A HEALTHY ATTITUDE FOR A NEW AMERICAN REAL ESTATE SCENE
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12.00 Normal 0 false false false EN-US X-NONE X-NONE MicrosoftInternetExplorer4 I spent several hours recently reading blogs, magazine and newsprint articles written by some of the country’s top economists. I was trying to get a sense of where the U.S. economy is headed and gain some sort of insight as to when things might get back to “normal.” The reality is, what we had come to think of as normal really never was.
The United States has been on a completely irresponsible fiscal... continue reading >>
GLOOM DOOM AND OTHER POSITIVE SIGNS
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The trouble with gloom and doom is that when you’re surrounded by it, that’s all you can see. While most economists don’t predict a depression, the prevailing thought is that we’re in for a very bad recession with lots more foreclosures, job losses and many personal and business bankruptcies.I’m not going to express my views about the insanity in Washington regarding the financial market and the Detroit bailouts. I will say the new President sure has inherited a mess (some would say it’s a crime scene). His hands are full but I think he’s got the moral support... continue reading >>
LIQUID ASSETS
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We think of liquid assets as something we can quickly and easily convert into cash, like stocks and bonds. With what’s been happening to investor portfolios lately, including IRA and 401k retirement funds, here’s something to think about:
· If you had purchased $1,000 of shares in Delta Airlines one year ago, you would have $49.00 today.
· If you had purchased $1,000 of shares in AIG one year ago, you would have $33.00 today.
· If you had purchased $1,000 of shares in Lehman Brothers one year ago, you would have $0.00 today.
· If you had purchased... continue reading >>
It’s Like Deja Vu All Over Again
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Baseball great Yogi Berra’s famous quote certainly applies to today’s real estate market. In the late 1980’s and early 90’s, the U.S. experienced a devastating downturn in the commercial real estate market. It lasted over five years and, although many investors lost huge sums of money, there were a few savvy investors who bought properties for pennies on the dollar. Sound familiar?
In the 1990’s, the government formed the Resolution Trust Corporation (RTC) to take over thousands of Savings & Loans, called their loans due and sold the ensuing foreclosures for chump change. Because there was almost no... continue reading >>
Self-Directed IRA Vs Traditional IRA
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The recent whipsaw gyrations of stock markets worldwide have kept many an investor on pins and needles lately. Since the beginning of 2008, the US stock market has shed over 40% of its value, with trillions of dollars being lost. IRA and 401k investors are especially worried that their retirement funds won't be there when needed, and for good reason. Much of their investment capital is tied up in mutual funds, and recently they have helplessly watched in horror as their savings evaporated.
To cut their losses, many investors have liquidated their accounts and moved into cash. Such a... continue reading >>
Mortgage Pools - Jump In, the Water's Fine
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I often get questions from potential investors about the basic functions of a mortgage fund (aka a mortgage pool). Therefore, I've decided to write about mortgage pools in general to clear up any misconceptions.
Mortgage pools are securities that are required by state and federal agencies to provide complete and full disclosure through an offering memorandum. A mortgage pool is a collection of capital contributions from many investors and is usually in the form of a limited liability company that sells shares. The investment pool of capital is then used to purchase a number of different loans, which are... continue reading >>
CONTRARIAN (LOGICAL) COMMERCIAL REAL ESTATE INVESTING NOT FOR THE TIMID
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After viewing the graph above, ask yourself these questions: “When the market is down (Recession Phase) what is the only direction it can go?” and “When the market is up (Expansion Phase) what is the only direction it can go?”
Some commercial real estate investors are able to consistently earn big profits due to the fluctuations common to the industry. Who are they and how do they do it? They are contrarian investors, who know when to buy and when to sell by identifying and understanding the phases of real estate market cycles. It also helps to... continue reading >>
What Does Sam Have to Say?
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On more than one occasion I’ve mentioned Sam Zell, the real estate billionaire and organizer of the original real estate “vulture fund” (now known by the politically correct term “opportunity fund”) of the early ‘90s. When commercial property turned sour he was ready and armed with his $409 million fund (small by today’s standards) to buy out excellent properties for pennies on the dollar from troubled sellers, including the Resolution Trust Corporation.
The RTC was a quasi-government corporation set up by Congress to take over troubled thrifts and dispose of properties foreclosed as a result of the S&L... continue reading >>
The Magic Of The Wraparound Mortgage
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12.00 Normal 0 false false false EN-US X-NONE X-NONE MicrosoftInternetExplorer4In times like these, when the economic future is so uncertain, let’s take a moment to revisit a lending vehicle that most people aren’t thinking about at the moment, the “wrap.” I know, I know, you’re wondering how this debt vehicle would be used in a real estate market such as this. Well, why not take a look at the function and structure of this type of mortgage and come to your own conclusions.
A wraparound mortgage (also known as an all-inclusive mortgage or trust deed, commonly... continue reading >>