategies step by step so you can start Flipping Properties and making money! 

Freedom Files

 

Click here to get the Freedom Files

 

Need more info? Click here for full details

 

 

Most Expensive Housing Market in the US (Special Report)

A piece of the American Dream can cost anywhere from $75,000 to $2.3 million. It all depends on where you live. Newport Beach, California, is the priciest place to live with the average list price for a four-bedroom, two-bathroom home at $2,291,764, according to a new report from Coldwell Banker Real Estate.

 

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The average listing price for a four-bedroom, two-bathroom home nationwide is $302,632, but buyers can snag one for under $135,000 in all 100 of the most affordable markets. At the other end of the spectrum, the 28 most expensive markets have an average listing price of at least $1 million, the report found.

In Cleveland, Ohio, which is the most affordable market, the average sale price is $74,502 — 30 times less expensive than a home in Newport Beach.

When it comes to affordability, Middle America dominates with 45% of the most affordable markets located in the Midwest.

“Many of these markets were the very first to go into a housing correction,” said Budge Huskey, president and CEO of Coldwell Banker Real Estate. “These areas have had a long way to recovery, they are still doing so.”

Though half of the 100 most expensive housing markets in the U.S. are located in California, it’s still not the most expensive state to buy a home. That honor goes to Hawaii, followed by Massachusetts, according Huskey.

While the booming tech industry caused home prices to explode in many areas in California, especially in and around Silicon Valley, Huskey pointed out many markets are still affordable in the state. “You can drive 30 to 45 minutes outside these areas and be in a very different price point.”

http://money.cnn.com/2015/11/10/real_estate/most-and-least-expensive-housing-markets/index.html?iid=Lead

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Real Estate Investor, and friend to the Real Estate Freedom community, Rob Swanson just released a training video that goes through a probate investing scenario, step-by-step.

In this video you’ll learn:

Learn how to get probate leads that no one knows about by getting the houses released from the probate early — the families will love you. SEE THE FULL TRAINING VIDEO HERE!

**********************************************************************************

Why do 97.4% of Real Estate Investors FAIL?

This new video by Matt Andrews reveals why most Investors are dead before they complete their first flip and how you can insure that you are one of the 2.6% who profit on EVERY DEAL. The Secret is… SEE THE VIDEO HERE

**********************************************************************************

REAL ESTATE FREEDOM is a member of Community Buying Group, which entitles you to free benefits, such as their Lowe’s program. You save 5%+20% every day at Lowe’s, Sherwin Williams, and many others. The average user saves more than $1,600 a year. CLAIM YOUR FREE MEMBERSHIP!

**********************************************************************************

 

Mortgage Rates GET HIGH (30 Year highest since July)

Mortgage rates for 30-year U.S. loans rose to the highest level since the end of July as a strong jobs report increased the likelihood that the Federal Reserve will boost borrowing costs for banks.

 

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The average rate for a 30-year fixed mortgage was 3.98 percent, up from from 3.87 percent last week, Freddie Mac said in a statement Thursday. The average 15-year rate climbed to 3.2 percent from 3.09 percent, according to the McLean, Virginia-based mortgage-finance company.

Last week’s jobs report sent Treasury yields soaring as the Fed prepares to decide whether to raise its benchmark rate from near zero at its December meeting. The unemployment rate fell to 5 percent last month, the lowest level since April 2008.

“We think the markets finally believe a December rate hike is a likely outcome,” Erin Lantz, vice president of mortgages at real estate website Zillow, said in a telephone interview Wednesday. “It’s safe to say rates are trending upwards, but how much and how quickly is anybody’s guess.”

Low borrowing costs have given a boost to the housing market. Sales of previously owned homes jumped in September to the second-highest level since February 2007, data from the National Association of Realtors show.

http://www.bloomberg.com/news/articles/2015-11-12/u-s-mortgage-rates-rise-with-30-year-at-highest-since-july

 

 

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Real Estate Investor, and friend to the Real Estate Freedom community, Rob Swanson just released a training video that goes through a probate investing scenario, step-by-step.

In this video you’ll learn:

Learn how to get probate leads that no one knows about by getting the houses released from the probate early — the families will love you. SEE THE FULL TRAINING VIDEO HERE!

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Why do 97.4% of Real Estate Investors FAIL?

