Boomer’s Blog

There certainly has been no shortage of sad news about real estate lending’s havoc on the economy lately. Once-shocking news articles about soaring foreclosure rates, dramatic price drops and the Fed’s efforts to treat Wall Street’s apparent hemophilia ebb and flow with tide-like rhythms, occasionally seeming slapstick in their essence.

News stories about the bloodletting on Wall Street can permeate the real estate investor’s consciousness like a Bob Dole TV ad for Viagra: You respect the fact that it may help your operation some day … but mostly you just want Bob Dole to resume his position as a war hero, self-made millionaire, Senate powerhouse and third-person presidential candidate. Only if there were a little blue pill to cure Wall Street’s performance issues however, could the beleaguered U.S. economy rebound any time soon.

Just as surreal as the esteemed American political icon’s widely publicized bout with erectile dysfunction are this week’s musings in Fortune magazine about the economic “Doomsday” it predicts would follow the all-too-possible failures of Fannie Mae and Freddie Mac. This government-sponsored duo owns or guarantees about $5.2 trillion in home mortgages, comprising approximately half of all outstanding U.S. home loans.

Fannie and Freddie Falter
Fannie and Freddie made a face plant on Wall Street this week, prompting the New York Times to discuss how they’ve managed to squander more than 60 percent of their market value this year and how the current mortgage bailout plan under consideration in Congress, if passed, would up the ante for taxpayers should either institution fail.

IndyMac Hits the Chop Shop
In the meantime, the Wall Street Journal reports that Countrywide’s spawn, Indy Mac has begun dismantling its operation. The mortgage lender and savings bank has announced plans to cut its workforce in half and sell 60 percent of its branches to Prospect Mortgage Co. Just last year, IndyMac was the 9th largest mortgage lender in the U.S.

These folks get objective, if not gentle coverage of their business practices in the news media. But when it comes to the real estate entrepreneurs who dare to attempt to make a living cleaning up the mess that the mortgage industry made, even some of the most widely respected news outlets too often resort to inaccurate depictions of our business, scorn and now, even metaphors that seek to identify us in the Wild Kingdom.

REI’s Proud Scavengers Run Circles Around the Competition
This week, CNN had the nerve to call real estate investors “vultures.” Frankly, I resent that. Not only because, unlike the bald bird of prey with keen vision, I have hair on my head and am slightly myopic. But also because real vultures mostly prey on carcasses, and I believe that the real estate market still contains a great deal of life. Come on CNN, it’s not as though we created the problems that have led to widespread foreclosure blight in the real estate markets hardest hit by the lending industry’s lapses in sane business practices.

if we’re the economy’s birds of prey, what does that make the folks who wrote billions in bad loans that have plagued once-mighty housing markets and jeopardized the stability of the U.S., if not the global economy?

A real estate investor featured in CNN’s story had to explain to the reporter that our industry actually helps neighborhoods and property values to recover from the devastation associated with high-density foreclosures. You’ll find this paragraph near the bottom of the lengthy CNN article.

When real estate owned (REO) homes sit vacant and are neglected for extended periods of time, the investor explains, they often become havens for squatters, drug dealers and the dangerous sorts of criminal activity that prompts most qualified buyers to flee a real estate deal with Blair Witch Project-like frantic abandon.

Navigate your Real Estate Business through the Economic Abyss
Clearly, the real estate deals are out there. But in tough economic times, it is more important than ever that we make the right decisions about our businesses. A timely Inman News poll posed the following eternal question: “Which of these items are the most vital to an agent in surviving a real estate market downturn?”

The following answers may surprise you, though they confirm what I’ve been saying all along: Marketing is everything in this business. (For more information, register for a free copy of “Secret Handbook of the Direct Marketing Revolution: Strategies to Guaranteed Success for Real Estate Entrepreneurs,” the report I wrote with Dan Doran to address obstacles faced by investors in today’s often cloudy markets.) To prove my point, here are the results of Inman’s poll:

• 0% Figuring out where to distribute data for for-sale properties I have listed.
• 32% Deciding how to spend my marketing dollars.
• 25% Knocking on doors, picking up the telephone.
• 11% Investing in new technology, communications tools.
• 32% Keeping in touch with past clients.

Is REI is the Little Blue Pill for Wall Street’s “Problem”?
So, while CNN calls us “vultures” one may wonder what other investment opportunity out there is part of the solution, rather than an endorsement of our great nation’s institutional failures? With so many economic indicators pointing down, what have any of the major players in the mortgage debacle done to help neighborhoods, families and local tax bases to recover from the mortgage crisis?

