Real Estate Information

If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!

We get busy. It happens. I know because it happens to me. I have a routine I usually go through at the start and the end of the day. It varies little, making sure everything is up and running for the hours I’m shut down.

Read more...

Real estate books are a mixed batch. There are those that I recommend, such as Eldred and McLean’s excellent Investing in Real Estate, now in it’s fifth edition. On the other end of the spectrum is Robert Kiyosaki’s bestselling fable Rich Dad Poor Dad, a dangerous and misleading book if ever there was one.

In discussing books for investors I often end up recommending books that aren’t really real estate books, but which hold some insights that investors would be wise to heed. Nassim Nicholas Taleb’s recent release The Black Swan falls into this category.

The Black Swan discusses highly improbable events - like the occurrence of a black swan in nature – and how they impact our society. Taleb comments on our collective overestimation of what we know (and our underestimation of what we don’t), our reliance on phony experts and the general folly of forecasting.

The book isn’t without it’s drawbacks. First and foremost is Taleb’s unsufferable tone; one gets the distinct impression from reading Taleb’s prose that he’s one of those types that’s entirely too fond of the sound of his own voice. Much of the book is spent ridiculing famous figures whose theories he disagrees with - including Nobel prize winners Myron Scholes and Harry Markowitz. He lauds the guys who “get it” (from street-savvy traders to literary sophisticates) while heaping scorn on the squares (from tenured academics to pencil pushers in corporate America). It would appear that Mr. Taleb’s intention is to syle himself as an out-of-the-box intellectual maverick, but unfortunately he comes across as preening and petty.

And that indeed is unfortunate, because beneath these annoyances there is a lot to like about The Black Swan. Many of the book’s revelations are relevant to real estate investors. Among them:

We’re hooked on phony experts.

Taleb calls this the “empty suit” problem; he opines that there are many fields in which the “experts” are no better at predicting the future or producing effective results than a reasonably informed layman.

According to Taleb, there are experts who tend to be true experts and experts who tend to be…not experts.

In the “real experts” category fall (among others): livestock judges, astronomers, test pilots, physicists, and accountants In the “empty suit” (faux experts) category fall (among others): stockbrokers, psychiatrists, college admissions officers, intelligence analysts, economists, and personal financial advisers

He poses the following thought experiment: Would you rather have your upcoming brain surgery performed by a newspaper’s science reporter or by a certified brain surgeon? The answer to this question is obvious – but it can’t automatically be projected on all professions. His follow-up question is whether one would rather listen to an economic forecast from a prominent academic with a PhD from a respected institution, or from a newspaper business writer. The answer here isn’t obvious.

This example will sound familiar to most real estate investors. Chances are you’ve heard it before – from a Realtor. Your average Realtor will consider herself closer to the brain surgeon analogy.? I disagree. There certainly are notable exceptions, but for a well prepared investor with at least one deal under his belt the vast majority of Realtors will offer little or nothing in terms of expert real estate investing advice. A Realtor can be extremely useful in helping you to get through the myriad steps to get to closing on time, but be careful about relying on him for “advice” on which market is gonna be hot, which one isn’t, and when to buy/sell. He’ll tell you that he knows, but he doesn’t.? You are every bit as good as “the expert.”

So the next time you’re listening to an outook on housing prices, consider the fact that your prediction about what’s gonna happen is every bit as valid as the one you re listening to.

We don’t know what we don’t know.

We often tend to overestimate how much we know and underestimate our ignorance. This error tends to increase as we get more educated, meaning that an educated person has an even more unrealistic view of what he knows than an uneducated one. Chalk it up to our educational system’s focus on building self esteem. This has lots of implications for investors.

All industry groups produce reams of forecasts about future price movements. This is all a bunch of hooey – made even worse by the fact that industry groups aren’t unbiased observers.

This also gives investors something to think about when using a real estate investment evaluation software package – including the one offered here at . All evaluation software packages rely on assumptions – the old garbage-in-garbage-out phenomenon. The primary use of a real estate evaluation software package should be to force you to consider and weigh your assumptions and think about the fundamentals of the deal. One way to do this is to look at what your assumptions mean in terms of future results, but bear in mind that this isn’t a forecast.

