Posts

Insight with Universal Commercial Capital

Topic

What to Expect in Private Lending for 2023 — Insight with Universal Commercial Capital

Description

Gain insight on the latest news on Private Lending in 2023 with a special webinar with Universal Commercial Capital.

Universal Commercial Capital is a U.S.-based private money lender. A trusted resource in real-estate mortgage lending, Universal Commercial Capital is known for its flexible, common-sense underwriting and efficient, hassle-free loan programs.

On this educational webinar, investors will learn directly from Eric Tran, CEO, and Ivy Baca, Vice President of Sales.

Be sure to register for this live and interactive webinar. Guests can ask questions during this session. Register now to gain insight on the financial markets in 2023.

ABOUT TODAY’S EDUCATOR:

Eric Tran, CEO of Universal Commercial Capital, has served the real estate mortgage lending industry for nearly 30 years. As an entrepreneur and career mortgage professional, Eric has worked in both residential and commercial lending, developing highly sought-after products and processes for consumers and fellow real estate entrepreneurs.

Eric resides in California with his family. He holds a Bachelor’s Degree in Political Science and Government from the University of California, San Diego. He is an active member of the National Association of Mortgage Brokers (NAMB). Learn directly from Eric Tran, CEO of Universal Commercial Capital, on this exclusive webinar.

Time

Jan 12, 2023 11:00 AM in Pacific Time (US and Canada)

Learn How to Flip Houses and Own Turn-Key Rentals

Please review this special webinar invitation.

Exclusive Webinar:

Learn How to Flip Houses and Own Turn-Key Rentals

Hello Investors,

It’s time to take your real estate portfolio to new levels of success in 2023. Don’t wait until the beginning of the year to make things happen… TAKE ACTION NOW!

To help our readers gain the insight and motivation they need, we are hosting an exclusive webinar with our special guest, Joe Arias.

This SPECIAL webinar will take place on Saturday, JANUARY 14th, 2023 starting at 10 AM / PT.

Joe is uniquely qualified to teach our members the ins and outs of flipping houses and securing turn-key rentals for cash flow and appreciation.

KEY TOPICS TO BE DISCUSSED:

  • Flip houses without using any of your own money.
  • Start building a passive income portfolio with turn-key rentals.
  • Access Joe’s exclusive tools for finding off-market properties and analyzing deals.
  • Access Joe’s personal list of reliable hard money lenders

Important: Don’t wait to register as only 500 virtual seats are available.

LEARN MORE ABOUT OUR EDUCATOR:

Joe Arias and his partners have flipped hundreds of properties in the Southern California Region. He has developed cutting-edge systems to simplify and scale the entire remodel process that can easily be applied to flipping, rentals, wholesaling, and other passive income strategies.

More recently, Joe founded a real estate investing education company called RealSuccess Investments, allowing him to share his tools and systems with hundreds of up-and-coming investors.

OurRealSuccess is focused on education on flipping, rentals, passive income, and wholesaling. Joe is also a best-selling author. He has written four books: Finding your RealSuccess, First Steps to Flipping, R stands for Rentals and Retirement, and Wholesaling Real Estate.

Joe’s personal story is truly transformational. It is the epitome of the American Dream realized. When describing his real estate journey, he says:

“I came from Argentina when I was 20, I am 40 years old now. I didn’t know anyone. I am CERO* generation. Usually people say, I am first or second generation, but I was the one that crossed the border — no language, no friends, no family, no money, nothing, NADA**… If I can do it, anyone can!”

From a young Latino immigrant to a celebrated real estate investor, Joe is a true testament to hard work and discipline. As an investor, he has made it his mission to help others achieve financial freedom while living a life of passion, fulfillment, and empowerment.

*Cero translates to zero in Spanish.
**Nada translates to nothing in Spanish.

5 Luxury Marketing Tactics on a Startup Budget

By Farlyn Lucas

Whether you’re a small business or a high scale luxury brand, advertising is essential to building brand awareness and increasing revenue. Just because designer brands have sizable budgets doesn’t mean they have to spend it all to effectively advertise their company. Here are our top tips on how to advertise your luxury brand without spending luxury budgets.


ADVERTISEMENT


1. Develop a sophisticated website

Building off of social media marketing, another digital way to advertise your luxury brand is through a professional and cutting-edge website. Web design is incredibly important in marketing your brand and reaching clientele. Invicta states that “75% of consumers say that they make snap judgments about a company’s credibility based on their web design,” highlighting the importance of maintaining a professional website in order to elevate your brand and strengthen your image. You want your website to be clean and informative while also impressing your clients. It’s a win-win; you need your website to drive online revenue, so why not make it cutting edge and eye-catching.

