Good News...If You're Not Too Hostile

Good News for Younger Buyers...If Our Hostility Remains at Bay

My boyfriend arrived home earlier than I did, and he called with the requisite, "Where are you?" inquiry. I said I'd be home from the store in moments, and that he could check out a new album I bought, just released last week by a favorite artist of mine, Nas. The untitled album features songs called "Black President," "America," and "Fried Chicken." You get the idea.

Well, I arrive home and he is listening to the politically charged album, and has this copy (above) of The Economist in his hands. He begins on a 12 minute diatribe about how, in this country, even with a very good salary like his, he STILL cannot afford to buy a house. And he served in the Army. And he is angry--and rightfully so.

He argued that our generation (the now-thirty somethings) will never benefit from real estate the way our parents have. To the point, his parents (having bought a home in Wisconsin in 1973 for $67,000, now worth a little more than $120,000) will never benefit from their real estate in the way that my parents did (having bought a home in the San Francisco Bay Area in 1975 for $80,000, now worth upwards of $800,000).

Here's what I say, here's another spin on the media this week. Young people now hear this: save your money. I'm looking at a Wall Street Journal Article ("Amid Housing Slump, Glut Eases Slightly," Tuesday July 29, 2008) that is telling me how much home prices have slipped--and this signals to me that especially first-time home buyers should be looking at how they can get into their own home.

WSJ reports the following price changes (all negative), this quarter (excerpted in part from WSJ):

• Atlanta -5.9%
• Detroit -15.9%
• Orange County -21.8%
• Portland, OR -5.9%
• San Diego -19.5%
• Washington, DC -13.2%
  

What's more, they expect Manhattan's numbers to change considerably next quarter due to financial sector layoffs and less, and fewer bonuses for those that withstand the next round of rolling heads.

You Never Know the Bottom, Until it Has Passed
The lesson the younger generation should heed is that we should not wait for the market to hit bottom to get into our own homes or into (more affordable) investments, because we will never rightly identify the bottom until it has actually passed. Now is a great time to try and qualify for your own home--and our government just passed some new legislation that is also supposed to give first-time home buyers more breaks, too.

So give your blood pressure a break, as I had to encourage my boyfriend to do. Instead of thinking about the losses that the market is bringing, think of it as a new (not golden, but maybe just gold plated) opportunity for younger buyers to actualize their own dream of owning a home or becoming an investor. This may be the best chance we get in another, long while.

Weekly Release

Hi Everyone,

This weekly release is minimal. We've made a little change to the Buyers tab, we're calling it Contacts. Don't worry, all your information and the great features are still there.

Our engineering resources have been directed towards the new Community and Outlook Integration. Soon you will be able to network with other members and sync your Outlook with MyPropFolio.

If you have any ideas that you would like to see in MyPropFolio, feel free to send us an email at info@mypropfolio.com.

Have a great Weekend

Forget Tried and True: Celebrate Diversity

Celebrating Diversity Gave Me a Headache in School, Now Wins in Investing

I grew up in a very politically-correct time, when learning about cultural differences and gender differences and socio-economic differences and every other difference made me think that there just wasn't a shared human experience. Certainly this is part of what resulted in my philosophy degree--but as I am now immersed in the world of investing, the angle on diversity now has new meaning.

Last week on the MPF Community Call, we talked about several ways you can leverage your self-directed IRA. Just think about all the instruments in which you can invest through your IRA!
Ok, not these kinds of instruments (aside), but I'm talking about purchasing Promissory Notes, purchasing a foreclosure property, or doing some land banking.

Taking this kind of diversified stance in investing is the smartest move, even if it appears that "the industry" (as the media will just blindly blanket the world of real estate) is suffering.

The sentiments I offer above are echoed in this week's Wall Street Journal, under the auspices of an interview with Gerard Mestrallet. Who is this guy?
What this guy is doing is basically taking charge (again) of a new French energy company (GDF Suez) and is making sure that the company has holdings across "a diverse set of long-term contracts with gas suppliers." So, not only do they have different kinds of energy, but--get this--GDF Suez has contracts with Norway, the Netherlands, Algeria, Quatar, Russia, Egypt, Libya, Yemen, Nigeria, and Trinidad & Tobago.

This has got to be the most real commitment to the power of diversity I have witnessed in a very long time. If the US had the foresight to have as many friends in the energy-source department, maybe I wouldn't be hawking my yet unborn first child for a tank of gas.

What's more, if individual investors were as likely as Mestrallet to have such a diversified approach to investing (think sustainable, scalable, long-lasting, and diverse in the parties it is willing to do business with, I'd argue that there would be better chances for long-term success.

