M. Nack’s Blog

The speaker at a conference I was at recently said that “massaging” your spine with one of those “massage” shower heads will stimulate your creativity. This same speaker gave us the assignment to spend at least 15 minutes A WEEK thinking. I thought he mispoke and meant 15 minutes a DAY - but he reiterated it several times: 15 minutes A WEEK! He suggested that the reason one has such great ideas in the shower is because of the massaging of the spine by the water. I don’t suppose the fact that you actually THINK has anything to do with it.

What I like to do is “massage” my scalp. I have heard that you have all sorts of nerve endings in your scalp and that scalp massages are very beneficial and relaxing for that reason. For sure, you have lots of blood vessels running to your scalp - which is why head wounds bleed so much. I think it has something to do with cooling the brain - but I could be wrong there. I’ve heard the same thing about feet and reflexology points - every major organ of the body is represented on the soles of your feet - and in the palms of your hands too!

This thing about massaging your spine reminded me that, I used to suffer these chronic kinks in my neck. A friend recommended a chiropractor. He was the old fashioned kind that really beats you up. It turns out it was just tension brought on by stress and tension (surprise!). But to make sure it wasn’t anything else, he x-rayed my neck. When he put it up on the light. I was stunned at the absolutely beautiful symmetry of the vertebrae. I vividly remember thinking, “Wow! That’s MY neck!?”

Underneath most things is a structure and an order that we may not even know exists. As with the scalp and soles of our feet, the macro is mirrored in the micro. As in the “science” of palm reading, people have their palms read to “learn about” themselves. Which is possible (if you believe in such things) because the palm is a reflection of the whole.

In deference to Deepak Chopra, who reminds us that we are Human BEINGS, not Human DOINGS, at the end of the day, the only true way to know about yourself is to just do. For it is in the DOING that you discover you who you are - what you enjoy , what you don’t. That is, as long as you take time out to think 15 minutes every week.

“All Things With Exuberance!”

mary!

I was listening to a teleseminar last night on REO’s (bank owned real estate). The speaker, (who is an REO specialist and has been doing REO’s since 2000) cited a study done by Credit Suisse 1st quarter 2008 on foreclosure trends. In this study, they predict that 1 out of every 8 homes will end up in foreclosure in the next 5 years!

He went on to cite a pool of loans made by Washington Mutual made in July ‘07. Out of nearly 1800 loans, by Feb ‘08 - 7 months later - over 6% were 30 days delinquent, 4% were 60 days delinquent, 3-1/2% were 90 days delinquent, 12% were in foreclosure proceedings and 3-1/2% were already REO - meaning that the homeonwer never made a single payment on the loan! Nearly 30% of those loans are in trouble!

And are these “deadbeats”? The average credit score of these borrowers is 704. The average loan amount is $519,000. And are these 110% loans? NO!! The average loan to value on these loans is 77%!  The media’s perception that only inner-city, financially illiterate poor people are in trouble is a myth.

So what’s going on here? Because values have depreciated, the homeowner is unable to sell if they need to move (job transfer, divorce, death, marriage - you know, the things that people do in the process of living their lives.) They can’t refinance because they’re upside down - the loans they already have are more than the home is worth. In fact, the only thing they CAN do is walk away!

The speaker’s premise is that there IS a real estate boom - only it’s in REO’s!
 
So what are the implications for the average consumer? Well - as home sales go down, rentals go up. People need to live SOMEWHERE. For those that have cash to invest, now is the best time that I’ve seen in over 20 years to jump into the real estate investment game.

I’m sure that reading this, you are saying that prices MUST continue to drop. However, from my perspective - from being out pounding the pavement and kicking the bricks - it feels like we are already hovering very near the bottom. At least in the Chicago market. And this is all I do everyday:  eat, drink, breathe and sleep what’s going on in the industry. 

What I’m seeing is that - even in this market - when a property’s price hits ”the sweet spot” it is being sold in a matter of days. Why is that? How is that possible? Well, rents are rising - and in some areas they are rising dramatically! (A major shift from 3 years ago when landlords were desperate for renters.) If an investor is able to extract enough rent to cover expenses of ownership and realize a satisfactory ROI, then he’d be crazy NOT to buy.

This is not a market to do “flips” - or, as they say in the stock market, for the “momentum” investor. You must be prepared for a long term “buy and hold” position. Contact me if you want to look at some good candidates.

“All Things With Exuberance!”
mary!

Well, there isn’t a soul that I’ve spoken to that isn’t scared to death of what’s going on in the financial markets - as well they should be!!

For those who don’t panic and are prepared, there has never been a better time to fortify your financial fortress. Do you actually think for one minute that Barclays isn’t utterly ecstatic about the deal they made on purchasing Lehman Bros! This is the kind of market where fortunes are made or lost. It’s no time to run and hide. If you can keep your head about you while others all around you are losing theirs, you can truly lock in your future!