2. Build awareness on social media

Another affordable marketing option is social media. Creating a profile on various social media platforms is a great way to establish your company and create awareness for free! As people scroll or click through the app, they can easily see your brand and check out your profile before jumping over to your website. Want to take it a step further? Your luxury brand can pay for advertising on these platforms, targeting your ideal client and furthering your reach.

3. Advertise on local print magazines

Local print advertising is a great affordable way to promote your luxury brand. After identifying your target audience, you can run advertising in a number of luxury home magazines that reach people with similar demographics. These large publications often offer discounts for local advertising, making it an affordable marketing option. Additionally, the majority of magazine readers are paid subscribers, meaning that readers are more likely to see and engage with your advertisement. It’s a great cost-effective way to promote your brand.


ADVERTISEMENT


Local print advertising is a great affordable way to promote your luxury brand. After identifying your target audience, you can run advertising in a number of luxury home magazines that reach people with similar demographics. These large publications often offer discounts for local advertising, making it an affordable marketing option. Additionally, the majority of magazine readers are paid subscribers, meaning that readers are more likely to see and engage with your advertisement. It’s a great cost-effective way to promote your brand.

4. Create an experience

A great brand marketing strategy for luxury businesses is to create an experience around your company. Widen describes a brand experience as “the sum of all the sensations, thoughts, feelings, and reactions that individuals have in response to a brand” and the “lasting impression” a brand has on consumers. By creating a memorable and personable experience, customers are more likely to frequent your store and make a purchase. They feel special and associate your company with this constant feeling that creates “lasting customer relationships and [an] increase[d] brand recognition.” Capitalizing on this sensation is an effective way to market your luxury brand without spending too much money.

5. Don’t be afraid to stand out!

From high end designer fashion to luxury hotels, a cost-effective way to market your company is by capitalizing on your uniqueness. It’s crucial to identify what makes your brand special and what makes your company stand out from the rest. As you advertise via digital or print platforms, keep in mind the distinctive characteristics of your luxury brand. It could be anything from your attention to detail to your craftsmanship or personal customization. By highlighting what sets you apart, you draw buyers in; they want a part of what makes your brand special. It’s a strategy that you can utilize across all advertising mediums.


Farlyn Lucas is a freelance writer who specializes in marketing and business. She helps business owners create content that works for their audience, so that they can attract the best people. When she’s not working, she enjoys playing badminton and baking chocolate chip cookies.


Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411Expo.com or our Eventbrite landing page, CLICK HERE.

More Home Buyers Flocking to Florida

By Stephanie Mojica

Five Florida cities have become the new hotspots for home buyers sick of historically high mortgage rates and housing prices, according to NewsNation. In Realty411’s analysis, this also opens opportunities for investors.


ADVERTISEMENT


Redfin created a list of the 10 cities most popular for real estate searches, also taking into account the number of people trying to leave a city. While Sacramento, California grabbed the top spot on that list, here are the rankings for the Sunshine State of Florida.

3. Miami

5. Tampa

7. Cape Coral

8. North Port-Sarasota

10. Orlando

These are recent rankings, meaning that Hurricane Ian’s effects on Florida in September did not dampen people’s enthusiasm for moving there.

The rest of Redfin’s top 10 list is as follows:

2. Las Vegas, Nevada

4. San Diego, California

9. Phoenix, Arizona

10. Dallas, Texas


ADVERTISEMENT


The cities that people most want to leave, according to a Redfin “net outflow” report, are:

1. San Francisco, California

2. Los Angeles, California

3. New York, New York

4. Washington, D.C.

5. Boston, Massachusetts

From the report, it appears that investors can buy homes in Florida, rent them out, and sell them in the future if that is part of their strategy. As always, do as much research as possible before making any type of investment.


Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411Expo.com or our Eventbrite landing page, CLICK HERE.

Accredited Investors: Learn About the Croatan Access Fund

Please review this sponsored post.

Dear Investors,

CityVest is pleased to offer our final investment of 2022 for accredited investors: Croatan Access Fund. We have been watching and waiting for the right time to make our move. Given current dynamics of interest rates and cap rates in the real estate investment market, we are now excited to make an opportunistic investment. Having a pool of capital to take advantage of buying opportunities will result in attractive acquisition valuations.