The only thing you know about your assumption around property appreciation rates over the next ten years is that it will be wrong. But, it’s vital to know if your investment will yield a reasonable return at a 3% rate of appreciation (as it will in many undervalued areas or if you grab a bargain) or if you’ll need a 10% or 15% rate of appreciation in order to break even (as is the case if you’re buying in many overheated areas, such as areas of California, Florida and Nevada).

You can’t see the future, but on the other hand you shouldn’t make a decision without knowing how various future scenarios might impact your investment.

Summary: I got some interesting insights from this book. Taleb takes many positions that I disagree with, but he’s a persuasive author who takes a stand, and some portions of this book changed the way that I think about certain things.

Related links

Why I don t like Rich Dad Poor Dad Five things real estate investors should remember when running economic analysis

The oil policy of Vladimir Vladimirovich Putin, President of the Russian Federation. “The world is leaving one epoch, the Cold War, and entering a new one. We have buried the Cold War at the bottom of the Mediterranean Sea” [Mikhail Sergeyevich Gorbachev, Malta, December 1989]. Who stands to gain the most from the destabilization of oil prices?

Ten years ago Russia was in a state of disarray reminiscent of the Seventeenth Century. Putin s predecessor, Boris Yeltsin, had secured re-election in 1996 only by turning the privatization of the Russian energy sector into a sleazy scam, trading oil and gas fields for campaign contributions. Meanwhile, ordinary Russians had to endure rampant inflation and unemployment. As former Soviet

republics and Warsaw Pact allies queued up to join NATO, the superpower seemed really to have become - as the Cold War joke had it - Upper Volta with missiles.

Then, at the end of 1999 Vladimir Putin took over, and since then he has ruthlessly reasserted the Kremlin s control over the energy sector - in fact over the entire country. When it comes to energy, Putin s Russia seems prone to loutish behaviour, despite constant claims that Russia is a reliable partner. Russian officials have made no secret of wanting to keep big oil projects in the family, and thus have pushed out of the country pretty much all major oil players, from Royal Dutch Shell to Mitsubishi. And the Kremlin has often intimidated neighbours with threats to cut off their oil or gas supplies. Last winter, for example, Russia appeared to blackmail the Ukraine s new pro-western government by cutting off the country s gas amid a dispute over prices. Early this year, when Lithuania had the temerity to sell an oil refinery to a Polish firm instead of a Russian one, the pipeline that supplies the refinery with Russian oil suddenly succumbed to a mysterious technical fault.

Through these bullying methods Russia s economy has bounced back, with growth averaging almost 7 percent and inflation coming down into single digits, and has enabled the country to once again re-establish its former political clout throughout the world. So much so, in fact, that at the recent international conference on Security Policy in Munich the Russian President declared that a “unipolar world”, meaning a world dominated by the United States, would “plunge into an abyss of permanent conflicts”.

Maybe so, but what would happen to a world dominated by Putin s Russian Federation?

His Russia is an energy empire, sitting on more than a quarter of the world s proven reserves of natural gas, 17 percent of its coal and 7 percent of its oil. America, for geographical and political reasons is not one of Russia s main customers, but three-fifths of Europe s natural-gas imports and one-fifth of its oil come from Russia. Energy is a weapon with which Vladimir Putin seems to be intent at restoring the lost greatness of the Soviet Empire. No longer needs Russia to go beg the West for money cap in hand, as it did in Boris Yeltsin s days. Now it can stand tall once more, not the least among the neighbouring former Soviet countries that many in Moscow have never reconciled themselves to losing.

Mr. Putin s use of energy as a weapon is only one instance of a newly-found Russian assertiveness that nowadays seems to border on gangsterism, as clearly pointed out by the assassination of former Russian Agent Alexander Litvinenko in London in December, 2006. Polonium has its merits.