This new video by Matt Andrews reveals why most Investors are dead before they complete their first flip and how you can insure that you are one of the 2.6% who profit on EVERY DEAL. The Secret is… SEE THE VIDEO HERE

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REAL ESTATE FREEDOM is a member of Community Buying Group, which entitles you to free benefits, such as their Lowe’s program. You save 5%+2% every day at Lowe’s, Sherwin Williams, and many others. The average user saves more than $1,600 a year. CLAIM YOUR FREE MEMBERSHIP!

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I SEE DEAD PEOPLE! (The Secret World of Probate Property Investing)

Most real estate investors have no idea that you can release a house (at 32 cents on the dollar) from probate and then buy it before any other investor even knows about the deal. Read on to discover one of the best kept secrets in Real Estate Investing today…

 

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Probate real estate investing is one of my favorite strategies and is a much less crowded field than some of the other REI strategies like foreclosures, short sales, etc. Success in the business of probate investing is determined by a combination of 2 main components; Lead Generation and Negotiation.

Family members begin the probate process at different times.  Sometimes the process is started almost immediately. Other times the family members just cannot deal with settling the estate until some time has passed. They need time to grieve. In so many cases, it is just an overwhelming task for those left behind.

 

Not only does the executor need to sell any property that is in the estate, but they typically need to sort through a lifetime of personal belongings. Often the family members have a sense of guilt over disposing of things that played such an important part of this person’s life, so they just put off the whole process.

Experienced investors ignore probate because they think it’s too hard. And the so-called Real Estate “Gurus” don’t ever talk about it because they don’t understand it either.  It sounds complicated.

Real Estate Investor, and friend to the Real Estate Freedom community, Rob Swanson just released a training video that goes through a probate scenario, step-by-step. In this video you’ll learn:

Learn how to get probate leads that no one knows about by getting the houses released from the probate early — the families will love you. SEE THE FULL TRAINING VIDEO HERE!

 

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Why do 97.4% of Real Estate Investors FAIL?

This new video by Matt Andrews reveals why most Investors are dead before they complete their first flip and how you can insure that you are one of the 2.6% who profit on EVERY DEAL. The Secret is… SEE THE VIDEO HERE

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Ready to take the next step in your Real Estate Investing business?

Register for our free Training here!

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REAL ESTATE FREEDOM is a member of Community Buying Group, which entitles you to free benefits, such as their Lowe’s program. You save 5%+2% every day at Lowe’s, Sherwin Williams, and many others. The average user saves more than $1,600 a year. CLAIM YOUR FREE MEMBERSHIP!

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HOW TO FIND GOOD COMPS {Investor Training Video}

No matter what phase of the Real Estate Investing game you are in, your business largely depends on being able to determine accurate comps in a minimal amount of time. In this new video, Matt Andrews breaks down the quickest way to get your initial comp values.

 

 

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Why do 97.4% of Real Estate Investors FAIL?

This new video by Matt Andrews reveals why most Investors are dead before they complete their first flip and how you can insure that you are one of the 2.6% who profit on EVERY DEAL. The Secret is… SEE THE VIDEO HERE

**********************************************************************************

Ready to take the next step in your Real Estate Investing business?

Register for our free Training here!

Screen Shot 2015-10-28 at 3.21.53 PM

**********************************************************************************

REAL ESTATE FREEDOM is a member of Community Buying Group, which entitles you to free benefits, such as their Lowe’s program. You save 5%+2% every day at Lowe’s, Sherwin Williams, and many others. The average user saves more than $1,600 a year. CLAIM YOUR FREE MEMBERSHIP!

**********************************************************************************

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1st Time Home Buyers Lowest in 30 Years {New Report}

The share of first-time buyers fell to the lowest level in nearly three decades, just 32 percent of all purchases, according to the National Association of Realtors’ annual profile of buyers and sellers. Investors are not included in the survey.

 

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The share of buyers saying their primary reason for buying was the simple desire to own rose overall and most dramatically among first-time purchasers. 

“There are several reasons why there should be more first-time buyers reaching the market, including persistently low mortgage rates, healthy job prospects for those college-educated, and the fact that renting is becoming more unaffordable in many areas,” said Lawrence Yun, the Realtors’ chief economist. “Unfortunately, there are just as many high hurdles slowing first-time buyers down. Increasing rents and home prices are impeding their ability to save for a down payment, there’s scarce inventory for new and existing-homes in their price range, and it’s still too difficult for some to get a mortgage.” 

Debt was the primary reason cited by first-time buyers for the delay in home ownership. They said debt kept them from saving for a down payment for at least three years. More than half of those citing debt pointed to student-loan debt as the main culprit.

