real estate-mortgage and investing

Saturday, January 20, 2007

Bad Credit Loans There is a solution to your mortgage problem

Written by: Joe Sanders

If you are reading this, chances are that you have bad credit and thinking of how to get a mortgage loan with bad credit. Bad credit loans are a good way to get back into the program. You’re probably thinking if I have bad credit how am I going to get a loan. The solution for bad credit is out there. Consider getting a bad credit loan. One very good place is e-loan. Although this is a risky business to loan to people with bad credit, there are companies that are out there to help.

What’s The Catch?

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Bad Credit Loans There is a solution to your mortgage problem

Written by: Joe Sanders

If you are reading this, chances are that you have bad credit and thinking of how to get a mortgage loan with bad credit. Bad credit loans are a good way to get back into the program. You’re probably thinking if I have bad credit how am I going to get a loan. The solution for bad credit is out there. Consider getting a bad credit loan. One very good place is e-loan. Although this is a risky business to loan to people with bad credit, there are companies that are out there to help.

What’s The Catch?

Tuesday, November 21, 2006

Mortgage Calculators how are you going to calc your mortgage.

Written by: Joe Sander

Are you looking for a mortgage, It’s a hard thing to do sometimes. You have a million questions and no answers. When you are looking for a good mortgage it’s always good to ask your self, what exactly am I looking for? Ask you’re self if you are looking for fixed rate mortgage or an adjustable rate mortgage. Free online mortgage calculators include a function to help you with your amortization schedule. When you discover what kind of mortgage you are looking for your next thing you want to focus on is to calc your mortgage. First find out what your interest rates are for your mortgage. Then proceed with how much your mortgage loan will be. Then figure out how long you want to take out the loan. Write this down on a note pad either on your computer or on paper. The most important thing to do is to make this as affordable as you can. Type in mortgage calculators or mortgage calculator in Google or yahoo, and look around for the mortgage calculator site that fits your needs. Now you are ready to calc your mortgage for your needs. If you are unsure of how much you need to borrow from the bank, you can easily calculate the amount. The amount you expect to pay as a down payment at the time of purchase should be subtracted from price of the house. If your down payment is small or negligible, you can just enter the full price of the house in this field on the mortgage calculator form. It is important that you satisfy your self and don't just get pushed into a corner. A mortgage is a very important thing, and you don’t want to make the wrong moves when shopping around. Once you have an idea of what you want to do and you have an idea of what you want along with numbers, now it is time to shop around for the mortgage of your choice. Shopping For a Mortgage Now that you have your numbers it is for your best interest to find the company that fits your needs, nothing less nothing more. There are many companies out there that are quick profit mortgage companies. Stay away from companies that seem as if they are going to take your money and load massive interest rates on your back. This is not what you want for you and your family. Instead you need to take your time and look for a company that you can trust, such as lending tree. Lending tree is only one example of a trusted company. Once again you need to look for the numbers that fit you and your family. It is also important that you find the mortgage company that you can trust.If you are in dept, free online mortgage calculators can help you budget your money wisely. Free online mortgage calculatores can help in many different ways besides just for mortgage. Free online calculators are very good because you do not have to spend a penny on this. It is something that is free for your use. You find when you type in free online calculators, that there are thousands of websites with mortgage calculators. You will also find that there are calculators found in every subject. So what ever the need, you are bound to find a calculator for you.

Monday, August 21, 2006


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Saturday, August 19, 2006

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Beat the Crowd when Investing in Real EstateWritten by: Peter Dobler
Copyright 2005 Peter Dobler
We all are thinking about it and some of us are actually taking action and getting their hands on real estate investment properties. The longer the NY Stock Exchanges doesn't produce desirable returns the more people are starting with real estate investments.
For most of us the obvious choice of properties are single family homes. Although you can invest in real estate without owning a home, most people follow the experience they made while purchasing their own home. This is familiar ground and the learning curve for doing a real estate deal of this type is pretty slim.
Of course there's a drawback with this approach. The competition is fierce and there are markets where investors are artificially driving up the cost of the properties while completely discouraging first time home buyers. If this is the case, the burst of the real estate bubble is just a matter of time.
How do you avoid these situations and still successfully invest in real estate? How do you get ahead of the competition and be prepared for bad times in real estate investments as well? The only answer I have is commercial real estate.
Why commercial real estate you might ask? Commercial real estate is a solid investment in good and bad times of the local real estate market. The commercial real estate I'm referring to are multi unit apartment buildings.
Yes you will become a landlord and No you don't have to do the work by yourself. You are the owner and not the manager of the apartment building. The cost of owning and managing the building is part of your expenses and will be covered by the rent income.
Apartment buildings are considered commercial real estate if there are 5 or more units. To make the numbers work you should consider to either own multiple small apartment buildings or you should opt for bigger buildings. This will keep the expense to income ratio at a positive cash flow. Owning rental properties is all about positive cash flow.
With investing in single family homes it is easy to achieve positive cash flow. Even if your rent income doesn't cover your expenses 100%, the appreciation of the house will contribute to the positive cash flow. With commercial real estate the rules are different.
While single family homes are appraised by the value of recent sales of similar homes in your neighborhood, commercial real estate doesn't care about the value appreciation of other buildings. The value of the property is solely based on the rent income. To increase the value of a commercial real estate you need to find a way to increase the rent income. The formula on how this is calculated would be too much for this short article. I listed a few very helpful books where you can find all the details.
What's another advantage to invest in commercial real estate? Commercial real estate financing is completely different than financing a single family home. While financing a single family home you are at the mercy of lenders who want to make sure that you are in the position to pay for the house with your personal income. Commercial real estate financing is based in the properties ability to produce positive cash flow and to cover the financing cost.
After reading all these information about commercial real estate you want to go out there and dive into the deals. Not so fast. First, you need to learn as much about real estate as possible. In commercial real estate you're dealing with professionals. If you come across too much as a newbie you will waste these guys's time and your commercial real estate career ended before it actually started. Second, no commercial real estate lender will lend you any money if you can't show at least a little bit of real estate investment experience.
What's the solution to this? Go out there and do one or two single family home deals yourself. It doesn't matter if you make huge profits to start off with. Most newbie investors are loosing money on their first deal anyway. If you can manage to show positive cash flow with your single family home deals you are ahead of the pack.
My advice, buy a small single family home in a decent neighborhood and rent it immediately. This will keep your out of the pocket expenses at a minimum and you will have rent income to cover for your monthly expenses. Bonus, you gain experience as an investor and as a landlord.
Here's another observation I made during my real estate investment career. Most people like to analyze, learn, discuss and analyze some more. They never actually got to do a real estate deal. They love to talk about real estate investments, but never did it themselves.
My approach to real estate investment was simple.
- I bought some books about real estate investment.
- I read every single one of them.
- I put together a simple plan on how I want to get started.
- I started looking for properties.
- I bought my first investment property 30 days after I started reading my first book.
- I made positive cash flow with all of my properties so far.
What is my point? You have to go out there and practice what you've learned. The only valid credential in the real estate business is practical experience. Having a couple of deals under your belt, you can go out there and start looking at commercial real estate and even impress seasoned investors with your knowledge. Because you made this experience by yourself and you know what you're talking about.
Book reference for commercial real estate investments:
Gary W. Eldred, PhD: "Make Money with Small Income Properties"
Jack Cummings: "Real Estate Financing and Investment Manual"
You will find these books and many more on my real estate investment website at
Sincerely, Peter Dobler

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A Simple Plan for Starting a Business of Real Estate InvestingWritten by: Steve Majors
Starting a business of real estate investing - whether you work out of an office or a 'home based business' you run out of a corner of your bedroom, you can drastically change your life, and your income in as little as 10 hours per week - all through a very simple plan of real estate investing. It is possible to become successful in real estate investing in a short time and, even when starting a business of real estate investing, you can find the time without crimping your current lifestyle! Starting a business of real estate investing with a simple plan. 1. Groundwork of your simple plan is crucial when starting a business of real estate investing. I know, it is easy to say - and the truth is, it is easy to do! Most people get stopped when starting a business of real estate investing because they simply FAIL to plan. That's right, it isn't because their plan didn't work, it was because they did not implement even a very simple plan! To be successful in real estate investing, first find someone else that is successful in real estate investing, watch them, interview them, find out everything you can about what they did when starting a business - and write up a simple plan of what they have done to be successful in their real estate investing - something that you can follow each day. In order to have what they have, you need to do what they do, so find out what percentage of their day is spent on the telephone, for instance. Find out how much of that time is spent on making calls, receiving calls and the type of calls they are (Customer Service, making deals, etc.) That gives you a good idea of what your total time should look like, when you are starting a business of real estate investing of your own. 2. The next step in developing your simple plan as you are starting a business of real estate investing is to divide your total time (10 hours per week is a great start) just like your successful mentor does. Even if they put in a hundred hours per week, they still divide their time, just like you will, once you begin working your simple plan. The 'secret to success' isn't in the hours - it is how you spend them! Follow the simple plan outlined here to make the most of your hours and get the most out of everything as you are starting a business of real estate investing with a plan of success. If your mentor spends 1/10th of their time making outgoing phone calls to find new business, then you need to spend 1/10th of the time you dedicate to your real estate investing business doing the same thing, a pretty simple plan, huh? 3. Set your Goals. A clear destination is something you always do when starting out on vacation, isn't it? Then have the same thing in mind when you are starting a business of real estate investing. Every successful person says to have a goal in mind so you know where you are going, and our simple plan gives you the steps to get there! A goal is crucial in anything, and certainly when starting a business of real estate investing. Without a destination (a specific income amount, a personal item like a car or boat, or simply an amount set aside in savings), how will you know if you ever arrived? 4. Track your progress. You have your goal in mind, and a simple plan to begin. It is time to get into your 10 hours per week program and 'backtrack' to create a clear and simple plan to follow. Take your goal (a clear date of completion and 'destination'), divide it out and chart the required progress each day, week, month and/or year to quickly know what is required to reach your destination. Follow your progress each day to know quickly if you are sticking to your original goal destination, or if you are ahead or behind schedule. As you are starting a business of real estate investing, you will likely come across some detours, that's OK (and where many people get lost... Do not!) When driving, if you find a road that is blocked or a path that seems impassible, you simply find another way around, right? The same is true when starting a business of real estate investing, just find another way. Include in your simple plan a few hours here/there just for such 'emergencies'. If you have no emergencies, do something else that will get you closer to your destination, or just relax and enjoy where you are. 5. Spend time ON your business, not only IN your business. In your simple plan for starting a business of real estate investing, you must set aside part of your working time to plan, set goals, promote and advertise your business, not simply work along in your business, doing the things you do. In today's world, when starting a business of real estate investing, you will most likely have a website. You need to spend a certain portion of your time (even 10 hours per week total) on getting more visitors to that website. The more people that see what you have to offer, the quicker your business will grow. You could spend time driving from house to house, telling everyone about your website (not a very simple plan for your time!), or you can maximize your time by writing articles about your business and post them online where many people will see them (many online services promote articles). This is often overlooked by people as they are starting a business of real estate investing, and one of the reasons they fail to make their simple plan. As your business grows over time, you will do less of this (but never stop!) and begin to work your simple plan toward the 'IN your business' phase. 6. Give excellent Customer Service. It never pays to make your customers angry. An upset customer will kill more business than you can imagine. Find a way to work with them, or simply give them their money back. Losing customers is something you cannot afford when you are starting a business of real estate investing! Many people simply don't make the time to provide quality service to their customers. Do not let that happen to you! A little up front planning and goal setting, then follow-through each week, then simply repeat the process. You will change your business from flat to cash in a short amount of time! Follow the steps above and it can be done in as much or as little time as you have. read more