Russia s geopolitical power has become a function of its energy exports. As history teaches us, the energy crisis of the 1970 s helped the Soviet economy very much even has it hurt the West, by bathing the ailing Soviet system in petrodollars. But as oil prices slid below an average price of USD 20 per bbl. from 1986 through 1996, Russian power and prestige slid too. It is no coincidence that the price of oil touched USD 11 per bbl. in Yeltsin s miserable last year.

As the renaissance of Russia is now well under way, one can t avoid wondering the political implications of today s very expensive oil, for which we all pay out of our own pockets. Quite simply Russia is, after all, the only major power that has an interest in high oil prices, both economic and political. Which then conversely means that Russia is the only major power with no interest whatsoever in the stability of the Middle East. And it shows.

Russia poses America s biggest problem when it comes to stopping Iran from acquiring nuclear weapons capability. Russia is the one supplying Iran with more than 3000 centrifuges for the enrichment of uranium. Russia is fomenting anti-Americanism throughout the region as well as sowing the seeds of discord among Arabs. Russia s condemnation of President Ahmadinejad s repeated calls for Israel to be wiped off the map was lukewarm, at best. Russia is building the Iranian nuclear reactor at Busher, and the Russians have recently been awarded the contract to build an additional six such plants.

So, would this be the world with the Russian Federation at the helm? A world where destabilization of the Middle East would guarantee high energy prices on which Russian power has come to depend?

Some things never seem to change.

Luigi Frascati

luigi@dccnet.comhttp://www.luigifrascati.com/

Real Estate Chronicle

Labels: POLITICAL ECONOMICS # posted by Luigi Frascati @ Thursday, July 12, 2007

Real Estate can make us rich. Don t ask it to make us happy as well.

Having practically doubled in value during the past six years and going, real estate is over half way towards notching up its best decade ever. Market capitalism, the engine that moves real estate, seems to be doing its job well. But is it? Once upon a time that job was generally agreed to be to make people better off. Nowadays, this is not so clear. A number of real estate consumers backed, somehow, by an increasing number of analysts think that real estate ought to be doing something else: making people happy.

The view that real estate should be about more than just money has been widely held in Europe for decades.

And now the idea of “wellness” behind real capital assets has sprouted in North America too, catering especially to the prosperous baby-boomers. Much of this draws on the upstart science of happiness, which mixes psychology with economics. Its adherents cite copious survey data, which typically shows some unsurprising results: the rich report being happier than the poor. However, a paradox emerges that requires an explanation: affluent countries, taken as a whole, have not gotten much happier as real estate has appreciated and as people have grown richer.

The science of happiness offers two explanations for the paradox. Capitalism, it notes, is adept at turning luxuries into necessities, thus bringing to the masses what the elites have always enjoyed. But the flip side is that people come to take for granted things they once coveted from afar. Homes they never thought they could possess become essentials they cannot do without. In a way, consumers are stuck on a treadmill: as they achieve a higher standard of living, they become inured to its pleasures.

Add to all this the fact that many of the things people most prize - such as an exclusive home address - are luxuries by necessity. An exclusive mansion, for instance, ceases to be so if it is provided to everyone. These “positional goods”, as they are called (a reference to the hierarchical position within society), are in fixed supply: you can enjoy them only if others do not. The amount of money and effort required to grab them depends on how much your rivals are putting in.

All this somehow casts a doubt on the long-held dogmas of Economics. The science of Economics, especially as it applies to Capitalism, assumes that people know their own interests and are best left to mind their own business. How much they work and what they buy is their own affair. But the new science of happiness is much less willing to defer to people s choices. In 1930 John Maynard Keynes imagined that richer societies would become more leisured, where people would have more time to enjoy the finer things in life. Yet most people still work hard to afford things they think will make them happy. They also aspire to a higher place in society and purchase status goods such as expensive homes, and in so doing they work even harder and have less leisurely time at their disposal.

On the other hand, if economic growth through consumerism does not make people happy, stagnation will hardly do the trick. Ossified societies guard positional goods even more jealously. A flourishing economy creates opportunity, which in turn spurs happiness to a certain degree. It is hard to say that most people were unhappy during the heydays of the real estate boom.

