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Economic Update

August 5, 2020/in News /by dulce

By Lloyd Segal

It’s 2020; a crazy C-R-A-Z-Y year. We are in the land of the unknown. Things are happening for the first time that none of us have ever seen before. You must take it for what it is and adapt as best you can. But ask yourself, when this pandemic is over (and it will be inevitably) will you be able to look back and be proud of what you accomplished during this incredibly difficult period? With that in mind, let’s wash our hands, put on our facemasks, and get under the hood…

Pending home sales.

Pending home sales continued to rebound across the country in June as Americans rushed to buy homes despite the pandemic. The index of pending home sales rose 16.6% in June as compared with May, the eternally-optimistic National Association of Realtors reports. The increase comes after pending home sales experienced the largest monthly rise on record last month. Compared with a year ago, contract signings are up 6.3%, a sign of how sharply the market has rebounded from its coronavirus-related low. Consumers are taking advantage of record-low mortgage rates resulting from the Federal Reserve’s maximum liquidity monetary policy. The index measures real-estate transactions where a contract was signed for a previously-owned homes but the sale has not yet closed. The continued rebound in pending home sales suggests that the real-estate market is thriving in spite of the continued rise in COVID-19 cases across the country. Two main factors are driving the surge in home-buying activity. First, many buyers appear to be entering the market looking to make up for lost time. As such, the rise in sales is a reflection of the delays caused by the coronavirus outbreak. Second, historically low mortgage rates have created a sense of urgency among Americans looking to purchase a home and lock-in those low rates. Nevertheless, there’s still a shortage of homes available for sale as some sellers continue to stay on the sidelines rather than list their properties for fear of exposing their homes (and themselves) to infection. This supply limitation will inherently limit how many deals close in the months ahead.

Gross Domestic Product.

In case you haven’t heard, the U.S. economy just suffered its worst quarter (April–June) in our nation’s history, with GDP falling a historic 32.9! The Commerce Department report highlights how deep and dark the hole is that our economy cratered into this summer. Sharp contractions in personal consumption, exports, inventories, investment, and spending by state and local governments, converged to bring down GDP, which is the combined tally of all goods and services produced by our economy during the quarter. Personal consumption, which historically accounts for about two-thirds of all activity in the U.S., subtracted 25% from the Q2 total, with services accounting for nearly all that drop. Spending also slid in health care and goods (such as clothing and footwear). Inventory investment drops were led by motor vehicle dealers, while equipment spending and new family housing took hits when it came to investment. Prices for domestic purchases, a key inflation indicator, fell 1.5% for the period, compared with a 1.4% increase in the first quarter. Bottom line: the numbers are alarming but all self-inflicted, with about half the quarter reflecting the sudden shutdown and the other half the slow re-opening. That said, GDP reflects the hole out of which we must now climb out of as we rebound in the remaining months of this bizarre year. Neither the Great Depression, nor the Great Recession, nor any of the more than three dozen economic slumps over the past two centuries, have ever caused such a sharp decline over such a shockingly short period of time. Ironically, this particular tumble, unlike previous declines, owes to a very different source than any of its predecessors: a government-induced shutdown aimed at combating a pandemic

Case-Shiller Index.

Home-price appreciation maintained a steady pace in May amid the pandemic, according to the Case-Shiller 20-city Price Index. The index posted a 3.7% year-over-year gain in May, down from 3.9% the previous month. Phoenix continues to lead the country with a 9% annual price gain in May, followed once again by Seattle with a 6.8% increase. Tampa, Fla., came in third, with a 6% uptick. But a look at the individual cities in the 20-city index shows that home-price growth could be slowing. Overall, the pace of price growth only increased in three of the cities Case-Shiller analyzed. Home prices have remained mostly insulated from the pressures of the coronavirus pandemic thus far. Falling mortgage rates have boosted the demand for homes among buyers, as the record-low interest rate environment has made purchasing properties more affordable for many people. At the same time, though, the supply of homes for sale nationwide remains severely constrained. Many home sellers have stayed on the sidelines and held off from listing their properties because of infection fears related to the coronavirus. But even before the pandemic, the country’s housing inventory was falling well short of demand. For years, the formation of new households exceeded the pace of home-building, creating a shortage. That gap between the demand for homes and the country’s inventory has pushed prices higher. And that gap explains why home prices continue to rise even if the job market takes another hit from the pandemic. There are some signs though that prices could end up falling. The house price index released last week by the Federal Housing Finance Agency indicated that home-prices nationally fell 0.3% on a monthly basis between April and May, despite a 4.9% annual gain. Finally, the godfather of the Case-Shiller index, Robert Shiller, predicts that home prices may decline in urban cities across the country as the pandemic accelerates buyers shift toward suburban and rural areas.

Mortgage Rates.

According to Bankrate’s latest survey of the nation’s 20 largest mortgage lenders, the benchmark 30-year fixed mortgage rate is 3.090% with an APR of 3.380%. The average 15-year fixed mortgage rate is 2.740% with an APR of 3.060%. The 5/1 adjustable-rate mortgage (ARM) rate is 3.300% with an APR of 4.040%. APRs and rates are based on no existing relationship or automatic payments. For these averages, the customer profile includes a 740 FICO score and financing a single-family residence (with 20% down).

Office Rents.

California office spaces are expected to keep getting emptier (and their rent prices will likely keep declining) as the fallout of the pandemic persists, according to a new survey of commercial real estate developers and financiers by the Allen Matkins/UCLA Anderson School. With efforts to slow the spread of the coronavirus forcing offices to shut down, companies have adapted to a decentralized model in which employees increasingly work from home. Even when they’re eventually allowed to reopen, offices still won’t resume business as usual. They will be required to follow safety protocols that can be expensive, putting additional strain on budgets stretched thin by the pandemic-ravaged economy. Besides, many workers won’t even want to return, for fear of catching the virus. As a result, demand for office space has tumbled. Last quarter, office leasing in Los Angeles County was at its lowest point since the Great Recession! One-third of builders surveyed said they’re cutting back plans for new office developments by more than 15%, and three-quarters said they were experiencing stress related to current tenant leases. Retail space is taking an even more severe hit. For retail properties, the survey suggests no light at the end of the proverbial tunnel. The current view is that retail properties will be generating significantly lower rents indefinitely. Why? Because the pandemic has accelerated a trend toward online shopping and away from in-person shopping. So, retail spaces (i.e. brick and mortar stores) are really going to suffer. Industrial real estate, on the other hand, seems to be in a much better position due to the rise of e-commerce. People staying home during the pandemic are a boon for warehousing development (in order to handle the increased distribution to consumers). The industrial space market will continue to build to handle the increased volume. In Southern California, 60% of the surveyed developers said they are planning at least one industrial development in the next year, and 39% are planning multiple projects.