Real Estate Investing Financing Truths - Part 1 of 2Written by: Steve Majors
(p28 - The Lazy Investor's Guide to Real Estate)
Real Estate Investing Financing Truths - Part 1 of 2
Traditional Methods of Real Estate Investing
Through years and years of transactions, the traditional method of buying and selling Real Estate investments has evolved into a market of its own and has grown into a Real Estate ¡®machine¡¯ that circulates massive amounts of money through Real Estate Agents, Real Estate appraisals, Title & Escrow Companies, Banks, and Mortgage Companies.
These once-simple real estate investments have grown from a modest fee for a professional to keep the Buyer¡¯s or Seller¡¯s best interest in mind during negotiations, to now, traditionally, 6% (or more) of the total sales price being paid to Real Estate Agents (via Brokers who often take the majority of the money), another 3 ¨C 5% being paid to Title, Mortgage and Escrow Companies for various fees, and then even more is taken for a real estate appraisal.
As if that weren't enough, then a huge amount of money is absorbed by the Bank, through the form of interest payments ¨C usually over 15 ¨C 30 years and totaling 2 ¨C 3 times the original purchase price of the initial Real Estate investment!
Down Payments go to pay a variety of fees.
Now, don¡¯t get me wrong, it certainly is possible to make money through these methods, but the ¡®traditional real estate investment system¡¯ is designed to simply ¡®break even¡¯ for the home owner in purchasing a home (the first, and perhaps, only real estate investment they will ever make) in this manner. It is really not designed for the investor, who, of course, wants every real estate investment to make money.
Traditional funding only allows the Home Owner to break even.
Example ¨C Home Owner Financing: (the numbers represented here reflect the methods, not necessarily the price structures of any given real estate investment market.)
List price on property (with Real Estate Agent) $200,000
Bank loan available (owner-occupied, 100% @ 7% interest) $200,000
Monthly payments (over 30 years) ~ $1350
Taxes, Insurance, etc. (per month) ~ $250
(This example is for an ¡®average¡¯ home in an ¡®average¡¯ neighborhood, for the ¡®average American¡¯ using an ¡®average¡¯ interest rate of 7% ¨C of course, these figures do not apply everywhere.)
Therefore, the payment for this property is approximately $1600 per month for 30 years, to be paid by the home owner living in the property.
Now, the ¡®traditional real estate investment system¡¯ allows for this home owner to have a change in their lives and decide to purchase another (usually larger) home. They have the right, and often do, ¡®rent out¡¯ the first house and move into the new one with their family.
The owner will be responsible for any additional expenses (repairs, Home Owner's Association fees, etc.) as well as their desire to make a small cash flow from this endeavor.
Their previous home now becomes a true real estate investment where they increase their 'homeonwer's' monthly payment to the ¡®renter¡¯ by an additional $200 per month, for a total price to the renter of $1800 per month.
Reasonable enough ¨C until/unless there are repairs to be made ¨C or, the renter leaves and the new ¡®landlord¡¯ has to make payments on this vacant house. Then, this $200 positive cash flow per month real estate investment doesn¡¯t look so good¡­.
But, the ¡°rent¡± has been established for that house ¨C and the ¡®comparable rent for the area¡¯ can easily be calculated using this method;
Total payment for the property (includes Principle, Interest, Taxes and Insurance ¨C known as PITI at 100% loan at 7% interest)
+ cash flow for the ¡®investor¡¯ (usually $200 per month)
= ¡®Rent¡¯
Note: With several homes in the area of similar size and style, plus the fact that most homeowners in the area have similar loan structuring, we can estimate that whatever the average loan percentage is will create a ¡®standard rental rate for X model real estate investment¡¯ ¨C in this case, $1800.
A simple (and LAZY) way to remember it is;
If an ¡®investor¡¯ (one that seriously wants to make money from buying/selling Real Estate investments) wishes to purchase the same house in the same area and for the same amount of money, the ¡®traditional real estate investment system¡¯ doesn¡¯t allow the investor to really make any money from the transaction.
Example ¨C Investor Financing:
List price on property (with Real Estate Agent) $200,000
Bank loan available (investor loan, 80% @ 8.4%) $160,000
Monthly payments (over 30 years) ~ $1250
Taxes, Insurance, etc. (per month) ~ $250
(This example is for an ¡®average¡¯ home in an ¡®average¡¯ neighborhood, for the ¡®average American¡¯ with an ¡®average¡¯ investor interest rate of 8.4% ¨C of course, these figures do not apply everywhere, but the formula is very similar.)
Therefore, the monthly payment for this investor- owned real estate investment is approximately $1500.
At first glance, seems very good, as the investor will have a ¡®cash flow¡¯ of $300 per month ¨C more cash flow per month than the homeowner-turned- investor.
However, the difference is that the 'Investor¡¯ (the one serious about making a profit from this real estate investment) has brought in cash (out of pocket) of $40,000 ¨C UP FRONT!
Plus, the investor has to pay a higher interest rate (in this example, I have included 1.4%, while a bank may charge several percent for investor loans ¨C those identified as being purchased solely for the purpose of being a real estate investment - check with your lending institution on their policies prior to finalizing your loans)!
Now, I don¡¯t know about you, but I don¡¯t know too many people with that kind of money for 1 property ¨C not to mention the fact that this person expects to make several real estate investments, repeating ¡®what works¡¯ several times.
Not only does the investor have to come up with $40,000 up front (every time they decide to make a real estate investment), but how long will it take (at $300 per month) to make enough to purchase a second investment property at this rate?
10 YEARS!! (presuming there are never any repairs, the investor never takes out a penny of the cash flow for their own use, etc)!
Investors and Homeowners get different rates.
Not what I call a ¡®wealth path¡¯, not what I teach ¨C and certainly not any way to run a business.
END Part 1 of 2 About the Author
Steve Majors has fixed stereos, been a radio DJ and owned several successful businesses - even before his wild success in Real Estate investments. Extremely well traveled (36 countries & counting), he now teaches others the secrets of Real Estate investing with his very own LAZY methods (minimum effort = maximum results).

The truth about owning real estate with no money or poor creditWritten by: Doug Fields
Discover The Truth About How To Own And Control Real Estate With No Money Down Or Poor Credit! This 27 year old licensed real estate agent and investor from Michigan tells you the absolute truth about investing in real estate with no money down... he holds nothing back in this break-through report and tells you exactly what other so-called real estate gurus FAIL to tell you! If you've ever thought about breaking into the billion dollar real estate investing business OR if you're just trying to take your investing to a new level, this is the most important letter you'll ever read! Dear Aspiring Real Estate Investor, If you want to skyrocket your bank account, create insane cash profits, build a lofty retirement nest egg AND want to do all of this with little or no effort by investing in real estate, THEN you're reading the WRONG letter! Yes, you heard me right. If you want a big reward with little effort, then you've come to the wrong website. Let me say this right up front... In life, you don't get something for nothing! Can I say it again? You don't get something for nothing! C'mon, you know in your heart that this statement is ABSOLUTELY the TRUTH. Although we all know that it takes effort to make good things happen, there is still that little glimpse of hope that we all hold in our hearts that maybe we can strike it rich with some get-rich-quick scheme or magic bullet. Listen, the only way to get rich without effort is to win the lotto. It simply doesn't happen. By the way, you've got a better chance of being struck by lighting than to win the lotto. Here's What's In It For You! If you consider yourself someone that is willing to learn...willing to follow directions...and if you don't quit at the first sign of a challenge, then this website is specifically for you and can show you how to build wealth through real estate investing for you and your family. And yes, in some cases you can do it relatively quickly. As a real estate investor you really can have a better quality of life and the lifestyle you may dream of. However, it will take work. If you're willing to follow directions, go through the learning curve and stay committed until you make it happen in your own life, then here is what you can expect to receive in return: Expendable monthly cash flow-- this is income that you receive every month that is extra money for you and your family to spend or save. Use it for vacations, a bigger house, that plasma TV, your child's education, or save it for a rainy's yours. Equity-- as the mortgage balance is paid down over time, you build equity in the home you own. Do not underestimate the power of equity! Equity can be the single strongest factor in building your personal real estate empire! Long term security for retirement-- real estate is proven to be one of the fastest ways to build a nest egg for retirement. So, even if you're approaching or if you're beyond the retirement age, there is still hope to grow a retirement savings. Your wealth will build exponentially over time through real estate and the compounding power of numbers will allow you to retire in style. Appreciation-- historically, real estate has gone up in value and you can make money over time just by owning one or more houses. You may buy a house today that's worth $150,000 and in 10 years you may be able to sell it for $220,000 or more. You then made a profit of tens of thousands of dollars and you didn't do anything accept own a house. Quick profit-- many investors today buy houses and put a little money into them to fix them up. Then they immediately sell them for a quick profit. Tax benefits-- investing in real estate gives many tax benefits that you can take advantage of and pay less taxes at the end of the year. Investing in real estate also allows you to: Be your own boss--listen, 95% of us work for someone else. However, you've got to be told the truth. If you are directly trading your time for dollars, then it is almost impossible to get ahead financially in a big way. Your boss can make money while they're at their kid's soccer game because you and the other employees are making them money. I'll show you how you can make money through real estate while you're at YOUR child's soccer game and you'll begin to leverage your time so that you have cash coming in 24/7 like an automated ATM machine spitting money into your pockets. Work from home--Not only can there be great tax benefits from working at home (you'll need to talk to your accountant), but now you can forget the rush hour traffic to and from work every single day. Ugghhh! Today, I absolutely refuse to drive in rush hour unless it is completely necessary (like attending a funeral or something). It just is NOT the way to start off your day...fighting traffic, dealing with angry road raging drivers all pissed off that they're running late for the office....enough already! As you build your real estate business, wouldn't it be nice to one day be able to do all your work from the comfort of your home? Be there for your kids... Work in your pajamas... Avoid the stress and headaches of traffic and deadlines at the office. It just sounds so much better, doesn't it? Have more free time--I'm going to show you how to actually free up your time by investing in real estate. Sure, you may have to add a couple more hours to your busy day at the beginning, but don't you agree that it will be worth it? C'mon... what would you do with your 40, 50, or 60 hours a week if you eventually did NOT have to report to a job? As you become experienced and build on your investing career, you will have MORE free time and you may have the option of firing your boss forever! Build your net worth There is no better way in this great country of ours to create financial independence, freedom, and long-term wealth than learning to invest in real estate. Why Should You Listen To Me? If this is your first visit to this website, then you may not know who I am. My name is Jeffrey Ringold and I've been a licensed real estate agent and investor for more than 7 years. I've bought or sold more than $12 million in real estate in my career and I accomplished this by the age of 27. I'm the author and publisher of several real estate investing courses, real estate newsletters and have helped thousands of real estate students from around the country. On the Internet, it can be very hard to know who to listen to. Day after day you can get hit by sales pitch after sales pitch with so-called gurus trying to sell you their latest and greatest get rich quick scheme. About the author:My name is Jeffrey Ringold and I've been a licensed real estate agent and investor for more than 7 years.