Fortunately or unfortunately, we live in the US, where diversity as a buzz word has had its moment. That being said, let's not forget that truly celebrating diversity does not only mean knowing about differences (thanks, college!) it is about exercising the power that comes with the depth of knowledge and having a lot of friends in a lot of places.

More New Features!

Hi everyone, we just finished releasing some great new additions to MyPropFolio. Check em out!

Session Time Out Warning

As some of you have experienced, if you're logged into MyPropFolio and are idle for a long period of time, you'll be kicked out to the login screen. I swear we don't do this to annoy you. This precaution is taken to protect your sensitive data. Now you will receive a pop up warning 5 minutes before your session times out. Just click Ok to reset the clock and renew your session.


Add New Tasks from the Dashboard

If the dashboard wasn't already packed full of features, we've made it better. Now you can quickly create new tasks without having to navigate to the buyers section. This saves you time! Click the Add Task link next to your list of Daily Tasks.


New Mail Merge Fields
We've taken a step further to customize your email messages. In addition to being able to add the First and Last name of you recipient, you can now add their Street Address, City and Zip code. When sending an email from MyPropFolio use the following new reserved words for the mail merge: {Address}, {City} and {Zip}.


We've added a New Filter to the Buyer Search

You can now search for Buyers by selecting a Lead Generator. List the Leads that were brought in by each Lead Generator.


2008 Economic Stimulus Act

Download our Webinar about the 2008 Economic Stimulus Act. Listen to Shelly Strebel as she explains all the minor detail of the Stimulus Act.

DependyMac: We Can Turn It Around

IndyMac Siezed: Now DependyMac

We have all seen the headlines about IndyMac's seizure last week, and have witnessed the subsequent fallout (plundering graphs like lightning bolts to the ground). Other banks now begin to suffer, as investors take back not only their trust but also their stock investments. Had anyone ever even heard of IndyMac before this catastrophe? Who are they, anyway? How dependent on the government are we going to become, if this keeps up? When will they let go of IndyMac?

My concern is not that the Fed is trying to take these over--clearly these guys run far from the metaphorical tight ship--but for how long will they have control? Forgive me for saying so, but it appears that the government is not so big on exit strategies, pretty much all the way around. Have we ever lost a civil liberty and gotten it back? What are the odds that we won't get IndyMac back either?

As an appropriate response, I believe that what investors should be thinking about right now is how to take the most responsibility (read: due diligence) for making ethical, informed, sensible choices. We can't clean the slate, but we can begin anew anytime. We just have to believe we can.

It occurs to me that what got us into this mess is a whole series of bad decisions, on both large and small levels. Being solutions-oriented both on a personal level and a community level is what is going to get us through this economic slump, I guarantee it. Now is the time to reach out to your circle of influence and offer them all the solutions, all the strategies, all the good referrals, all the credible resources that you have to hand.

Decision by decision, investment by investment, we have to remember that the larger markets only consist of individuals. Each greater body is only as strong as its weakest part, and as the next generation of real estate investors, now is the time to extend yourself to your circle of influence and strengthen them as much as we can.

Strengthening the tools and knowledge of each individual investor is going to help this economy in an amazing way. For it is individuals, in the end, that make decisions--not ephemeral committees. Individuals are the source of new ideas--even if it is credited to a think tank in general. Individuals are the only agents of change, the only real source of creation--and that's why it's a good reminder that individuals are you.

Turn your properties income from $2,500/mt to $12,000/mt...

Over the past few months MyProp Members have been asking, what strategy would work to have new higher end properties in Las Vegas, San Diego, and Sacramento etc cash flow? After doing my due diligence on a number of these areas, I found that we can buy these types of foreclosed properties in Las Vegas for 50% of their original price in 05/06. The same is true in certain areas of Sacramento. Wow – I would say that those prices are cheaper than what the builder paid to build them.

Thinking about this I contacted some of the more experienced MyPropFolio members, like Bob Shaw to find out how we can make these local properties cash flow. After talking with Bob who buys properties in many different States and lives here in California, he told me about a group home that he currently manages in California. Group homes are for people, who need support in their lives, and there are different levels of management involved. Examples of these types of properties are:
• Houses for nurses who have come to the US for the Philippines to work but do not have any credit history or history of income – low management
• Older people who don’t want to live in retirement homes but don’t want to live on their own – medium management
• Half way homes for recovering alcoholics, drug abusers etc – higher management
• Homes for Mentally Retarded - Highest management.

The premise of these types of homes is that you rent out the room rather than the house and you can charge a lot higher amount for taking on the additional management headaches.