Consumer Confidence.

Consumer confidence swooned in July amid a rash of new coronavirus cases in many states. The index of consumer confidence fell to 92.6 this month from a revised 98.3 in June, the Conference Board reports. The level of confidence is still above its pandemic low of 85.7, but it’s likely to be a long time before it returns to its pre-crisis peak. For example, the index stood near a 20-year high at 132.6 in February before the pandemic struck. This index signals a rocky economic recovery in the months ahead. It suggests that the recovery has shifted into a slower gear, as consumers become more cautious about the outlook as virus cases continue to escalate. Consumers have grown less optimistic about the short-term outlook for our economy and remain subdued about their financial prospects. Such uncertainty about the short-term future does not bode well for our recovery, nor for consumer spending. Thankfully, massive federal aid and other measures to prop-up our economy have helped stave off worse financial straits for millions of Americans already struggling to survive. More than 30 million people are receiving unemployment benefits. And hopes for a quick economic recovery from the coronavirus have been dashed by an explosion in new cases in Texas, California, Florida and other hotspots. Our economy will likely continue suffering regular ups and downs until the virus is brought under control or a vaccine is discovered.

Durable Goods.

Durable goods orders continued to recover in June, rising 7.3% on the heels of May’s 15.1% jump. The increase in orders in June was led by consumers buying automobiles and companies buying fabricated metal products. Orders for new cars and trucks leapt 86% last month as auto makers made up more lost ground after getting slammed early in the pandemic. On the other hand, aircraft manufacturers posted a whopping 462% decline in bookings. Boeing has seen demand for its planes dry up after a plunge in global travel during the coronavirus outbreak (see Boeing story below). That said, durable goods still have a long way to go to make up the massive declines in March and April, with overall orders remaining 16.0% below February. Fabricated metal products registered the largest improvement, up 4.5%, followed by primary metals (+3.6%), machinery (+2.7%), electrical equipment (+1.2%), and computers & electronic products (+0.1%). While computers and electronic products showed the smallest improvement in June, the category has been remarkably stable throughout the coronavirus contraction. Orders are up since February (pre-pandemic), probably reflecting extra computer equipment needed to help people work from home. But remember, while the second quarter was bad – terrible in fact – activity turned a corner in June and continues to recover. The third quarter (July, August & September), which we are roughly 1/3rd of the way through, is on track to see continued growth.

Federal Reserve.

The Federal Open Market Committee left interest rates unchanged last week and noted that economic activity and jobs “have picked up somewhat in recent months” while pledging again to use its full range of tools to support further improvement. “Following sharp declines, economic activity and employment have picked up somewhat in recent months but remain well below their levels at the beginning of the year,” the Fed said in a statement after two days of talks. But economists are worried because the latest unofficial data suggests the U.S. economy is sagging again. In a unanimous decision, the Fed voted to keep its federal funds rates close to zero. The central bank again said it would keep rates near zero until employment recovers and inflation picks up. The central bank also kept the pace of asset purchase steady at $120 billion per month. The Fed is buying $80 billion of Treasurys and $40 billion of asset-backed mortgage securities to support the economy. Further, the Fed is expected to tie any future interest rate increase to higher inflation. Jerome Powell says the central bank will not consider raising short-term interest rates until inflation is seen rising above its 2% target. But many economists think the Fed has already informally adopted this approach.

Weekly Jobless Claims.

The number of Americans who filed new claims for unemployment benefits last week totaled 1.434 million, the Labor Department reports as the pandemic continues to ravage our economy. It was the 19th straight week in which initial claims totaled at least 1 million. But more disappointing is the fact that it is the second consecutive week in which initial claims rose after declining for 15 straight weeks. “Continuing Claims” — which are composed of those receiving unemployment benefits for at least two straight weeks — rose by 867,000 to 17.018 million for the week ending July 18. (Data on continuing claims is delayed by one week.) Thus, the level of weekly claims remains shockingly elevated and the rise in continuing claims definitely reflects the re-closings over the past few weeks that we’ve seen in some states where the virus has flared-up. For example, initial claims filed in our own California totaled 249,007. California is among the states that have seen a resurgence in coronavirus cases as state officials eased quarantine and social distancing measures. The stark reality is our economic recovery will be bumpy and uneven until we have a vaccine where most of the world’s population can be mass inoculated.

Boeing.

If you think you’ve had a difficult time this pandemic, consider Boeing. The airplane manufacturer lost $2.4 billion during the last quarter and has laid off 35,000 workers this year. Ouch, that would give anyone air sickness. But the news only gets worse from here, so fasten your seat belt because this is going to be very bumpy! Boeing’s revenues fell 25% to $11.81 billion from $15.75 billion a year earlier, and their shares fell to $166.01, down more than 50% over the past year. The commercial aircraft unit suffered the most with a 65% drop in revenue from a year earlier to $1.6 billion as deliveries of new planes crashed. Add all of that to their beleaguered 737 Max program. If you remember, Boeing was in crisis before the coronavirus because of the fallout from two fatal crashes of its 737 Max that claimed 346 lives. The resulting lengthy grounding of the 737 Max, along with the financial pain of airlines, has driven up cancellations and scared off new orders for new Boeing jetliners this year. The company only booked a single order in June and suffered nearly 200 cancellations! Worse, Boeing has more than 470 planes sitting on the tarmac that haven’t been delivered to customers, most of them 737 Max jets (that may never be delivered). And if all of that weren’t bad enough, Boeing is also ending production of its legendary 747, a plane that has been its primary money-maker for more than five decades and is credited with spurring the boom in travel worldwide. International demand has been particularly soft, hurting the outlook for Boeing’s widebody commercial planes, like the 787 Dreamliner. Boeing expects turbulence ahead as demand for new aircraft won’t return until the second half of next year, depending on the timing of a coronavirus vaccine. The International Air Transport Association, a trade group that represents most of the world’s airlines, says it does not expect global passenger air travel to take-off again until 2024. (Question: Did I incorporate enough aeronautical terms in this story?)