Real Estate Investment Success Series Tip #1- Making Money With Real Estate InvestingWritten by: Joel Teo
Are you losing money in all kind of speculative instruments like share, bonds and forex and am wondering what asset class to invest in? Why not consider real estate investment with its traditionally higher yields as compared to leaving your money in your bank account. This article will highlight four common strategies that real estate investors use to make money in property investment.Money Making Method #1 - Purchase run down property and spruce it upThis method involves finding a run down property in a good area that you think has promise for resale and sprucing it up like some of the shows where people do an extreme makeover on the property. Bring along a good structural engineer or architect when you do look for such properties so as to ensure that the renovation works that you have to do will not be so extensive that it does not become worth your while to purchase the property. Since the property is may be rather run down, you need to redecorate and repair it and then you can resell this real estate for a much higher price. The key consideration when investing in this kind of real estate is to keep your renovation costs low but ensure that the basic utilities like the electricity , water and gas pipes are in good working condition. Thus this buy at undervalue and upgrade real investment strategy requires good investment property valuation skills and the ability to keep your costs low.Money Making Method #2 - Find places with high rentalsFind areas with traditionally high rental returns that outperform the national average and then spend time looking for them and make money from the rentals. Here in this area of real estate investment, spending some time to find the real estate investment that is a bargain is a good idea so that you can get better return on investment.Some people do not seem to get it that high rental yields are important to a real estate investor and think that most of their customers would pay anything to get a winter residence. I was at a property exhibition recently and spoke to a Spanish Real Estate Agent and when I asked her what the Return on Investment was on a piece of Bulgarian property that she was selling. Not only could she not even understand the concept of ROI but she even laughed off the question of rental yield when I asked her. I am sure she is not alone in his mistaken belief that people buy just because they like the real estate. Thus rental yields or return on investment is critical when you decide what type of real estate investment property to purchase.Money Making Method #3- Purchase foreclosed propertyMost people will know that foreclosed property usually fetches a lower price than the market value since banks are often eager to sell at a price that covers their mortgages or sometimes they just want to liquidate the property. Such properties tend to be auctioned off and you can then resell them for a higher value subsequently. However beware of hidden defects in auction properties and always arrange for a visit down to the property just to check it out.Two people you should bring with you when deciding on a real estate investment is your professional engineer and your contractor. You want to check for hidden defects in your real estate investment to avoid buying a defective property that would cost loads of money just to repair. Thus purchasing foreclosed property may be profitable if you find a real bargain for your real estate investment portfolio.Money Making Method #4- Cash Flow InvestmentRobert T. Kiyosaki in his book explains this real estate investment strategy. He argues that the best investment you get is when you find a property at a bargain and then purchase it with as much debt as possible and then generate a cash flow from the difference between the monthly rent and the mortgage instalment. This method is highly interesting and requires you to really spend time looking for such a real estate investment that fits in that criteria.Remember that real estate investment is dependent on rental and the higher the proposed rental the better your monthly cash flow is. You could also purchase the property at a lower price and this would mean that your monthly cash flow would improve. Note that once your property is partly paid up, you can refinance your loan and extract out some money and purchase a second property and so on. Soon you would have multiple streams of income from the purchase of one real estate investment property.In conclusion, there are many ways to make money from real estate investment and what's missing is massive action on your part. Take massive action and start hunting for your ideal real estate investment property today and start generating substantial real estate investment property profits.
About the Author:Joel Teo takes a keen interest in real estate investment as part of a larger investment portfolio.

Learning About Real Estate Website DevelopmentWritten by: Danny Selka
Learning About Real Estate Website Development Thousands of individuals in United States are real estate agents. Many real estate agents work for an existing real estate agency or they their develop their own. In many states a real estate agent is required to obtain a real estate license before they being selling homes. Obtaining a real estate license may be difficult for some individuals; however, many have a problem with obtaining clients once they have acquired their license. A common mistake that many business owners make is not using the internet to its fullest potential. The internet is an amazing resource of information; however, it can also be used to promote a business. For many businesses to become successful they must learn about website development. Fully understanding real estate website development will allow real estate agents to use the internet to their advantage. One of the best ways to learn about real estate website development is by researching it through the internet. If you are interested in developing your own website there are number of online resources pertaining to real estate website development. Many of these online resources come in the form of a website or online message forum. The majority of these forums or websites should be free to use. It is possible that a few websites may require you to pay for obtaining information on real estate website development; however, you really shouldnít have to. There is honestly no reason why you should pay for just obtaining information when a large number of other sites will allow you to acquire the information for free. Once you have researched real estate website development you can begin the work of developing your own website. If you are unhappy with the quality of your work or do not feel that your website design is professional enough you may wish to consider hiring outside help. This outside help can be acquired in a number of ways. When you were researching real estate website development you may have came across a few websites that offer real estate website templates. Real estate templates can usually be purchased for around one hundred dollars or less. They are used as a model or guide for developing a website. Once a real estate website template has been purchased you will generally just have to enter in your business information. Real estate website templates are popular because they are an easy and fairly low-priced way for real estate agents or agencies to have a website developed. If you do not have the time to develop your own website or to use a real estate template you may wish to hire a website designer. A real estate website designer is typically experienced in real estate website development. For a fee they can create a professional looking real estate website for you. Researching, learning about, and understanding real estate website development will not only make you more knowledgeable, but it may also help your business. Company websites are proven to help increase the sales and profits of a company. If you are currently operating a business without a company website you should have one developed today. About the author:Danny Selka is a writer for Communicate Real Estate

Use Real Estate Loans To Finance A Commercial or Residential Property

Use Real Estate Loans To Finance A Commercial or Residential Property

Written by: Aldrich Chappel

Real estate is one of the most lucrative investment options. Besides using it for investing, people acquire real estate to have a comfortable and sprawling residence. Real estate is also used to further a person's business and commercial interests. Although enticing, buying a desired real estate is beyond the financial capabilities of most of us. Without the real estate loans to finance the purchase, the dream of owning the real estate would essentially remain unfulfilled.

Real estate loans can be taken to purchase a commercial property or a residential one. Commercial real estate loan can be taken for properties like guesthouses, hotels, restaurants, pubs, shops, nursing homes, warehouses, industrial facilities and leisure resorts etc. Residential real estates loans can be taken for the purchase of mansions, bungalows, farmhouses, apartments and other dwellings.

Real Estate Loans use the property in consideration as the collateral. It means that the borrower has legally agreed to put the real estate as the security for the loan. The lender will be holding the title deed of the real estate with him and the borrower gets it only after he has repaid the entire loan with interest. If under any circumstances the borrower is not able to keep up with the repayment schedule, the lender is free to sell the real estate and recover his amount.

Real estate loans are available for huge amounts. Residential real estate loans can range from £25000 to £100000 and upwards. The commercial real estate loans are capable of funding real estate purchases up to £1000000. Lending amount is restricted by the value of real estate, the repayment capacity of the borrower and his credit history. The APR's (Annual Percentage Rates) on real estate loans range from 6% to 20%. A borrower has the option to choose between a fixed rate and a floating rate interest regime. The real estate loans can be repaid in 30 years. However, the borrower can choose a repayment period of 25, 20, 15 or 10 years. The shorter the repayment period for the real estate loan the lower will be the loan cost. However, the monthly installments towards the repayment will become higher as the repayment term decreases.

Lenders require that the borrower should contribute some percent of the entire value of the real estate. This is known as down payment. Lenders prefer if the borrower is able to put at least 20 % of the total value as the down payment. The balance of the real estate loan will be divided in equal monthly installments according to the repayment term. Paying a higher down payment will result in a smaller loan amount and smaller monthly installments.

Applying for a real estate loan becomes very simple if the online method is used. Online lenders do not have any application fee as compared to regular lenders. In addition to this the online application process is streamlined and does not require hefty documentation. The variety of real estate loans and their repayment options can be easily researched by using the lenders websites.

Whether a borrower gets the best or not on his real estate loan will depend on how carefully he chooses his lender. Since, a real estate loan is a long-term commitment to repay a substantially high amount, any hidden clause or fine print that threatens to drive things in the favor of lender can be detrimental to the borrower's interest. To remedy such a situation a borrower must hire a competent real estate attorney and scrutinize the fine prints carefully. Thus, by negotiating the best deal a person can get the right real estate loan to finance his dreams.