Now is the time to invest! Consider these investment sages:

   “Be Greedy When Others are Fearful”
– Warren Buffet
   “Buy When There is Blood in the Streets” –Baron Rothschild

Our unique Croatan Access Fund will allow you to participate in the $150 million institutional investment fund named Croatan All-Weather Fund II.

The Croatan All-Weather Fund II (Croatan) has the following attributes:

  • Proven Track Record. Croatan’s investment manager has achieved a 32.7% net IRR * and a 2.8x Equity Multiple on realized multifamily investments.
  • Strong Targeted Return Croatan Fund is targeting an annualized net IRR of 17%.
  • Higher Negotiated Returns The Access Fund has negotiated to receive a 12% preferred return from Croatan, as compared to an 6% preferred return for direct investors into Croatan. In addition, the Access Fund has negotiated to receive 80% of profits after the 12% preferred return has been achieved.
  • Desirable Investment Niche Croatan specializes in multifamily rental housing throughout the south from Maryland to Arizona. Croatan will make direct and co-investments, with the Croatan Fund participating in “Promote Sharing” of 10% to 35% on so-called GP co-investments.
  • Attractive Portfolio Acquisitions Already Closed Croatan Fund has already concluded 9 property acquisitions composed of 2,765 units with a total capitalization of $444 million.
  • Skin-in-the-Game Croatan’s investment manager and general partner will invest approximately $7 million into the Croatan Fund.

Please join me on a conference call to learn more about CityVest’s Croatan Access Fund. Here is a link to register for one of several group conference calls:

GROUP CONFERENCE CALL If you have any questions do not hesitate to contact me directly at 917-747-3091 or schedule a direct call through my calendar link.

As always, thank you for the opportunity to provide unique and successful investment services to you.

Sincerely,

Alan Donenfeld
Founder and CEO

p: 212.593.1600 c: 917.747.3091
a: 
110 East 59th Street 22nd floor New York, NY 10022
w: 
www.CityVest.com e: [email protected]

Email sponsored by CityVest, 110 East 59th Street 22nd floor, New York, New York 10022

DISCLAIMER:
*Past results may not be indicative of future results. Please review all documents including risk factors.
This message contains confidential information and is intended only for the individual named. If you are not the named addressee you should not disseminate, distribute, or copy this email. Please notify the sender immediately by email if you have received this email by mistake and delete this email from your system. If you are not the intended recipient you are notified that disclosing, copying, distributing or taking any action in reliance on the contents of this information is strictly prohibited. The information contained in this email is a summary and is for informational purposes only. It is impersonal and not individualized to any specific investor’s financial situation, and, accordingly, does not constitute investment advice. You should always carefully consider investments in any security and be comfortable with your understanding of the investment, and it is recommended that you consult with an investment professional that knows your specific circumstances before making any investment.

© 2022 CityVest. All rights reserved.

What Are Common Plumbing Problems That People Don’t Think About?

By Stephenie Mojica

Whether you have a residential or commercial property or plan to buy one, it’s important to ensure that the plumbing is well maintained. REALTOR.com recently published a list of six common plumbing problems that people don’t necessarily think about.


ADVERTISEMENT


While the fall and spring months are the best time for you (or a plumber) to check your pipes and other fixtures, any time is better than never. However, keep in mind that most plumbing issues surface during the winter. So, it’s best to get in the habit of looking for problems during the fall season.

Most landlords and other types of homeowners know the dangers of frozen pipes, water heater problems, stuck garbage disposals, and clogged drains. But what else should real estate investors keep an eye on?

1. Clogged cleanouts.

A cleanout is an outdoor pipe close to the home that usually sticks out of the dirt. This is an important pipe because it provides access to plumbing. If the cap or cover of the cleanout is open, cracked, or broken, then leaves or debris can clog it and cause a backup of water flow.

2. Cluttered gutters.

Leaves and debris are once again the typical culprits for this plumbing-related problem. Cluttered gutters can also damage your roof or foundation. Regularly cleaning your property’s gutters and inspecting them (and your downspouts) for cracks or damage will prevent most problems.


ADVERTISEMENT


3. Root intrusion.

If your property is in a dry climate, sudden rain causes the roots of trees to expand in search of much-needed water. These roots can crack plumbing pipes. If you own a property with large trees, have a plumber perform a camera inspection so they can identify and rectify any issues.