Monday Morning Quarterback.

Congress is currently debating a second stimulus package to help American families through the pandemic. The issue now is whether the $600 weekly unemployment benefits should be continued, slashed, or worse, discontinued. Some argue that paying laid-off workers $600 exceeds what they received in salary thereby discouraging them from returning to work. But that argument is specious for several reasons.

First, do you know anybody that is actually refusing to return to work because they are receiving $600 a week staying home? Didn’t think so. As any attorney will tell you, there is always anecdotal evidence to support any argument, but even this is far-fetched (particularly in California). I’m sure there is somebody somewhere relaxing right now on a chaise lounge sipping a pina colada because they’re receiving $600 a week? But really, for the millions and millions of unemployed American workers that weekly $600 is crucial to their survival (plus it injects money into our economy).

Second, whenever their opposition to the $600 weekly benefits is questioned, Senators proudly point to a May article in Barron’s entitled “$600 Unemployment Benefits are Keeping People from Returning to Work.” But that title is terribly misleading and a gross distortion of the facts. The source for the article is the Federal Reserve’s May Beige Book. But the Beige Book says nothing like that. The Beige Book actually cited three distinct reservations raised by reluctant workers, not just unemployment benefits. The Beige Book explained that workers were more fearful of returning to work for health concerns during a pandemic (getting infected at work) and the lack of child-care (while schools are closed) than losing the $600 weekly checks. The Federal Reserve of Philadelphia reported similar findings among its contacts, including the fear of infection (if they returned to work) and lack of child-care as the primary reasons for not returning to work, not the $600 unemployment benefits. The Federal Bank of Chicago’s survey went even further and found that unemployed workers (receiving $600 weekly benefits) searched for work more aggressively than those whose benefits expired or who have not received them at all. The study also found that once individuals exhausted their benefits their search efforts dropped precipitously. That would indicate that unemployment benefits enhance the desire to return to work rather than discourage it.

Third, the above findings make sense when you consider the hard numbers. $600 a week for 52 weeks is $31,200 per year. Over 98% of American workers earn more than $31,200 per year. So why would any worker in their right mind refuse to return to work (and get paid more) rather than staying home and receiving $600 each week ($31,200 for one year)? Even if you add additional state benefits, people can still earn more if they return to work. For example, the median income is California is $71,000 and 98% of workers earn more than $31,200 per year. Does anyone truly believe that workers are content staying home (with $600 per week) and not want to return to work and earn more? Does a worker really want to reject a stable job opportunity rather than receiving $600 a week that they know is only temporary? That simply defies logic.

Bottom Line: Over 30 million unemployed American workers are dependent on that weekly $600 check to feed their families, pay their rent and utilities, purchase medical supplies, and buy the necessities of life during the pandemic. And all of that consumer spending is the very lifeblood of our economy. Continuing these weekly unemployment benefits is a much more efficient way to pump money into our economy. So the imperative is for Congress to pass the second stimulus bill as quickly as possible and help American families survive and preserve our entire economy, rather than punishing them by cutting unemployment relief.

LAREIC Monthly Meetings.

As you know, we canceled our April through August meetings due to the pandemic, and now we must cancel all meetings until the end of the year (or the coast is clear). Our home at the Olympic Collection also remains closed. And, no, we’re not doing Zoom (for now). When California (and/or Los Angeles) terminate all restrictions, we will resume our monthly general meetings, Gold meetings, and real estate seminars. In the interim, thank you in advance for your understanding and for being a valued member and friend of LAREIC. We will keep you updated as the situation evolves and look forward to resuming activities as soon as we safely can. Please register on our website, www.LAREIC.com, for further updates.

Annual Los Angeles Real Estate Grand Expo.

Our annual Grand Expo is the largest and most exciting real estate event in Southern California. Last year we had 14 national speakers, 64 vendors, and over 800 investors and real estate professionals attending! (The Grand Expo is a joint production of the Los Angeles Real Estate Investors Club, Realty 411, and Sam’s Club). We originally scheduled this year’s Grand Expo for September 26, moving from the Olympic Collection to UCLA (to accommodate the huge crowds). But because of the pandemic, we were forced to postpone until November 14. We received word from UCLA that their entire campus is closing down until the end of the year. So we have officially moved our Grand Expo to Saturday, January 30, 2021. To get the latest updates, please register at www.LAGrandExpo.com.

This Week.

Looking ahead, investors will continue watching for news about medical advances, vaccine development, government stimulus programs, Fed monetary policy changes, and plans for reopening (or re-closing) our economy. Beyond that, the ISM national manufacturing index will be released today and the ISM national services index on Wednesday (8/05). But clearly the highlight of this week will be the monthly Employment report to be released this Friday (8/07). This data on the number of jobs, the unemployment rate, and wage inflation will be the most highly anticipated economic data of the month.

For further information, comments, and questions:

Lloyd Segal
President
Los Angeles Real Estate Investors Club
www.LAREIC.com
[email protected]
310-409-8310

Myths About Land Trusts

August 3, 2020/in Land Trust, News /by dulce

By Randy Hughes, Mr. Land Trust

I write and teach a lot about the many benefits to using a Land Trust to hold title to real estate investments. There is a lot of misinformation in the marketplace about Land Trusts and a lot of bad advice given regarding these Grantor Revocable Title Holding Trusts. After using these trusts for over 40 years I have found that the myths outnumber the facts. In this article I will dispel some of the myths that I hear over and over.

MYTH: My lender will not let me close my deal using a Land Trust (LT)

TRUTH: This depends on if you are using borrowed funds from a lender that must qualify you in the secondary market. If you must meet secondary market guidelines it is true that you must close the deal in your name, but you can put the property into a land trust the day after closing. Once you have 4 secondary market loans (the maximum allowed) you must use a portfolio lender and they WILL let you close by taking title directly from the seller to your trust (So, you are never in the chain of title).

Note: Bank of America WILL let you close four secondary market loans using a land trust to take initial title. However, you must use an Illinois Land Trust and the property must be in Illinois.

MYTH: Do I have to get a tax ID number for my LT?