About the author:

Aldrich Chappel has been associated with get-secured-loans,since its inception.Having completed his Masters in Finance from Lancaster University Management School,he undertook to provide useful advice through his articles that have been found very useful by the residents of the UK

Reinventing Real EstateWritten by: Charles Warnock
Reinventing real estate, Part 1:How online and empowered consumers are taking charge and paying less. For decades, the real estate world turned in a predictable manner. The roles of buyers, sellers and real estate professionals were fairly well defined and transactions followed a predictable path of yard signs, newspaper ads, open houses and miles of paperwork. Recently, online and empowered consumers have changed the game. Real estate professionals now face issues similar to the ones that have transformed the retail, personal finance and travel planning industries. As technology advances and new business models evolve, the real estate industry has begun to transform itself from providing traditional, carefully controlled "agent-centric" transactions to new "consumer-centric" practices. The following is a look at some of the recent industry trends and how buyers, sellers and investors can expect to benefit. The "Five Ds" that are driving change in real estate are: 1. Disruption - Over the past 10 years, the Internet has matured into a powerful platform for delivering real estate information, forever changing the interaction between buyers, sellers and real estate professionals. 2. Displacement - The popularity and acceptance of self-service and consumer-direct business models is being felt by real estate professionals, who are striving to develop attractive new offerings for Web-savvy consumers. 3. Demanding consumers - You now have more real estate knowledge, tools and resources at your fingertips than ever before. More savvy consumers tend to be more independent and demanding.4. Downward pressure - Traditional real estate commissions of 5-6 percent of a property's sales price are facing downward pressure.5. Developing alternatives - The real estate industry is transforming itself to provide targeted services and exciting new options that add value for consumers. Disruption"We are going to see our industry go through dramatic transformation via the Internet and consolidation of agents and companies." - eRealty Times Columnist Dirk ZellerSome industry observers have adopted Harvard Business School professor Clayton Christensen's term "disruptive technology" to explain recent developments in real estate. Though it's easy to point to the World Wide Web and advancing technology as the main changes in real estate, that's only part of what's shaking things up. Essentially, the real cause of disruption is not just technology, but technology-enabled real estate consumers.Web-enabled consumersAccording to the National Association of Realtors (NAR), more than 72 percent of homebuyers now begin their home search online. The popularity of online real estate ads surpassed newspaper property listings back in 2001, and the gap is widening. Less than one percent of buyers first learned about the home they purchased on the Internet in 1995, while in 2004, that number passed 20 percent. According to a California Association of Realtors (CAR) survey, 97 percent of respondents said the Web helped them understand the buying process better and 100 percent said using the Web helped them understand home values better. Web-enabled homebuyers like you are taking a more active role in researching homes and neighborhoods. You also now spend less time with real estate professionals once you have completed your research. Internet homebuyers also used the Web effectively to filter out properties that did not interest them, visiting 6.1 homes on average versus 15.4 for traditional buyers. Today, you can view photos and detailed information for hundreds of properties in the time it used to take to visit a single one. And the Web provides much more opportunity than simply moving print listings online. The growing availability of residential high-speed Internet connections has boosted the popularity of virtual tours and interactive maps, providing consumers with powerful and flexible visual search tools.In addition to making home searches easier, automated valuation model (AVM) software is making a big impact in how properties are evaluated. AVMs, which generate valuation estimates by analyzing and comparing property information data, are becoming increasingly sophisticated and accurate. While not considered a substitute for human appraisals, AVMs are gaining popularity because they are inexpensive, easy to use and produce valuation estimates in minutes. Now AVMs, used extensively in electronic mortgage approval processing during the recent refinancing boom, are becoming available on real-estate Websites aimed at consumers. This is a significant development for independent sellers, who often find it challenging to price their properties correctly when selling on their own. The MLS goes public"In real estate, MLS data sits at the apex of the change, specifically the MLS information that is pushed to the Internet every minute of the day." - Bradley Inman, Publisher of Inman News Once an exclusive tool for real estate professionals, the multiple listing service (MLS) has in recent years become a very public platform for real estate listings. The MLS is the nation's most comprehensive database of properties for sale - four out of five homes sold in the United States are listed on the MLS. MLS properties are available to agents and brokers worldwide, and are now accessible via consumer Web sites such as,, Excite, Netscape, AOL and MSN. MLS listings also appear on local, regional and national brokerage Websites through Internet Data Exchange (IDX) agreements that allow participating Realtors to share listings and display them to consumers. Even though only licensed realtors can list property on the MLS, the system has begun to figure prominently for the $110 billion independent seller (for-sale-by-owner or FSBO) market. About 13 percent of real estate sales are now FSBO, conducted without a broker's assistance. Type "flat fee MLS" into any major search engine, and you'll see dozens of real estate professionals willing to list your property in the MLS for a fee. If you are willing to pay a commission of 2-3 percent, you can attract the attention of thousands of agents who will show your property to prospective buyers. You can then reduce the cost of the sale to about half a traditional 5-6 percent sales commission, plus the cost of the MLS listing. If you find an independent buyer working without an agent, you could make a sale with no commission at all and pay only an MLS listing flat fee. Displacement Currently, about 2.4 million real estate licensees operate nationally, according to the Association of Real Estate License Law officials. The NAR has more than one million members, up from about 760,000 members five years ago. Many real estate professionals and industry observers expect a significant decline in this number because some tasks traditionally performed by agents and brokers can now be done more quickly and easily by Web-enabled consumers. "Historically the fundamental driver of the real estate industry was the control of information. The real estate agent and the real estate office were the only sources of comprehensive information on which properties were for sale and those who might be interested in buying them. With this control revenues were practically guaranteed. Moreover, because this exclusive control was akin to a monopoly by virtue of the multiple listing service (MLS) any firm of any size could serve the customer equally well. As a result, the number of real estate companies grew without regard to market efficiencies.Simply put, the traditional model is too inflexible. Consumers are seriously questioning the value of a real estate agent. They frequently feel that many of the traditional tasks undertaken by the agents are now either no longer required or can be done by the consumer themselves."- Swanepoel & Tuccillo, Real Estate Confronts ProfitabilityThe quotes above, from a popular report on emerging real estate business models and dwindling profit margins, highlight a number of issues traditional real estate professionals are now facing. And if the real estate industry has grown historically without regard to market efficiencies, the issue has only been compounded since 2001, as new agents signed on in droves, lured by low interest rates and skyrocketing home prices in many areas. It's likely that the number of traditional real estate agents will decline, while new types of real estate jobs will be created to deliver value to Web-savvy customers.End part 1
About the Author
Charles Warnock is Marketing Communications Manager at South-Florida based Homekeys. He writes often on the topics of real estate, finance, interactive marketing and business development. He can be reached

Investing In Real Estate Investors

Written by: John E. Roush

With the never-ending changes in our Real Estate Markets real estate professionals are starting to pay attention to the sound of new commission streams of income. Some realtors have either shied away or ran-away from such terms as "Cap Rate," & "Cash-on-Cash Returns." Terms that only the 'savvy' and 'numbers-oriented people use to determine if a Real Estate purchase is a "Good Deal", or not. A majority of the realtor brethren attended real estate school because they are excited and passionate about the promise of selling real estate and making a fantastic living. That being said "Times are a Changing." Even if you live in a Hot Market where residential real estate sells in 2-3 days there is an old approach to real estate that is growing faster by the day?..Residential Real Estate Investors.

This deft group of real estate investors is taking real estate and the real estate investment world into a new era! No longer accepting the wild volatility of the Dow Jones and NASDAQ families, and unwilling to accept the investment practices of their fore-fathers, these Investors throw caution to the wind for returns above the traditional 5-6% in their Roth or IRA accounts. These Investors are bold and oftentimes aggressive. Today's Real Estate Investors are all about the fast fix-n-flip, high appreciation, and rock solid monthly cash-flows. Cutting their teeth on investment in their own home-towns is only the beginning as the Serious Investors turn to points outside their own back-yards to other regions that demonstrate greater promise and higher returns.

You may say well how does the older adult view these investment opportunities? For starters the age of these stealth hunters ranges from 28 to 68. From "Rich Dad-Poor Dad" book series to Trump's magical presence on "The Apprentice," the young real estate entrepreneurs are making their dreams happen to the tune of 3-5 acquisitions a year! Got your attention now? The typical Investor has good to great credit scores, excellent cash reserves or hidden resources of partners with cash, and a willingness to make the deal happen at nearly any cost. The best kept secret of all is that these investing beasts travel in packs. Where you see one, another is very close behind. In other words they know the people that you need to know to grow your investor database even larger. If the real estate professional does a good job the happy clients are likely to refer many of their fellow-investors. Not just investor clients but their regular every-day real estate business. Face it, if you can demonstrate to your clients how adept you are with their investment portfolio, then wouldn't you suppose they would carryover this trust in looking to you in buying a basic home, condo or beach house?

So what if you haven't been focused in the real estate investment sector, and you are thinking this all sounds pretty good, let's give it a try. First question to ask yourself is who have your clients been working with or exploring their options of real estate investing with over the past 3-4 months. Statistically 6 out of 10 clients have considered investing in real estate or have already begun doing so before their realtor even has a chance to blink an eye. Got your attention now? How about the fact that in less than one year I increased my annual commissions by 30% by just positioning myself within my primary data-base of clients. All I did was let them know that I was ready, willing and able to begin assisting them with their "Investment Realty" needs. What I learned during the first year was that if I could create an environment for my clients to learn more about real estate investing that they would thank me in a variety of ways?most importantly they would call me before writing a contract and would make sure that I was involved in every contract where they wanted to make a real estate purchase. Before long 30% went up to 45% and further.

Even if you aren't interested in expanding your client database, at least consider protecting the turf you have for so long spent tireless amounts of time and financial resources to maintain their allegiance. On the other hand if you are looking at your real estate career and are wondering how to reposition yourself for market growth certainly to go well into 2025, here are a few known facts about how real estate investors can improve your business.
Real Estate Investors are literally everywhere. Successfully tapping into your current database could increase your annual commissions by 20-30%.
Real Estate Investors will be loyal to the professional that helps fill the gap of their investment education. Workshops, mentoring groups, finding the "golden deals" in your market makes a huge impact!
Investing in Real Estate Investors doesn't have to mean that you lose your "typical" residential realtor position. Being a real estate investment specialist means you are smarter than the average realtor in the market.
Mortgage professionals are struggling to provide real estate investors with property deals, so when you can place an investor into a good deal the referrals will begin to flow even more.
Real Estate Investors tend to be more conscientious about your personal time away. Investors also like to shop Monday-Friday for their deals before the "Weekend Warrior" investors get out into the competition. This translates into more normal hours and days of operation for you and your business.
Real Estate Investors buy-sell cycles are shorter than primary home purchasers resulting in more transactions in shorter time-frames.
If any of these points are encouraging you to seek new opportunities in your business then make sure to sign up for the monthly "Grow your Real Estate Investment business" e-mail newsletter from additionally, other excellent tools to improve and expand your real estate business can be explored at the InvestorLoft's educational Shoppe.