While debt continues to stall younger buyers, their attitude toward home ownership appears to be making a dramatic move. Sixty-four percent of first-time buyers surveyed said their primary reason for purchasing was the “desire to own.” That is up from 53 percent just one year ago. For repeat buyers, ownership tied with the desire for a larger home. The view of home ownership as a good investment also moved slightly higher to 80 percent; 43 percent of those surveyed said they see housing as a better investment than stocks.

The report comes as the home ownership rate in the United States sits at the lowest level in a half century, 63.4 percent. It did, however, stop falling in the third quarter, the first time that has happened in two years.

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Cash is still playing an outsized role in the housing market today. While the majority of buyers do finance their homes with mortgages, that share dropped slightly in the latest survey. Nearly half of first-time buyers said the mortgage applications and approval process was more difficult than they expected.

The average FICO credit score for those getting a mortgage is historically high today, but more borrowers are getting approved, according to an analysis released Thursday by Zillow. Loan approvals are especially improving among middle-income black and Hispanic applicants, although they still lag the overall market. 

A few things that have not changed in housing — the median age of buyers (31), sellers (54), and the share of multigenerational households buying (13 percent), according to the Realtors survey. Builders have been focused on what they see as growing multigenerational housing demand, adding separate entrances and second kitchens.

Today’s buyers are using the websites and mobile apps at an ever-increasing pace to find their potential purchases. They are also moving faster, buying in an average 10 weeks compared with 12 between 2009 and 2013. The median time on the market for recently sold homes stayed at four weeks for the second-straight year. This is far less time than historical norms and is due to the still very low inventory of homes for sale that plagues most of the country.

Rising home prices are giving sellers bigger equity gains and consequently bigger sale profit. More buyers are also seeking larger homes again, and slightly more are heading to the suburbs to buy. The market continues to be dominated by married couples who are seeing their household income increase. The share of single female buyers, while higher than male buyers, dropped to the lowest level in 14 years.

(http://finance.yahoo.com/news/first-time-homebuyers-fall-desire-150004872.html)

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**********************************************************************************

Why do 97.4% of Real Estate Investors FAIL?

This new video by Matt Andrews reveals why most Investors are dead before they complete their first flip and how you can insure that you are one of the 2.6% who profit on EVERY DEAL. The Secret is… SEE THE VIDEO HERE

**********************************************************************************

Ready to take the next step in your Real Estate Investing business?

Register for our free Training here!

Screen Shot 2015-10-28 at 3.21.53 PM

**********************************************************************************

REAL ESTATE FREEDOM is a member of Community Buying Group, which entitles you to free benefits, such as their Lowe’s program. You save 5%+2% every day at Lowe’s, Sherwin Williams, and many others. The average user saves more than $1,600 a year. CLAIM YOUR FREE MEMBERSHIP!

**********************************************************************************

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DON’T BURST MY BUBBLE! (Why Real Estate Markets Could Quickly Stall in 2016)

Our real estate market is now powered by mortgage rates which are less than half the norm seen by our parents and grandparents. What does this mean for Real Estate Investors?

 

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Real estate is pretty much a numbers game and the two most important figures are home prices and mortgage rates.

For much of this year the numbers have jelled very nicely and the result has been both rising home values and increased sales. Such outcomes have been made possible in large measure by the fact that interest rates have been largely below 4 percent, but unfortunately that does not mean such rates are in any way permanent.

If history is any guide then we mention what the history actually is: The usual mortgage rate during the past 40 years or so has been 8.6 percent according to Standard & Poors. That means our real estate market is now powered by mortgage rates which are less than half the norm seen by parents and grandparents.

But what if rates increase? How would that impact real estate sales? What would happen to home prices?

To answer these questions we need to consider several factors:

First, according to the Census Bureau the U.S. median household income was $51,939 in 2013.

Second, the typical down payment according to NAR is 10 percent. First-time buyers usually purchase with 4 percent down while repeat buyers can be expected to bring 13 percent to closing.

Third, to have a “qualified mortgage” or QM borrowers typically cannot devote more than 43 percent of their income to recurring expenses such as auto payments, credit card bills, student loans and housing costs — principal, interest, taxes and insurance (PITI).

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As it happens the 43 percent debt-to-income (DTI) limit impacts a huge majority of all borrowers. The National Association of Realtors says that in the second quarter only 2.6 percent of all loan originations were for non-QM financing, mortgages which did not have to meet the 43 percent DTI standard. Seen the other way, 97.4 percent of all loans met QM benchmarks.