To find the real estate market or, for that matter, the entire capitalistic system at fault because they do not deliver joy as well as growth is to place too heavy a burden on them. For many to do well is not enough: they want to do better than their peers, and this competition sets anxiety very deep.

Real estate can make people well off and the consequence of it is that one can choose to be as unhappy as he wishes. To ask anymore of it would be asking too much.

Luigi Frascati

luigi@dccnet.com

http://www.luigifrascati.com/

Real Estate Chronicle

Labels: REAL ESTATE ECONOMICS # posted by Luigi Frascati @ Tuesday, July 24, 2007

Once being a ”newbie” real estate investor myself, I know how valuable hearing advice directly from a real person actually using the strategy is to the education process.

Josh Houghton, from the Real Life Real Estate Blog (which we reviewed a little while back) was nice enough to share a bit of his real life experience and expertise in purchasing real estate “Subject To” with us.

We hope to make guest posts from actual real estate investors on the ground doing this everyday a regular thing on this blog. Afterall, the best way to learn something is to learn it from someone who is actually doing it and doing it successfully.

Look for the bold phrases for the priceless nuggets that you REALLY NEED to retain.

Here we go!

=======================

Josh Houghton on Investing in Real Estate Subject To:

First off, I just want to say that Trevor's post on purchasing real estate Subject To method was an excellent resource for investors and had some great information inside.

After reading the post I felt I needed to add a couple of extra items of information. I would like to thank Trevor for allowing me to post a follow up to his article. I think the subject to method can be a great investing tool for buying properties, but it can also cause a lot of pain for investors who don't understand the finer points of subject to investing. So I thought I would add some extra insight for anyone who is interested.

Many people hype up the subject to method of buying, but you must remember that investing using this method requires a little more work and knowledge then a common deal.

Sellers will be calling you to help them solve their real estate problems. You will also not have as much time as a conventional deal. Many of the sellers who will be calling you will be in the pre-foreclosure stage and may be close to actually facing foreclosure. Some of these issues include items such as inspecting the property, informing the seller of the risk and rewards, reviewing and understanding the loan documents, setting up the closing, dealing with the mortgage company, insurance, change of address and many other items.

Some of these items fall into the usually stuff you must do for any real estate deal to happen, but most subject to deals require a little more work and attention to detail. Now once you complete a couple of subject to transactions then the rest of them may be pretty easy, but if you have never done a deal before then I recommend you do a couple of "normal" deals before attempting a Subject To transaction. I'm not saying you can't do one because many people have successfully completed one, but I just want you to be aware that it does require a little more work than a common conventional deal.

So with all of that being said I wanted to address a few of the finer points of the subject to transaction. One of these issues has to deal with performing kitchen table closing.

I highly recommend that you close everyone of your subject to deals with a closing attorney.

When you close with an attorney it adds a high degree of credibility and will reduce the chances of a seller coming back down the road claiming you ripped them off. Always remember that just because you helped some sellers out of a tough spot doesn't mean they will always remember it. There have been many reported incidents of sellers claiming some investor tried to steal their house from them. The truth is that most of them were all kitchen table closings. While investing does mean you have to take a risk; it doesn't mean you can't take steps to reduce the risk, and closing with an attorney is one of those steps.

Credibility is everything within the business world and closing at the kitchen table just doesn't have the same degree of credibility. Now I am not saying you can't close using a kitchen table closing because many successful investors have, but I don't recommend it for the beginner and I personally recommend using a closing attorney.

You want a subject to transaction to appear as much as a conventional sale as possible. This one action alone stands out in the mind of the seller because seller's think of closing attorney's and think of a conventional sale. Many investors who are new to using this method are taking a huge risk by performing a kitchen table closing. All you need is to make one mistake and you will see how fast it can come back to bite you. Once again it is completely up to you if you want to use an attorney or not, but as an experienced investors I recommend you always close with an attorney.

