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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: redfish who wrote (31263)	5/15/2005 5:25:06 AM
From: redfish	Read Replies (1) \| Respond to of 306849

Seminars, Gurus, Entrepreneurs & Broken Dreams There are many seminars on RE that have differnt takes on how to get rich. This CNN Money story reveals that success may prove elusive. "The Enlightened Millionaire Institute charges well into five figures for premium packages that can include the opportunity to do deals with the gurus themselves." "But what this inspiration industry downplays is that most students don't have the talent or timing or temperament to strike it rich. With real estate seminars turning out thousands of would-be moguls every month, all pursuing the same no-money-down schemes on the same fringes of a market bound to slow sooner or later, the odds of making a quick fortune in real estate are becoming vanishingly small." "Most gurus make light of setbacks as mere bumps on an inevitable road to success. Mark Victor Hansen announces with a smile that both he and co-leader Robert Allen had been bankrupt. Then he turns to Allen and asks, 'How did you sleep when you were bankrupt? 'Like a baby. I woke up every two hours and cried.'" "Larisa Belliveau, an MBA, turned to real estate to make a living. All told, she studied under five gurus and three coaches, spending $75,000 on classes, materials and marketing, nearly all of it in credit-card debt that she hasn't paid off. 'It's not for the faint of heart. I think I was too soft.'" thehousingbubble.blogspot.com

To: redfish who wrote (31263)	5/15/2005 7:49:29 AM
From: Crimson Ghost	Read Replies (1) \| Respond to of 306849

