Bird-dog Program Invitation

Hey Rebels!

Most of you have seen my stories about two of our "bird-dogs", people making money in California and Bay Area Real Estate without risking any of their own cash or having a real estate license. If you haven't, take a look at the recent interview with Francine, one of those people who is part of the program.

I'm happy to announce that we'll be rolling out a new training program for bird-dogs, and you're invited to apply. If you're interested in making money in real estate by sources properties that are good short-sale investment opportunities, we'd like to chat with you.

Please be aware that not everybody will be a good match for the program-here's our preferred criteria:

• live/work in the San Francisco Bay Area or Los Angeles Area
• be outgoing, friendly, and solution driven; somebody people like to talk to
• currently working in an environment that brings you into contact with homeowners from all walks of life on a regular basis

Essentially, the program is about earning money by finding and referring acceptable properties for our team. If you'd like to be considered for the program, please click here and drop our team a note. One of my group will reach out to you and discuss details and to see if the program is a good fit...

...and get ready to join the Rebels!!!

Rebelliously,

Larry

January Rant-A Call to (examine) ARMS

What’s in a name?? When is an interest rate not an interest rate? When it’s an ARM. I think it’s time we call these loans what they are-teasers, ticklers, or worse, traps.

I’ve been staying on top of what’s going on in Real Estate in the San Francisco Bay Area for awhile now, and I’ve got to be honest, I’m getting pretty nervous about what I’m seeing on the ARM horizon. I’ve mentioned it before, but in talking to people and banks in the area I’m afraid there’s a lot of head-in-the-sand attitudes out there about this topic.

Think about it. In the Bay Area, most people have to use an ARM to get into just about any home, in order to soften the blow of the payments they have to make in the beginning of their mortgages. Often, the thinking goes that by the time the ARM rate increases, the buyer will be in a position to refinance their mortgage for better terms, or they’ll be ready to sell in any case.

So what happens when their real estate has actually gone DOWN in value?? Or if the buyer can’t refinance? Well, then, the payment goes UP. And UP…, and if they were barely making ends meet already, then they’ve gotten themselves into a trap that leads directly into default and often foreclosure.

Why is this on my mind right now? One of my readers just sent me a CNN.Com piece from a couple of weeks back that really puts it into perspective:

“For many of the more than 350,000 option-ARM borrowers, it's time to pay the piper. Their loans will change into fully amortizing mortgages that will carry much higher monthly payments. A very large percentage of these homeowners will default, according to Shari Olefson, author of "Foreclosure Nation: Mortgaging the American Dream."
"We've still only seen the tip of the foreclosure iceberg," she said.” (CNN.com)

Yep, that’s 350,000 loans resetting that are at higher risk for foreclosure THIS YEAR than they were LAST year.

And what’s the government doing with our money to help ease these extra burdens on the economy? That’s a REALLY good question. The tax credit is set to expire this year, there are still no teeth to any of the modification programs, and the banks have been remarkably silent on the issue of how they’ll handle this next wave of foreclosures. Add to that the reminder that the government re-purchase of mortgage backed securities will taper off this year, and you’re looking at least one more tough year in the housing arena and a good case for thinking interest rates will rise. Besides, there’s not a heck of a lot left for the government TO do in this area.

So what’s a borrower to do if they’re looking at a mortgage payment that’s suddenly going to go up? Sadly, I don’t have a lot of advice there. If you’re looking at default/foreclosure, you know my best recommendation is to explore all your options, including short sale.

BUT, if you’re one of those lucky few who are actually buying a house in this environment, you should consider one question very carefully: can you, if the interest rate increases in a few years, still afford the payment? Are you already 110% stretched, or is there a little wiggle room in your budget?

Remember the Schwab posters… “My house is worth a million bucks is NOT a retirement plan”? If you’re looking at taking an option-ARM, make your motto “If the payment gets too high we can just refinance is NOT sound financial strategy.”

So, me Rebellious Readers, before you take up ARMS, take a sharper pencil to your worst-case scenario budget.

Stay Rebellious!
Larry

January Buyer Tip-5 Questions

It’s a new year, and already the questions about what 2010 will bring are POURING in…as, unsurprisingly, are the pseudo-answers. Ira Glass, host of public radio program “This American Life”, had a great commentary on the uselessness of predictions, in particular his feelings about The Economist Magazine’s annual prediction issue, in his show a couple of weeks ago. You can listen to the program here…

You all know that I’m not in the business of predictions. Unless, fer instance, the question is “Will Larry open that last bottle of wine?” For things like that, I’m usually bang on. Instead of predictions, I’m going to give those of you considering BUYING a property this year some questions to help you make up your mind. For each question, I’ll ALSO talk about why it’s important to think about it. Remember, there are no right answers…

1) How stable is your job?
Even if you’re looking at a great deal on a property, if you look around you and see waves of layoffs at your company, and the guy next to you just got his pink slip it’s very possible you’re the next head on the block. If you lose the job, can you still afford the place you’re considering? This is especially important for single-income families to think about. If you’re in sales or marketing and heavily commission based, even if your job is secure, what income fluctuations may loom?