The final issue I would like to discuss: The so called benefits of the properties you buy not appearing on your credit.

While this is true you still have to remember that the loan will be in the name of the seller. You will screw up the seller's credit if the payments are late or by letting the property go into foreclosure. When taking on a subject to deal always remember that you should treat each loan as if it was your own.

The reason this method has been in the news lately is because many investors have misused it and caused harm to the seller's credit and their own credibility. This can hurt your own business and even end up with a lawsuit being bought against you. So if you ever lost the property to foreclosure it wouldn t affect your credit, but it would affect the sellers and you don't want that to happen.

I would also suggest that you please make sure you can cover the payments on the property for at least a period of six months.

I have seen too many investors fall into serious trouble when they discover they can't afford to continue making the payments. Some of you may be thinking that I can sell a house within that time, but the fact of the matter is you just never know. Remember you are responsible for keeping the payments current, repairs and everything else. You should plan ahead to make sure you can survive the tough times in case they happen.

You should also know ahead of time what your exit strategy is before you buy the deal.

For instance:

Are you going to rehab the property?Are you going to rent the property out Are you going to sell the property with owner financing?

If you know how you are going to sell then in the end it can save you a lot of pain.

There are many other items to discuss, but I can't address them all in one post.

The main thing to remember when performing a subject to transaction is

credibility is everything and follow thru on the promises you make to the sellers.

I would also advise that you educate yourself by reading material on how to use the subject to technique.

Authors such as William Bronchick, Matthew Chan and William Tingle all discuss the subject to mortgage in great detail.

If you like this post, let then let The REI Brain know. I would love to write other articles if you have found value from this one.

I wish all of you well with your investment futures. Thank You.

Josh Houghton

Real Life Real Estate Blog

http://www.realliferealestateblog.com/

=====================

Hoped you enjoyed Josh s take on purchasing real estate “subject to”!

If you liked this post be sure to subscribe to our RSS feed.

Digg this - Post to del.icio.us - Post to Furl

Related Posts:

Once being a ”newbie” real estate investor myself, I know how valuable hearing advice directly from a real person actually using the strategy is to the education process.

Josh Houghton, from the Real Life Real Estate Blog (which we reviewed a little while back) was nice enough to share a bit of his real life experience and expertise in purchasing real estate “Subject To” with us.

We hope to make guest posts from actual real estate investors on the ground doing this everyday a regular thing on this blog. Afterall, the best way to learn something is to learn it from someone who is actually doing it and doing it successfully.

Look for the bold phrases for the priceless nuggets that you REALLY NEED to retain.

Here we go!

=======================

Josh Houghton on Investing in Real Estate Subject To:

First off, I just want to say that Trevor's post on purchasing real estate Subject To method was an excellent resource for investors and had some great information inside.

After reading the post I felt I needed to add a couple of extra items of information. I would like to thank Trevor for allowing me to post a follow up to his article. I think the subject to method can be a great investing tool for buying properties, but it can also cause a lot of pain for investors who don't understand the finer points of subject to investing. So I thought I would add some extra insight for anyone who is interested.

Many people hype up the subject to method of buying, but you must remember that investing using this method requires a little more work and knowledge then a common deal.

Sellers will be calling you to help them solve their real estate problems. You will also not have as much time as a conventional deal. Many of the sellers who will be calling you will be in the pre-foreclosure stage and may be close to actually facing foreclosure. Some of these issues include items such as inspecting the property, informing the seller of the risk and rewards, reviewing and understanding the loan documents, setting up the closing, dealing with the mortgage company, insurance, change of address and many other items.

Some of these items fall into the usually stuff you must do for any real estate deal to happen, but most subject to deals require a little more work and attention to detail. Now once you complete a couple of subject to transactions then the rest of them may be pretty easy, but if you have never done a deal before then I recommend you do a couple of "normal" deals before attempting a Subject To transaction. I'm not saying you can't do one because many people have successfully completed one, but I just want you to be aware that it does require a little more work than a common conventional deal.