4. Dirty sump pump.

Once again, the leaves and other debris associated with the fall season can spark year-round havoc. A dirty or clogged sump pump filter can cause standing water in your basement or shut the pump down too early. Slowly pour a bucket of water into the sump pit to see if everything operates normally; if not, call a plumber immediately.

5. Garden hose mishaps.

Put away all garden hoses before the temperatures drop. Unless your outdoor spigots are freeze proof, use foam covers to protect them. Otherwise, you risk problems such as flooding and pipes bursting or freezing.

6. Hidden or small leaks.

It may be tempting to ignore a tiny bit of rainwater leaking from the dining room ceiling, but the risk is not worth it. Even droplets of water can get into your electrical wiring and ignite a fire. Discolored spots or high water bills could signify a hidden leak; the assistance of a plumber is necessary if you suspect hidden or small leaks.

Underwater Homes and Short Sale Solutions

By Rick Tobin

Many homebuyers who purchased their homes near the peak of the latest 7-year “boom” or positive valuation cycle earlier in 2022 now may have zero or negative equity. This is partly due to the fact that so many owner-occupied home buyers came in with very low to no down payments anywhere between 0% (VA loans) to 3% (Conforming) or 3.5% (FHA). It may cost the average seller 6% to 8% in real estate commission fees, title, escrow, and transfer taxes to sell their homes which actually makes the number of underwater (mortgage debt exceeds current market value) properties higher than what’s reported.

Black Knight’s October 2022 Mortgage Monitor report shared details about how 8% of homes purchased in 2022 were already underwater and that almost 40% of properties had less than 10% equity left in their homes. The hardest hit property owners were first-time home buyers with small down payments such as seen with FHA, Conforming, and VA. Should home values fall 5% to 20%+ next year, then the number of underwater properties will rise like the tides during a peak moon cycle.


ADVERTISEMENT


According to Black Knight, more than 20% of the 2022 FHA/VA purchases had negative equity as of October 2022 and a whopping 66% had less than a 10% equity stake. Black Knight also reported that excluding the time near the start of the pandemic the “early-payment default” (EPD) rate, which tracks mortgage delinquencies within the first six months of origination, hit the highest level since 2009. 

The good news is that there’s still some high percentages of equity for homes purchased prior to 2022 due to how fast those homes appreciated nationwide over the past 10+ years. For example, the negative equity rates for all properties nationwide still remains historically low near 0.84% as of the third quarter of 2022. These very low negative equity numbers may change and rapidly increase in 2023 if mortgage rates keep rising and home values flatten or decline.

The #1 reason after the loss of income for why a homeowner is likely to walk away from their home and mortgage payment obligations is when their property is upside-down or underwater with negative equity. While the homeowner may be drowning in debt with a financial anchor that takes their home equity is underwater and figuratively sinking as well. 

Maritime Admiralty Law and Money Terms

You are primarily made up of water. In fact, upwards of 70% of your body and 80% of your brain is derived from water. Iodine is the body’s natural disinfectant, so effectively you’re made up of saltwater somewhat like found in one of the Seven Seas (Atlantic, Pacific, Arctic, and Indian Oceans, the Mediterranean Sea, the Caribbean, and the Gulf of Mexico). If you’re fortunate enough to live near the sea, you probably own a much more valuable home due to the higher demand for coastal properties.

Did you know that the early origins of US law and taxation authority come from Old English Common Law and Maritime Admiralty Law? Common Law is determined by past judicial or courtroom decisions or verdicts in civil and criminal courthouses.

Maritime Admiralty Law is also referred to as the Law of the Sea. It’s a body of private international law that governs relationships between private parties or business entities which also operate ships or vessels. The law of water dominates the entire planet partly since about 71% of the Earth’s surface is covered in water.

Let’s take a look next at how money, real estate, water, and taxation share many hidden and not-so-hidden meanings or double meanings:

Merchant banker: Merchant banks were the first modern banks which evolved from medieval merchants that traded in various commodities such as cloth merchants. These merchant bankers also helped finance the sales of these goods. “Mer” is also defined as sea as seen with the word Mermaid (woman of the sea).

Flipper: The name of a beloved dolphin in a television show from the 1960s because the dolphin completed amazing flips in the air. A home flipper, on the other hand, is an investor who purchases distressed and discounted fixer-upper properties prior to remodeling and later selling or “flipping” them. A flipper who sells his rental property in less than a year will probably pay much higher tax penalties for his or her short-term gains.