You can see where this is going. If our model buyers have an annual income of $51,939 they earn $4,328.25 per month. Forty-three percent of $4,328.25 is $1,861.15. If we subtract an estimated $100 a month for property insurance and $250 monthly for property taxes they have $1,511.15 remaining for mortgage payments — if they do not have any of those nasty recurring bills. At 3.9 percent, roughly today’s fixed rate for 30-year financing, they can get a loan for $320,384.

So far our buyers are doing very well because in August the median price for an existing home was $230,200 according to NAR.

If we leave our fantasy world for a moment and say that our prospective buyers DO have monthly bills then things change. If we set aside $200 a month for student loans, $250 for a car loan and $150 for credit card debts then we reduce our $1,861.15 by $600 to $1,211.15. Knock off property taxes and insurance ($100 plus $250 = $350) and $911.15 remains for mortgage principal and interest. At 3.9 percent our borrowers can now afford a $193,176 mortgage.

The principle here is always the same: Given a particular debt-to-income ratio — 43 percent in this case — any increase in defined costs such as student debt, auto financing, credit card bills, property insurance or property taxes reduces the dollars available for principal and interest. Going further, a higher interest rate is simply a cost with the same impact; it limits the ability of the borrower to qualify for financing.

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The Fed & Interest Rates

For much of the past year there has been ongoing speculation regarding when the stars would align and the Federal Reserve would raise interest rates. The presumption is that if the Fed increases rates for banks virtually all forms of interest will rise, including mortgages. However, it should be pointed out that mortgage rates may not move in lock-step with the Fed because the Fed does not set mortgage rates and the banking system is now awash with capital.

For the sake of discussion let’s say that the Fed increases rates by .25 percent and that mortgage rates follow suit. Now our borrowers face a 4.15 percent interest rate so their maximum loan amount is lowered to $187,440. The quarter percent rate increase has reduced the ability of our model borrowers to finance by $5,736.

Is this a big deal? You bet. The borrowers now have less financing capacity so they have to cut back on any bid they might make for a home. Not only is this a problem for marginal borrowers, it’s also a problem for sellers because suddenly their pool of potential purchasers is smaller so they may have to lower their asking price.

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The argument can be made that 4.15 percent financing is still less than half the rate seen during the past few decades, an average of 8.6 percent according to Standard & Poors. This is entirely true but for borrowers such an observation is merely an academic curiosity, the reality is that their ability to finance goes down with a rate increase. Because of the DTI limit any borrower who wants a qualified mortgage instantly feels the sting of higher rates.

If the Fed does raise rates it will perhaps start with a .25 percent increase and then, over time, try to move rates higher in an effort to head off inflation. If mortgage rates move higher, then the marketplace impact will be more visible.

For example, with a 5 percent interest rate a $911.15 monthly payment for principal and interest only finances $169,730 — a $23,446 drop from $193,176. At 8.6 percent — that historic norm — our borrowers can only afford a $117,414 mortgage. That’s a shocking $75,762 less than $193,176, our baseline figure.

Is there a reason why buyers might now rush to enter the marketplace as mortgage rates rise? Yes. We can expect that some borrowers will finance and refinance because they will want to catch rates before they rise further.

The Fed now faces more and more pressure to raise rates if only because it has discussed the idea so often. When it finally does raise rates the housing market will wobble, home prices in many markets will stall, and sale volume will drop. The Fed is keenly aware of this reality, one reason — perhaps — it has not raised rates so far this year.

(http://www.realtytrac.com/news/mortgage-and-finance/why-real-estate-markets-could-quickly-stall/)

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Why do 97.4% of Real Estate Investors FAIL?

This new video by Matt Andrews reveals why most Investors are dead before they complete their first flip and how you can insure that you are one of the 2.6% who profit on EVERY DEAL. The Secret is… SEE THE VIDEO HERE

**********************************************************************************

Ready to take the next step in your Real Estate Investing business?

Register for our free Training here!

Screen Shot 2015-10-28 at 3.21.53 PM

**********************************************************************************

REAL ESTATE FREEDOM is a member of Community Buying Group, which entitles you to free benefits, such as their Lowe’s program. You save 5%+2% every day at Lowe’s, Sherwin Williams, and many others. The average user saves more than $1,600 a year. CLAIM YOUR FREE MEMBERSHIP!

**********************************************************************************

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