So with all of that being said I wanted to address a few of the finer points of the subject to transaction. One of these issues has to deal with performing kitchen table closing.

I highly recommend that you close everyone of your subject to deals with a closing attorney.

When you close with an attorney it adds a high degree of credibility and will reduce the chances of a seller coming back down the road claiming you ripped them off. Always remember that just because you helped some sellers out of a tough spot doesn't mean they will always remember it. There have been many reported incidents of sellers claiming some investor tried to steal their house from them. The truth is that most of them were all kitchen table closings. While investing does mean you have to take a risk; it doesn't mean you can't take steps to reduce the risk, and closing with an attorney is one of those steps.

Credibility is everything within the business world and closing at the kitchen table just doesn't have the same degree of credibility. Now I am not saying you can't close using a kitchen table closing because many successful investors have, but I don't recommend it for the beginner and I personally recommend using a closing attorney.

You want a subject to transaction to appear as much as a conventional sale as possible. This one action alone stands out in the mind of the seller because seller's think of closing attorney's and think of a conventional sale. Many investors who are new to using this method are taking a huge risk by performing a kitchen table closing. All you need is to make one mistake and you will see how fast it can come back to bite you. Once again it is completely up to you if you want to use an attorney or not, but as an experienced investors I recommend you always close with an attorney.

The final issue I would like to discuss: The so called benefits of the properties you buy not appearing on your credit.

While this is true you still have to remember that the loan will be in the name of the seller. You will screw up the seller's credit if the payments are late or by letting the property go into foreclosure. When taking on a subject to deal always remember that you should treat each loan as if it was your own.

The reason this method has been in the news lately is because many investors have misused it and caused harm to the seller's credit and their own credibility. This can hurt your own business and even end up with a lawsuit being bought against you. So if you ever lost the property to foreclosure it wouldn t affect your credit, but it would affect the sellers and you don't want that to happen.

I would also suggest that you please make sure you can cover the payments on the property for at least a period of six months.

I have seen too many investors fall into serious trouble when they discover they can't afford to continue making the payments. Some of you may be thinking that I can sell a house within that time, but the fact of the matter is you just never know. Remember you are responsible for keeping the payments current, repairs and everything else. You should plan ahead to make sure you can survive the tough times in case they happen.

You should also know ahead of time what your exit strategy is before you buy the deal.

For instance:

Are you going to rehab the property?Are you going to rent the property out Are you going to sell the property with owner financing?

If you know how you are going to sell then in the end it can save you a lot of pain.

There are many other items to discuss, but I can't address them all in one post.

The main thing to remember when performing a subject to transaction is

credibility is everything and follow thru on the promises you make to the sellers.

I would also advise that you educate yourself by reading material on how to use the subject to technique.

Authors such as William Bronchick, Matthew Chan and William Tingle all discuss the subject to mortgage in great detail.

If you like this post, let then let The REI Brain know. I would love to write other articles if you have found value from this one.

I wish all of you well with your investment futures. Thank You.

Josh Houghton

Real Life Real Estate Blog

http://www.realliferealestateblog.com/

=====================

Hoped you enjoyed Josh s take on purchasing real estate “subject to”!

If you liked this post be sure to subscribe to our RSS feed.

Digg this - Post to del.icio.us - Post to Furl

Related Posts:

So you ve done your time in the city the big smoke as we Aussie s call it, and you re looking for the next step. Well, one of the biggest catch phrases around, along with the one of the most popular Australian real estate investment moves these days is the “sea change”.

The term “Sea Change” came about a few years back, giving a bankable “tag” to the thousands of people that each week move to coastal towns along the perimeter of this beautiful land. While it mainly refers to the older generation, younger investors are flocking to the beaches, east and west, north and south.

Just a few years back, deals a plenty were able to be found along the coast, homes for $60-$70-$80 and $90 thousand were everywhere these days they no longer exist! Adding a zero to those figures are more common nowadays that s not to say good deals aren t still available

In south east Queensland alone, up to 600-700 sea changers move each week, so long into the future, money will be able to be made by investing in the Australian coastline. This is no overnight fad!