Whale: A very wealthy client or organization with lots of money.

Loan Shark: A third-party lender who typically offers very expensive loans for fairly short periods of time over weeks, months, or a few years to motivated clients who may be short of funds.

Cash flow: Real estate investors strive to find assets that create positive and consistent cash flow or income streams just like they may see at their nearby river where they may fish. For real estate investors who are fortunate enough to have a positive monthly cash flow while letting their money work hard for them instead of vice versa, they will have more time to fish or go boating.

Sink: A poorly managed rental property or significant debt can sink you financially and pull you to the bottom like a falling anchor.

Float: When you’re running out of cash, a bank loan can float you like a lifebuoy so that you keep your head above the water and don’t figuratively “drown” in debt.

Liquid: A person with lots of access to money or capital is described as being liquid or having exceptional liquidity. Conversely, a person with no money is illiquid.

(River)bank: A courtroom judge rules from the bench. In Latin, bench translates as bank. Most courtroom disputes are monetary disputes, so the judge acts somewhat like a merchant banker while trying to balance out the assets and liabilities. Banks also are located on both sides of a river or riverbank.

Docs: Boat or larger ships are tied to docks when not at sea. Clients sign loan docs or documents when purchasing a property with a mortgage.

Current-sea: All nations have their own acceptable currency like the dollar. Seawater also flows via an ever-changing current.

Underwater: A property that has more mortgage debt than the current market value.

Soak: You may be familiar with the “Let’s soak the rich” phrase when some people are demanding that wealthier Americans pay their “fair share” of taxes.

Levy: For taxation purposes, a levy is the government’s right to seize your property if you don’t pay your taxes. For water purposes, a levee protects dry land from water damage that may originate from a nearby river or flood channel.

Sinking Prices and Short Sales

“I can’t change the direction of the wind, but I can adjust my sails to always reach my destination.” – Jimmy Dean

If you think a financial storm is coming on the horizon, you can either do nothing as the figurative waves crash over the front of your boat’s bow until it sinks or you can adjust your sails and head off towards safety, sunshine, and new prosperity. Today, you’re more likely than not to read negative news about real estate and the financial markets as we’re near the low point or trough of the economic wave or cycle.

Kieran Clancy, a senior economist at Pantheon Macroeconomics, published a recent analysis about how he thought that home values may fall 20% from their June 2022 peak wave highs. New home listings fell 19% from the 2017-2019 levels, which was the largest deficit in six years aside from the early pandemic and lockdown months in 2020.

Home delistings reached an all-time record high by November 2022 as more sellers got frustrated with fewer buyer prospects who also weren’t offering high enough purchase price offers for many of the sellers. A record 2% of homes for sale across the nation were delisted as being offered for sale every single week on average for 12 consecutive weeks through November 20 as per Redfin.


ADVERTISEMENT

An underwater and a potential short sale deal is a home sales situation where the mortgage debt exceeds the current market value at the time of the sale. The seller and advising real estate and mortgage licensees can assist with persuading the existing lender or mortgage loan servicer to significantly discount their debt concurrently at the payoff of the short sale. This way, the seller doesn’t lose more money, the buyer pays fair market value, and both the listing and buyer’s agents receive their commissions.

Some of our past clients who came to us for financing have worked on several thousand short sale deals, so our team is very experienced with offering solutions for all parties involved. For motivated sellers, you should set realistic home listing prices in the near term to maximize your profits or to minimize your losses. For real estate licensees, you should learn more about how short sales and creative seller-financed sales can help you and clients at a much faster pace while increasing gains or reducing losses at the same time.

What goes up must come down, but it also can build up powerful future momentum like a peaking wave crest as we “surf” or “sail through” the continuous boom and bust wave cycles!!!


Rick Tobin

Rick Tobin has a diversified background in both the real estate and securities fields for the past 30+ years. He has held seven (7) different real estate and securities brokerage licenses to date, and is a graduate of the University of Southern California. Rick has an extensive background in the financing of residential and commercial properties around the U.S with debt, equity, and mezzanine money. His funding sources have included banks, life insurance companies, REITs (Real Estate Investment Trusts), equity funds, and foreign money sources. You can visit Rick Tobin at RealLoans.com for more details.


Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411.com or our Eventbrite landing page, CLICK HERE.

