Finally you easily generate huge real estate profits without even having to leave your home!

Mid-Day Market News & Commentary by Chris McLaughlin, December 31, 2008
http://www.shortsalesriches.com/welcome.html

——
You really can make a huge six figure income … even a 7 figure income … with no money out of your pocket in the deepest recession our country has ever faced.  How?  Well, you asked and we listened … some of you said that 9 PM ET webinars were just too darn late for you!  So we’re holding one this Saturday … at 4 PM EST: 

https://www2.gotomeeting.com/register/703821628

——

Happy New Year’s Eve!

Good news for those looking to lock in rates!  Mortgage rates continued to drop this week, as Freddie Mac reported that rates continued to drop consecutively for nine weeks in a row.   Rates for a 30 year fixed mortgage dropped to 5.10% , down from 5.14% for the previous week.  “Interest rates for 30-year fixed-rate mortgages fell for the ninth straight week and represented a third consecutive all-time record low since Freddie Mac’s survey began in April 1971,” Frank Nothaft, Freddie Mac’s chief economist stated. 

And the good rate news has lenders busier than they’ve been in a year.  The Mortgage Banker’s Association index of mortgage application activity held steady this week at 1,257.7, which is its highest level since July 2003.

Now on to our real estate investing education section…

Hidden Environmental Incentives

While most short sale buyers or investors are well aware of potential pitfalls when working with environmentally sensitive properties, it is also a good idea to become familiar with hidden profit sources when purchasing properties. Here are the top methods for making more money simply due to environmental management trends:

Open Spaces. When possible, search for properties adjacent to open spaces. Conservation areas, buffer zones and even properly maintained or landscaped drainage areas sell for nearly 13 percent more than similar properties not adjacent to an open space. Open spaces represent more land, less congestion, less noise and other irritants for buyers without the higher property taxes making it an appealing resale potential.

Acreage. Search for properties located near or adjacent to acreage to realize almost 17 percent greater return on your investment compared to similar sized/area parcels. The prime size is typically 2 to 3 acres of land; anything larger is likely to be considered farming and actually subject to decreased values rather than increases.

Wetlands. Contrary to popular wisdom, properties located or classified as wetlands averaged a .3 percent increase compared to non-wetland designations. While the buyer should always be aware of potential restrictions or other environmental limits upon use, wetlands also represent “mandated” quiet zones for many buyers searching for peace and quiet.

Combinations. By combining open spaces, small acreage plots and even a wetland area it is possible to increase property values by 1/3 or more. Short sale investors presented with an opportunity to purchase on a neighborhood or community that utilized this type of planning versus another neighborhood of high density track homes will disproportionately benefit in the long term by purchasing in the environmentally sensitive community.

What to Avoid. While open spaces, acreage and wetlands represent prime purchasing opportunities, there are environmental pitfalls to be avoided if possible.

Farmland. While farm land represents a tremendous buying opportunity for other reasons, for the purpose of residential real estate it is well known to reduce property values of adjacent parcels by over 13 percent. It only makes sense; few people desire the exposure to unpleasant odors, pesticides, diesel trucks and other common pitfalls associated with farming.

Major Roads. Another common profit buster is a property located within 20 meters of a major Interstate or other highway. While the path of progress can transform an undesirable property into a future mall location or commercial milestone, the long term developmental and others costs can be out of the reach of the ordinary owner creating an inverse incentive for years.

Not in My Backyard. Despite the convenience and easy commute, there are many major construction projects deemed less desirable for residential properties. Common examples include nuclear power plants, prisons and manufacturing plants.

——–

See you at the top!

Chris McLaughlin
http://www.shortsalesriches.com/blog

P.S.:

Are you ready to get 2009 rolling?  Then it is time to come to our LIVE “Recession Proof Real Estate Investing” webinar this coming Saturday at 4 PM EST, 1 PM PST:

https://www2.gotomeeting.com/register/703821628

P.S.S.:

Have you seen the hilarious “Short Sale Kid Gets a Holiday Haircut.”  Don’t miss this challenge issued by Nathan Jurewicz:
http://www.youtube.com/shortsalesriches

Mid-Day Market News & Commentary by Chris McLaughlin, December 30, 2008
http://www.shortsalesriches.com/welcome.html

——
You really can make a huge six figure income … even a 7 figure income … with no money out of your pocket in the deepest recession our country has ever faced.  How?  Just register now for our fr’ee webinar unveiling the strategies to use in this economy…all tonight at 9 PM ET: 

https://www2.gotomeeting.com/register/638209573

——
This should come as no surprise to most of our readers: home prices posted an 18% drop for October of last year, the biggest drop ever since the Standard & Poors/Case-Shiller 20 city housing index was created.  The 10-city index fared a bit worse, dropping 19.1%.  And there areas really got wacked: Phoenix dropped 33%, Las Vegas slid 32%, and San Francisco declined 41%. 

