National Study of Real Estate Buyers and Investors debunks myths and identifies signficant opportunities in this vast underserved market

April 15, 2008 - Denver, CO and Phoenix , AZ

Most people think that real estate investors have contributed to destroying the housing market. This gives a very small number of individuals credit for an undue market effect by buying junk houses or pre-construction homes, and flipping them - adding no value - for vast profits. Have "speculators and investors" ruined the residential real estate market?

Real estate is considered an orphan investment that is shunned by traditional financial advisers because they view it as a non-traded asset - unlike stocks and bonds, where they earn fees for trading and advisory services. Recently The Tiger Group, a group of high net worth individuals, reported that almost 40% of their assets were in real estate.

Essentially real estate as a personal investment - the investor and the market for real estate investments - is misunderstood. This first of its kind professionally conducted study addresses these and dozens of other questions

Can you believe I had the relative of a Rent to Own tenant come into my office and say that the electric on the house does not support his R.V.  He said when he plugs it in that the power doesn’t really support the R.V. and it blows breakers.  Wow…then he said that it also affects the washer/dryer and the A/C.

I told him that if I go there and turn the A/C and the breaker doesn’t blow then I am going to charge him $75.  Then I said if I go there and I turn on the washer and dryer and the breaker doesn’t blow then i am going to charge him another $75. 

I asked him what time can I stop by …then the story changed.

The moral of this story is that Tenants or worse then Tenants, tenant relatives staying with tenants will always complain and always want something fixed.  Well, with our Lease Option tenants we only warranty major items such as Plumbing, Electrical and Roof which solves many of our immediate problems.

Below are some excerpts from an article I discovered written by Dan Melson at his web site

It wasn’t until recently I realized that we are experience a refinance boom.  To what extent, i am not sure but our corporate Mortgage Branch have been having record months.  This is all good to know considering many professionals are having a difficult time surviving let a lone having record months. 

Meslon says:

With rates having nose-dived in recent weeks, we’re experiencing a refinancing mini-boom. Now that rates have fallen by about a full percent from where they were most of the last year, people are waking up to the fact that refinancing now can save them some serious money.  Underwriting times are up to five business days - a full week. Unlike all of the recent refinancing booms, this time a lot more people have a couple extra issues.

Although a number of people are upside down in their home FHA has a program that will allow you to Streamline refinance for a lower interest rate regardless of how upside down you are in your house.  I receive calls daily from people that have hurt their credit and are upside down in a stated loan, unfortunately I do not have an answer for these people.

I heard of no money down real estate, but I did not hear about no money down Premium Financing until our last Investment meeting.  As a result I listened to a short presentation that involved applying for Life Insurance and based on net worth and age getting qualified for No Money Down Financing for your Life Insurance Policy.  Yes it does seem to good to be true which is why I am studying this investment strategy.

Below is an article I found that describes some of the basics. 
Article Name :"The Guide to Life Insurance Premium Financing"
This article came from PREMFINANCE - Premium Financing for High Net Worth Individuals

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In an effort to learn more about Premium Financing, I came across this article that describes the process as an investment.

To learn more about premium financing, attend one of our Choice IQ Investment Forum meetings where Premium Financing has been a regularly discussed topic.

Insurance
An Analysis of Premium Financing
by Peter C. Katt, CFP®, LIC

Financing permanent life insurance premiums via third-party lenders is a marketing idea that promises relieving clients of having to pay their life insurance premiums. But whether premium financing makes sense for some of your clients will require some careful analysis.
Typically, targeted clients are buying life insurance associated with their estate planning, and therefore have substantial assets and are probably in their sixties or older. The life insurance policies are almost always owned by irrevocable trusts or similar entities. The marketers of life insurance or clients negotiate financing arrangements with lending institutions.
According to some of the major marketers, there are two primary reasons to consider premium financing. First, financing can allow assets to remain invested that might otherwise need to be liquidated to pay premiums, or allow funds that would otherwise go to premium payments to be used for other investments with greater potential. Second, financing can avoid making gifts to trusts. Financing both the premiums and interest charges isn’t a realistic option because the compounding costs of carrying the loan interest will likely cause the program to go into deficit before life expectancy. The only realistic option is to finance the premium payments while paying the interest charges annually.
In researching this issue, I spoke with a person who handles premium financing for a national sales network that works with many different life insurance companies. He informed me that although premium financing is frequently discussed, it hardly ever is actually used. I don’t know if his perspective is unique or typical. If it is typical, there may be a lot more marketing effort about premium financing than actual business. As my following analysis points out, premium financing may have some merit for clients with limited cash flow and significant value tied up in assets that are either difficult to market or where liquidation would come at a high tax cost. For others, premium financing is probably not a good solution.
Generally, these factors are relevant to premium financing.