The Next 7-Year Housing Cycle

By Rick Tobin

I’ve shared written content in numerous articles, real estate courses, and in college textbooks over the past few decades about how we’re likely to see 7-year boom and bust cycles that especially affect real estate. Almost all boom and bust cycles for housing, stocks, bonds, and the rest of the financial markets are directly tied to the direction of short-term and long-term interest rates.

The Federal Reserve will first flood the markets with “easy money” prior to slamming the figurative brakes by tightening up access to the money supply partly by raising rates. Positive or booming housing market eras usually take place when interest rates were below historical averages and had more flexible mortgage underwriting allowances like experienced during the peak no income qualification and subprime credit mortgage years between the late 1990s and 2006.


ADVERTISEMENT


History tends to repeat itself partly since the Federal Reserve, US Treasury, and consumers generally follow the same strategies and steps. First, the Federal Reserve lowers rates to stimulate a sluggish economy which increases demand for housing assets while pushing inflation rates skyward right alongside increased government spending. Then, asset prices, consumer spending, government deficits, and money creation grow too quickly prior to the Fed raising short-term rates while making the housing market and overall economy cool down.

In many ways, the 7-year boom and bust cycle becomes more of a vicious cycle or downward cycle in that these financial actions can overinflate asset bubbles prior to them later popping. Energy price directions are generally a root cause of inflation. Housing prices, inflation, and oil costs are more likely to rise and fall together while the purchasing power of the dollar or petrodollar (“oil for dollars”) goes in the opposite direction in an inverse seesaw-like direction.

“The definition of insanity is doing the same thing over and over and expecting different results.” – Albert Einstein

7-Year Financial Cycle Examples

Let’s take a look at the last 7-year boom and bust cycles over the past 49 years to better understand how the current and future market directions can be more clearly seen or anticipated:

  • 1973 – Oil Shock Crash: This was directly related to the end of Bretton Woods when the “gold standard” was switched to the Petrodollar (“oil for dollars”) system beginning earlier in 1971. Between October 1973 and January 1974, oil prices quadrupled within just a few months due to the ongoing OPEC (Organization of Petroleum and Exporting Countries) Embargo, or the reduction in oil production, increasing U.S. demand, and skyrocketing oil prices for consumers.
  • 1980 – Record High Interest Rates: This is primarily because energy costs started to rise while the purchasing power of the dollar fell. As a result, the Federal Reserve began pushing rates skyward starting in 1978. For example, the Fed increased their Fed Funds Rate from 6.75% in January 1978 to 10.25% in April 1979 and later to 20% in December 1980. The US Prime Rate for the most creditworthy borrowers reached 21.5% in December 1980 and the 30-year fixed mortgage rate peaked at 18.6% in October 1981. Shortly thereafter, seller-financed home sales became more appealing because fewer buyers could qualify for these high double-digit mortgage rates just like they may in 2023 and beyond.