The Conference Board announced that its Consumer Confidence Index dropped 38 in December from a revised 44.7 in November.  The low number surprised economists: a survey of 62 number crunches estimated that the reading would come in around 45.   

But in good news for consumers, General Motors announced that it would once again offer zero percent financing for the next several weeks.  This comes on the heels of the announcement that GMAC was approved as a bank, therefore eligible to tap into $5 billion of the $700 billion of TARP funds. 

Now, on to our real estate investing education section…

Discounting Hedonic Pricing Models

Short sale investors interested in obtaining the lowest possible price should learn to turn the tables on rapid rate increases by discounting hedonic pricing models to their benefit. Hedonic pricing essentially works like this; instead of calculating the increase in a price of a home as inflationary, the “upgrades” and other enhanced “quality” measures are calculated independent of the base price of the home. While this is a valid method of taking quality improvements into account especially during periods of economic growth, it does little to account for increased “liabilities” during periods of economic or financial contraction.

Let’s demonstrate by using a basic example; Buyer A and Buyer B both purchased 3 bedroom, 2 bath homes on 1/3 acre lots with city utilities. Each home is 1500 sq. feet living area and is 3 years of age. Home A is a “bare bones” affordable housing model with laminate counter-tops, inexpensive carpet and off the shelf fixtures throughout. Standard bathtub, windows, doors and other items were used. The cost of the home was $100 per square foot or roughly $150,000 plus the price of the lot. Buyer B also purchased a home of the same size but with granite countertops, imported Italian tile, upgraded windows and custom features throughout. Upgraded appliances, a large in-ground pool, whirlpool spa tubs and other upgrades resulted in a cost of $300 per square foot or a selling price of $450,000 plus the price of the lot.

So far so good. Unfortunately, as the economy begins to stagnate items originally deemed highly desirable quickly become undesirable as the cost of maintenance and repairs outpaces the ability of homeowners to sustain these items. This is where short sale investors are likely to reap major benefits. Deep discounts of common upgrades or former enhancements are possible by keeping these rules of thumb in mind:

1.     If it requires high maintenance it is a liability and should be deeply discounted. In-ground pools are a prime example. Not only do they increase electric bills when heating but cleaning supplies and maintenance contracts can easily cost $100-$250 per month. Items that require regular out of pocket costs should be deeply discounted as potential liabilities for a property. Aggressive pricing estimates would deduct the cost of repairs, maintenance and even potential removal of the item.

2.     If it requires minimal maintenance but adds no additional value it should be discounted by comparing a standard pricing model. For instance, those beautiful granite countertops don’t save money or increase functionality to the home therefore they are of no more “real” value when selling than laminate or less expensive alternatives. Make a point of going through the home and putting together a comprehensive replacement price list based upon standard “off the shelf” alternatives for all items that do not activity save money or represent major buying incentives in the new economy.

We had so many positive comments about our top 5 positive things about the market … so we’re going to post it again for you:

As 2008 draws to a close and short sale investors look to 2009 the question on everyone’s mind is whether or not the economy will continue its downward spiral or experience a recovery. Despite the considerable abundance of doom and gloom reporting in the media, there are a few bright spots that aren’t receiving the full attention deserved. Short sale investors searching for a silver lining in an otherwise cloudy economic environment would do well to focus on these current trends:

1. $40 per gallon oil and $1.65 per average gasoline. How low will it go and how long it will last is subject to debate but one thing is certain; those who rely upon gasoline and oil are experiencing a bit of much needed relief in the form of lower prices.