TRUTH: The answer is no. Nor do you have to register your Trust Agreement with anyone on planet earth! (There are two States that I am aware of that require disclosure of the Beneficiary upon creation of the Trust…via the Deed to Trustee…but this problem is easily solved).

MYTH: You cannot do a Short Sale using a LT

TRUTH: False. You can and I have and there are many advantages to using a LT for this type of transaction.

MYTH: Is it true that I must record my Trust Agreement to make it valid?

TRUTH: No, and 99% of the time you would not want to record your trust agreement. However, there is that 1% reason that you might want to record. Contact me if you want to why.

MYTH: My attorney says Land Trusts are illegal in my state

TRUTH: This is probably not true. Almost all states recognize the validity of a LT or a similar type entity (Title Holding Trust, Common Law Trust, etc.). My experience is that a vast majority of lawyers do not understand Land Trusts and therefore do not recommend them. Too bad for their clients…they are missing out on over 50 Reasons to Use a Land Trust (I have written a booklet called, “Reasons to Use a Land Trust” and will deliver it to you for free if you text the word Reasons to 206-203-2005).

MYTH: If I use my LLC as the beneficiary of a Land Trust, I must register the LLC in the state where the property (held inside the Land Trust) is located.

TRUTH: Wrong! Many accountants will tell you this, but they are incorrect. The beneficiary of the Land Trust is not “doing business” in the state where the property is located…the Land Trust is…and the Land Trust is not required to register.

Note: California has a law that says if you transfer more than 49% of ANY entity that owns property in CA or is the beneficiary of a Trust that owns property in CA, they have the right to tax you.

MYTH: Land Trusts are expensive to set up and maintain

TRUTH: Not true. If you follow my advice to put each of your properties into a separate Land Trust and you hire an attorney to do this for you, it WILL get expensive. But you do not need to do this. You can learn how to set up and administer your own Land Trusts (as many as you need/want).

MYTH: Land Trusts must have incorporation papers and the State notified

TRUTH: Wrong again! Land Trusts are not registered like corporations and LLC’s on a state-by-state basis (in fact, they are not registered at all…anywhere!). This is one of the many reasons to start your estate planning with a Land Trust for each property you buy.

MYTH: I was told that my Land Trust must open an account at a local bank

TRUTH: Not true. Since Land Trusts are “pass-through” entities in the eyes of the IRS you do not need a separate bank account for each Land Trust you form. You can set up an account, but it is not required. If you set up an account for your Land Trust, you will not have a tax ID number to use so you will have to use your own social security number (or, if your LLC is the beneficiary you might use the tax ID # for your LLC).

MYTH: It is illegal to hide the ownership of property

TRUTH: I love this one. WRONG! It is not illegal to hold title to your real estate in a Land Trust to conceal the ownership (I call this being private about your business). The past president of the United States, Barack Obama, owns his home in Chicago, IL in a Land Trust with his attorney serving as the trustee. If it is good enough for a president, it should be good enough for you!

MYTH: Can I buy the Beneficial Interest in a LT without buying Title Insurance

TRUTH: Yes, you can, but I would not suggest doing this. I would always get a title policy and have the proper “search” done prior to transferring any funds. You want to make sure that the Trustee has clear title and there are no unknown liens or judgments against the property. You should also obtain a copy of the trust agreement and make sure the Trustee acknowledges EVERYTHING!

This is certainly not a complete list of misconceptions about Land Trusts, but is enough to digest for now. I will write more on this subject in future articles. Feel free to contact me if you have any specific questions. My number is: 217-355-1281. Or, [email protected]

I encourage you to learn more by going to my FREE online training at www.landtrustwebinar.com/411 and text “reasons” to 206-203-2005 for my free booklet, Reasons to Use a Land Trust. You can also reach me the old-fashioned way by calling me at 217-355-1281. (I actually answer my own phone unlike most other businesses in America today!)

The Secrets of Being a Successful Landlord

July 27, 2020/in Keys To Success, Landlording, News /by dulce

By Kathy Kennebrook (The Marketing Magic Lady)

You’ve all heard the tenant horror stories from people who have had tenants in properties, but being a landlord doesn’t have to be difficult as long as you learn some strategies for handling your tenants. My husband used to say that handling tenants was like having a group of children that you have to train and discipline. But it doesn’t have to be that difficult.

You do have to make some specific rules for your tenants and stick to them. Every time you change the rules you give your tenants the upper hand. You must also have an iron clad lease that specifically addresses the issues that you may have with tenants including getting your rent paid on time.

This is one area in which I am steadfast with the rules. I don’t care what the tenant’s situation is, their responsibility is to pay me on time and in full or they are stealing services from you without paying for them. My tenants are responsible for having the rent in our post office box or direct deposited through zelle or paypal on or before the date it is due or they are served with a three-day notice the next morning as required by law where I live in order to begin the eviction process. There are no exceptions. We even have tenants who send their checks to me priority mail to make sure they get to me on time. Most of our tenants have been with us a long time and many pay early.

You must also take the time to pre-qualify your tenants’ right from the beginning so you can avoid some problems right from the start. Don’t just accept a tenant into your rental property because they have the money to move in. Don’t let greed be your guide. Have your tenants fill out a specific rental application. Then you run must a tenant check with a reputable company. Don’t try to do this yourself just by looking at public record. You will miss credit issues and anything that may have occurred out of state. You need to find out the information you need to know about your tenants’ right from the start before renting them your unit.

For example, if the tenant check shows the applicant was just evicted from another premises, this certainly isn’t going to be a tenant you want in your property. Or if your tenant has had recent felony convictions, this isn’t a tenant you want in your rental unit. If your applicant has multiple animals, this is also not someone you want in your rental unit. I will mention however, that I will allow a tenant with a small dog or cat to rent my units. I find that usually a tenant who has a pet that they have had for some time will make a good tenant who will stay longer in your unit.

I also have a separate pet lease which addresses specific rules regarding pets in my units. The pet lease requires that the dog or cat is an indoor pet and I have an additional non-refundable amount of security deposit for the pet lease and additional pet rent of 25.00 per month. I find that this works out very well. If the tenant gets a pet that is not on the lease, this is grounds for immediate eviction, and we do have someone who checks our units about every 60 days for us to make sure all is well with our rental units.