ADVERTISEMENT


  • 1987 – Black Monday Stock Market Crash: On October 19, 1987, the Dow Jones index fell by more than 22% in just one day, which is still an all-time record overall percentage loss. For better perspective, a 22%+ price drop for today’s 33,000+ Dow Jones index would equal more than a 7,000 point drop in one day. All of the 23 major world markets at the time experienced huge losses for the October 1987 time period. Eight of these markets declined by 20% to 29%; three fell by 30% to 39% (Malaysia, Mexico, and New Zealand); and three market regions dropped by over 40% (Australia, Hong Kong, and Singapore).
  • 1994 – US Bond Market Crash: In spite of low inflation rates at the time, the Fed thought it would be wise to increase rates from 6.2% in early 1994 up to 7.75% by mid-September. These quick rate hikes eliminated upwards of $600 billion of Treasury bond values in the US and caused international bond losses that were closer to $1.5 trillion.
  • 2001 – Stock Market Crash and 9/11: After the longest shutdown of the stock market since 1933 following the tragic 9/11/01 day, trading resumed on September 17th prior to the Dow tanking 684 points (a 7.1% decline). For this first week back in session, the Dow dropped a total of 1,370 points (or a 14% loss). The S & P 500 index fell 11.6% for the first week back after 9/11. Upwards of $1.4 trillion of stock value vanished for the first five days of trading after 9/11. Shortly thereafter, the Federal Reserve began a series of significant rate cuts which directly boosted stock and real estate values for many years up until the official start of the “Credit Crisis” in August 2007.
  • 2008 – Stock Market Crash: The Dow Jones fell an unlucky -777 points in one day on September 29, 2008, which was then an all-time record point loss. Quantitative Easing that began in November 2008, Operation Twist (Fed simultaneously bought and sold short-term and long-term bonds to drive overall rates downward), and other bailout strategies began shortly thereafter in order to attempt to boost stock and real estate values while artificially suppressing interest rates at later dates to near or at all-time low mortgage rates. The Dow Jones later reached a low of 6,547 on March 9, 2009 before Quantitative Easing kicked in and boosts a stock and real estate boom for many years.
  • 2015 – Currency Wars and Stock Market Pricing Glitches: The currency wars between the BRICS (Brazil, Russia, India, China, and South Africa) start to escalate in this same year with America’s Petrodollar (“oil for dollars”) currency system. As more nations start using BRICS financial instruments, many stock and bond trading platforms begin to experience significant disruptions in their asset prices. As a result, many large investors pull their funds out of stocks and bonds prior to later reinvesting the funds in residential and commercial real estate in the US partly for more pricing stability. Today, more nations are becoming BRICS members and leaving our Petrodollar system which may weaken the dollar further and push inflation rates higher.
  • 2022 – Record Inflation and Fastest Rate Hikes Ever: The published inflation rates, which are much lower than the actual inflation rates partly due to how the inflation measurement guidelines keep changing, reach all-time record highs that exceed the 1979 to 1981 era. The Fed’s rate hike pace in 2022 is potentially as much as the 2004-2006 rate hike era when the Fed increased rates 17 times from 1% to 5.25%. However, the Fed has a much more rapid pace to increase rates as much in just 12 months instead of 24 months between January 2022 and January 2023. The 30-year fixed mortgage rate increases from 3% or below to 6%, 7%, and 8%+ within this same calendar year and home prices start to flatten or decline.

Massive Oil Price Swings

Between mid-2014 and early 2016, the global economy faced one of the largest oil price declines in modern history. The 70% price drop during that period was one of the three biggest declines since World War II, and the longest lasting since the supply-driven collapse of 1986. There were seven previous 35% + oil price drops within the time span of between 12 and 18 months going as far back to 1986 up through 2008 which were as follows:

  • 1986 – “Oil Supply Shock” in Saudi Arabia
  • 1988 – Second stage of the 1980’s oil glut
  • 1991 – Gulf War end “Relief Rally”
  • 1993 – Weak worldwide demand and rising OPEC / North Sea production
  • 1998 – Price collapse related to the Asian markets bond and derivatives defaults
  • 2001 – High Tech, Telecommunication, and NASDAQ collapse and 9/11
  • 2008 – The Credit Crisis and the near implosion of world’s financial system

There were three additional 35%+ oil price swings within the same calendar year in 2020, 2021, and 2022 as the energy and financial markets got more volatile or unpredictable. In 2020 after the global coronavirus pandemic was declared on March 11, 2020, oil prices fell from a price peak near $70 per barrel to a negative price of -$37 per barrel. Back then, the price of the barrel was worth more than the oil inside for a short period of time. In 2021, oil prices swung from a high near $85 to a low closer to $47.

For the 2022 year, oil prices went skyward to over $122 per barrel for West Texas Intermediate (WTI) oil in March due to increasing global conflicts like seen with Russia and Ukraine and other factors. Later in the year as the economy started to weaken and demand for consumer goods, services, and assets like real estate started to fall, the WTI oil prices per barrel declined to $77 in early December.

Out of Chaos Comes Opportunity

Whether a market is busting or booming, you can create generational type wealth that can be passed on to your heirs if you’re ahead of your competition by keeping your eyes wide open. The old nursery school rhyme song that goes “the wheels on the bus go ‘round and ‘round, ‘round and ‘round, ‘round and ‘round” is something to keep in mind when watching either the start or end of a 7-year boom or bust cycle. Or, you should study the past to better understand the present and future potential financial trends.

Another warning sign to pay close attention to is the ongoing inverse yield curve situation where short-term bond yields are higher than long-term bond yields when they’re supposed to be the other way around. For example, the spread between a relatively short 2-year Treasury yield of 4.36% reached an all-time record spread difference of more than .82% higher than a 10-year Treasury yield which reached 3.54%. Historically, inverse yield curves are a signal that the financial markets are about to significantly weaken.