2. Low Mortgage Rates & Dropping LIBOR Rates. The cost of money is cheap – not just inexpensive but downright cheap. Make no mistake about it, real interest rates are the lowest in decades and make it less expensive than ever to borrow money to build a short sale empire. It is possible to buy more house for less money while simultaneously spending less on taxes and insurance. It’s a win-win-win situation for those with the courage to buy when others are selling.

3. Huge Fiscal Stimulus. Coming soon to a federal budget near you is a huge fiscal stimulus package destined to become one of the largest in history. Bridges, roads, hospitals, schools, utilities and other mega-projects are slated to spur the economic growth needed to jump-start the economy. Whether you believe the stimulus package will work or worsen the long term economy, one thing is certain; those workers will need affordable and convenient housing for long term projects. Short sale investors would do well to make a mental note of future road plans, schools and other large building projects in the target areas of interest. Whether you buy low and sell high or wait for the path of progress to reach you, it is a position of strength rather than weakness.

4. Long Term Lag-Times. The global decline in commodities and other tangible assets will eventually lead to long term shortages with tremendous upside profit potential for short sale investors. Remember, there is a lag time between the supply and demand which will result in high demand and low supply once the economy stabilizes. Everything from basic building materials to mineral rights, timber and even natural gas holdings will be impacted. Savvy short sale buyers would do well to realize the long term potential inherent in their holdings.

5. More Renters. Foreclosures aren’t over…in fact, due to legislative restrictions on the number of “bad loans” and tangible assets a bank may have on the books at any given point in time, the current bail-out simply provided the liquidity required for banks to prepare for the 2^nd stage of the growing mortgage meltdown. Most experts agree that what began as a sub-prime mess is expanding into ARM’s, low/no Doc loans and even prime mortgages in response to rising unemployment, falling stocks and bonds plus a plethora of other economic problems hit the average homeowner.

——–

See you at the top!

Chris McLaughlin
http://www.shortsalesriches.com/blog

P.S.:

Are you ready to get 2009 rolling?  Then it is time to come to our LIVE “Recession Proof Real Estate Investing” webinar tonight – at 9 PM ET:

https://www2.gotomeeting.com/register/638209573

P.S.S.:

Have you seen the hilarious “Short Sale Kid Gets a Holiday Haircut.”  Don’t miss this challenge issued by Nathan Jurewicz:
http://www.youtube.com/shortsalesriches

Mid-Day Market News & Commentary by Chris McLaughlin, December 29, 2008
http://www.shortsalesriches.com/welcome.html

——
You really can make a huge six figure income … even a 7 figure income … with no money out of your pocket in the deepest recession our country has ever faced.  How?  Just register now for our fr’ee webinar unveiling the strategies to use in this economy…all on Tuesday night at 9 PM ET: 

https://www2.gotomeeting.com/register/638209573

——

CNBC reported today that several private equity firms are circling the wagon to purchase IndyMac Bancorp, the huge bank that went belly up because of the subprime mess that is now run by the Federal Deposit Insurance Corporation (FDIC).  The prospective buyers include J.C. Flowers & Co., Dune Capital Management, and Paulson & Company.   In the small world of finance, IndyMac was founded in 1985 by Angelo Mozillo and David Loeb, who later went on to found Countrywide Financial, which is now owned by Bank of America.  Looks like the initial management team setup both companies for failure, huh?

And if you thought the housing mess was limited to just the United States, think again.  Reuters reported today that prices dropped 8.7% in England and Wales for 2008 and are expected to fall further. 

Now on to our real estate investing education section…

As 2008 draws to a close and short sale investors look to 2009 the question on everyone’s mind is whether or not the economy will continue its downward spiral or experience a recovery. Despite the considerable abundance of doom and gloom reporting in the media, there are a few bright spots that aren’t receiving the full attention deserved. Short sale investors searching for a silver lining in an otherwise cloudy economic environment would do well to focus on these current trends:

1. $40 per gallon oil and $1.65 per average gasoline. How low will it go and how long it will last is subject to debate but one thing is certain; those who rely upon gasoline and oil are experiencing a bit of much needed relief in the form of lower prices.

2. Low Mortgage Rates & Dropping LIBOR Rates. The cost of money is cheap – not just inexpensive but downright cheap. Make no mistake about it, real interest rates are the lowest in decades and make it less expensive than ever to borrow money to build a short sale empire. It is possible to buy more house for less money while simultaneously spending less on taxes and insurance. It’s a win-win-win situation for those with the courage to buy when others are selling.

