Whether you are a real estate investing newbie or a seasoned pro, there are a lot of mistakes that can be made in real estate. These mistakes can be very costly, both financially and emotionally. Many investors make at least one or more of these mistakes. The key is to recognize, avoid, learn and move forward from these potential investing pitfalls.
In this content packed webinar, I’ll cover what I believe are the top 10 real estate investing mistakes and how you can avoid these common pitfalls. They say that knowing what NOT to do can often be more valuable than knowing what to do. This is especially true when it comes to real estate investing. Knowing and being able to avoid these pitfalls can mean the difference between financial independence and financial ruin.
Presenter: Lori Greymont
When: Thursday, June 13th, 7 PM Pacific
Set your portfolio up for success. REGISTER HERE
If you’re following real estate headlines, you might be getting worried we’re entering another real estate bubble. Here are some of the headlines I’ve run across recently, “Signs of new housing bubble in several areas”, “Wall Street Buying Adds To Housing Boom. Is A New Bubble On The Way?”, “From Brooklyn to California, Housing Bubble Threat Grows”, “Warnings of the Next Housing Bubble Have Already Started”, “The Housing Bubble Goes Mainstream”.
These headlines can be very disconcerting to real estate investors, especially with wounds from the previous bubble still very fresh. But if we take a close look at some of the claims made by housing market bears here’s what the cold hard facts will tell us.
1.Homebuilding Stocks Too Far, Too Fast?
The S&P 1500 Homebuilder group hit a low in August 2011, since then it is up 170%. In the short-term these stocks have had a meteoric rise, but it is still down a whopping 55% from the high reached in 2005.
Bubble Concerns Warranted: NO
2. Peak Homebuilding and Sales Activity?
The most recent data from January 2013 shows single-family housing starts are about 65% below the peak hit during the boom. And if you look at long-term averages since 1962, they are roughly 40% below this average. If we look at existing home sales, the current levels are about 30% below peak levels.
Bubble Concerns Warranted: NO
3. Residential Fixed Investment (RFI)
In Q4 of 2012 RFI turned positive adding 0.4% to GDP growth after being negative since 2005. But again if we look at the long-term average since 1995, RFI needs to increase another 40% just to hit the average.
Bubble Concerns Warranted: NO
4. Less Distressed
Foreclosures and short sales are an important component when evaluating the health of the real estate market. What does the data tell us? According to RealtyTrac, notices of defaults, scheduled auctions, bank repossessions and other filings fell 28% in the past year.and new foreclosure filings are at their lowest levels since June of 2006. However, foreclosure filings are about twice the pace they were in 2005.
Bubble Concerns Warranted: NO
5. No More Negative Equity For You
Now that housing prices are rising again in most areas, nearly 2 million homeowners have been freed from negative equity over the last year says Zillow. But with the number of homeowners underwater at 13.8 million there should be more than enough room for the real estate recovery to continue.
Bubble Concerns Warranted: NO
So there you have it. Looking at the cold hard facts indicates the housing rebound is entrenched at this point, but there should be plenty of room for it to run.
Read the full article “10 Signs We’re Not in Another Real Estate Bubble (Part 1)” by Louis Basenese here.
I love traveling and I suppose I still do because I haven’t done a lot yet. It began on Wed. before the Saturday tour from Oakland CA. An uneventful on-time departure on Southwest, on to Vegas, a 1 hour delay, then pulling into the Atlanta airport (claimed the busiest in the world) and a 15′ wait on the taxis-way for a parking spot.
After baggage and car rental, my two traveling buddies with their iPhone’s got us to the Embassy Suites in downtown Atlanta. We hadn’t eaten dinner yet and it was late (for us about 8:30 pm) so dumped the bags & walked across this enormous park with several locked gates to a yellow sign we were pointed to by hotel staff – The Waffle House.
Sitting at the table with my chicken salad looking so good, it occurred to me that it was now about midnight and we would be getting up for an early morning buffet breakfast and 8 am team huddle with Lori. The amazing thing to me about The Waffle House was at that time of night/morning the place was clean and every one of those people serving us (5 in total) were very friendly and thorough.
Thursday, up at 6:30. I was just amazed looking out the hotel window to see the beautiful park we had walked through the night before – Centennial Park, 2.5 acres of beauty, cleanliness and memories of the 1996 Olympic games held here. All of the tall building (some over 100 stories I was told) that line this park add to its majesty.