Sell your home now, or risk the coming real estate crash Reader count for this story: 1594 Political Gateway and Atlas Homes (May 13th, 2005)- We at Atlas Homes in Florida say it is time to sell if you own investments. Huge condo complexes are being built everywhere (just like before in the late 80s before the condo market crashed). Apartment complexes are converting to condos/townhomes which tells you what the corporate investors are thinking "time to sell and get out". Updates and links to news items are at bottom of article In the 1980s, Gold went crazy and hit 800 an ounce on the markets. Everyone started buying at the high rates while smart investors dropped out quickly. Gold fell so quick it broke many small investors. Real Estate is going crazy, bidding wars are all the frenzy for even run down homes. People are jumping in to get rich quick on what may be the tail end of the bubble. Let's look at the information. Bankruptcy: Your wonderful lawmakers, bowing to special interests who know the crash is coming, have changed the bankruptcy laws. Your home is not safe in a bankruptcy now. You cannot walk away from your debt (especially the debt of a foreclosure) anymore. Chapter 7 is almost impossible, you will be forced into a payemnt plan and not be allowed to start over. To make such a huge change in the bankruptcy laws at the behest of credit card companies and lenders at this time can only be looked at as an indicator of what is going to happen. These companies and special interests are not stupid and they plan for the future. Only the most dense cannot see this as a 'pre-emptive strike' against defaults that are on the way. Interest-Only loans: In the 1920s these type of loans became popular so people could free up money to buy stocks. After many lost their homes and fortunes in the market crash bankers only allowed their rich clients to obtain these loans. Currently interest-only loans are one of the hottest loans out there. It allows people to buy homes and investments they could usually never afford. Interest-only loans become adjustable rate loans after a few years (1 to 5) with the obvious devastating effect of causing a need for a homeowner to sell when the payments become to much. Rates are rising: Rates have gone up for seven straight quarters and the 'Fed' has said they will continue to go up aggressively to stave off inflation. Low rates allowed people to buy more home for the same monthly payment; thus homes shot up in value. When rates go high enough even an adjustable or an interest-only loan will not allow people to afford a home at these prices. The sellers market is over when that happens. Home Equity loans: Home Equity loans in the last few years have been great for homeowners. Equity lines are second mortgages they can write checks from. Many used these loans to upgrade their home or to buy second, even third homes. These equity lines are 'adjustable' mortgages that do not exactly amortize as you think when figuring out a payment. Since they are adjustable they will go up with rate increases. Since they are not a first mortgage the regulations keeping them at a low 'maximum' rate cap' are not as strong. We talked to a lady who did not know what her cap was so we made her take a look. It turned out to be 18% and she almost had a heart attack. Re-financing will not help: So you went a bit crazy and have adjustable mortgages and some equity lines of credit. "Hey, I will just refinance when the rates come back down," you say. These are the lowest rates in 40 years.40 years ago someone said they would wait for them to come back down and was an old man when they finally did. Rates are rising for adjustable and fixed. Re-financing at a fixed rate will be much higher than your current adjustable and it will cost you to make that financial move. So like many you will wait and hope the rates will not rise too high. Trouble is, some 80% of all loans written this year were 3 year adjustable mortgages and interest only loans. That is a lot of people who are 'hoping' to not be in financial trouble. What to do? If you are a property owner I say sell now and put the money in the bank. All of it. Rent a house for a year or so and get ready for some super bargains to be had as people unload their 2nd, 3rd, and other investment properties. Those who need to sell will sell and sell low. Prices will probably stagnate as they did in the 90s after the last Real Estate bust, so deals will be everywhere as people try to save themselves financially. What if we are wrong? What if home prices just keep rising 'to the moon' and you miss out on buying new home? The worst that can happen if you rent right now is you lose a little increase of what could have been your equity. And your rent will be cheaper than a new mortgage right now at these prices. What if we are right? Renting after selling your home could keep you from losing a ton of equity (remember, you sold your property) and possibly not being able to afford your home as rates make re-financing impossible. In Florida we at Atlas Homes are offering savvy investors and selling home owners a 'One Week Listing' and almost guaranteeing a bidding war before the week is over. If ever there is a time to sell it is now. Do not wait 40 years to get your equity out. Home prices can and do fall after a real estate bust. Sell high, rent and wait, then buy low next year or the year after. Updates May 13th: Washtenaw Mortgage Introduces 40-Year Mortgage To lower monthly costs and keep prices high they are pulling out all the stops. biz.yahoo.com US real wages fall at fastest rate in 14 years ( it was 1991, the last real estate bust) news.ft.com Developer tactics to avoid housing bust Developers have figured out how to stop flipping of properties while still building. csmonitor.com Vultures smell drop in hot Florida condo market "real estate entrepreneurs are forming "vulture capital" funds to pounce on what they call an inevitable downturn in an exploding south Florida real estate market" Investors are getting inline to pick up foreclosures news.yahoo.com Foreclosures galore This worked fine so long as the houses didn't lose value. However, the drop in real estate values during the Depression pushed a large proportion of interest-only loans into foreclosure. Lenders switched entirely to fully amortizing loans, and that has been the standard mortgage loan since. bankrate.com Discuss News in our Forum P

To: redfish who wrote (31263)	5/15/2005 2:55:56 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 306849

I have a number of friends who work in Los Angeles but have purchased homes in the cities they moved from, after deciding they either can't afford to own a home in Los Angeles or would rather rent. None of them have ever rented out the home they purchased as they wish to maintain their home in pristine condition. I have suggested to each of them that, even lying empty, their homes will require more maintenance than they suspect. One purchased a new home in Denver in 2000 and has paid for a parade of contractors to bring his empty home up to his specifications. One owns an empty home in San Francisco, two have empty homes near Seattle, another an empty home in New Mexico and another an empty home in Atlanta. After going "home" to visit, they always come back with new ideas for home improvement projects they will supervise from hundreds or thousands of miles away. I can't say I understand this psychic need for remote ownership without tenant income. I recall how busy my Grandparents were owning maintaining a home in the city in addition to a mountain cabin and beach house. They occasionally rented the beach home. My parents decided to own only commercial property in addition to their home, as tenants are responsible for most or all of the maintenance. My brother and sister and I were not favorably impressed with the huge debts they acquired with new buildings, so we went into other investments. When my parents are gone, we have all decided that we might keep only as many properties as we can without debt. In downturns, its easy to cut back on your spending when rental income declines, but a real nightmare when that decline in rental income is matched with mortgages that need continued feeding. .