3. Huge Fiscal Stimulus. Coming soon to a federal budget near you is a huge fiscal stimulus package destined to become one of the largest in history. Bridges, roads, hospitals, schools, utilities and other mega-projects are slated to spur the economic growth needed to jump-start the economy. Whether you believe the stimulus package will work or worsen the long term economy, one thing is certain; those workers will need affordable and convenient housing for long term projects. Short sale investors would do well to make a mental note of future road plans, schools and other large building projects in the target areas of interest. Whether you buy low and sell high or wait for the path of progress to reach you, it is a position of strength rather than weakness.

4. Long Term Lag-Times. The global decline in commodities and other tangible assets will eventually lead to long term shortages with tremendous upside profit potential for short sale investors. Remember, there is a lag time between the supply and demand which will result in high demand and low supply once the economy stabilizes. Everything from basic building materials to mineral rights, timber and even natural gas holdings will be impacted. Savvy short sale buyers would do well to realize the long term potential inherent in their holdings.

5. More Renters. Foreclosures aren’t over…in fact, due to legislative restrictions on the number of “bad loans” and tangible assets a bank may have on the books at any given point in time, the current bail-out simply provided the liquidity required for banks to prepare for the 2^nd stage of the growing mortgage meltdown. Most experts agree that what began as a sub-prime mess is expanding into ARM’s, low/no Doc loans and even prime mortgages in response to rising unemployment, falling stocks and bonds plus a plethora of other economic problems hit the average homeowner.

——–

See you at the top!

Chris McLaughlin
http://www.shortsalesriches.com/blog

P.S.:

Are you ready to get 2009 rolling?  Then it is time to come to our LIVE “Recession Proof Real Estate Investing” webinar tomorrow night – Tuesday – at 9 PM ET:

https://www2.gotomeeting.com/register/638209573

P.S.S.:

Have you seen the hilarious “Short Sale Kid Gets a Holiday Haircut.”  Don’t miss this challenge issued by Nathan Jurewicz:
http://www.youtube.com/shortsalesriches

Mid-Day Market News & Commentary by Chris McLaughlin, December 26, 2008
http://www.shortsalesriches.com/welcome.html

——
Are you ready to get 2009 rolling?  Then it is time to come to our LIVE “Recession Proof Real Estate Investing” webinar tomorrow, Saturday, at 4 PM ET and 1 PM PST! 

https://www2.gotomeeting.com/register/521115603

——

GMAC Financial Services got a huge Christmas present this week when the Federal Reserve approved its application to become a bank holding company, thereby enabling it to tap into $700 billion of TARP rescue funds.  Not only will GMAC be able to tap into the bank stabilizing funds, it will also be able to borrow from the Fed’s discount window for virtually no interest. 

Somber retailers took note that the Grinch showed up this holiday season.  According to Mastercards’s SpendingPulse division, total retail sales dropped 5.5% in November and a whopping 8% in December as most Americans kept their money in their bank accounts.  Luxury items were hit the hardest, with a drop of 35%, while electronics dropped 27% and women’s apparel slid 23%.  But there was so positive news from retailers, but it just so happened to be online…

There’s more proof that Americans are tired of crazy malls and rude drivers that steal your parking spots: Amazon.com announced that its 2008 holiday season was its “best ever.”  Get this: orders came in at a record-breaking 72.9 items per second! 

Here are some pretty cool amazon.com holiday facts they released today:

• Amazon.com sold enough “Breaking Dawn” books that stacked end to end they would reach the summit of Mt. Everest eight times.
• During the period from Nov. 15 - Dec. 10, Amazon sold one copy of Microsoft Office Home and Student 2007 every 2.5 minutes.
• The weight of all GPS devices sold from Black Friday through December equals the combined weight of 151 Mini Coopers.
• Amazon sold enough high-performance headphones that everyone attending the last three Super Bowls could grab a set and rock out.
• Amazon Grocery sold enough coffee to give each resident of the highly caffeinated city of Seattle a cup per day for two months.
• Amazon sold enough Casio G-Shock watches to outfit every Kanye West fan attending the 2008 Glow in the Dark Tour concert at Madison Square Garden, N.Y.
• Amazon sold enough Coldplay CDs that laid side by side they’d stretch from Seattle to Violet Hill (a street in London and the album’s first single) and more than halfway back.
• Amazon sold enough Munchkin Mozart Magic Cubes to fill every seat in the Sydney Opera House five times over.
• Amazon sold enough Wild Planet Hyper Dash games that the total weight of sets sold is over 81,000 pounds — almost the size of two 747 aircrafts.
• Amazon sold enough Spalding basketballs to fill three C-130 cargo planes.