About the Author

John E. Roush, Broker-Owner Atrium Real Estate Investments. John is a full-time real estate agent specializing in real estate investment and real estate investment education. To contact John send all correspondence to © 2005

Real Estate GrantsWritten by: Dr. Martin Oliver
According to informed sources, if you want to become a real estate agent but need a grant to help you succeed, you should immediately go to and apply on line. Applicants have until midnight December 31st, 2005 to apply according to the Real Estate Apprentice Foundation. The Foundation awards 20 bi-annual real estate grants totaling $250,000 to aspiring real estate Rookie Agents seeking to pursue a real estate career. Real estate education prizes and awards are sponsored by leading companies and providers in the real estate industry. According to the Foundation there are no application fees, no payback, no hidden agendas, and no strings attached. The Real Estate Apprentice Foundation is a California nonprofit Public Benefit Corporation seeking to help aspiring Rookie Agents become profitable real estate professionals.
Yearly Grant AwardsThe estimated value of the Twenty Finalist Grants are approximately $5,000 each and the Two Grand Prize Winner's Grants are valued at approximately $75,000 each. Grants total $125,000 every six months - $250,000 annually. Exact selection and value of product & services awarded depends on the products and services offered by sponsors. Some of the largest awards include real estate education and training by RealtyU® Real Estate Schools; real estate mentoring by; real estate marketing and corporate identity by Hobbs Herder Advertising and Marketing; MLS and other real estate transaction management software by First American Residential Group; top of the line real estate books by Thomson Publishing; real estate coaching by Success Strategies Institute; real estate calculators and Laser Dimension Masters from Calculated Industries; Real Estate SimulatorT testing to determine the applicants suitability for a career in real estate; membership to The Real Estate Cyberspace Society; and subscriptions to the print magazines Broker Agent News and Real Estate Magazine, a RISMedia publication.
Real Estate Grant Winners Season IThe names and a brief biography of all Season I winners can be view on the Real Estate Apprentice Grant website. To view the The Real Estate Apprentice Story" go to the website and Watch "The Real Estate Apprentice Story", staring Kendra Shearer, Season I Grand Prize Winner. The lively sound track is courtesy of The Walt Disney Company. Recent Real Estate Apprentice News and all recent press releases are also available online.
Apprentice VisionThe program is designed to spotlight the importance of real estate apprenticeships for the public good, the enhancement and betterment of the U.S. residential real estate brokerage industry and to raise the standards and levels of professionalism for real estate agents in general. Finalists are selected through questions and interviews and are judged by a panel of industry leaders, authors, business professionals and top producers.
Apprentice MissionThe Real Estate Apprentice Grant Program's mission is to assist new licensed agents entering the Real Estate Industry, to overcome their fears and obstacles and to facilitate the creation of top producing sales people by providing quality guidance, products and services to expedite a successful fast track to profitability.
Application ProcessTo apply right now for the Real Estate Apprentice Grant applicants will be asked to answer three short questions, which will assist The Foundation in evaluation of the applicants. Applicants are judged on the basis of: Salesmanship and communication skills, entrepreneurial spirit, integrity, creativity and uniqueness. Semi-Finalists will be asked to respond to additional questions.
EligibilityParticipation is open to US/Canadian citizens or legal residents who are taking or have taken a real estate licensing course or who became licensed as a new agent between April 2nd, and December 31st, 2005. Applicant must at the time of award have passed the state/province real estate licensing examination and be a licensed agent in good standing. Proof of eligibility must be provided upon request. The Grant does not discriminate and is fair and impartial regardless of race, color, national origin, religion, sex, age, disability, marital status, political affiliation and sexual orientation.About the Author
Contact Dr. Martin Oliver at

Real Estate Education Should You Spend Your MoneyWritten by: William J Archambault Jr
Five years ago I would have started talking about the late night TV Real Estate Gurus, but today anyone with cable TV, a satellite dish, or in a large city can learn the virtues of having money 24 hours a day. The infomercials or rather the programs they promote are all most people think of if you mention real estate education. But, there are really three distinct types of real estate education and hundreds of sub-categories. The three types are: real estate investment (as popularized by Carlton Sheets,) pre-licensing (mandated by most states,) and real-real estate education (traditional education at the college/professional level, it should be mandatory in High Schools.)
Everyone should have some real estate investment education, especially the poor among us. We all live and work in or on real estate, even pilots land. Almost all fortunes great and small included real estate, yet we don't teach it to our kids.
Pre-licensing education is only needed for those who want a real estate license.
The most difficult is real-real estate education. No matter what any guru says you'll need real-real estate education, the good news is you can hire it. One note of caution, don't assume your local real estate agent has anything but pre-licensing education! In real estate the three most important words are location, location, location. If you're hiring or taking any form of real estate education the two most important words are caveat emptor!
Lets start with Pre-licensing, it's the simplest form of education memorization!. In the preface to my book "One House At A Time / Finding And Buying Single Family Rentals" I write:
Don't confuse understanding real estate with being able to pass the real estate licensing exams!
To pass the real estate exam, take the required pre-licensing class and memorize the answers!
Do not debate with your pre-licensing instructors, accept the answers they provide, whether or not the answers makes sense! Do not let anyone knowledgeable, or not, confuse you! Pass the exam!
What the pre licensing instructors know is that the real estate exams are not written by real estate people! Licensing exams are written by professional educators who are assigned a chapter of the law or even just a paragraph and told to write questions about it without reference to how the question might be affected by the entire law, case law, other laws, or common and local practice.
There are only two ways to pass a state real estate exam either know the law so well that you can tell from what paragraph each question comes from (answering as if you knew only that paragraph) or memorize the answers. I stand by that advice, I can think of no better way to put it! If you want to get your real estate license, get it first before taking any real estate investment classes or any real-real estate education. I've been in lending and real estate since 1969, teaching real estate, real estate investment, real estate sales, mortgage lending, mortgage sales, 1031 exchanging, and real estate development. In every class I judged my results by the students understanding. I've never taught pre-licensing because understanding real estate is irreverent to passing the exam.
Real-real estate education comes from two sources, colleges/ universities and the various divisions of the National Association of REALTORS®. Real estate schools teach pre-licensing, gurus teach real estate investment. Real-real estate education covers every area of real estate, advanced classes have required prerequisites, and their instructors have either advanced degrees or demonstrate experience.
Real estate investment education is mostly "motivational!" Instructors known as "GURUS" (mostly quacks) preach you don't need real estate education, only their expensive "advanced" classes. They promise to teach "secrets." They promote themselves by telling you the value of having money! They tell you how easy and quick it to make money is using their "system." They give you canned speeches rather than educate you so that you can use your own words. They present lots of anonymous testimony to their teachings none of which you can verify. They provided huge amounts of paper and recordings to justify their outrageous prices.
There are good Gurus! Read "One House At A Time / Finding And Buying Single Family Rentals." I"m a Guru, I use to teach real-real estate but now teach real estate investment. There are others, I would trust anything written by John T Reed. The very best free class I ever saw was by Barney Zick (his is best stage present I've seen in real estate investment education) his prices are outrageous, but I liked everything he said.
The question was "Real Estate Education Should You Spend Your Money?" To answer that first we ask how much are we talking about? My book sells for $44.95, Reed's books start near $30.00, the TV Gurus start at several hundred dollars and to get their whole program can cost as much as $35,000.00! Don't be fooled by $9.95 trials! "Should You Spend Your Money?" Yes! You get very little extra with the higher prices unless you judge education by the weight of the books, but one reasonable deal can recover the cost of even the most expensive program! So do something!
The only advantage to the high priced programs is the motivation you'll get from your spouse, when she finds out what you spent! read About the Author

3 of the top 9 reasons that the real estate bubble is bursting

Written by: Louis Hill, MBA

If you own real estate or are thinking of buying real estate then you better pay attention, because this could be the most important message you receive this year regarding real estate and your financial future.

The last five years have seen explosive growth in the real estate market and as a result many people believe that real estate is the safest investment you can make. Well, that is no longer true. Rapidly increasing real estate prices have caused the real estate market to be at price levels never before seen in history when adjusted for inflation! As a result, there are nine top reasons that the real estate bubble will burst. The growing number of people concerned about the real estate bubble means there are less available real estate buyers. Fewer buyers mean that prices are coming down.

On May 4, 2006, Federal Reserve Board Governor Susan Blies stated that "Housing has really sort of peaked". This follows on the heels of the new Fed Chairman Ben Bernanke saying that he was concerned that the "softening" of the real estate market would hurt the economy. And former Fed Chairman Alan Greenspan previously described the real estate market as frothy. All of these top financial experts agree that there is already a viable downturn in the market, so clearly there is a need to know the reasons behind this change.

3 of the top 9 reasons that the real estate bubble will burst include:
1. Interest rates are rising - foreclosures are up 72%!
2. First time homebuyers are priced out of the market - the real estate market is a pyramid and the base is crumbling
3. The psychology of the market has changed so that now people are afraid of the bubble bursting - the mania over real estate is over!

The first reason that the real estate bubble is bursting is rising interest rates. Under Alan Greenspan, interest rates were at historic lows from June 2003 to June 2004. These low interest rates allowed people to buy homes that were more expensive then what they could normally afford but at the same monthly cost, essentially creating "free money". However, the time of low interest rates has ended as interest rates have been rising and will continue to rise further. Interest rates must rise to combat inflation, partly due to high gasoline and food costs. Higher interest rates make owning a home more expensive, thus driving existing home values down.

Higher interest rates are also affecting people who bought adjustable mortgages (ARMs). Adjustable mortgages have very low interest rates and low monthly payments for the first two to three years but afterwards the low interest rate disappears and the monthly mortgage payment jumps dramatically. As a result of adjustable mortgage rate resets, home foreclosures for the 1st quarter of 2006 are up 72% over the 1st quarter of 2005.

The foreclosure situation will only worsen as interest rates continue to rise and more adjustable mortgage payments are adjusted to a higher interest rate and higher mortgage payment. Moody's stated that 25% of all outstanding mortgages are coming up for interest rate resets during 2006 and 2007. That is $2 trillion of U.S. mortgage debt! When the payments increase, it will be quite a hit to the pocketbook. A study done by one of the country's largest title insurers concluded that 1.4 million households will face a payment jump of 50% or more once the introductory payment period is over.

The second reason that the real estate bubble is bursting is that new homebuyers are no longer able to buy homes due to high prices and higher interest rates. The real estate market is basically a pyramid scheme and as long as the number of buyers is growing everything is fine. As homes are bought by first time home buyers at the bottom of the pyramid, the new money for that $100,000.00 home goes all the way up the pyramid to the seller and buyer of a $1,000,000.00 home as people sell one home and buy a more expensive home. This double-edged sword of high real estate prices and higher interest rates has priced many new buyers out of the market, and now we are starting to feel the effects on the overall real estate market. Sales are slowing and inventories of homes available for sale are rising quickly. The latest report on the housing market showed new home sales fell 10.5% for February 2006. This is the largest one-month drop in nine years.

The third reason that the real estate bubble is bursting is that the psychology of the real estate market has changed. For the last five years the real estate market has risen dramatically and if you bought real estate you more than likely made money. This positive return for so many investors fueled the market higher as more people saw this and decided to also invest in real estate before they 'missed out'.