Ponzi Moves on to Greener Pastures
In March, we reported that money management firm Black Rock Inc., and hedge fund Highfields Capital Management were backing a new firm to buy distressed mortgages, betting that investors would snap up bargains in the beaten-down sector. The new company, Private National Mortgage Acceptance Company, or Penny Mac, has quietly been raising capital from private investors to help borrowers restructure loans to avoid foreclosure.

Penny Mac stars Stanford Kurland, who spent 27 years at mortgage giant Countrywide Financial Corp., as its chief executive officer and Morgan Stanley Global Residential Mortgage veteran David Spector as its chief investment officer.

Housing Wire recently reported that Penny Mac currently has $2 billion in its “war chest” to buy discounted, distressed mortgages, and will fund its own in-house servicing platform. in May, Penny Mac backer Black Rock reportedly negotiated a deal to buy $15 billion in subprime mortgage exposure from UBS, the Swiss bank that has been floundering since its boom-time tango with Countrywide Financial and other problematic U.S. lenders. (Here’s an awesome article in the Wall Street Journal that touches on this issue.)

Hey CNN: If we’re vultures, what do you call the evil geniuses behind that flip?! Oh wait, CNN’s intrepid staff of crack reporters hasn’t really covered that story in much detail. Sometimes I wonder if we all wouldn’t be more in-the-loop if we got our financial news from Animal Planet.

If you’re looking for a real estate investment strategy that’s rock-solid and steadier than a world-class surgeon’s hand, you should take a look at investing in probate properties. And especially if you’re sticking to a tight budget (and who isn’t these days?) legendary straight-shooting probate investing legend Ron Mead has all the training you need to get started, for the price of a tank of gas for your car.

Simply put, probate is the legal process of liquidating an estate’s assets after debts and creditors have been satisfied. With probate property investing, Ron says, you’re easily getting properties for $.50 - $.60 on the dollar. And there are many viable options for maximizing your profits in the flip transactions that follow.

Ron’s book on probate property investing, “31 Days to Profits in Probate Real Estate,” conveys his wealth of experience and knowledge in concise, plain English. Ron will be the first to tell you that he’s no professional author, but his experience with the U.S. military, where “there is a manual for everything,” Ron says, prompted him to write some manuals of his own.

Ron is no stranger to the world of real estate investing. He has been an active real estate investor and entrepreneur for 29 years, and has specialized in probate for more than a decade. Ron got his real estate license in 1979, and became a licensed real estate broker in 1993.

Building on his degree in Business Finance and his reputation as a no-nonsense, wealth-building real estate investor and teacher, Ron has written books on personal finance, probate property investing and creative real estate financing. He’s also gotten considerable buzz in the industry through the real estate investing seminars he’s been conducting for the past decade. He’s accomplished all this, in addition to actively running his own probate property investment business.

Implementing Ron’s techniques may require a bit of up-front time to ramp-up, but when the deals start to hit, your momentum and lack of competition likely will leave you wondering why you didn’t try it sooner. As Ron says, ”There’s just enough work involved here to weed out the tire kickers.” By putting in the effort, Ron assures that you’ll be “handsomely rewarded.” And isn’t that what this business is all about?

Folks, I’ve spent more than $100,000 on real estate training, and I’ve got to tell you that Ron’s entrepreneurial epic “31 Days to Profits in Probate Real Estate,” is better than many of the systems I’ve paid for, and available at a fraction of the price. Read my review of Ron’s book in the Resources section of GaryBoomershine.com.

Sign up my “What’s Working & What’s New” monthly and special reports and you’ll be among the first to learn about a Webinar I’m planning to hold with Ron in the near future for members of the GaryBoomershine.com community.

Where else can you learn how to find and flip distressed real estate using just your laptop and cell phone but on GaryBoomershine.com? If you missed my dynamic conversation with Virtual Wholesaling pioneer Cris Chico last week, we’re offering you a second chance to learn what the experts already know about this innovative strategy to generate awesome returns on your real estate investment (ROI) dollars today.

Now Available by Popular Demand
If you’ve joined the GaryBoomershine.com community by signing up up for my “What’s Working & What’s New” monthly and special reports, or if you’re a SalesTeamLive member, chances are good that you’re among the hundreds of real estate entrepreneurs who listened in awe last week as Cris told his his story and revealed the secrets behind how he made his real estate fortune. Using his own system, Chris went from having his sports car reposessed, to flipping 116 properties and making more than $1.4 million in profits in just two years.

Because I’ve heard from so many folks who were unable to listen in on our live Internet broadcast last week, I’m posting the call online for those of you who missed out on this awesome opportunity to learn how to make real money in virtual real estate wholesaling using just your laptop and a cell phone.

Emerging Opportunities to Cash in on Distressed Real Estate
Wholesaling is one of the hottest investment options today for real estate investors seeking to crack the code on generating fast cash while investors in other sectors are loosing their shirts. With wholesale real estate deals, investors place a property under contract and then assign the deal to another buyer who closes in the investor’s place. Because real estate investors usually never put any money down or close on the property, risks are minimized and profits are immediate.