The Sea Change phenomenon has been big business and a big marketing hook for investors, but while everyone is changing into their bikini s and board-shorts, is anyone thinking about the reverse surely if thousands of people are moving to the coast, that s leaving homes for sale within Australia everywhere! And when people move en-mass, prices are sure to be dropping quality investments will be revealed!

Really, the long and the short of the sea change phenomena is it really doesn t matter where you go quality investments can be found where ever you may be looking!

Analysts say that this area is better than that area, but I am a firm believer that good investments are realized through good research and negotiation. Learning the basics before outlaying any of your hard earned cash is the best advice I can give.

Do your numbers know your limits and stick to your guns!

All the best in you're Investing

Listen to this post

Ah, it seems like it was just yesterday when A E TV was premiering Flip This House and the TLC Channel was launching Flip That House. Notice these were two different shows – I guess targeting two separate target audiences who were interested in either this hosue or that house. Free markets bring choice to the consumer, ain’t America grand?

Well now that the housing market is starting to slow in some regions flipping is starting to lose its shine. Perhaps one of the most telling pieces of evidence that the pendulum is starting to swing is that allegations of fraud are starting to pop up even in the sanitized, staged world of reality TV. One Flip This House participant evidently didn’t even own the properties that he allegedly was flipping for big bucks. If you can’t believe what you see on reality TV then whom can you trust these days?

So these are additional bits of evidence on a fact that we already knew: flipping isn’t investing, it’s speculating. Not that there’s anything wrong with that, as they say on Seinfeld, but it’s important to know that flipping is a speculative technique that works well if the market is flying and you have a healthy risk appetite.

Flipping is glam and flash – high rollers and big bucks. But that’s so 2006, so what trend are they going to selling us next?

Well one man’s pain is another man’s profit, so expect the spotlight to fall on the short sellers and pre-foreclosure artists. Not as glamorous as the fast rolling world of the flippers since it requires the investor to manage the unpleasant task of dealing with folks who are having their home foreclosed, but in an environment of stagnating prices and embattled mortgage holders short selling can work.

Quick primer: The bank doesn’t want to get stuck with a foreclosure. I’m always annoyed when I read these expos?s about banks licking their chops to kick grandma out of her house and sell it at the auction block the minute she gets behind on her mortgage payments. In the eyes of a bank a foreclosure is a black eye; banks don’t want to own real estate, especially a house that has been trashed by a aggrieved foreclosed owner.

If the owner is getting foreclosed on a house with zero or negative equity then there is little he can do. Say his house is worth $150 thousand and he owes $160 thousand; trying to sell won’t help.

Enter the short seller. He cuts a deal w/ the owner to give him the house and simultaneously cuts a deal with the bank that he’ll pay, say, $125 thousand for them to release the lien. Voila, everyone is happy: the investor gets a quick $25 thousand in equity, the previous owner avoids the indignity of a foreclosure, and the bank avoids the time, cost and expense of trying to unload the property – a process that probably would have cost them more than the $35 thousand it just wrote off.

Note that this is nothing new. People have been doing it for years. But it about to be the new thing which will be promoted online and in the media.

If the flipping phenomenon was vulnerable to fraud, this one will be as well. Two reasons:

It’s hard: Making money flipping houses in a booming market is as easy as falling off a log. All you need is guts and the right level of risk appetite. Making money off of pre-foreclosures and short sales is hard. There are a lot of moving parts to these deals and pulling them off requires knowledge, negotiating skill and patience. Dealing with vulnerable people: Short sellers promote themselves as investors who help people. And indeed many of them are good, decent people. But investing isn’t an altruistic pastime, and when a dishonest investor comes into contact with a troubled owner who is looking for a lifeline there is a potential for bad things to happen.

I’m trying to look into the crystal ball on this one. I’ll revisit in a couple of months…

Here we go!

Part two of our Real Estate Blog review series.

This next blog is one of the real estate investing blogs with a high Google PageRank so it is a pretty popular site. Worth checking into.