The psychology of any bubble market, whether we are talking about the stock market or the real estate market is known as 'herd mentality', where everyone follows the herd. This herd mentality is at the heart of any bubble and it has happened numerous times in the past including during the US stock market bubble of the late 1990's, the Japanese real estate bubble of the 1980's, and even as far back as the US railroad bubble of the 1870's.

The bubble continues to rise as long as there is a "greater fool" to buy at a higher price. As there are less and less "greater fools" available or willing to buy homes, the mania disappears. When the hysteria passes, the excessive inventory that was built during the boom time causes prices to plummet. This is true for all three of the historical bubbles mentioned above and many other historical examples. Also of importance to note is that when all three of these historical bubbles burst the US was thrown into recession.

With the changing in mindset related to the real estate market, investors and speculators are getting scared that they will be left holding real estate that will lose money. As a result, not only are they buying less real estate but they are simultaneously selling their investment properties as well. This is producing huge numbers of homes available for sale on the market at the same time that record new home construction floods the market. These two increasing supply forces, the increasing supply of existing homes for sale coupled with the increasing supply of new homes for sale will further exacerbate the problem and drive all real estate values down.

A recent survey showed that 7 out of 10 people think the real estate bubble will burst before April 2007. This change in the market psychology from 'must own real estate at any cost' to a healthy concern that real estate is overpriced is causing the end of the real estate market boom.

The aftershock of the bubble bursting will be enormous and it will affect the global economy tremendously. Billionaire investor George Soros has said that in 2007 the US will be in recession and I agree with him. I think we will be in a recession because as the real estate bubble bursts, jobs will be lost, Americans will no longer be able to cash out money from their homes, and the entire economy will slow down dramatically leading to recession.

In conclusion, the three reasons the real estate bubble is bursting are higher interest rates; first-time buyers being priced out of the market; and the psychology about the real estate market is changing. The recently published eBook "How To Prosper In The Changing Real Estate Market. Protect Yourself From The Bubble Now!" discusses these items in more detail.

Louis Hill, MBA received his Masters In Business Administration from the Chapman School at Florida International University, specializing in Finance. He was one of the top graduates in his class and was one of the few graduates inducted into the Beta Gamma Business Honor Society.

Mr. Hill received his undergraduate degree from the University of Florida with a double major in Finance and Risk Management.

For the past several years he has been working in a South Florida commercial real estate lender that specializes in financing real estate developers. Mr. Hill has seen firsthand the challenges and pitfalls that real estate developers are experiencing, and how the real estate market has been deteriorating rapidly. He is also a professional consultant to professional real estate developers and investors. read more