I also check out where they were living before by going by the address and checking it out and I talk to their previous landlord. I want to see how they have been treating the place where they were living before. If it looks like a pig pen or if they have multiple animals, this is not someone I want in my unit. If they don’t give me this information on the rental application, I won’t even consider them to rent my unit.

I know some of this is just common sense but it bears discussion. If a tenant makes it through my rigorous screening process, I also have them pay first month’s rent, last month’s rent and the security deposit either by cash, cashiers check or by money order. I do not accept personal checks for the move-in amounts.

During the following months I do not accept personal checks from them for the rent, we only accept money orders or direct deposit. The first time a check bounces for insufficient funds or any other reason, they must make it good immediately or I will immediately begin the eviction process. This is all covered in the lease they have signed. I also make sure that the person I have putting tenants in units for me thoroughly covers all the items in the lease with them before they sign it.

If a tenant does get their rent to us late, they are responsible for additional rental fees of one percent per day. These fees are in our lease as additional rental fees as opposed to late fees since some courts won’t allow you to get a judgment for late fees. Within the body of our lease we also require our tenants to have renters insurance and I want to see proof of the policy before they move in. This way I can’t be held liable for any injuries or the loss of their possessions due to an accident, fire, hurricane or any other natural disaster.

Additionally, once my tenants sign a lease with me, I will not give them keys until I see proof of utilities in their name for the unit. In certain counties like ours, the landlord can’t turn off utilities in their own name. The only way the name changes on the utilities is with a new lease and then utilities get put in the tenant’s name. This rule may be different where you live, but a lot of the time if the tenant doesn’t pay their utilities it falls back to the landlord. This is just one way for you to protect yourself.

These are just a few of the basic techniques that will make you a happy and successful landlord. Monthly cash flow is a wonderful thing if your properties are managed correctly.

For more information on becoming a successful landlord and finding all the deals you need for your real estate investing business, check out my website at www.marketingmagiclady.com. While you are there be sure and sign up for my Free Monthly Newsletter!!

Realty411’s VIRTUAL Weekend Investor Expo – Download Agenda

July 23, 2020/in Events /by dulce

Amazing connections, up-to-the minute news, and influential deal makers await at this weekend’s Realty411 VIRTUAL Weekend Investor Expo.

Beginning at 9 am PST, Realty411, the longest-running real estate investment media and expo company, is producing their third online weekend expo hosting hundreds of investors from around the nation, and the world.

Realty411 is celebrating 13 years of publishing the most popular real-estate investment magazines in the nation with their original brand titles: Realty411 and REI Wealth. Prior to the pandemic, the company had produced live expos and hosted investors in 12 states, meeting thousands of their readers in person.

The California-based media company is once again going ALL OUT for their 3rd VIRTUAL Weekend Investor Expo this July 25th and 26th, which features some of today’s top influencers in the real estate investment industry.

These successful investors and entrepreneurs are sharing their time to give personal investors insight during this unprecedented COVID-19 pandemic crisis.

Now, more than ever, Realty411 wants to unite the REI industry to create a foundation of security and strength for investors — one based on knowledge and community.

Guests who attend this weekend’s VIRTUAL Expo on Saturday and Sunday will have the opportunity to connect LIVE with phenomenal and successful educators. These experts sincerely want to make a positive impact in the lives of the masses by teaching about the life-changing benefits that real estate investing can provide.

This is a unique opportunity to also ask top experts any real estate-related questions directly via chat.

Realty411 is once again leading the industry by creating an amazing platform to learn and network, at no cost to investors, thanks to the support of stellar companies who are sponsoring this complimentary online conference.

The solid line-up for this weekend is spectacular, so it’s imperative that investors carve out time to enhance their education, as well as to acquire the inside information needed to make intelligent financial decisions.

If one wants to start or grow their real estate portfolio, it’s paramount that they invest time this weekend to learn from time-tested professionals who are sharing their knowledge.

To RSVP for Realty411’s VIRTUAL Weekend Investor Expo, PLEASE CLICK HERE. If the system asks for a password, please type: Realty411 (capital R and one word).

To download the recently-released expo agenda, PLEASE CLICK HERE.

The expo schedule is also outlined below.

REALTY 411 VIRTUAL EXPO JULY 25 & 26

FROM 9 AM TO 5 PM PST – PACIFIC STANDARD TIME

Hosted by Dave Grimm, Linda Pliagas and Paul Finck

SATURDAY, JULY 25th – WELCOME!

9:00 – 9:15 am PST

Linda Pliagas & Dave Grimm

Welcome to Saturday’s Expo!

Ask Your Questions Via Chat After Every Session!

9:15 – 10:15

Dave Lindhal – REMENTOR.com

Discover How COVID-19 will Create Great Opportunity for Investing in Apartments

10:15 – 11:15

Travis Abbott – INVEST 1 PROPERTIES

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How to Make Smart Real Estate Investing Decisions During the Pandemic

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The State of Financial Lending Now

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Finding Deals in 6 Minutes + How to Invest During COVID — Including AirBnB

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Lead Generation for Serious Real Estate Investors

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Out-of-State Property Investing Like a Pro for Cash Flow Through Commercial Real Estate

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Coronavirus Outbreak and Its Effects on Rental Property and 1031 Exchanges

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The Inevitable Market Correction – How to Not Just Survive BUT thrive With CASH FLOW

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How Deferment of Mortgage Payments May Affect Borrowers in the Long Run

July 23, 2020/in Credit Crisis, Loans, Mortgage, News /by dulce

By Edward Brown

When Congress passed Section 4021 of the CARES Act in response to the effects of COVID-19, their intent was to help borrowers who were having problems making their mortgage payments. Little did Congress realize that they were potentially setting up borrowers for trouble in the future when it comes to credit worthiness as assessed by the lending community.

According to Mark Hanf, president of Pacific Private Money, “Section 4021 of the CARES Act contained a regulation that loan servicers “shall report the credit obligation or account for those participating in forbearance as current”. In other words, those participating in a forbearance program should not see their credit scores drop. However, there is a loophole that allows lenders to discover whether or not a borrower is actually making payments. It is the “comments” section of a credit report. The CARES Act does not mention the comments section of credit reports, and that’s where forbearance notations are going.” What borrowers are not being told is that any reference in a credit report to forbearance can be a Scarlet Letter for an applicant seeking a new mortgage, according to Kathleen Howley in an article she wrote in early May 2020.