The blog is called:

Insider Secrets From a Successful Real Estate Investor

I found this site by going to Google and typing in “Real Estate Investing blogs”. This blog piqued my interest so I clicked on through.

At first glance, just by looking at the titles of the posts I saw that this blog has some good content in it. Titles like:

- Finding Your Investment Property - How to use FHA Loans to Invest In Your Home - Stocks vs. Real Estate Investing

They are very specific post topics and he puts his voice into the writing very well.

One excellent part about this blog is that it is very easy to find the information you are looking for. There is one question that I have about this blog though there aren t a whole lot of posts yet it is in the first half dozen listings on Google for “Real estate investing blog”. Usually a blog will have to have a lot of content to get a high ranking in Google. While this blog has excellent content it doesn t have a vast library of it.

Overall this blog is pretty darn good.

The good:

His posts are candid, have good conent, and you can truly learn something from each of his blog posts.

The bad:

He has relatively few posts for such a popular blog. Not a big deal because his posts are content rich and don t pitch products but it would be nice to see a bit more variety of posts.

Well I just read through my review again and it s not the best I ve written. So, head on over to Insider Secrets From a Successful Real Estate Investor and see it for yourself.

If you find one bit of information on the blog reviewed above, has done its job.

Just so you know, our whole aim in reviewing these blogs isn t to have a comprehensive list of real estate investing blogs. It s simply to find a good resource and tell you about it.

Well take care and good luck in your investing!

If you liked this post be sure to subscribe to our RSS feed.

Digg this - Post to del.icio.us - Post to Furl

Related Posts:

Well, now that I m back in Far north Queensland, I had time to catch up on some emails and came across some interesting facts

Totally oblivious to these facts before now, I though I d share them with you. They show that, “greed is bad karma” and no matter how rich and famous you may be being humble is the better option!

SOME WARREN BUFFET FACTS YOU MAY NOT KNOW

 still lives in the same house he purchased when he was 28 for US$31,500  receives 250 - 300 letters per day and he answers them that same day  plays online bridge 12 hours per week  bridge partner is a two time world champion  can read up to 5 books per day  no calculator or computer in his office  has over 200,000 employees but just 17 at his corporate office in Omaha, Nebraska  office building does not have his company s name on it  requires no meetings or budgets  rarely visits the companies he purchases  could guarantee an annual return of 50 percent if he had less than $1m to invest  pays himself US$100,000 per year with no stock options, bonus or raise in the past 20 years  all of his wealth will be given back to those that have been the least fortunate among us  over 28,000 attend his annual shareholders meeting  annual letter to shareholders is the most widely read of any on the internet  purchased his holding company Berkshire Hathaway for less than US$20 million in 1965 and today it is worth over US$170 billion  over 30 books have been written about him and more on the way  few investment books written today fail to mention his name  drives his own car and has had it for 10 years  lives in the middle of the USA in Omaha, Nebraska, his birthplace  father was a stockbroker and a US Republican Congressman  is a registered Democrat  raised Episcopalian but is an agnostic  visited by 32 different universities consisting of 40 - 50 graduate level students, gives them 90 minutes of Q A and then takes them to lunch  largest employer in the state of Georgia  with an 8 percent ownership of Coca-Cola, after every 12 cans consumed, the profit goes to Berkshire Hathaway  name of his holding company (an old New England textile mill) is also the one business he had to close due to cheaper foreign labour  his wallet has been auctioned off for US$210,000, with all proceeds going to charity  lunch with him has been auctioned off for US$640,000, with all proceeds going to charity  owns the most profitable newspaper in the United States  owns over 60 businesses in their entirety  largest owner of Coca-Cola and American Express  has US$150 million per week flowing into Omaha to allocate  business card is a toll free number for his auto insurance company  Bill Gates got his engagement ring at Borsheim s, Buffett s jewellery store, the largest single location store in the USA. Warren joked that engagement rings should represent a significant portion of the net worth of the acquirer.

All the best in your Investing and giving!

Listen to this post