« August 2007 | Main | October 2007 »

September 29, 2007

Current real estate market is nothing to cry about

A couple of commentaries published recently have pretty much articulated my feelings on the current mortgage debacle, real estate market crash, housing bubble burst – whatever you want to call it.

Orlando Sentinel columnist Beth Kassab said this about the mortgage crisis and resulting foreclosure rate: “In the end, the problem is the result of consumers shrugging off responsibility for themselves. …if you signed the loan, you agreed to the terms.” Click to read the full text of “Housing mess: Many buyers didn’t beware.”

In “Don’t Cry Over Burst Bubble,” syndicated columnist Stephen Chapman writes: “The boom in prices has long been disconnected from the actual utility of a single-family dwelling, and it's satisfying to see reality assert itself for a change.” Later in the same piece, he notes, “Of course, speculators who sunk money into second homes and investment properties, figuring they could flip them in a year or two for a handsome profit, will also get the short end of the stick.”

At Wealth Intelligence Academy, we teach you to understand market appreciation—but not to depend on it for your profits. Sound real estate investing strategies depend on much more than the luck of a good market.


September 26, 2007

Does income affect your FICO score?

You might think that wealthy people have high credit scores just because they are wealthy – but that’s actually not true. Whether or not you have money is not always a good indicator of whether or not you pay your bills on time. Certainly prospective creditors will look at your income to see if you can handle the debt service, but your income isn’t considered in your FICO score calculation.

Click here to read a discussion of this issue on the MyFico.com forum.

September 17, 2007

Buy now, pay later – good idea or not?

90 days same as cash.

No payments for one year!

Buy now and pay nothing—no interest, no payments—until next year!

Should you take advantage of these offers? Of course, that’s up to you. But my personal policy is this:

If I want or need the item and have the cash to buy it, I buy it and take advantage of the delayed payments as long as there is no interest or other charges involved. I take the money I would have spent for the item and invest it until it’s time to pay it off.

I don’t charge or otherwise finance depreciating assets, such as furniture, clothes, jewelry, and electronics. But I don’t pay for them before I have to, either.

Let’s say I want new furniture and I’m going to spend $5,000, which I have in disposable income. The store is offering no payments, no interest, for 18 months—all I have to do is pay the sales tax up front. I buy the furniture, take the $5,000 and put it in either real estate or stocks (or even just a simple savings account or certificate of deposit), and make sure my records are noted so that when the debt is due, I pay it off in full. My money has worked for me for a year and a half while I’ve enjoyed having the new furniture.

If you use this strategy, it’s critical that you exercise the discipline to pay the debt before you have to pay interest on it. Merchants typically sell these contracts to a finance company of some kind, and the finance company is counting on you to not have the money at the end of the no interest period. Don’t buy on one of these deals thinking that you’ll save the money—if you don’t have the cash, don’t buy until you do. But don’t part with your cash until you have to.

Also, be sure to carefully read and understand any buy now, pay later contract so you know exactly what you are obligating yourself to. Don’t count on a salesperson’s explanation—read the contract and question anything that doesn’t make sense.


September 15, 2007

Is asset protection a man’s problem?

Should men be more concerned with asset protection than women?

Absolutely not!

While the economic playing field as it relates to men and women is still far from level, things are changing. Women are gaining in their degree of financial literacy and independence. With those gains comes the need to protect their hard-earned assets.

As women continue to increase their share of wealth and assets, their need for asset protection grows. When it comes to financial security, people don’t always “play nice” and they often don’t play fair.

Every person, regardless of their situation, needs a carefully crafted, tested asset protection plan. Gender simply does not enter into the asset protection equation.


September 07, 2007

Evaluating a preconstruction real estate investment

Even though many parts of the country are seeing sales of existing homes slowing, there is still demand for new construction. And remember that the real estate market cycles, so whether it’s up or down where you are right now, the one thing you can be sure of is that it’s going to eventually change.

If you have the opportunity to make a preconstruction investment, Jordan Taylor’s article, “Should You Buy Before It’s Built? How to Evaluate a Preconstruction Real Estate Investment,” will give you some guidelines as to the types of issues you should consider before making a decision.


September 05, 2007

Robert Kiyosaki’s comments at the Super Conference

When Robert Kiyosaki, entrepreneur and bestselling author of Rich Dad Poor Dad, spoke at the Wealth Intelligence Super Conference, he said that the audience was in the right place at the right time getting the education required to be a winner.

“Capitalism means there are winners and losers, and the uneducated are the losers,” he said.

With his characteristic humor and tell-it-like-it-is bluntness, Robert stressed the power of leverage, pointing out, “Real estate is the only investment my banker will lend me money for.” You can’t borrow money to invest in stocks, bonds, mutual funds, or other investments—but with real estate, banks and other lenders are only too happy to let you use their money to make yourself rich. The key to it all, Robert said, is to use your greatest asset: your brain.

September 04, 2007

Lessons about tax liens and tax deeds

There’s an interesting article in the Orlando Sentinel about tax liens: “Whose land? Water can muddy the issue.”

The story focuses on a woman who built a dock between her backyard and a state-owned creek. An investor who purchased part of the land under the dock at a tax deed sale years ago is now saying she must either buy the land (a total of seven acres – far more than she wants or needs, for $50,100) or tear down the dock. She’s fighting.

This raises some key points about investing in tax liens and deeds.

• This is an area of real estate investing that can be lucrative, but you must know what you’re doing and be familiar with the laws of the area in which you’re investing.

• You should operate ethically and with integrity. Certainly protect your rights, but don’t try to extort people even if you can do it legally.

• If you acquire property through tax deeds, pay enough attention so that you know what’s happening on or near it.

• Did I mention know what you’re doing? Get training from qualified instructors. Check out our advanced training on tax liens and deeds.