According to Hanf, within a week of Howley’s article, his company received a loan request from a home buyer who was denied credit from a major bank for just this very situation. Although the bank sees the existing mortgage as “current” the forbearance has let the world know via the comment section that this borrower has requested a deferment. The major bank involved would most likely not deny the loan on its face due to the deferment, as this would violate the law; however, banks are notorious for coming up with a myriad of reasons for denying a loan and still stay within the guidelines set out for them.

Conventional lenders desire to have plain vanilla borrowers who pay back loans in a timely manner. When a borrower changes terms of the loan by requesting principal forgiveness or other aspects of the loan, the lenders generally do not usually extend credit again to these borrowers and can negatively affect the borrower’s ability to borrow again from unrelated lenders. Such is the case back during the Great Recession wherein some borrowers took advantage of the economic climate by asking their lender to reduce the principal of their loan [total forgiveness rather than just a deferment]. The borrowers may have gotten a reprieve, but the long-term effects may have been more drastic. Similarly, to when a borrower files bankruptcy. The borrower may get out of paying creditors, but their ability to borrow in the future is usually severely hampered.

In one case, back in 2009, during the heart of the Great Recession, one banker tells a story of how a wealthy borrower first asked for a principal loan reduction of $500,000 because his collateralized real estate had decreased and his request was granted. But, when this borrower was faced with the prospects of having this reduction reported on his credit report or the fact that he would have to inform any new lender that he requested a principal reduction [as this question is usually on bank applications], he voluntarily requested that the $500,000 abatement be reinstated. He decided his ability to borrow in the future was worth more than the $500,000 principal reduction.

Borrowers will have to decide if requesting deferments is worth the risk of potential future lending restrictions based upon the lender desire to lend to borrowers who choose to defer mortgage payments when the opportunity arises. Whoever said, “there’s no free lunch” must have been talking about these very situations.

Edward Brown

Edward Brown currently hosts two radio shows, The Best of Investing and Sports Econ 101. He is also in the Investor Relations department for Pacific Private Money, a private real estate lending company. Edward has published many articles in various financial magazines as well as been an expert on CNN, in addition to appearing as an expert witness and consultant in cases involving investments and analysis of financial statements and tax returns.

Women Who Behave Never Get Rich!!

July 21, 2020/in Marketing Strategies, News /by dulce

By Kathy Kennebrook (The Marketing Magic Lady)

I am often asked by women at events I speak at whether or not I think a woman can make a go of the real estate investing business on their own. My personal answer to this question is always a resounding-YES!

Actually, women have a distinct advantage over men in the real estate investing business. Sorry guys, it’s the truth! You see women are generally much more comfortable working with other women. That’s a given. So this makes the whole process go a lot more smoothly. And Men really like working with Women because it kind of levels the playing field. Women are seen as easier to work with. So Women end up doing really well in the real estate investing business even if they are working on their own.

Men are more comfortable working with a female investor for a lot of reasons. The first and most important is that there is no ego or testosterone coming into play in the negotiation process so generally a man and a woman working together are going to come up with a win-win solution much more quickly and easily than a man working with a man. It’s not like one of the guys “has to win”

Women can definitely be very successful in the real estate investing business working on their own. I am living proof of this fact. Even though my husband and I work together in the business, I am usually the one creating the deals, especially when working with senior homeowners. Once again; they just seem to be more comfortable working with a woman. I don’t mean to sound chauvinistic here; it just seems to work out that way. There seems to be a greater trust when working with a woman investor.

It also seems to go over better when I am the one asking for the deed to a property I want to buy subject to the existing mortgage. The whole scenario just goes better when I am the one doing the asking whether working with male sellers, female sellers or couples. I just think women are seen as more nurturing, empathetic and easier to work with. So yes, ladies; you can definitely have a successful real estate investing business all by yourself!

I could share several examples of deals I have done myself, even very recently to drive this point home. I recently did a deal with a lady who had just turned 40 and decided to sell her home so she could use the proceeds to travel the country before she was too old to do so. She had been contacted by Real Estate Investors who were men and she wouldn’t sell her home to them. Then she saw our ad in a shopper guide and called me. We met and she agreed to sell me her house. She was just much more comfortable working with another woman, and being a single woman living alone, she was nervous about letting a man into her home that she didn’t know.

Let me share another deal I did where a couple was being transferred out of state for business and needed to sell their home quickly. They had had another investor come out to see them before I showed up. He showed up in a suit and tie and they felt he was just too “slick” for them to be comfortable working with, so when I showed up in nice slacks and a blouse, empathized with their situation and showed them how I could help them solve their problem, they sold their home to me. I made a hefty profit on this deal! I also brought references with me so they could make sure I was really who I said I was and that I could really purchase their home.

I do have some advice for women working on their own based on my own experience. Here is some of the best advice I can give you. Ladies, if you are going to a property and you haven’t been there before and you don’t know the sellers, carry a cell phone with you and make sure someone knows where you are going to be. This is just common sense information to protect you. In my case, most of the time, the negotiations have been done on the phone before I ever go see any property.

If you are going to a seller’s home and there is a couple involved in the deal, make sure they are both going to be home. You need both of their signatures on paperwork anyway.

If you are going to a vacant ugly house I suggest taking someone else with you or making sure someone knows where you are, just in case. Just remember to use a little bit of common sense and caution in your dealings and you will be very successful in this business.

For more information on Kathy Kennebrook check out my website at www.marketingmagiclady.com While you are there be sure and sign up for my free monthly newsletter!

The Problem With an IBC Policy

July 16, 2020/in Keys To Success, News /by dulce

By Gabby Darroch

“What’s the problem with IBC?”

If you’re like many people who’ve heard about The Money Multiplier Method and IBC (especially for the first time) then you’ve probably had this thought cross your mind a time or two.

We get it. You want to know all the bad things that accompany all the stellar benefits of having and using your banking policy.

Since the “perfect system” does not exist, this concept presents some challenges of it’s own. And we are prepared to discuss them with you, right here, right now. Why? Because, if you know anything about The Money Multiplier, you know we LOVE transparency. Just not when it comes to walls… or clothes.

So here it goes.

Policyowners must commit to a long-term plan.
Applying the recommended guidelines can be challenging… on your own.
Most people don’t know the first thing about designing a plan that fits their specific financial needs.
Your own mind may be your worst enemy.