Real Estate Problem SolverWritten by: Willard Michlin
Introduction There are many areas one can invest in. Since I was 15 years old I have looked for the fastest, most effective way to accumulate a lot of wealth, with the least amount of risk. I am now 58. While looking for this road to truth, I spent a lot of time in the school of hard knocks. The school of hard knocks is a very interesting but painful school to attend. It is also the most expensive way to learn something, but when you graduate you have a PHD in what to do and not do with your time and money. The schools I attended were: Investing in businesses as a silent partner, owning my own businesses, working for another family member-in my case my father, buying publicly traded stocks and securities, penny mining stocks, commodity trading, investing in gold and silver, real estate private lending, real estate development, real estate remodeling, buying foreclosure properties. I also worked as a real estate problem solver/matchmaker, bringing business owners together with business buyers, and matching up real estate owners with real estate buyers. Writing about all of these activities would take an encyclopedia, so we will limit this essay to the kinds of situations you can run across in the real estate school of hard knocks. I will present my solution with the given situation. There are more than one possible solution and I invite you to come up with other possible solutions as you read. If you get some value from my experiences that will hopefully lower your tuition to the real estate school of hard knocks. Feel free to e-mail me your comments, alternate solution or stories. Do, please, let me know that it is all right for me to publish them. My Real Estate Philosophy As a way of introducing myself, I thought you might find what lessons I have learned, after all these years of real estate, interesting. Buy real estate instead of stocks, bonds, mutual funds, or commodities. When you pick a winner in one of these non-real estate areas you can make 5-10 times your money. When you are wrong, in one of these non-real estate areas, you can actually loose up to 90% of your money. In real estate, if you are not greedy-not trying to get rich quick-in one year, you can make 100 times your money, on the upside. The downside risk is only based on how well you looked at all the possibilities ahead of time. If you did, the downside risk is reduced to only the holding time to fix a mistake. If you rush in and do not explore all the possibilities of a business venture, you can actually loose 100% of your money. In my mind an upside of 100 times profit is better than 10 times profit. My philosophy on real estate ownership has changed in the last 15 years. I used to think that selling at the top of the market was the smart move and buying in the crash. Now I feel that buying when prices are down is still a smart move but never selling is the way to go. In order to hold on to a property in a down market you require proper planning to survive the crash. This I call a back door or emergency plan. This is have a plan and knowing what you will do if everything goes wrong with you original plan. When you have a backup plan, you rarely need it. This is the basis of my philosophy. With this understanding, you might more clearly see why I did what I did in these situations. The Stories and article: The area of real estate investing is one of the most complex because it is a combination of law and real estate. It is one of the most interesting because fortunes are made and lost in this area, and the numbers are so enormous. Lastly it is an area where crooks can make a lot of money and many times get away with it. Following are some stories (case histories) I have dealt with and some articles I have written on the subject of fraud in real estate. Finally, I have included an article on the basics of foreclosures and real estate in general, for your interest. I hope you enjoy them. The Stories: Story 1: It was early March 2000 and I received a call from Kevin. He said that he had heard about me from some mutual friends. He wanted to speculate in buying HUD houses (Properties that the Government had foreclosed on). He wanted to buy them, fix them up and then sell them at a profit. He had heard that I had bought many foreclosures in the 1970's and 80's and he was hoping I could advise him. We met for lunch and he told me his life story. The important part of this conversation is that he had bought a boarded up 14 unit apartment building in downtown San Bernardino, across the street, from one of the roughest high schools in California. By the end of the meeting, I had figured out that he had overpaid about $75,000 for the building, he had already wasted $200,000 trying to remodel it, and it was still $100,000 away from being finished. He had bought it 1.5 years ago and a large part of his costs was the interest on all his loans, related to this project. He was now broke, and in deep trouble, but in his mind, the badly needed money was coming. It is interesting to note where he got the money to invest in this project. 4 years earlier he was given money to buy an apartment building by his father. He was given enough money that he only needed a very small $150,000 real estate loan to purchase a building in Pasadena that cost him a total of $525,000. In order to buy the San Bernardino rehab project, he first refinanced the first trust deed on the Pasadena building and jumped the loan balance to $385,000. When that money was gone he borrowed $74,000 as a second Trust Deed on both the Pasadena and San Bernardino properties. By the way, that loan cost him 15% interest and $15,000 in up front fees to get the money. Before we parted, I told him that he made a very expense mistake in buying San Bernardino. I explained that from the day he bought the building it was a sure bet that the project would fail. I then had to tell him that I would not lend him any money on San Bernardino, to save his butt. Over the next 2 months I received periodic phone calls, telling me the progress of the fund raising. One of those updates I was told that the existing 2nd Trust Deed lender was saying that he might give Kevin the added $100,000 he needed to finish the project. At the same time, Kevin also believed he had found a bank that might refinance all the loans of San Bernardino. The difficulty with the bank loan was that the appraisal fee was $3,000, and it had to be paid in advance, even to just apply for the loan. Again Kevin asked me for money. Again I refused to put more good money down his black hole. Then one morning I got a call from Kevin, "If I don't make the $2,000 payment to the 2nd trust deed holder, he will start foreclosure in 2 days. Kevin also told me "The 2nd trust deed lender said that he would buy the Pasadena apartment building for what I had paid for it, 4 years ago, $525,000." The offer had a stipulation to it. Kevin had to bring the loan current first. In my mind, if Kevin could bring the loan current, why would he even bother to sell the property for a wholesale price? I couldn't believe what I was hearing. After hearing all of this I decide that it is time I stop saying no and help. What Kevin thought he wanted was a real estate loan for a lot of money. The truth is, that money was not the solution to his problem. The problem had to be different than what Kevin believed, which is why the problem persisted. The real situation was not more borrowing. More borrowing meant more money down the drain. Experience has taught me, "If the problem was what Kevin thought it was, it wouldn't be a problem." What does this phrase mean? A businessman has a financial set back. He thinks that with some short term funding he can recover from the set back and return to the top. After looking around, our businessman will usually find the money, but strangely enough the problem doesn't resolve. If the problem did correct itself, then the businessman was right about what the problem was, and the problem would be gone. Usually the money doesn't help, but the businessman doesn't understand that. He doesn't realize that the problem wasn't money in the first place. If it were, the problem would now be gone. Lets continue the explanation. The last money borrowed is now gone and the problem persists, so our businessman goes out to find more money to solve the problem that didn't solve with the money he borrowed, the first time. What happens the second time? The same thing. The money is used up and still the problem continues. Our businessman is working on the wrong problem. The problem is not money, or the problem would have been gone. Kevin thought the problem was money. It wasn't. He had already poured $300,000 into the San Bernardino building, on top of the $209,000 1st Trust Deed loan that came about when he bought the building. Before he was finished, he spent over $500,000 in a building that needs $100,000 to finish, but was only worth $475,000, after it was finished. What could I do? Use what the good lord gave me. 30 years of experience, on the subject of getting out of problems that I created when I was young and inexperienced. Here was the war strategy. I got Kevin to agree to turn over total management of the two properties to me. Knowing that I was managing the property and working on what I believed was the correct problem, I felt comfortable about loaning money on this deal. If I can't trust myself to solve this problem, whom can I trust? I started by loaning Kevin $25,000 to make needed repairs to the Pasadena building, pay the property taxes and to bring the first and second loans current on the Pasadena property only. Nothing was to be spent at this time, on the San Bernardino building. Now that I controlled the Pasadena apartment building, I discovered what repairs the building needed. The list was so long it took one man three months, full time, to fully handle it. I then did a very detailed market study and determined what the market would pay in rents. I asked the tenants for a list of everything they wanted done in their apartments to be happy. I then did everything the tenants requested and I then raised their rents 30%. After the building was full, I raised the rents another 15%. The value of the building went up and I received an offer for $725,000. This was $200,000 more than its value 6 months earlier. I put it into escrow, and then I realized that I could raise the rents some more. I raised the rents again in escrow and forced the buyer to pay another $25,000 for the building. Bringing the price to $750,000. That $225,000 profit was needed to help cover the money being lost in San Bernardino. Author's Note: The escrow fell through and the building was kept until this update, December 5, 2004. The building is now in escrow for $1,583,000 What did I do about San Bernardino? I contacted the seller/lender and asked him if he would like me to pull the security guard out of the building and let him have it back in foreclosure. He didn't want it back, even though he pretended that he was willing to do that. He offered me $25,000 in incentives to get me to personally lend the money necessary for the completion of the building, so he wouldn't have to take it back. For 3 months he tried to get me to put money into the building, with the idea that once I put my money in I wouldn't walk away from it. The real story was that I wouldn't put a dime into that black hole until I figured out how to make it recover at least $100,000 of Kevin's lost money. I asked for a $70,000 discount on the note, and offered to pay him off. We negotiated for two months. Just when I was ready to finish the deal, the seller sold his note to someone else for only a $30,000 discount. I was not able to make the money I wanted because now the new note holder wanted 100% of interest and principal due. This threw a monkey wrench into my negotiating. All this time, I had a buyer standing in the wings to buy the building from Kevin while I was negotiating. I was then forced to sell the property to this buyer and Kevin recovered only a little bit of his investment. The lender and I were both playing a high stakes poker game. I lost this round. If I could have gotten the payoff reduced, Kevin would received a large hunk of money from an "as is" sale. This is what I call playing "Craps" on a very big Monopoly board. Author's Note: The buyer, thinking he was going to put $125,000 to finish the remodeling, notified me, after one year, that he had spent $300,000 to finish the building. The apartment building values were increasing rapidly during this time period, so Kevin's project was increasing in value at the same time the buyer was going deeper and deeper into construction costs. The buyer made out all right in the end. If the market had died, he would have lost $200,000 on this building after Kevin had already lost a fortune. It's all about timing, isn't it? Kevin learned that money alone was not the answer to his problems; he needed a Genie, to turn his turkey into a swan. Story 2 Janet is the daughter of one of my oldest and wealthiest friends and clients. We have been doing real estate deals together since 1975. Janet and her husband started buying distressed real estate in Phoenix Arizona in 1994, which was 8 years ago when it was the thing to do. It was now Dec 2000. The market appears to be slowing down and did after September 11, 2001. Janet had been continually borrowing money from her father, whenever things got too difficult. She later sold everything in Phoenix and bought property in Northern California. Then in 1999, one year before I was brought in, she started buying real estate in Kansas City. One day Janet's father called me and asked for my help. He had loaned his daughter $200,000 and felt that everything she owned was upside down. (Loans more than the market value.). This was further complicated by the fact that if she sold her properties, to pay off her father, the capital gains taxes would eat up any cash, from the sale. On top of all this, Janet kept asking for more money to keep up the payments on the properties that had a negative cash flow and didn't have enough rental income. He hired me to help his daughter and agreed to pay my fee. I would work with this 40 years old kid, to get her to return her fathers $200,000 and make herself totally debt free. Janet and I met. She was brilliant. She did know what she was doing, as far as picking good real estate deals. She owned, at the time of our meeting, 10 properties located in 2 different states, and there was $500,000 in equity. If we could get it out, before her father had a stroke things would be great. Janet agreed to the arrangement, happily, if I would be her adviser, not his. Her father agreed to fund whatever money was requested as long as I approved it. Also I had to be the one to ask Janet's father for the money, since the upset between the farther and daughter was getting unbearable. This is what we did. A list of needed repairs was created for each of the 11 properties. Bids were received and the work ordered to be done within 30 days. This was not to take months. It had to be done immediately so we could go to step two. Step 2 was to put on the market all of the expensive Northern California property. To my disbelief, Janet wanted to move her family, to a new city, in the middle of all this and her father agreed to let her do it. She had found an old run down house that she felt was undervalued. That meant that her old residence was put into the group of properties to sell. Sell is what we planned to do. Everything was to be put on the market, and sold at the best price to be gotten, but sold regardless. The property in Kansas was to be repaired and fully rented. The properties that could be sold at what we thought was full retail, were also put on the market. The plan was that when everything was sold, the father would get paid off; the loans on the remaining properties would be paid off and the balance of the cash would be put into the bank. Since all of the Kansas deals appear to be a good investment, Janet could now continue to buy more Kansas property, (she had only been spending $25,000 on each deal) but for all cash. The rents coming in would generate enough income for her family to live on without having to ask for money from dad or touching her investment nest egg. That was the plan. I forgot one last thing. Because many of the properties had been bought years ago on a 1031 exchanges (tax-free exchange), the capital gain tax was going to eat up the cash proceeds. That was one of the traps Janet fell into. She felt she couldn't sell without buying a replacement. Of course by not liquidating before starting anew, she would never get out of debt with her real estate lenders or her father. The solution, for this problem was simpler than one would think. First, the father did a 1031 exchange with Janet for one of the big profit houses. The father sold Janet his personal residences for no money down. Now Janet rented her father the house he lives in. So much for capital gains tax on the $150,000 profit in that one big sale. The second big profit was in the house Janet currently lived in. That was tax-free under the current laws. Since the other houses sold had smaller profits, it was decided that the business decision to get out of debt was more important than avoiding paying any taxes. Author's Note: That was the plan. So what happened? Janet decided she didn't want to sell the junk in Kansas and fired me. She refused to pay her father back and as of December 2004 he had not seen a dime. Father has deducted what she owes him from her inheritance, which will be put into a trust administered by her brother for the benefit of the grandchildren. Real estate in California skyrocketed after 9/11/01 terrorist attack and her properties all doubled in value. Summary: Everyone thinks that his or her problem is not confrontable and therefore unsolvable. I have found that someone other than myself can solve my un-confrontable problems in 10 min and I can do the same for them. It is not a question of being smarter, or more experienced, though experience helps a lot when coming up with easy solutions, quickly. It is really that we all are willing to confront someone else's problems much easier than our own. When we are willing to confront our own problem head-on, solutions begin to appear miraculously. What I do is help people take their mountains and turn them into molehills. The molehills are then flattened with ease. The Real Estate Fraud Articles: These articles were published individually at different times. Here they appear all together, as parts 1, 2 and 3. Fraud in real estate, are you being victimized? (Part I) Rip off artists appear in all shapes and sexes. They usually are nice looking, well dressed and very smooth talkers. They, in conversation, tell you about a financial killing they made, or are in the middle of closing. Then they change the subject. A really smooth talker never asks or suggests you invest. They wait until you beg and plead with them to let you in on their great deal. At this point you are HAD. That means, " your goose is cooked and you are invited to the feast, because you are the main course." The logical question is how do you