Another investor I know owns a number of properties/facility in Sacramento where he rents 4 of his 5 rooms for approx $3,000 per room. He would have rented the entire house out for less than 1 room in the traditional property management model. This facility is only offered to older people, who are in good health but don’t want to live in a retirement home. So I hear you saying – where is the catch….

Ok so now you are making $12,000 rental income for the property, but your expenses have gone up as well, you need to organize the following things:
• Get the required permits/certification for your facility (This can take 1 mt in some states and 6 in others..)
• You will need an administrator to act as your “Property Manager”
• You will need to have a live in staff member
• Depending on what you offer, your live in staff member will need to prepare food, travel etc.

I must admit, I am not an expert in this area but Heather and I are looking into using this strategy for some properties in Vegas. I would love to hear your experience and maybe we could get an expert on a Wednesday night call if that would interest you.

Have a great week
Alan

New Features !

New Features !

Hi everyone, we've just released a brand new set of features for you to use. Check out the detail below.

New How To Videos!

• Cash Flow Analysis: Learn how to Analyze the cash flow for your Buy and Hold property.
• Manage Tenants: Learn how to manage Tenant information for you Buy and Hold property.
• Property Loans: Learn how to record your Property Mortgage.
• Dashboard Overview: At a glance, see how all the elements contained in the dashboard show you how your business is performing.
  
• Pipeline Overview: Watch how to utilize all the powerful features in the Pipeline Section.
  

Print out your communication log!

Have you ever had the need to provide a hard copy of an email or historical log of communication? With a simple click of a link, you can print out the detailed description of communication logs with any of your contacts. Just navigate to the communications tab of your contact and click on the print link above each communication list.

New Vendor Type!

When creating a new vendor in the system, you know have the option of selecting a vendor type of Marketing/Advertising.

Thanks for using MyPropFolio

My Mom Almost Got Mauled by a Bear

3 Great Ideas to Save Mom and Dad from the Bear Market
While there are a good 40 years between us, as well as widely varying political views and completely different social standards, right now I'm looking pretty closely at how different generations--with different levels of assets, liquidity, and different cash flow needs--can work with the current economic conditions, and make them work in our favor. Here are some suggestions for my favorite, older generation, based on what the media is spewing this week:

Media Spew: Don't Touch Your 401K, IRA--Advisers are Predatory Right Now
MyPropFolio Reply: Seek Appropriate Financial Advisers

While I was brought up amongst the notions of "celebrating diversity," and "holistic approaches" to understanding 'how things work,' my 100% North Beach Italian mother was not. If your parents have similar tendencies toward or against certain people, understand that this will affect how, if, and with what regularity they interact with their financial adviser. It is key to match this generation with an adviser or firm that will literally cater to their needs, look past their foibles, understand their intentions, and who won't look upon their nest eggs as a new and completely viable playing field to bolster their management experience.

This week, Business Week featured three "older" (read over 60) retired men who got bored with retirement, and moved into to money management. They all shared the common feature of being very, very conservative. That approach in mind, it might be a good idea to help your parents, or insist that they 'interview' their current adviser to make sure their quarterly goals are being met. This is also a good way to hold your adviser accountable.

Media Spew: Diversification means Less Transparency
MyPropFolio Reply: Diversification with Due Diligence Always Win

I'm not saying you or your parents are like my mom in this, but I tell you: she doesn't even want to buy anything made in China anymore--and good for her. The thing is, while she may think that our jobs are going to "illegal immigrants" (while I was taught people cannot be illegal) I try explaining about outsourcing...Ah, it's a lost cause.

The most common thing I see amongst financial advisers right now is the cry for diversification--because this is what the investing firms themselves are suffering from: they just about lost their shirts (even when Bear Stearns kept their shirts through the Depression) with the security investment vehicles (read: subprime loan) mess.

It was, in fact my mother who said to never put all your investing eggs into one basket. This said, people like my mom also seems to have sanctified comfort zones when it comes to diversifying her investments. "Hell no, Shanghai Stock Exchange," I can hear her saying, even after I tell her that the volatility of that exchange system makes it a formidable place--money rules standing--to really generate some considerable additional income.

Media Spew: Money Rules Go By the Boards in Times of Economic Duress
MyPropFolio Reply: Adjust Money Rules, But Gradually, and not Reactively

The housing market, stock market--pretty much any market is NEVER unpredictable, if you look at enough history. While it is true that some rules get tossed aside as the economy changes, it is more important to alter expectations to fall in line with real possibilities right now. You cannot hope to get a 100% mortgage nowadays. Bank on that. You cannot expect appreciation rates of 6-7% nowadays. Plan on that. You should not expect the same returns on your stocks, unless you have adjusted your "buy" and "sell" thresholds. Adjust those.