Now, the good news is that we have solutions to each of these “obstacles.” So stop reading here if you hate having solutions to your problems.

The problem: Policyowners must commit to a long-term plan.
The solution: If you have commitment issues when it comes to your money, we get it! But just remember, your money isn’t locked up for years, unable to be even touched without some kind of harsh fees or penalties. This policy is nothing like your 401k, 403(b), annuity, or even a CD. And while in the first few years you don’t get access to 100% of the premium deposits you put into your banking policy, you’ll never have less than 60% of those funds available immediately within 30 days of making your premium deposit. And that’s just for the first year! Every year after, that percentage increases so you’re able to borrow more and more of your premium deposits. (And yes, it won’t be long before you’re able to borrow every single penny you put into your policy and more!)

The problem: Applying the recommended guidelines can be challenging… on your own.
The solution: Did you hear that last part? There is only a challenge if you’re going in alone. But if you’re with The Money Multiplier, we’ve got your back. We check in with you at least twice a year to update your goals. And we also give you a plan of how best to utilize your policy to reach those goals using your banking policy. So when you get a policy, we don’t expect you to know everything. We have a team that does all the hard stuff for you so you can enjoy your life, which is why you started this policy in the first place, right?

The problem: Most people don’t know the first thing about designing a plan that fits their specific financial needs.
The solution: We don’t expect you to know a thing about these policies (although we always provide resources for you to learn from. Knowledge is power!). That’s what we are here for. You don’t need to know anything about policy provisions, riders, or other policy options that you might need. We take care of that part, always keeping your best interests at heart. So rest assured, your policy is completely customized to fit your specific financial needs.

The problem: Your own mind may be your worst enemy.
The solution: These concepts, even though they’ve been around for over 200+ years, are difficult for many to believe in. Not because they don’t work. In fact, there is no other tool out there that works quite as well in reaching your financial goals as the Infinite Banking Concept does. However, so many are taught their whole lives to think the way banks want them to think about their money. But your bank telling you they should control your money is like your (shady) mechanic telling you your car needs repairs it doesn’t actually need. Both are trying to make a profit off of keeping you in the dark about what’s really going on. (Side note: not all mechanics are shady. Some are pretty awesome!) The point? Trust the process that puts you in control of your money, not the one that’s kept you on the financial hamster wheel your whole.

Our only goal is putting you back in the driver seat. And we’re here to help you overcome whatever obstacles are standing in your way to do so. Because here’s the thing: There’s never going to be a better time than now. We grow older. The bills keep coming. Our health declines (even if slowly). Problems come out of left field and hit you square between the eyes. But you can do this for yourself and your family and work towards the life you want, the life you want for them, and the future you all deserve. Because where there’s a will (and an awesome team of experts who’ve got your back), there’s a way.

As Nelson Nash, the founder of the Infinite Banking Concept, once said, “Someone’s gonna be the banker. And the tragedy is that it should be you, but people don’t realize that.” But now, I hope I’ve helped you to realize that you should be in control. You should be the bank. And we’re here to help.

To learn more about The Money Multiplier or to get started with your own policy, please visit www.TheMoneyMultiplier.com/member-area and watch the presentation that appears on the next page.

When you’re ready to get started on creating your financial legacy or if you have more questions, please email us at [email protected], or give us a call at 386-456-9335, and one of our mentors will be in touch with you.

Rise Up And Take Care Of The Greatest Generation

July 14, 2020/in Assisted Living, News /by dulce

By Gene Guarino

Should I help take care of the elderly?

I know some of you have been inspired to take care of the elderly or you enjoy doing exactly that, and I want to encourage you to continue to do that. There is a real need for caregivers of all types and that is a looming crisis out there that you can help with right now. There is the opportunity to help, to engage, to be a part of something big and something important. We’re all aging and people are lasting and living longer than ever. The question is, are you going to be a part of the solution that is going to help society or part of those who complain about it and sit back?

What if I already have a job?

Some of you right now are thinking that you really do like taking care of people but may be busy at another job. If taking care of the elderly is your passion, that’s what you should do. You see, right now there’s a lot of caregivers that are needed to take care of the elderly population, and that crisis is only getting worse because more people need help for longer, but there are fewer caregivers and family members that are willing to do it or are trained properly to do it. So if you are inspired, and you feel the calling, then I encourage you to do exactly that.

Could I just volunteer at an assisted living home?

You can start by volunteering at a home and see if it’s right for you. Read a book, do a puzzle, play cards, sit and talk, play some music, sing along, whatever it is that you can do to be there and interact. Those care homes can use the extra hand and you don’t need to be the caregiver. If you can just be there providing some company, companionship, or a conversation. That alone would be incredibly helpful to those caregivers, and those seniors need it.

Why is this generation called the silent generation?

One of the saddest things In our society today is that more than half of the people polled feel lonely. I think a lot of that is technology. We look at our phones and all of those things that take us away from talking to each other face to face. There’s a lot of seniors who would just love to have somebody stop by and say hello. It really doesn’t take much. It may not even take a conversation as much as just sitting with them. If you’re sitting in your home watching golf over the weekend, why not go sit with them and watch golf providing companionship and then ask them a question, did you ever play golf? What kind of clubs did you use? Before you know it, you’re going to find out about wooden clubs and how they used to play with just three clubs, and that was it, and they played the whole round with three clubs and 1 ball.

You can do this!

Have those conversations. Take that time. The greatest generation, the silent generation, needs your help and you will truly be a part of the solution by simply being “present”. Volunteering your time is one way. Starting a residential assisted living business with an excellent home with excellent care is another. It’s totally up to you, but you can do both.

You can also subscribe to our iTunes for on the go listening:
https://itunes.apple.com/us/podcast/assisted-living-networks-podcast/id1360517721?mt=2

Gene Guarino
Founder/CEO
Residential Assisted Living Academy™

Gene is the President, CEO & Founder of RALAcademy.com. Gene has over 30 years experience in real estate investing and business. Today, Gene is focused on just one thing… investing in the mega-trend of senior assisted housing. He has trained thousands of investors/entrepreneurs throughout the United States how to invest in and operate residential assisted living homes. For over 25 years he has been educating people on the strategies of successful investing, business and self-employment. He now specializes in helping others take advantage of this mega-trend opportunity.