Now, on to our real estate education section…

The Misery Index and Short Sales Negotiations

The Misery index is derived from taking the unemployment rate and adding it to the rate of inflation to gauge the economic and social climate of the nation. The higher the misery index, the more negative and desperate the average consumer tends to become. The low was 2.9 percent in July of 1954 with the high reaching 21.9 in June of 1980. Today the misery index stands at 7.77 and rising as of the end of November 2008.

So, how should short sale investors use this information? Well, in a couple of ways. First of all, watch the macro trend…as the index increases so too does the uncertainty of the average American consumer (and by proxy, business owners). Their spending habits tend to decrease and they often start to save for a rainy day.  People, business owners and even banks in this stage tend to think it is short-term and less inclined to negotiate more than a minimal reduction.

Next, watch for a shift. The second stage takes place as momentum builds and the rate of change increases at a faster and faster pace. Uncertainty gives rise to outright fear as people begin to worry about their own job or financial future. Banks and business owners begin to think this could last longer than expected and begin to pad their own balance sheets for the long run. There is a decidedly motivated response to downsize unnecessary assets, overhead or other non-performing holdings.  Short sale investors will find these individuals and banks much more motivated especially if approaching with fast closing and minimal escape clauses. The emphasis of 90 percent (or more) of people will be a flight to “safety” during this  stage as evidenced by the purchase of government bonds or other items that provide little to no real return.

The third and final stage is recuperation. Banks, investors and others realize the properties or other holdings were now over-sold and represent financially desirable long term investments. Even more importantly, there is a renewed interest in actual earnings due to the erosion of real earning power. Every short sale investor will do well to remember that earned income represents only a relatively modest allocation of most income…over the long term few people can actually live entirely on their own earned income. At this point, the money tends to flood into tangible assets and commodities including oil, real estate, farm and agricultural lands or products, oil, minerals, natural gas and other related holdings resulting in rapidly rising prices…and profits for those with the foresight to buy during stage two.

So, where are we today…most experts agree we are now transitioning from stage one into stage two making this the perfect time to begin buying foreclosures and short sales in earnest.  To keep track of where the misery index is heading, visit http://www.miseryindex.us/default-pda.asp at least quarterly. 

——–

See you at the top!

Chris McLaughlin
http://www.shortsalesriches.com/blog

P.S.:

Are you ready to get 2009 rolling?  Then it is time to come to our LIVE “Recession Proof Real Estate Investing” webinar tomorrow, Saturday, at 4 PM ET and 1 PM PST! 

https://www2.gotomeeting.com/register/521115603

Mid-Day Market News & Commentary by Chris McLaughlin, December 23, 2008
http://www.shortsalesriches.com/welcome.html

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It was simply an amazing webinar, and we’re giving you a replay that will be up until the end of Christmas.  Go now to watch this awesome replay…we’ll show you exactly how you can make serious cash in this market with no money out of your pocket, even if your credit is shot:

 http://www.webinarwizards.com/custom/index.cfm?id=170027

——

There won’t be any updates today, instead it is a time for reflection and family.  2008 is coming to a close, and indeed it was quite a year.  We have amazing opportunities ahead of us, and 2009 promises to be the absolute best for all of us.

A year ago I shared with our associates a powerful essay written by Yelena Bonner, wife of the exiled Soviet physicist Andrei Sakharov.  Bonner came to the United States for heart surgery and returned to the Soviet Union after six months in the U.S.

At a time when many are wondering just what home ownership means, I thought it appropriate on this Christmas Eve to share with you her powerful essay again.  What is remarkable to me is that she truly understands the American Dream – home ownership – more than many Americans do.

I hope you send this on to those who have stood strong in the midst of foreclosures, short sales, REOs, and all the other craziness of the year.  At the end of the day we’re offering many the possibilities of home ownership.  And that is something indeed worth celebrating.