Other popular rules that may need adjustment right now:

• The 1% rule (getting 1% of purchase price in rents to make a rental cash flow)
• The 4% rule (do not drain more than 4% of your retirement nest egg, upon inauguration of retirement)
• To Retire Comfortably: Save 10% (yearly) for basics, 15% for comfort, or 20% to escape

Clearly these "rules" do not hold now, what with housing prices down and inflation rising. It will become increasingly important that we all understand how slightly or drastically these rules need to be adjusted across time to reflect the reality of the economic conditions we are capable of creating for ourselves.

Have any other ideas on how to help ourselves and our parents? I'd love to be able to add to the list. Click below to post a comment.

CNN Money - "On the path to a housing rebound"

This morning, like every other morning I pull up google reader (which syndicates all the news I wish to read) and wow I was amazed - it was the first time in months if not years that I can recall a national news group saying something positive about the housing industry.

The story highlighted that new home starts have fallen to the lowest level in 17 years - that made me smile for 2 reasons

1. The media said something positive about Real Estate
2. Phase 1 of the Real Estate cycle is recovery which is defined as low to no new construction.

Now with the media beginning to print positive information, new home buyers confidence should begin to grow and with new home starts data supporting we are in the recovery phase of the market - it seems to me that it is a hot hot time to be a Real Estate Investor!

As we all know Real estate markets are cyclical due to the lagged relationship between supply and demand of homes. With the supply being curbed with the drop in new home starts (the lowest since 1991) and with the media beginning to have headlines like "On the path to a housing rebound" (source http://money.cnn.com/2008/06/24/news/economy/tully_housing.fortune/index.htm) it seems obvious to me that it is time to buy, buy, buy. Economics 101 educates us about Supply and demand - the supply is obviously dropping at an extensive rate and the demand is slowly picking up so this is the time for real investors to go and make money!

I would love to hear what your feelings are on the street?

New Features!

At MyPropFolio we are always trying to improve your experience by constantly adding new feature. This week we has some great new enhancements, please read below for details.

Take MyPropFolio for a Test Drive

Still deciding if you should sign up with MyPropFolio. Do you have friend of business partner you would like to refer. Experience the power of MyPropFolio for FREE. Test drive Fix and Flip 2.0 by signing up for a FREE demo account. You'll have hands on access to all the great features we provide for you to grow your business.

View Local Rental Rates for Your Property

You can never have enough information. When analyzing your property, view the low, median and high rental comps for properties in your area. This incredible new information is displayed in the upper left hand section of the analysis page next to the property address.

Make Copies of Groups

Do you have Groups that contain similar steps? Check our new feature that copies Groups. With just a click of a Button, you can create a deep copy of group INCLUDING all of its Steps.


Thanks for using MyPropFolio,

Paul Sohal

Hard Money Loans Due Dilligence

Last week one of MyPropFolio users contacted me to review a hard money loan that she was reviewing. It was a 4 unit in Arizona and it looked like a good deal but I took the time to write up my philosophy on doing personal Hard Money Loans (HML's) secured by properties..

Here are the key areas that I review before moving forward with the deal:
1) It is all about the property - I go into HML deals with the belief that I will have to take over the property and I decide if that is ok with me - the way I look at this is

a) Where is the property - am I happy with the properties location and demographics?
b) What are the Economic Projections - Solid job growth and employment outlook?
c) What is the local Real Estate market appreciation?
d) What are the Crime Rates?
e) Does the area rate high in national quality of life surveys, growing in popularity?
f) Is there good population growth and density?
g) What are the current RE Market Conditions?
h) Is there any redevelopment going on in the area?

2)If I take over this property will it be able to pay its monthly expenses and give me a profit at the end of each month. You can use MyPropFolio to do this analysis for you.
Due-diligence --
a) What are average market rents?
b) Are Rental rates on the upward move (at low point)?
c) Do income properties sell for 10 times annual rent or less?
d) What is the average vacancy rate? (I prefer 7% or less)
e) Contact local Property Management Companies
f) What are the local Section 8 Laws?
g) What are the local Rental Laws?

3) Is there equity in the property - If I am giving a prom note of $100K, just like the bank I require that the property is worth $120K - $125K. If the property is in an area that I am not savvy about I require a appraisal on the property. (I do not pay for this expense)

4) Interest rate - The reason that I am doing this mortgage is because that banks find it too risky... As such I need to make a larger spread than the bank does...

5) The investor - what is their track record and their current Personal Financial Statement? This is very low on my radar as I assume I will be taking back the property..

These are the 5 points that I review before investing in any HML - I hope that this helps you out and please tell me what you do....