For sure, “cash is king” - and if you have access to cash, it’s how you are going to negotiate your best deals. If you can GET a mortgage, interest rates are at historic lows - 5-7/8% for 30 year fixed! For those for whom it is appropriate, now is the time to get rid of those adjustable and ”interest only” loans and lock in a fixed rate. It seems certain that interest rates aare going to climb. I’m guessing the window of opportunity on low interest rates closes Nov 4 - although with this week’s news, it may last a little longer.

It’s uncertain whether or not housing prices have yet hit bottom, but it seems fairly certain that we’re hovering there. The only way to know when the bottom is the bottom, of course, is when it no longer is. The only way to actually hit bottom is by just falling into it out of sheer luck. And, unlike stocks, real estate has real, inherent value. You can’t eat your stock certificate, but people will always need a place to live.

The past few months, I’ve been promoting a particularly unique investment opportunity to my clientele. The initial reaction has been “it seems too good to be true” and they back off from jumping onto it. But I have done my research and, like the Barclays purchase of Lehman Bros, this could be an opportunity to lock in your future wealth. Check it out at www.BuyersEquityFund.com and email my friend Marc@BuyersEquityFund.com to get all the info on it.

For those who own their home and want to pay off their mortgage in 1/2 the time, I have been promoting a very conservative mortgage acceleration program (No - this is NOT another MLM scheme) that my friend Neil@EquityExcel.com has available. You can check out the details on THAT program at http://mnack.eqxl101.hop.clickbank.net.

One of my mantras has always been, if you’re not “running with the herd”  - if you’re doing the opposite of what everyone else is, you’re probably not too far off the mark.

“All Things With Exuberance!”
mary!

A VERY hot “deal” that everyone is jumping onto these days is pre-foreclosure properties - also known as a “SHORT SALE”. There are a ton of seminars, speakers, and classes on how to ‘do’ a short sale. Here’s a news flash:

The only people making money on short sales are the ones selling the seminars!

Here’s what happens: for whatever reason, the homeowner can’t make his mortgage payments anymore. Ultimately, the bank will foreclose - but that’s a long, drawn out process that can take up to a year. In the meantime, the homeowner retains control of the property and can sell it at anytime.

The catch is, the homeowner owes the bank more than the property is worth. So, the bank has to agree to take less than what’s owed them before you can actually close the sale.

Doesn’t sound so tough, right? Think again! The banks are horribly understaffed. You never speak to the same person twice - and anyone you DO speak to is basically on a par with the kid working the McDonald’s counter. The only difference is that they’ve graduated - high school. They have no decision-making authority and they don’t even really “get” what’s going on. You’re dealing with a “bureaucracy” in the absolute worst sense of the word.

The situation is compounded if there are second mortgages or IRS liens on the property. Each layer just doubles the complexity of the deal.

Many times when an owner gets into a financial bind (maybe they’ve lost their job or have a major health problem) - the first thing they do is tap the equity in their home. So even if they’ve owned the home for many years, they’ve taken all the money out of it.

The lending environment up (until about 12 months ago) often let them do it. They’re hoping that once they find a new job, get their health back - whatever - they’ll be able to get caught up on their payments and keep their home.

Sadly, it rarely happens. They’ve taken on so much debt and have gotten so far behind that they can never catch up. Usually, their only recourse is to give the home back to the banks and file bankruptcy.

(There are lots of things they can do to re-negotiate with the bank if they actually DO find a new job or get their health back. For details on that see my article “Rescuing Your Home From Foreclosure”.)

Thanks to our weird economy, there are a TON of these out there. And there’s more of them everyday. A lot of them are “investors” that should have been afraid to buy 3-5 years ago who went ahead and bought anyway.

The point is you can easily spend 90 - 120 - maybe even 150 days! You handhold your offer all the way through the process (and trust me, the process is about as much fun as having a root canal) only to have it all blow up in your face. And for reasons that make absolutely no sense whatsoever. 

Trust me - you don’t want anything to do with a short sale!

A number of years ago, a movie came out called “Global Thermonuclear War Games”. The Big Computer (incorrectly) senses a nuclear threat to the US and prepares to launch nuclear missiles at Russia and start WWIII. No one can prevent what’s happening until they teach the computer that the only way to win the game is by not playing it in the first place. 

Maybe 3-5 years ago, short sales were a good opportunity. But no more…

For helpful hints on real estate investing, visit my website at www.mnack.com.
mary!