2) How are you “fixed” in your current housing payment?

If you rent, are you looking at doubling or tripling your monthly housing payment? If you are an owner right now, will you be able to get terms that are more favorable as you have currently?


3) How much do you love the property/neighborhood you’re looking at?

I have a colleague who was looking at buying a condo in the SF Bay Area. He and his wife liked it a lot. They didn’t LOVE it enough to believe that, if they ended up without any extra cash for a few years, they’d be perfectly happy re-arranging the furniture every Friday night instead of going out to dinner and a movie. They walked away and have never ever regretted the decision.

4) Where are you in the family planning stage?

If you’re just starting, do you really need that second bedroom already? If your kids are grown and out, do you want to have room for them to come visit or does the excuse “We just don’t have enough space for everybody for Christmas” sound like an EXCELLENT way to justify a trip to the Bahamas for the holidays next year?

5) Do you have the skills to take care of any issues that may pop up in a fixer-upper or bank-repo’d home you buy?

I know several people who made great deals and learned how to take care of some basics that the previous owners let slip while the place was undergoing the foreclosure process. They knew they could figure out a leaky pipe or a sagging porch and avoided spending money on contractors.


Remember, Rebels, there’s no right or wrong. There’s also no guaranteed good/bad time to buy. The Real Estate Rebel formula is simple: go in with your eyes open and consider your risks.

Of course, if all else fails, ask the Magic 8-Ball. The signs always point to “maybe”…

Rebelliously,
LARRY

Putting Christmas Lessons into action in 2010-check out some other RE sites!

"I know on the face of it, this plan sounds idiotic and impossible, sending Macy's customers to Gimble's. But gentlemen, you cannot argue with success! -Miracle on 34th Street

One of my favorite things about the holidays (now that they’re over, at least) is the regular reminder about life lessons, captured in great stories like “A Christmas Carol” and movies like “It’s a Wonderful Life.” Both as a kid and as an…ahem…adult (well, kind of an adult) I feel that the little reminders about the way life should work are helpful, and gosh-darn it, I still like to think that every time a bell rings, an angel gets his wings!

One of the things that I think is missing from our world today (and maybe of yesterday too, since they put the idea into a movie made in 1947) is the idea that helping people find what they WANT, versus what you want to sell them, is a hallmark of fantastic service. You remember the scene from Miracle on 34th Street, right? When Santa tells kids where to go find the toys they really want, even if they don’t have it at Macy’s? At first, it seems incredible, but then, it works, and the people at Macy’s are heroes, even if they sent a customer to Gimbles.

I’ve been mulling over that idea for awhile, and thought I’d put it into action in a way here on the Real Estate Rebel by sharing with you some of the best, in my humble opinion, places other than here to get information on the Real Estate market. I don’t always agree with every conclusion they reach, and in some cases people may think they’re my “competition”, but the information is sound and, in true rebel fashion, I encourage you to use your own judgment about what you read.

Now, there are roughly a hundred zillion sites out there that a person can go to, from individual Real Estate Agent pages and the MLS all the way to high-end sites requiring a credit card for investment advice. I’ve narrowed it down to five places that 1) I use regularly to keep updated, 2) DON’T require payment for basic information and 3) present intelligent analysis as well as facts. I’ve listed them in no particular order, so click away and again, read REBELLIOUSLY!

1) Patrick.net has a forum called “Housing Crash” that has a lot of spirited discussion about what’s going on today, with a focus on the California Bay Area. It’s a good source of links to additional information, as users are constantly tossing up new sites and news items.

2) www.property-investing.org is a good source for broad spectrum news about Real Estate around the country. There’s a slight bias toward selling some services/books, but the round-up of trends and information is well worth the occasional pitch you’ll find buried in the links

3) www.bloomberg.com has good information from (mostly) market-leading business writers and the basic content is free. I keep my eye on this site for intel specifically from the Fed and other government-based entities that affect the market.

4) www.housingpredictor.com has excellent information about what’s going on in various states. Like Bloomberg (above), basic and useful content is free. If you want to pay for the deeper stuff, go for it!

5) Last but not least, I have to mention the Real Estate News and Commentary Blog at ShortSalesRiches.com, Chris McLaughlin’s website. Great intel there in easily digestible bites.

So there you have it, my Rebellious Readers, a veritable treasure chest of opinion, fact, and perspective on Real Estate around the Bay Area and the country. Go gettem!!

Oh, and one more time, HAPPY NEW YEAR!

Rebelliously,
Larry