After breakfast (YUM) and our meeting, this day was the tour review for 3 of our 7 person team that were there. The others were in prep mode. It was a beautiful day, warm in the mid 60’s, overcast & normal humidity, perfect to see the whole of Atlanta and 5 properties we had planned for the tour. As we drove to each property I was struck by the country like setting of the entire area once out of the downtown part of Atlanta. Every property we visited seemed as though it was in a rural area with large trees, big lots of 1/2 acres or more, and greenery everywhere. At one property, I heard a familiar sound – there were nearby train tracks and the sound of a passing train brought back memories of my teen years.
Having been in real estate since 1973, I’ve seen many properties, and these were not much different than most. Average size and all the way from just acquired (A total mess with trash & broken things everywhere) to sale ready, a finished condition of rehab that is a large step above rent ready. This is how Summit prepares each property. Walking into the completed property was like walking into a new home model, every details seemed attended to and just felt amazing for the property and location. The day ended with a client dinner meeting for Lori and I at a near-by upscale restaurant – simply amazing food.
Friday was our only free day so we took the opportunity about lunch time to take a guided Segway tour of all the historical significance of downtown Atlanta. It was on this tour (Segway’s are a blast – try it you’ll like it) that our tour guide shared and I became aware of the age, history and significance of this part of the country and the heritage of the South. Here is a short list of some of what we wheeled past & learned about:
o The new trolley system being worked on everywhere
o CNN building
o The Turner building and Ted’s Montana Grill
o Capital building
o The path & place of Martin Luther King
o Coke building
o New football stadium being build
Saturday, tour day began again with and early morning meeting to review final details & make some last minute adjustments to the tour and logistics. The pre-tour group meeting began at 9 am where Lori reviewed our process, the opportunity Atlanta is, and the tour including how folks could buy what they were seeing on a unique first come first serve commitment form in the packets that all got.
By 11:30 we were on the bus, and yes as luck would have it some of the 50+ inches of rain Atlanta gets during the year came down steadily “all day long”. Conversations in the bus were plentiful among investors and team members while some with their smart phones, calculators, and paperwork were frantically doing their due diligence on each property to be prepared to submit their commitment. We spent an average of 15′ at each of 4 properties which again demonstrated every property condition from acquisition to complete for every one of the 14 investors to get a complete feel for our commitment to them. Box lunches were picked up fresh from a nearby deli just prior to leaving and we ate on the bus.
At 5:15 we arrived back at the hotel and shuffled everyone back into the meeting room complete logistics and paperwork for the property commitments we had received during the trip. All participated and watched contracts being written and a local lender discussing various lending options with the investors.
The evening ended with a celebration and charity dinner for all. The purpose was to donate $500 per property sold to City Ministries for the work they do in the area, providing homes and counseling for the homeless to return them as active members of the local culture. It was also an opportunity to notice the enormous positive impact that doing business in an area really does support in many ways not often thought of, the local economy. The food was amazing and service was astounding provided by Ruth’s Chris Steak House in the Embassy Suites.
All in all it was an inspiring trip for me and I can say, having spoken to all investors present, that there is a deep sense of understanding, commitment, and background one gets when participating in this kind of event. It adds depth to the investment experience but also reveals the heart, soul, and caring of Summit Assets Group in a way that many just won’t get until they are clients. I recommend this tour for all our clients and prospective clients to support their choice to build their holding, support Summit, and the Atlanta community.
Director of Public Relations
In this article we’re going to look at the massive changes undergoing the retirement planning process. Let’s start with the “Old Rules For Retirement”. Here are a few basic retirement planning numbers that probably sound familiar to you, either from working with a financial planner or using an online program to plan your retirement:
- Annual return on your portfolio: 6%
- Annual inflation: 2%
- Percent of your portfolio to invest in the stock market: 100 minus your retirement age. The rest went into low-risk investments such as CDs and high-quality bonds with a guaranteed 6% return.
Well, if you’ve looked for low-risk investments such as CDs and safe bonds returning 6% lately, you know they are impossible to find. A long-term CD, say 5 years, will return around 1.8%. What impact does this have on your retirement income. It’s huge.