Over the past 5 years or so, I have noodled around with different notions on how to help my clients invest shrewdly yet prudently in real estate. Believe it or not, when the market was so hot, it was difficult to find a “good deal”. Apartment buildings were just ridiculous expensive. The prices at which they were selling had no basis in the amount of rents they were getting. That’s because condo developers seemed willing to buy them at any price. Yeah, the condo market was blistering. Even so, I don’t know how those guys made money. You know - the old “supply and demand” thing. Demand was high, but there was plenty of supply (as we now know). I suspect a lot of them lost their shirts - or maybe just their lenders did, since they probably financed 110% of the project and had themselves personally protected behind their “corporate veils”. But that’s another story for another day.

I have never wanted to be responsible for putting my clients into an investment that didn’t accomplish their goals. The idea, after all, is to not just sell them one property but many. That can only happen if they are successful in achieving their goals. With the down-turn in the economy, the deals are much easier to find. Yes, financing is harder to get - but cash is always king.

I have always maintained that if you’re going in the opposite direction of the herd, you’ll probably do just fine. People are afraid to jump into the market now - when they SHOULD have been afraid 2-3-5 years ago!! NOW they should be buying as much property as they can!! Prices (in Chicago) have rolled back at least to 2004 levels. With the Fannie Mae/Freddie Mac bail-out, interest rates may be coming down even lower. As I’ve already said, it’s an inverse formula: a 1% INcrease in interest rates translates into a 10% DEcrease in pricing to offset that increase. Vice versa - if rates come down another 1/2%, a purchaser can easily absorb a 5% price increase. Even if we aren’t at yet at the bottom of prices falling, it gives you plenty of buffer. The general consensus is that prices may drop another 1or 2%. Certainly not 5 or 10%!

I’m thinking we have about a 60 day window before interest rates start to climb. That window starts to close on election day.

To help my clients take advantage of current market conditions, I am instituting an “Income For Life” investment program. I will coach my clients all the way through from purchase to sale to assure their success. I am partnering with other financial service providers to create education forums in general financial literacy as well as specific real estate investing education. (We launch our first program on Thurs even, Oct 2. “News at 11″.) I’ve always loved “Rich Dad’s” materials.  However, when you put the book down, you don’t know where to begin or what to do. I want to remedy that. I want to move my clients from the theoretical to the practical achievement of their goals.

My current client base will serve as my “guinea pigs” as we refine the pieces of the program. And as such they will receive my services free. Once we have the kinks worked out, that will no longer be true. This is a program that can literally transform your life and be worth hundreds of thousands of dollars in passive income! If what I’m saying makes sense and you want to participate, I urge you contact me today!

“All Things With Exuberance!”
mary!

I’m not sure how many will remember that campaign slogan from Bill Clinton’s first campaign as President. It actually started out as a slogan internal to the campaign - a way to keep everyone focused on the core issue of the campaign. It wasn’t meant to be spread to the public at large. But you know how those pesky media people are - always digging up stuff. After 16 years, it seems as if that campagin slogan is more apt than ever.

I’ve just spent the past 2 weeks watching with great interest both the Democratic and Republican National Conventions. Of course, being from Illinois and living in Chicago, I suppose it’s only natural that I would lean towards supporting Obama, even though I like to think of myself as being independent and open-minded about such things. It is actually quite out of character for me to get involved with politics and politicians at all. To watch both conventions is very unusual for me.

I think most of us tend to be pretty cynical about politicians. We’re pretty sure none of them can be trusted - Republican or Democrat. This, by the way, is the legacy that Richard Nixon left us - thanks to Watergate. Never before had the office of the American president been so seriously questioned or tarnished. It has only been compounded by one president after the next - with the media uncovering one scandal after another. As a result, the American public is pretty much disillusioned with the whole institution of government.

We in Chicago know that Chicago is “The City That Works” - as long as you are connected to the right people. Or, as we say in Chicago, as long as you’ve got “clout”. “Clout” is typically bestowed on those that contribute most to the various campaigns. We just accept that as how things are done. Money and power is the grease that makes it all work. Oh, the papers get on their high horse about it. (Lately the Tribune has been running a series on aldermen doling out zoning variances to the developers that line their campaign coffers - in addition to other “perks”. And we read it and say, “Yeah? So? What else is new?”) We just accept it as how things get done. If the alderman is likable and seems like a decent enough fellow, then we annoint him/her as ”honest”.  Even if his methods aren’t so pure, his intentions are - and that’s all that really matters.

And then there’s our state government - the Land Of Lincoln: how many of our governors have gone to jail for corruption? One can’t help but wonder if our current governor isn’t far behind after the Tony Rezko debacle. One can only imagine that Lincoln is turning in his grave knowing what’s happening in his Land.