God Bless you and yours this Holiday season,

Chris McLaughlin

————-

“I Want a House,” by Yelena Bonner.

I maintain that Americans do not want war. What Americans want is a house. No matter their place on the social ladder, they want a house of their own. They want a house and the ground it stands on, that’s all.

The First Lady says that when the President retires, they will sell the house in which they lived before the Presidency. The children are grown, and the place is too big for them. So, they will buy a smaller house. A wonderful plan! The President doesn’t want war, he wants a new house.

I also want a house, in addition to my usual wants that everyone be together and healthy, and that there be no war. A house with enough land around it for me to plant flowers. I don’t need a lot of bedrooms, just one for us and one for Mother, a guest room, and one more so that I’m always ready for our Grandchildren. And I’d like a room where I could at last spread out my books, and Andrei could make a mess.

What nonsense I’m writing! I want a house! This is me, who should be counting the days, no, counting the hours of my freedom to do what I want.

But you know, I’m 63, and I’ve never had a house. Not only that, I’ve never had a corner I could call my own. After the war we had a room in a communal apartment - there were 48 people in that apartment and only one toilet. I think the first time I was mistress of my own place was, well, it’s hard to believe, it was in Gorky, while we were in exile. I do not want that.

My Daughter has a house in Newton, Massachusetts. It makes me so happy to think that she has a house. Her family is caught up in our affairs, in our Gorky horrors and suffering. They have forgotten the pleasure of their house. I want them to go back to caring about it - it has done so much for them.

I want a house. My dream - my own house - is unattainable for my husband and myself, as unattainable as heaven on earth. But, I want a house. If not for me, then for my son and his family in America. My son and I plan to buy one. And, I am learning many new things. The house should be near good schools. My Granddaughter is three, and schooling is not far off in the future. It should be in the suburbs - vacations are short, and a child should not have to grow up in a polluted city. It should be close to work - both parents have jobs and there is only one car. It should have a foundation and basement. I have never known such considerations to exist. It should have three bedrooms so my mother can be with them, or at least visit. And, it should have a studio. My Son, Alyosha, needs a workroom for his mathematics.

A house is a symbol of independence, both spiritual and physical. Some own a tiny house, like a toy cottage with only the soil in their flower boxes. Others have lots of bedrooms, baths, and extensive lawns. The American feeling about his house expresses the main traits of Americans - the desire for independence and privacy. But that attitude gives rise to a third trait; “My house is my pride and joy.”

And from that comes, “My city, my state, and my country is my pride and joy.” It is an attitude that is open, kind, and caring, both toward the house and everything it stands for - the soil in the flower boxes and the lovingly tended lawn, even if it’s only three yards square. And I say, this shows that Americans care about the land in general, and about the whole world.

I want, I want, I want. More than the children, I want a house. But, it’s time for me to pack my bags. The children live here, I live over there. What difference does it make if Gorbachev and Reagan meet in June, or any other month? Americans don’t want war, they want a house. I don’t want war, I WANT A HOUSE.

————–

See you at the top!

Chris McLaughlin
http://www.shortsalesriches.com/blog

P.S.:

It was an amazing webinar, and will set you up for next year!  Go here now:

http://www.webinarwizards.com/custom/index.cfm?id=170027

Mid-Day Market News & Commentary by Chris McLaughlin, December 23, 2008
http://www.shortsalesriches.com/welcome.html

——
Yes, Virginia … there is a Santa Claus!  And he loves to represent buyers in foreclosure and make a ton of money.  So check out this amazing youtube video…Santa definitely showed up in Tennessee this year, early!  You have to see this!!

http://www.youtube.com/watch?v=XTvvi311YDg

and then make sure you register for our upcoming Recession Proof Investing webinar!  There are 17 slots available, first come first serve:

https://www2.gotomeeting.com/register/732240980

——

The National Association of Realtors reported that existing home sales dropped 8.6% to 4.49 million in November, from a revised rate of 4.91 million in October.  This represents a 10.6% decline below the 5.02 million in November 2007.  Lawrence Yun, NAR chief economist, expected the decline. “The quickly deteriorating conditions in the job market, stock market, and consumer confidence in October and November have knocked down home sales to another level. We hope the home sales impact from the stock market crash turns out to be short-lived, as was the case in 1987 and 2001,” he said.