The Federal Reserve Rolled into the US Treasury and Economic Forecast

July 9, 2020/in Financing, News /by dulce

By David Mashian

In March of 2020, the single biggest news event of the decade hardly got any news coverage, and that is the Federal Reserve just got rolled into the US Treasury Department. This happened in the midst of the COVID-19 pandemic, so such massive news got drowned out by Corona Virus news and concerns. Most people don’t know what the Federal Reserve is or was. To put it simply, The Fed was a privately-owned banking cartel owned by foreign and domestic wealthy banking families who controlled the economic system of the United States by controlling its money supply. With this single act, the US government now owns “The Fed” and has the ability to govern its own financial destiny without acquiescing to a third-party entity whose interests are not aligned with WE THE PEOPLE. We, through our elected officials, now control our own money supply. THAT IS HUGE!

This bodes well for our economic recovery as a result of the COVID-19 pandemic that paralyzed the US. President Trump, through the US Treasury, now has full control over spending money to stimulate economy. As a result, it looks that the US is at the start of a golden age.

With this new power, President Trump can stimulate the economy in the following ways:

Historically Low Interest Rates – Interest rates will be maintained at zero until 2022 to be able to stimulate the economy through liquidity and cheap money. We will see continued purchases of homes and a boom in the refinancing of single-family residences – keeping more money in people’s pockets instead of interest payments.
Easy Lending Standards and Lots of Stimulus Money – The Federal Government has already provided PPP loans, SBA COVID-19 Disaster Loan Assistance, unemployment benefits, and much more to keep people afloat while we work through the aftermath of this pandemic. There will be more to come, and since President Trump controls the Federal Reserve by way of the US Treasury, there are no obstacles.

Economic Forecast: We Had a Pause – Not a Crash

I believe we will bounce back soon, be it V-shaped or U-shaped recovery. We have a pro-business President who understands that small businesses are the backbone of the country. There will be lots of investment money available to businesses going forward. In fact, the new version of the Federal Reserve is establishing the Main Street Lending Program to support lending to small and medium-sized businesses that were in sound financial condition before the onset of the COVID-19 pandemic.

There are many factors that still hold true despite the Corona Virus lock down, including a strong jobs market and strong stock market.

Strong Jobs Market – People (employers and employees) are eager to start work after being cooped up self-isolating for so long. Similarly, the employers looking to fill positions before the lock down are still looking to fill positions. Also, many of the people who could not work during the pandemic are basically on hold, and will be back at their jobs once the COVID-19 situation clears up. We saw a pretty fast bounce back with the first reopening, and it will things will bounce back again once the coast is clear of COVID-19 in this second wave.
Stock Market Strong – The stock market is still strong, and did not suffer a meltdown as a result of the pandemic. Most importantly, people’s retirement funds are secure and confidence in the economy to go back to work is stable. This may largely be a product of unprecedented government and central-bank support, and a lack of compelling alternatives to equities.

Going Forward

MORE JOBS AND ECONOMIC STIMULUS COMING!

USMCA Trade Deals Just Took Effect July 1 – The new United States-Mexico-Canada Agreement (USMCA) is a mutually beneficial win for North American workers, farmers, ranchers, and businesses. This will create more balanced, reciprocal trade that supports high-paying jobs for Americans and grows the North American economy.
Huge Infrastructure Investments – The Trump administration is preparing an up to $1 trillion infrastructure package focused on transportation projects such as roads and bridges and 5G wireless infrastructure and rural broadband. All infrastructure improvements have the added benefit of creating secondary and tertiary jobs that support the initial infrastructure jobs.
Elimination of Payroll Taxes Likely – President Trump is pushing to eliminate payroll taxes. This should boost the economy by putting more money into the pockets of Americans resulting in higher spending for goods and services, speedier repayment of debts, and a faster return to normalcy. This amounts to slightly higher real wages for workers at no higher cost to the employer.

We are in the midst of a recovery, and in the worst-case scenario if we don’t see a recovery, the Federal Reserve can still lower interest rates to negative. Yes, that’s right, negative interest rates. This sounds odd, but many countries around the world, such as Japan, Denmark and Switzerland, currently have negative interest rates. Similarly, right now, the Eurozone, Norway, Sweden, and Bulgaria are at 0% interest rate, with Israel, the United Kingdom, Canada and Australia being near 0%. It is a real possibility.

One thing is clear, we are in the midst of a paradigm shift, with a change of perception of money and how money is used and transferred. The power structures that controlled the economic and political systems have changed and more is to come. The once unimaginable is becoming real, and I see great progress for humanity and the planet as a result.

I hope you have found this newsletter helpful. Please feel free to contact me anytime.

Nationwide Real Estate Lending
Contact me now for more information:
David Mashian
310.903.6907
[email protected]
Visit us at: https://moneymacloans.com/

Back in Black/Airbnb is on the Upswing

July 7, 2020/in Landlording, News /by dulce

By Michelle Corsetti

At the beginning of the Covid-19 Pandemic, Airbnb occupancy rates dipped significantly as people opted to cancel their travel plans. Also, many counties put into place restrictions stopping Airbnb rentals from operating. Some counties restricted all but first responders and essential workers from renting Airbnb locations.

However, as of May 28th, there has been a 17.1% increase in occupancy rates. Overall, Airbnb is still down for the year but is hopeful as some restrictions are lifted. The good news is that places with smaller populations are gradually picking up the pace. People are venturing out to get rid of the lockdown blues.

According to Pittsburgh Action News, most rentals have been within 50 miles of home. Since traveling abroad has been halted to a standstill, people are having mini-vacations close to home.

While some people are optimistic about the increase in bookings and sales, others are opting for a more drastic change. CNN reported that some Airbnb hosts are giving up on their short-term rental properties and are proceeding to sell.

These hosts report that because of loss of sales and income, they are planning on selling not just their properties, but their furnishings as well.

Other hosts are changing from short-term term rentals to long-term rentals to compensate for the loss.

Only time will tell what the real impact of COVID-19 has on Airbnb and other short term rental platforms. As of now, while slow, things are looking on the upswing.

Holly Lynn is still very busy in business as a short-term rental expert and host. If you need your property rented– short-term or long-term, she can do for you what she does best–make you money!

For more information or booking, contact Holly at [email protected] or 415-317-6071.