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Jersey Paves the Way for Alternative Investment Funds With New Order

ST. HELIER, Jersey, Feb. 20 /PRNewswire/ — Walkers, the global offshore law firm of choice for investment banks, international law firms, collateral managers, and other financial institutions, announced the Collective Investment Funds (Unregulated Funds) (Jersey) Order 2008 came into effect yesterday. The Order was signed by the Minister for Economic Development on February 18, 2008 and permits Unregulated Eligible Investor Funds and Unregulated Exchange-Traded Funds to be established in Jersey by filing a notification with the Jersey Financial Services Commission (the "JFSC").

"We expect that UK- and European-based alternative investment managers, hedge fund managers, and institutions who have traditionally chosen other offshore jurisdictions as a domicile for their fund vehicles will be particularly interested in this unregulated funds class," said Jonathan Heaney, a partner in Walkers’ Jersey office. "The new regime is intended to provide another option to managers and promoters looking for an alternative funds domicile. Walkers’ experience with global investment funds makes us well-positioned to counsel institutions and funds managers on how to use the new Jersey funds regime to the advantage of their clients around the world."

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If you would like to have an IRA account with FXDD, you cannot open one directly with FXDD. Rather, you must have your account rolled over to one of the following IRA custodial firms:

Millennium Trust: www.mtrustcompany.com   Toll-free in the U.S. 1-800-258-7878
Entrust Group: www.theentrustgroup.com   Toll-free in the U.S. 1-888-340-8977
Equity Trust: www.trustetc.com   Toll-free in the U.S. 1-877-693-8209

Once your account is opened at one of these firms, you must complete all of FXDD’s opening applications and documents and send them to your custodial firm. The custodian will make a few changes on your application (e.g., such as change the account from being in your name to Entrust Admin FBO __). The custodial firm will then forward all of your paperwork to us, and we will open it as a regular account. You cannot make any deposits or withdrawals directly into your trading accounts – it all must be done through your custodial firm. If you have specific questions regarding IRA’s, you should speak directly with them.

This week’s RealtyTrac report about U.S. foreclosures as a real eye opener. You can read the full text by clicking here, but here are some highlights:

• The foreclosure rate in America’s top 100 metro areas has hit 1.38 percent.

• Detroit registered the highest foreclosure rate of any of the 100 largest metro areas, with nearly 5 percent of all homes going into foreclosure.

• 1.775 million foreclosures were filed in the last year - a one-year increase of 78.2 percent.

• California, Ohio and Florida are the hardest hit.

For smart investors, it remains a very advantageous time to acquire foreclosed and pre-foreclosed properties at very attractive prices. Plus, there is the positive fact that interest rates are low. But still, it is hardly a risk-free environment. Houses are typically appraising very low, for example, and that can make lenders wary about writing loans on properties that they see as questionable investments.

Other trends complicate matters, too. Oil prices, for instance, are rising and that can put a very big squeeze on investors who need to heat apartment buildings. If you are a landlord, the rent income you were expecting can go literally up in smoke.

But there are wise ways to ride out the current situation and profit from it - both today and in the months ahead. I have recently had discussions with several first-time investors, for example, who have gotten pre-qualified for mortgage loans and who are waiting three or four months before jumping in to buy homes at the point when prices have hit bottom.

In summary, it is easy to invest in a bull market, but it takes a savvy investor to comprehend the opportunity in a down market.

Also remember, many investors are using their Self Directed IRA and 401k to invest in these same foreclosures.  For more information contact Dometri Companies about their active strategies for foreclosure purchases.

Fact 1:  There are about 45,000 IRAs in America and Wall Street has had about a 97% share of the trillions of dollars in those IRA funds.

Fact 2:  Some IRA custodians have more then doubled their Self Directed IRA assets in the last 18 months (that means many more Americans are rolling over their IRA or 401k to Self Directed IRA custodians)

Fact 3:  Stockbrokers, Financial Planners, Banks, Registered Investment Advisor and Insurance Companies all offer a limited menu of Wall Street financial products.  Most are like mutual funds, stocks and annuities and some are more complex like premium financing which allow you to invest your money into real estate for 5 years and in return you get 7% annually plus a insurance policy. 

Fact 4:  Self Directed IRAs do not charge commission.  They only charge a small annual fee each year for managing your account.  Although there are transaction fees, you can put all your money into your own LLC and have checkbook control of your IRA.

I found this article on the Internet that explained risk and investment choices.  I thought this article was applicable to some so I posted it here. 

The November 9th issue of USA Today had an interesting article about investments. Our choice of investments can have a profound effect on whether or not there will be any money remaining in later retirement years.

First, you have to determine your level of risk. If you will only sleep well at night with your money in bank CDs, then you must be content with a 6% or 7% rate of return in today’s market. With bank CDs, your deposits are guaranteed by the FDIC.

The next level of risk is mutual funds. Your deposit is not guaranteed, and you could potentially watch your assets go down. Within each mutual fund family is everything from very low risk to high risk. If someone is very conservative or elderly, I recommend a fund that buys U.S. government securities. They usually return about 5%, although at times in the past the return has been higher.

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