Whether the economy is becoming stronger or weaker, there’s opportunity for you as a buyer, seller, investment advisor, or as real estate licensee. For investors and first-time buyers, you might find a motivated seller who will sell their home at a discounted price and carry some equity as a new 1st, 2nd, or as a wraparound (land contract/contract for deed or all-inclusive trust deed or AITD). For real estate licensees, you might want to start learning more about how short sales work and how you can help bail out your clients with forbearance, loan modification, “subject-to mortgage” purchases, foreclosures, “cash for keys” deals, or bankruptcy situations.

Stay focused on your goals and targets in life rather than on any temporary obstacles. If and when the economy starts to really weaken and home prices flatten or fall, the Fed may then be inspired to start cutting rates as fast as possible prior to reigniting the next 7-year boom cycle.


Rick Tobin

Rick Tobin has a diversified background in both the real estate and securities fields for the past 30+ years. He has held seven (7) different real estate and securities brokerage licenses to date, and is a graduate of the University of Southern California. Rick has an extensive background in the financing of residential and commercial properties around the U.S with debt, equity, and mezzanine money. His funding sources have included banks, life insurance companies, REITs (Real Estate Investment Trusts), equity funds, and foreign money sources. You can visit Rick Tobin at RealLoans.com for more details.


Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411.com or our Eventbrite landing page, CLICK HERE.

Marketing Tip – Developing Your Dream Team

By Kathy Kennebrook

Putting your “dream team” in place while establishing your real estate business is one of the key steps to developing a successful real estate investing business quickly and efficiently. Your dream team is going to consist of those people or vendors who can help you find deals, provide funding, get your deals closed and then sold or leased quickly.

Having your dream team in place and being able to close deals quickly will give you a distinct advantage over your competition by allowing you to complete deals they simply won’t be able to finish in a timely manner.


ADVERTISEMENT


The first element you need to think about is your marketing team. Your marketing dream team will include the people who can help you locate good deals, such as “bird dogs”, Realtors, mortgage brokers, promotional companies who will supply your business cards, signage, t-shirts and whatever advertising materials you need, and people who will implement your direct mail campaigns for you. You also need to add to the mix the account representatives who will handle your classified and display ads in your local newspaper and shopper guides.

The more you can automate this part of your business, the more deals you’ll be able to do more quickly.

Next, your dream team needs to include a title agent and/or a real estate attorney. These people are going to insure your deals close smoothly and with a clear title. A real estate attorney can help you to solve a lot of problems that can arise during a closing, such as a title glitch, a survey problem, or estate and probate issues, just to name a few. As you develop a relationship with your title agent and/or real estate attorney, they will become a major asset to your business by being better able to work one-on-one with your sellers and you to make sure all your deals close as smoothly as possible. You also need to make sure that your title agent and/or real estate attorney are bi-lingual so they will be able to work with your Spanish speaking sellers as well. This part of your team is one of the most important. If any part of a deal is going to fall apart it is going to be during the process of closing. Make sure you choose the best in the industry to close your deals from the very beginning, even if it costs a little more!


ADVERTISEMENT


Then have in place those vendors who can get repairs to a property done quickly and efficiently. Once you develop your dream team, don’t keep changing vendors. This will cost you a lot more money in the long run. Developing a great team of people in your business will help you get more deals done and create bigger profits.

For more information on getting deals done and finding the sellers none of your competitors know anything about check out my website at www.marketingmagiclady.com

Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411Expo.com or our Eventbrite landing page, CLICK HERE.

Housing Prices Cooling in Once-Hot Markets

By Stephanie Mojica

“Pandemic boomtowns” such as Austin, Boise, Las Vegas, Phoenix, and Sacramento are seeing downturns amidst a stagnating real estate market and an imminent recession, according to Forbes.com.

Typically, housing prices in these cities see consistent growth. However, double-digit percentage gains just aren’t happening anymore — especially with current mortgage rates. For example, Austin’s median price per square foot used to go up about 24% per year. This year, the figure was only 1.3%.

During the height of the COVID-19 pandemic, remote workers living in more expensive areas (especially the East Coast and the West Coast) flocked to Sun Belt destinations for high-quality living at a lower cost. As a result, home prices spiked by about 30%.

The dramatic drops in the stock and cryptocurrency markets are another contributing factor to investors seeing slowed growth in the value of their properties.

Sun Belt cities are far from the only ones seeing this problem, per Forbes.com. Even tech hubs such as San Jose, Oakland, and Seattle are no longer seeing double-digit gains in the value of residential properties.

Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411Expo.com or our Eventbrite landing page, CLICK HERE.