Let’s take a look at some numbers using an example of someone who is 60 years old. Under the old paradigm this person would have 40% in the stock market (100-60) and 60% in CDs and bonds. If 60% of your retirment investment income drops from 6% to 1.8%, your retirement income from safe investments drops a whopping 70%. Yikes!
And the government has said it intends to keep interest rates low for years to come so it’s unlikely safe investment returns will increase significantly anytime soon.
But what about inflation? Do you believe inflation is only 2% like the government reports? It sure doesn’t feel like it when you go to buy food, gas, and other goods and services. In fact, Shadow Government Statistics reports the current inflation level at just under 6% when using the 1990-based alternate inflation rate which is closer to reality than the government wants you to believe. And with the printing presses running full tilt, one can expect the rate of inflation to increase in the coming years.
With lower traditionally safe investment returns and higher inflation, it’s time to rethink the rules for retirement, unless you want to sell everything you own and move in with your children! It’s crazy to keep a major portion of your retirement nest egg in investments with low returns during a time of high inflation.
As you can see, with the current economic scenario of low returns on traditionally safe, interest-bearing investments and high inflation, it doesn’t seem wise to follow the 100 minus your age rule for allocating your retirement investments. So does that mean you should go “all in” investing in stocks? There’s a very famous proverb “Don’t put all of your eggs in one basket” and that is especially true with the stock market, and most investments for that matter. The risk of a large downturn is just too great with the stock market to put it all on the line.
The New Rules
Diversification is key, focusing on investments that provide safety, yield, growth, and inflation protection. We think real estate, when purchased wisely, is an excellent retirement investment vehicle in the current economic and investment landscape. It can provide a dependable, passive income stream, appreciation, and generational wealth with minimal risk.
Home prices are still near historically low values but have started to go up with a vengeance. Mortgage rates are extremely low so you can lock in a long-term fixed rate mortgage and as inflation rises, resulting in higher rents, your cash flow increases. And as the value of the home rises you also enjoy capital appreciation. Last but not least, at the end of the mortgage you own the investment free and clear.
If you don’t have a viable plan for your retirement or would like help coming up with a plan or finding investment properties, our team of experienced real estate professionals can help you create a customized retirement investment plan and find properties in the best rental markets of the country with high cash flow and minimal risk.
Give us a call today at 888-298-0652 for a free consultation or join us for our upcoming property tour in Atlanta, click here to learn more.
Quantitative easing, or simply known as QE, is a form of monetary policy that is used by the central bank to raise the supply of money in an economy where the rates on discount, interbank interest and normal interest is at zero or close to that. QE3 stands for the third round of this process of quantitative easing and is aimed directly at the mortgage and housing industry.
How is Quantitative Easing Done?
The Federal Open Market Committee (FOMC) announced recently that purchases will be made that will target Housing. Their aim is to buy $40 billion of securities per month in 2012 which are mortgage-backed. The goal is to lower interest rates.
The FOMC will first credit its account with cash that it has created ex nihilo (a Latin phrase that means “out of nothing”). With this money,the FOMC then goes ahead and buys financial assets including different types of bonds from different financial institutions through a process termed open market operations.
This process will enable the committee to acquire new money through deposit multiplication. The increase in money circulation will ultimately stimulate the economy. The term quantitative easing comes about due to the fact that a specific amount of money is being generated (quantitative) and it is helping reduce the burden on the banking system (easing).
What is the Effect of QE3 on Mortgages?
When you go out to buy a house, you usually pay a certain amount of interest on the loan. With QE3, you will have access to purchasing mortgages which are backed by bonds. This will most likely provide you with lower interest rates for new mortgages.
Why lower the rates? It is believed that when the mortgage rates go lower, many individuals will take advantage of the lowered cost of home ownership and thus buy homes. Though many buyers don’t see this as the only motivator in buying a house, at least some will be motivated to purchase.
When more homes are bought, investors will construct more houses which inevitably create more jobs and increase the employment levels. Lower mortgage rates will definitely motivate investors to purchase housing and convert them into rental units suitable for single families.
Previous QE programs were limited to a specific amount of stimulus. QE3 is different because the government has announced it will continue the program as long as necessary to jump start the economy. Clearly, the government sees housing as a key ingredient of a robust economy and they are willing to do whatever it takes have a healthy housing market and increased home prices.