Cris’ Virtual Wholesaling system takes the wholesaling process to the next level by leveraging technology to laser-target wholesale investment properties in any market real estate entrepreneurs choose to penetrate. (Read my full review: “Virtual Wholesaling with Cris Chico.”)

With user-friendly advances in technology that are built into Cris’ virtual wholesaling system, the power to hone in on the best neighborhoods is far superior than the “no pain, no gain” techniques that were popular in the past. Using Cris’ system, investors can laser-target areas and build lists based on the best possible case scenario for virtually any market. Cris’ system teaches investors how to prosper and make tons of cash in the current housing crisis. If you can use email, you can use Cris’ innovative system for fast, no-money-down profits in your REI business.

Tap new Markets and Boost your Bottom Line
Though the real estate bubble may have burst in your locale, there are a lot of U.S. real estate markets that are not currently suffering because they weren’t affected by the boom. Since their prices never rose when the market was jumping, they’re not dropping now that market conditions are changing.

Cris can teach you how to profit from these market uncertainties. He also is extending killer special offers to members of the GaryBoomershine.com community and SalesTeamLive members, respectively, that are packed with awesome incentives including a ticket to the upcoming Virtual Investing Seminar in New Orleans slated for June 26-29. By following the links above, you can check out the details and read the awesome client testimonials while you’re listening to the call.

Invigorate your REI Business: Join us Today!
If you haven’t yet joined our thriving on-line community, and are interested in in learning more about how you can cash in on the latest news and developments that drive our industry, please sign in now using the yellow fields at the right side of my GaryBoomershine.com home page. Like always, I pledge to never share your contact info with anyone or inundate you with useless messages. Of course, you’re welcome to listen to the call, even if you don’t want to join us in building a strong community and sustainable future in creative real estate investing. Sometimes we all need a little nudge in the right direction! Let this be yours.

As the number of U.S. home foreclosures topped one million this month, cities in the states hardest hit by foreclosure: Arizona, California, Florida and Nevada were named by Fortune magazine as the hottest markets for real estate investment. In addition, emerging reports of real estate market overhang are not surprising. Especially in light of the mid-decade building frenzy in Arizona, California, Florida and Nevada that was spurred by gravity-defiant home prices and easy money loans.

During the Boom
Back then CNNMoney says, dramatic price surges were fueled by investors who used risky mortgages to cash in on hot market activity, Today, these four states combined hold one-third of the nation’s foreclosures, with nearly 400,000 homes hanging in the balance.

According to the Mortgage Bankers Association Q1 report, Arizona, California, Florida, and Nevada combined represent:

• 62 percent of all foreclosures started on prime ARM loans, and 84 percent of the increase in prime ARM foreclosures;
• 49 percent of all of the subprime ARM foreclosures started in the country during the Q1, and were responsible for 93 percent of the increase in subprime ARM foreclosures
• 29 percent of prime fixed-rate foreclosures and 60 percent of the increase in those foreclosures; and
• 25 percent of subprime fixed-rate foreclosures and 53 percent of the increase in those foreclosures.

Fortune’s Five Hottest REI Markets
Especially now that the chips appear to be down, it seems that everyone wants in on the real estate game, and Fortune magazine has named five cities as ideal for real estate investing. These markets are generally the hardest hit in the foreclosure epidemic:

1. Miami
   According to the S&P/Case Shiller index, prices and sales here appear to be circling the drain. Miami house prices have dropped a whopping 21.7 percent in the past year, and dwindling median condo prices. Miami condo and home sales have plunged 40 over last year, and market activity has slowed dramatically. Fortune recommends that the following markets are ripe for real estate investment: Aventura, Bal Harbour, Sunny Isles Beach and Coral Gables
2. Tampa
   The Case-Shiller index reports that in the past year, real estate values have fallen 17.5 percent. Still, Fortune predicts a rebound is in the forecast for Tampa because of its strong local economy and other market forces. Currently, the median home price is $222,000, down from $275,000 last year, and the National Association of Realtors (NAR) predicts 20 percent or greater appreciation value over the next five years. Today, home prices are 50 percent lower than they were during the boom. Those surges may be attributed primarily to speculators flipping houses for quick profits, Fortune says. When the deals began to recede and the investors started started pulling out in 2006, the prices began their free fall. Now, Fortune says, this market is ripe for high-end real estate investment: Gulf-front luxury condos in Clearwater or St. Petersburg, are down from the $1 million a few years ago, to around $600,000 today.
3. Las Vegas
   Here, the real estate bubble swelled with annual price increases of up to 50 percent, making for today’s dramatic price drops and hot bargains. According to the Case-Shiller index, Las Vegas is the hardest-hit locale nationally, with prices dropping nearly 23 percent in one year, and one in 44 homes hitting foreclosure Q1 alone. In this market, with the third-highest rate of foreclosure in the U.S., Fortune predicts that the sun-drenched climate, proximity to pleasure, and glut of luxury homes, combined with the absence of state income tax will attract droves of retirees — and a speedy market recovery. Here, Fortune recommends investing in new construction in outlying areas like Summerlin and Providence, or in high-rise condos, especially in light of their 10 percent price drops since last year.
4. San Diego
   Prices here have plunged nearly 10 percent and foreclosures have surged in the past year, according to Moody’s Economy.com. Despite the fact that the Council for Community and Economic Research deems San Diego County’s cost of living 47 percent higher than the national average, the area’s natural beauty and beach-front locations give it the strength to conquer adversity and recover quickly from the mortgage crisis. Again, Fortune’s forecast is growth in the high-end property appreciation, as these properties have been the slowest to move in the inventory glut.
5. Phoenix
   Although Moody’s Economy.com shows its real estate values plummeting by 8 percent over the past year, and RealtyTrac reports its foreclosure rate has tripled since 2007, Phoenix, like Las Vegas will continue to attract retirees. Here, Fortune says, the planned communities that surround the metropolitan area offer hidden bargains. Also, amenities such as golf, shopping and luxurious recreation centers add additional value for the retirement crowd. Fortune suggests that here, areas like Sun City Anthem, Palm Valley, and Avondale are great places to find housing bargains that’ll likely offer healthy returns as the markets continue their recovery.

Make your real estate investment career meltdown the first day of the rest of you life with a new, optimized lifestyle design (LD) and bestselling author Tim Ferriss’ entrepreneurial manifesto, “The Four-Hour Workweek: How to Escape 9–5, Live Anywhere, and Join the New Rich” (4HWW).

Before taking his now-famous pen to paper, Ferriss, a Princeton University graduate, drove himself — and his business — into the ground with over-work and precious time squandered on tasks that actually kept him from generating wealth and attaining his goals.

Pursue your Dreams and Build Wealth
In this monumental work, Ferriss urges people to shed the traditional expectations that wedge us into cubicles and create our dream lifestyles by following his formula for achieving personal freedom and financial wealth.

In 4HWW, readers learn how to make this liberating transition through executing the four steps of LD, Ferriss’ efficiency-optimized approach to maximizing effectiveness in your work and creating more fearless joy in life. Not only is balance between the two possible, Ferriss tells us how to increase our profits while we’re at it.

In 4HWW, Ferriss provides a recipe for LD that revolves around the simple mnemonic: DEAL. Each letter represents a transcendent step to attaining personal freedom and financial wealth:

Ferriss’ Four Steps of Lifestyle Design

1. Definition: Requires you to determine what you want, conquer fears, look past society’s “expectations,” and estimate the costs of your desires. This is about beating the game rather than playing the game and emphasizing your strengths instead of trying to change your weaknesses. Here, the pursuit of happiness is the pursuit of excitement.
2. Elimination: This section begs readers to forget about time management and embrace the possibility that you can accomplish more by doing less. When you limit tasks and work time, you’re free to effectively focus on completing the most important tasks in less time, Ferriss says. More time economy comes, he adds, by eliminating time wasted by constantly checking email and using personal electronics, When you do this, you’ll defeat procrastination and be free to focus on the minority of tasks that bring the greatest results.
3. Automation: Ferriss defines efficiency and encourages that it be abandoned and replaced with true effectiveness. In this section, he discusses how to maximize overall effectiveness by outsourcing low-end tasks. This can free up valuable time for entrepreneurs to build businesses that provide a sustainable, automatic sources of income. Using the right process models, and effective marketing practices, Ferriss insists that we can maximize income and best manage our businesses through absence.
4. Liberation: When you’ve successfully defined your desires, eliminated unnecessary tasks, automated and outsourced your life, Ferriss says that liberation will manifest itself in many ways and you’ll be ready to join the ranks of the New Rich.

To learn more about how 4HWW and Ferriss’ formula for LD can help you be a better entrepreneur in your real estate investment business, be sure to check out my review, now posted in GaryBoomershine.com’s Resources section.

As a growing number of homeowners dangle over foreclosure’s jagged edge, many lenders have historically been slow to approve short sale deals, but there are signs that they’re changing their ways.

The short sale is a long-standing investment technique that can benefit buyers, lenders and homeowners alike. According to the National Association of Realtors (NAR), Short sales currently account for about 18 percent of overall home sales. But as the housing market continues to stall, some major lenders and loan servicers are streamlining their processes for accepting short sale deals, and this may make short sales a more viable option for investors than it has been in the recent past.

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