know, before you lose your money that you are going to be ripped off? The answer is independent research, and lots of it. 1) Find a friend, or a friend's friend who is an "expert" in the specific field of investment you are considering. Ask lots of questions and listen to him. Ask him or her how to make sure you are protected. In the years, 1990 to 1995, eight people I know paid the same real estate trainer over $5,000 each to show them how to buy real estate for "NO MONEY DOWN." The trainer claimed she got results. Not one of the students, all of who got to know each other, after years of trying, ever bought a property for "No Money Down." Recently the same trainer is offering to get her students 100% financing on real estate, even with bad credit. The MARK (the name for a con artist's pigeon) thinks he is paying for an education. The education is that you are $5,000 poorer and you have the name of a loan company that will charge you 8.5% on a 1st Mtg. and 11% on a 2nd mtg. I will tell you how to find such a lender yourself and it will only cost you a phone call. 2) See an attorney or an accountant to review the deal, especially the paperwork. I have seen contracts that if you just read it yourself, word for word and think about what it said you would run like a wolf is chasing you. He is. One simple real estate contract allowed the con man to take the money out of the joint account before he did the repair work. He took the money and never did any work. Never release money until you have everyone's signature on the paperwork and your adviser has read the whole contract, word for word. If you cannot afford an attorney, do not do the deal. It is better to not make a profit than to loose what you already have. "A fool and his money are soon parted." Don't be the fool. 3) Get to know this person. Who are his friends? Who does he work with? What information does the real estate commissioner or the "Better Business Bureau." have on him or her? Ask for the names of people who have already invested with the "con artist", made their profit, and are out of the deal. Do not ask anyone who has gotten in but hasn't gotten out yet. Multi-level people love to have you talk to people that have just entered the group, just before you have. One of smoothest people around was a securities investment adviser in Santa Barbara. He got hundreds of people to invest with him because hundreds of people had already invested with him. None of them did the level of homework they should have. The few people, who did do independent research, smelled a rat and didn't invest. Many of his investors have lost their whole life's savings; the rest just lost a lot of money, but will recover. If you think I am trying to scare you, then you are absolutely right. "Money should come in rapidly and be spent very slowly. Fraud in real estate, are you being victimized? (Part II) The phone range and Peter was on the other end of the line. "Willard, I have a friend of mine that has a real estate problem." I said, "Send him over." Two hours later, Jerry sat in front of me terribly upset. Three years earlier, he had been talked into buying a 4 unit building in partnership with Smooth Talker, a knowledgeable, smooth talking real estate salesman. Smooth Talker offered to find the property, arrange the financing, manage the building and even put up the down payment. Jerry was told that all he had to do was use his perfect credit to qualify for the loan and then sit back, wait seven years and the money would come rolling in. Smooth Talker also promised that the two of them would do more deals and Jerry would make over $100,000. What Jerry did not know and would not figure out until 3 years later, was that Smooth Talker had no intention of splitting anything and Jerry could kiss his perfect credit goodbye! 3 years ago, Smooth Talker had Jerry and two other buyers, buy three buildings, located on one street. The buildings cost $150,000 each. Smooth Talker put up $1,500 down payment for each property, while at the same time, telling the buyers that he was putting in $12,000.00 for each. There was an unexplained difference of $10,500 each. Smooth Talker also collected a $9,000 Real Estate commission on each. Smooth Talker also agreed to take the building in as-is condition, with no inspections and without requiring the seller to make any repairs. There were, unknown to Jerry $10,000 worth of air-conditioning as well as other work that needed to be done on the building. Smooth Talker had those other two buyers borrow from the Federal Government a remodeling loan of $48,000 to make the needed repairs. When those other two buyers each got their loans, Smooth Talker took all the money and said he spent it on Jerry's building. Let me clarify that. Smooth Talker stole the money from the other two investors, telling them he used it on Jerry's building. That is still stealing. My research later showed that he did almost no repairs to any of the buildings, and what little repairs he did have done, were not even paid for. Smooth Talker cheated the poor workers out of their pay. No one could ever understand what he was doing. He even collected rent, pocketing any cash. When the buyers wanted an accounting. Smooth Talker wouldn't even supply it. When I came on the scene and demanded, as a matter of law, an accounting of what was received and spent. Smooth Talker didn't have any proof of what happen to all the money. Jerry wanted out of the partnership but Smooth Talker didn't want the building sold; but he did want to make sure he got his due, if it was. He gave me a statement showing that he had put in $34,000 (which was not true) into the building and wanted that before any split of profits. This would have left Jerry receiving $5,000 and Smooth Talker making $46,400 on the whole deal. To avoid being in this kind of a situation, I advice the following, before doing any sort of real estate deal; a) Evaluate your risk. What is your downside? Have a real estate expert study the deal. b) Set up operating and reporting guidelines with your partners. Put everything in clear English. c) Have everything reviewed by an attorney or an accountant. d) Choose your people partners with care. Fraud in real estate, are you being victimized? (Part III) Jonathan's Story: Jonathan had the sadist story I ever heard. You decide how the story turns out. It was 1997 and I received a call from Jonathan. He had received my letter asking if he wanted to sell his business any time soon. He asked me to come out and see him. Jonathan was 81 years old. He owned a woodworking factory that had been going for 40 years. He also owned two commercial factory buildings and had a beautiful residence that was debt free. His wife, Janet, also 81, was the sweetest woman I ever met. They were both healthy and they loved each other dearly. They had no children or grandchildren. Janet had nieces and nephews on her side of the family. Jonathan had no living relatives of any kind. When I met Jonathan I adopted him. Sounds like the perfect picture, doesn't it. It was until 5 years ago. Jonathan received a letter from Nigeria explaining that if he would front them some cash to pay off some government officials, they would pay him millions of dollars out of what the government owed them. You may have heard this story. It has been on 60 minutes. In fact Jonathan had heard this story; the problem was that he thought that his contact was different. They showed him legal documents, had Nigerian attorneys certify the validity of them and they did everything else necessary to con a rich old man into believing that his ship had come in. Over the next 3 years, Jonathan stopped paying his real estate loans, borrowed on his factory equipment, ran up $500,000 in credit card charges and cleaned out his wife's separate bank account, all without telling her anything. Every payment to Nigeria was supposed to be the last one, and Jonathan was hooked. When I found Jonathan he couldn't raise what he thought was the last $10,000 necessary to finish the deal. His creditors were getting very upset and were ready to sue him. As terrible as this sounds, Jonathan was the 3rd person that I have met in the last 10 years that has been stung by this scam. I cried. I know that at least $500,000 was sent. Jonathan thinks he sent closer to $1 Million. Jonathan decided that it was fate that sent me to him. He may be right. By the way my company name is Kismet Real Estate Investments, Inc. Kismet means Fate, Destiny, Karma, etc in Turkish, Indian, and Arabic. Time was very short, we had work to do and fast. His wife knew nothing of what was happening, and I had to get Jonathan to tell her that they had gone from being millionaires to destitute in one conversation. Jonathan told his wife the truth. She forgave him. (Now that's love.) Her one concern was that she didn't want to loose her home. We were but a few weeks away from the creditors coming down on his business and her mortgage free house. In one clean swallow, they would put her into bankruptcy, a one-bedroom apartment and living on social security, which would have actually killed her. How much can one take at that age? I went to work. First I promised Janet that no one would take her house away from her. She needed to trust ME, a total stranger, to not put the nail in the coffin. I do not know if I could have made the decision she had to make. We put her house in an irrevocable trust for her family when she died. That meant she had to give up ownership of her house, to me, a total stranger, in order to continue to live in it the rest of her life. Next we sold his two buildings to an investor who would work with us. The loans on the two buildings were equal to the market value at that time. We then found a buyer for the worse of the two buildings and made a deal with the Small Business Administration, to lower the interest rate and payments on the remaining building. Those payments are about 30% of current market rents today. By making those very low payments, the lender who is on the building and the business equipment was happy. The result of all this was that Jonathan was able to keep his factory running and make just enough to pay his current living expenses. Then the creditors, eight of them, started suing Jonathan, one after the other. Each tried to take the assets of the business. There was nothing to take. Some tried to go after the commercial buildings. That failed as they had been sold. One tried to go after the house. I arranged for someone friendlier than the bank to buy the bank's judgment at a discount and hold it until it doesn't make any difference. The bankruptcy attorney said we would never get away with what we were doing. He said that Jonathan needed to file Bankruptcy. Jonathan decided that he trusted my ability more than the attorney's advice. It has been 3 years now and all is quiet on the northern front. Jonathan and Janet are now 84 years old, still healthy, and still in love. Everyone thinks that his or her problem is un-confrontable and therefore unsolvable. I have found that someone other then myself can solve my un-confrontable problems in 10 min and I can do the same for them. It is not a question of being smarter, or more experienced, though experience helps a lot to come up with easy solutions quickly. It is really that we all are willing to confront someone else's problems much easier than our own. When we are willing to confront our own problem head on, solutions begin to appear miraculously. What I do is help people take their mountains and turn them into molehills. The molehills are then flattened with ease. Foreclosure; the basic procedure: In order for foreclosure to occur in California, there are certain basic things that have to take place. How this works, in the case of a Deed of Trust, called a 'Non Judicial Foreclosure,' goes like this - with regard to the time line. The borrower (property owner) does not make the monthly payment to the person or institution that he or she borrowed money from. Technically, a default occurs the moment the first payment is missed. However, for practical purposes, most lenders do not really start the foreclosure proceedings until after the third payment is missed. A few only wait until the second payment is missed, but this is rare. The procedure, once started, is continued on through to the end unless the property owner stops it by bringing the loan current (bringing it current means to make all back payments owed to the lender). · Day 1 - A notice of default is recorded. · Within 10 business days - The Notice of Default (NOD) is posted on the property, mailed to the property owner and published in a countywide newspaper. · After 3 months - A sale date can be set for the property to be sold, in order to repay the lender their money. The Notice of Sale (NOS) is also posted on the property, mailed to the property owner and published 3 times in a countywide newspaper. The publications are one week apart, announcing the public auction. · The recording of the notice of sale must be done at least 21 days before the sale date. A notice of sale is sometimes sent to the I.R.S, if necessary - it is not in all cases. · 7 days before sale date, if this is a court action, the 7-day rule may apply. · 5 business days before the sale date - The right of the property owner to re-instate the loan (bring the loan current) expires. · Sales Date - the trustee, for the benefit of the lender to recover his or her money, sells Property to the highest bidder at a public auction. Should we Buy, Sell or Hold real estate in this Market? It has been said, "Buy land, they aren't making any more of it." It is really a true statement. Of course there is a lot of land to be had, some very very cheap. Other land like beachfront is very limited and over the years gets even scarcer. I have a book in my library written in 1964. It talks about buying California land. It makes reference to the expansion of Los Angeles into the surrounding neighborhoods, as would be expected. It also talks about land prices in the desert and other outlying areas where city expansion even today has not happened. Funny, land that was never going to be useful for anything for at least 100 years was selling in 1964 for $40 per acre and is today dirt-cheap worthless land for $200 per acre. Even junk real estate has gone up 500% in 38 years. So lets look at the question: Is real estate a "buy and hold" investment or a "buy and sell" investment. First I would like to investigate why people have actually lost money buying real estate. We are not talking about "no profit" or "breaking even" owning real estate, we are talking about actually losing money. Let me tell you a story of where I actually lost money, and a lot of it. In 1987 to 1989, the real estate market went up double in 3 years, much as it has been doing in between 2000 and 2002. I bought 2 houses in rent control West Hollywood, with the idea of building 9 condominiums. Expected profit was to be $1 Million. The market turned south in 1990 and stayed that way until 1995, when it began to go up 5% per year. I lost that property which today would have made me $2-3 Million. Why did I loose it, when if I would have held it for 10 years, I would have been much richer than if I would have been able to build and sell those condos in 1990? The mortgage payments on the houses totaled $6,600 per month, including taxes and insurance. The market rents were $4,500 per month, which I couldn't get because West Hollywood rent control would not allow me to raise the rent, even when a tenant moved out. I was locked in to $3,200 rent which meant I was loosing $3,400 per month or $40,800 per year. Since I needed to hold the property for 10 years, which was 2000 before getting a great price for the property or the build condos, I needed to have the ability to put $408,000 cash into the property. This was after paying $700,000 for the property in 1990. I didn't have the staying power at the time. Real estate investors usually do not just buy one property at a time. They tend to own many. I have owned up to 30 properties at one time. I know people who have owned and managed 100 houses or 100 units at one time. It is not being able to support the negative cash flow that can wipe out everything you worked years for. If you understand this, and do not get excited by big profits and greed, you will avoid these kind of deals. In hindsight, if you think this was not a good risk, you would be correct. At the time it appeared that the condos would be built and sold within 18 months and my partners and I would be $1 million richer. Things are not always as they seem in real estate. Of course if you had a mortgage payment of $2,000 and rent of $2000 including taxes and insurance. You would never have this problem. Or would you? I know it appears that rents would never go down, but in real estate recessions they do. We never believe that our loan payment will go up but they do also. If you have an adjustable rate loan, maybe with a 6 month teaser rate, you will find your payments going up $150.00 per month every year and it doesn't take more than a few years before the yearly increase gets expense to support, especially while property values are flat or dropping. When buying property to hold, these risks must be taken into consideration so that you are not surprised by them but are in fact fully prepared for these eventualities. When people buy at the top of the market they always tell me they are in for the long run. But in fact they usually sell out at the bottom, after being hit real hard by the negative cash flow. On the other hand, people who buy in bad markets, get increasing rents, decreasing interest rates and appreciating property values guaranteeing the investor success. By the time the market peaks out this investor is making 100% profit on the appreciation, double the rent needed to pay the mortgage and the ability to support the property for another 10 years if the market drops and the investor has not sold. Risk free, at this point, unless the investor borrows all his equity out to buy two more deals. The bargain buyer is in the exact same situation as the top of the market buyer, except he owns 3 houses, not one. I had four friends who, in the late 1970's, did this exact thing. They each owned 10-30 properties. One of them owned only beachfront Malibu properties. The result was the same for all of them. By the bottom of the market in 1983, all of them had lost everything. Two of the four also got divorced in those 3 years because of the financial stress from a falling market. Lessons to learn: First, do not think you are smarter than the people who passed this way before you; you're not. Second, markets never go up forever, have not performed as if they will. Third, if you are not prepared for the worst, it will kill you. If you are prepared, it will only hurt a little. You will survive and come away much richer in the end. About the author:Willard Michlin is an Investor, Business Broker, California Real Estate Broker, Accountant, Financial Distress Consultant, Well known Public speaker and Administrative/Business Consultant. He can be contacted at his Ventura, California office by calling 805-529-9854 or by e-mail at See other article by Willard at