So, Hizzoner “Da Mayor” manages to get the real estate transfer tax increased from $7.50/$1000 to $10.50/$1000 with the additional $3.50 supposedly earmarked for the Metra system - a system that desperately needs to be overhauled and upgraded. I’m not opposed to the increase on general principal - because the money has to come from somewhere and we MUST have public transportation. In fact, the condition of our public transit system is a disgrace to our city. Other cities I have been to  - D.C., Tokyo,  London, NYC - they ALL have amazing rail systems that really do an excellent job of transporting their citizenry. How can Chicago consider itself a world-class city with a third or fourth rate public transit system? The real estate community was lobbying fiercely to vote the increase down. I didn’t agree with that. In hindsight, though, maybe they were right. Because one can only wonder how much of that money the RTA will ever actually see. Kind of like the lottery was supposed to pay for public schools. Ha! What a colossal joke on the voters THAT was - and continues to be, though I don’t think anyone deludes themselves that the money actually goes to the schools anymore. Then the increase in the sales tax. I’m not 100% on this, but I believe Chicago now has the highest sales tax in the country at 10.25%, In spite of all this, the city is virtually bankrupt and is looking to cut 20% of its payroll - something like that. ‘Course you can’t help but wonder how many millions of dollars goes out in graft, corruption and “payola”. You almost have to wonder if all that was eliminated and the city, the RTA and the state government AND the federal government - if they were all properly managed - even as well as a small business owner manages their company, not with any great sophistication but at least with an eye on the bottom line - how much would the taxpayer be saved? It makes you wonder - if it were all cut out, could we cut our taxes in half!? I don’t mean just federal and state income taxes,  I’m talking everything that we pay in taxes. I’ve read somewhere that if you include everything we pay in taxes - sales tax, this tax, that tax - that the money we earn the first half of the year pays our taxes. (’Course, I guess it’s worse in other first world countries.) It’s only the second half that we get to live on. That is if you have the misfortune of belonging to the middle class.

I don’t know - maybe I’m just getting old and cranky. But as I watch and read and observe all this that’s going on - and I spent a good amount of time this Spring meeting with and talking to people who are losing their homes to foreclosure - I can’t help but think we just can’t afford to be apathetic anymore. The state of our nation - the state of our economy is frightening. We haven’t even seen the tip of the iceberg on these foreclosures and bank closings. I realize that I’m at risk of sounding like Chicken Little - and those who know me know, that’s not who I am or what I am about. But I am becoming very, very concerned. Our country is in crisis. We are looking down the mouth of another Great Depression - which most of us are too young to remember or appreciate. But my 95 year old mother remembers it well - and what she sees happening scares her to death. I remember seeing the movie/reading the book about that race horse during the Depression “SeaBiscuit”. The prologue informs us that the Depression didn’t occur in one day when the stock market collapsed. It grew over time as one bank closed after another. Isn’t that what we’re seeing now? And now the feds are bailing out Fannie Mae and Freddie Mac! It makes the savings and loan bailout of the ’80’s look like a walk in the park.

And if that isn’t scary enough, I read a (certainly not front page) article about how the FBI warned of all this back in - wait for it! - 2004! They knew all this mortgage fraud was going on and predicted the dire outcome of it all - but they didn’t have the manpower to do anything about it. Compared to the ’80’s during the savings and loan crisis when they had 1000 people on staff to investigate and prosecute, they now only have 100.

We can’t afford to say, “Oh - those politicians - business as usual with them.” I don’t want to sound like a campaign slogan, but something HAS to change!! We CAN’T afford another “4 more years of the same.” We, The People, HAVE to stop being blase, apathetic, with our heads buried in the sand. We are at risk of losing the very country, the very principles that we cherish most dear. The fact that only 40% of the electorate even bother to vote - we DESERVE to have “more of the same.”

And I know that people are too tired, too scared, are working too hard trying to hold down their jobs (or 2 or 3) and raise their families to get involved. And then there’s the whole issue of people who make their decisions not based on the issues - but based on 30-second, well-engineered sound bites. How else can you explain the defection of Hillary supporters to the republican ticket based on Sarah Palin? The two are at opposite ends of the spectrum on the issues! Do you support a candidate simply because of her gender? You can’t have any reasonable expectations of having a democracy without an informed public. Which brings us back to the failure of our school systems. *sigh* So where does it all end?!?!

It ends with each one of us at least caring enough to at least THINK about what is important to us. And then not being afraid to say what we think - at least to our friends and to each other.  

I don’t know if Obama is the man to take us there - but I think he is the best hope we have in this year’s election. I don’t doubt that McCain is a true patriot and that his intentions are honorable, sincere and true. I’m just not sure he’s up to the task either mentally or physically. Particularly as compared to Obama who is a once-in-a-generation mind. As for Sarah “Baracuda” Palin - please. The woman is a gold digger and an opportunist. She brings all the worst of what we hate about politicians. Oh, she’s a bright tool - no question - but beyond that… How hard is it to have a budget surplus when the price of oil has just doubled and you’re the governor of Saudi Arabia?

OK - I’m done ranting. For now…

“All Things With Exuberance!”
mary!