Reevaluate your investing strategy

Posted on September 2, 2011 by xdnus

While real estate investments, principally rental property, make up the core of our investing strategy, its important to hedge risk by employing your capital across a diverse set of asset classes.  As active stock market participants, we’re big fans of the people over at PowerTradingRadio.com. They’re investment education specialists who believe that everyone can take control of their entire spectrum of investments  with the proper education and cut out financial servicers as middle men.  After all, who has a more vested interest in your capital appreciation – you or a financial adviser who is paid based on fees generated and assets under management?

Generally speaking, the daily podcast and radio show by Power Trading Radio focuses on stocks or foreign exchange markets.  However, yesterday’s show featured real estate investment expert Diana Hill.  Her segment on the different strategies that can be employed to make money with real estate is one of the most sophisticated and concise pieces on the full potential of real estate investing that we’ve come across in a long time.

Check out the below link for the MP3 download of the Podcast:

Power trading radio Real Estate Podcast – September 1st, 2011

Diana couldn’t go into depth on the different strategies in the brief segment on the show, but hopefully these ideas will get the juices flowing and cause you to step back and reevaluate the way you’re approaching your current investments.  Are there revenue or funding streams you may be missing?  Does your return time frame match with your purchasing strategy?

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Shadow Inventory Dropping

Posted on August 25, 2011 by xdnus

There is quite the mixed bag of real estate related news out this week.  And as with the general economy as a whole it’s a bit difficult to gleam any real certainty as to market direction based on the latest figures.

To start, Standard & Poor’s, who you may know from the crater they left in your retirement accounts a few weeks ago, reports that bank shadow inventory shrunk in the second quarter to 47 months supply, dropping from 52 months in the first quarter of this year.  The dollar value of the loans on these properties also fell $28 billion quarter over quarter to $405 billion.

In terms of total number of homes, these figures still point to somewhere between 4 and 5 million homes hanging as supply over the market.  While the supply may be dwindling, it will still take a long time to work through.

And do you know what won’t help us work though the current inventory? Mortgage applications falling to 15 year lows despite the lowest mortgage rates in decades.  The Mortgage Bankers Association said today that home mortgage applications fell 5.7% to the lowest level since December 1996. Refinancing applications now make up nearly 80% of the market.

Stock market volatility, economic uncertainty and just a complete lack of faith that the U.S. government has any answers to help pull us through the current mess have home buyers gun shy.  Until employment growth picks up, don’t look for anything to change.

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Bank of America Paying to Have Foreclosures Destroyed

Posted on August 2, 2011 by xdnus

Bank of America is taking a new approach to dealing with their unsellable foreclosed home inventory.  In Cleveland, Detroit and Chicago, the lender is donating homes and paying local agencies to demolish them.  They plan to roll the program out to more cities in the future.  At the same time, Wells Fargo, Citigroup, JPMorgan and Fannie Mae are considering or already participating in similar programs of their own.

With nearly 1.7 Million foreclosed homes in some stage of foreclosure many people believe the only way to stabilize home prices is by reducing the supply.  The best way to do this they argue is to get the garbage off the market by destroying it.    Bank of America will pay as much as $7,500 toward demolition costs and the reclaimed land will be used for development, green space and urban farming.

Most of the homes being demolished are worth less than $10,000 and in such a state of disrepair that it would be economically unviable to make them inhabitable.  Donating the homes also generates some desperately needed good PR for the reviled (with good reason we might add) Bank of America.  That said, we suspect the donations are more about lowering carrying costs and booking the fair market value of the home’s donation as a tax deduction.

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Foreclosure News Roundup – Mon. July 18th

Posted on July 19, 2011 by xdnus

Help Is On The Way To Those Who Face Forclosure
Patch.com
Eligible homeowners, in danger of foreclosure due to loss of job, can qualify for up to $50000 in emergency federal loans to avoid foreclosure. The deadline to apply is July 22…

Damaged foreclosures hurting Las Vegas values
Las Vegas Review-Journal
The reason Las Vegas home values keep dropping is directly tied to foreclosed properties that are being neglected by banks and left in bad condition for…

Home auction draws hungry buyers to Oakland
KGO-TV
California is still leading the nation in the number of foreclosure filings this year, and on Saturday, people took advantage of those who lost their homes to foreclosure. The talk is fast and the numbers kept climbing at…

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$36.7 million in lawn care

Posted on July 8, 2011 by xdnus

If you’re Fannie Mae, the nation’s largest owner of foreclosed homes with more than 153,000 on the books, this is just the bill to keep the lawn mowed this year – at least according to a rough calculation done by NPR.

NPR’s Morning Edition did a great piece this morning on Fannie Mae’s incredible carrying costs on their REO property.  The lawn bill is just a drop in the bucket.  In just the 1st quarter of 2011, Fannie incurred $488M in foreclosure expenses.  And since Fannie Mae is under governor conservatorship, that means the nearly $2B in expenses they’ll incur this year will be footed by you and me.  On the plus side, at least it will keep our neighborhoods reasonably maintained and help limit downward pressure on neighboring homes.

If you missed it, check out the audio and written transcript of the NPR piece at the below link:

NPR: The cost of owning 150,000 Foreclosed Homes

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Refinancings drop once again

Posted on July 6, 2011 by xdnus

According to the Mortgage Banker’s Association, the refinance index has dropped 9.2% from last week and marks the third straight week of declines.  According to the Mortgage Bankers, the drop is due to rates on 30 year loans moving from 4.46% to 4.69%.  We disagree.

This so called jump in mortgage rates is way too small to account for such a dramatic drop in refinance applications.  The real problem is there is almost no one out there who is still eligible to refinance.  If you haven’t already refinanced at these historically low rates, then you likely are underwater on your home and thus unable to refinance.  Even if you do have some equity left, you probably don’t have enough or good enough credit to make the payback worth it.  It’s certainly not a good time to be a mortgage originator.  We know a good number who are actively seeking an alternative career path.

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John McCain’s former home in foreclosure

Posted on June 30, 2011 by xdnus

The former home of John and Cindy McCain is in foreclosure.  Cindy McCain’s childhood home, and the home where the McCain’s raised their children, is situated on 3 acres on Phoenix’s Central Avenue.

The house was sold to investor Jane Popple in 2006 for $3.2M at the height of Phoenix’s real estate bubble.  Even though the house has since been completely renovated, it is currently listed as a short sale for $3M.

Interested in buying?  The house is a 12,000 square foot 11 bedroom 13 bathroom beauty with a chef’s kitchen and several outdoor living spaces perfect for entertaining 250 to 400 of your closest friends.

Fan favorite lender Bank of America holds the nearly $4.5M note on the $3M listed property and is apparently “very interested ” in entertaining short sale offers.

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