“It is, therefore, imperative to provide incentives for homebuyers to get back into the market. It also depends on how effectively Congress and the new administration can help facilitate the short sales process and unclog the mortgage pipeline – impediments remain for some buyers with good credit,” Yun said.

The Associated Press reported late yesterday that Representative Barney Frank, the Chair of the House Financial Services Committee, wants the final $300 billion installment released before President-elect Obama takes office.  Frank is looking to stiffen disclosure related to lending for banks that received TARP money that seem to be hoarding the money now.  In addition, Frank wants to allocate about $24 billion to back FDIC Chair Shelia Blair’s plan to encourage more lenders to modify loans.  And finally, Frank is supporting using government money, along with Fannie Mae and Freddie Mac, to buy down long term 30-year mortgage rates to 4.5% or below, an effort widely seen as stimulating housing demand.

Frank’s buy-down effort is certainly good news for most real estate investors and Realtors.  And if comes on the heels on a shocking statistic about the failed government-backed loan modification called “Hope for Homeowners.”  This ridiculous program, which I’ve spent many an e-mail lambasting in the past, was supposed to help at least 400,000 homeowners.  Guess how many have bothered to even apply when it was launched on October 1^st?

312.

No, that’s not a typo.

Three hundred and twelve.

What a joke!  At some point the government is going to figure out that the key to solving the foreclosure crisis doesn’t rest solely with the supply side of the equation – they MUST stimulate demand with goodies like tax credits, accelerated depreciation, low interest rates, and government-backed loans.  Once you have demand, then guess what happens?   Prices begin to not only stabilize … but move up!  And when prices move up, less people go into foreclosure, and less people walk away from homes that are under equity.

Ok, enough of my soapbox.  You get the picture!  The Hope for Homeowners Program is truly hopeless.  Let’s hope they start focusing on where the focus needs to be: encouraging new buyers of homes and investment properties!

Setting Up for a New Year: Maintenance and Repair Index

This year make it a priority to set-up your books and other financial record-keeping to run smoothly and on auto-pilot. One useful measure is the maintenance and repair index. This shows how much maintenance and repair was required for each direct hour of labor invested.  It is an excellent alternative measure for short sale investors or real estate agents who need to track productive hours in relation to a given property. As every real estate investor knows, the 80-20 rule applies to real estate just as it does any other business situation; roughly 80 percent of your profit will come from 20 percent of your clients or holdings while 80 percent of your problems will come from only 20 percent of your holdings. Reducing those time-consuming properties and increasing those profitable properties is the key to building wealth.

How to Measure

Computing the Maintenance and Repair index is easy;

Maintenance and repair hours/Total direct labor hours = MRI

Example

Let’s assume you have two properties called A and B.

Maintenance and repairs for property A = 20. Total direct labor hours = 100. Total MRI = 20.

Maintenance and repairs for property B = 60. Total direct labor hours = 94. Total MRI = 60.

Obviously property B requires extensively more time for upkeep, maintenance and repairs. By calculating the MRI then assigning a dollar value to invested hourly time required, you can assure a reasonable return on time and opportunity cost while avoiding or eliminating poor performers.

How to Use

At least once per year, every short sale investor and real estate agent should take stock in their best and worst performers then cut the bottom 10 percent. Yes, it can be frightening to eliminate clients or inventory during tough economic times but the reality is you need to work smarter – not harder –when times are tough. Think of it this way, you only have x hours in any given day so they must be the most product possible. Clients or holdings that require unusual amounts of time, energy or maintenance actually detract from your full potential by causing you to miss other more profitable endeavors.  By continually maximizing your efficiency and reducing expenses –both in terms of time and money – you will be better positioned to take advantage of new opportunities as they arise.

See you at the top!

Chris McLaughlin
http://www.shortsalesriches.com/blog

P.S.:   Don’t miss our webinar tonight, Tuesday, at 9 PM EST!  We’re holding this Recession Proof Real Estate Investing webinar once again on a weekend to accommodate all those who are unable to join us at night!  Click here, there are only 17 spots available:

https://www2.gotomeeting.com/register/732240980

Mid-Day Market News & Commentary by Chris McLaughlin, December 22, 2008
http://www.shortsalesriches.com/welcome.html