Dean Graziosi Real Estate Blog

Selfish mortgage practices and unscrupulous loan officers  have left the state of Florida in real estate hell. Congress has acted upon the publics distress by passing several legislative acts to assist struggling home owners. The most popular being,  President Barack Obama’s much advertised plan available at his websites, http://www.obamahelpforclosures.com, and the home recovery act website, http://www.homercovery.org.

The Impact of Florida’s lending Practices and Foreclosures

The Center for Responsible Lending, available at http://www.responsiblelending.org, an organization committed to protecting home ownership and family wealth, staked Florida’s 2010 foreclosure projections at 1,482,279. Florida’s high foreclosure projections, thankfully, doesn’t spell the end. While, the pan handle state did project almost 1.5 million foreclosures in the state, the number of foreclosure sales is relatively small, reaching only 112,836. Florida’s low foreclosure inventory, when considering its projection rates,  is equally impressive. Only 484,421 homes remained in the states unsold category at the end of 2010’s first quarter.

The state’s total past due mortgages is a million, all by itself. When looking at the numbers presented by Florida, just for the first quarter of 2010, it’s easy to see how they came to their current sky-high foreclosure projections. When the first quarter of 2010 came to a close the state of Florida posted 875,869 past due mortgages. Florida, expectedly, had a major change in foreclosure starts. Using the time frame of the past 4 years, 2006-2010, Florida has had an overall foreclosure increase of 731 percent.

As the result of all these drastically changing factors, the average loss, per home, for the pan handle residential real estate market was $41,271. The total loss of wealth due to Florida’s foreclosures, across the years of 2009-2012, is projected to be a real estate zeppelin, in the $330 billion range.

The Impact of Texas lending Practices and Foreclosures

Texas has done surprisingly well, enduring the burst of the housing bubble. Texas has had a medium rise in foreclosures as compared to the rest of the large states in the country. Between the years of 2006 to 2010, Texas foreclosures have risen 67%. At the end of the first quarter of 2010, Texas had survived 204,464 foreclosure starts. This was quite a feat, just of itself.

Over the same period of time, the state only sold 67,669 of its foreclosed homes, leaving Texas with a inventory of just under 65,000 foreclosed homes. The annual loss per home in Texas, was recorded by the state, as relatively small $3,030. In the end, Texas residential real estate compiled a total loss of $20 billion. As of the last quarter of 2010, Texas is embarrassed by its total of 337,620 past due mortgages. The number of private homes in nearby foreclosure in Nevada, are 6,596,254, an outrageously high number for such a low loss per home.

This shows that the cost of doing real estate, with the right agent,  in Texas can still be worth its weight in housing gold.

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In the past 100 years the housing industry, despite its short falls, have exploded. Since the early 1900’s, the housing industry has been building at record pace. To keep up with that frantic pace, certain materials were developed and put into use before a proper analysis could be conducted. Below are some of the most important factors to look for and know about before buying any real estate property, home or otherwise.

Man Made Hazards

Asbestos

The most famous of the man made materials that have been used, only to be recalled and banned across the country, is asbestos. It is a mineral that was manufactured as the primary ingredient used to make insulation. It was considered one of the great discoveries, until it turned deadly. The mineral was used for wall, and water pipe insulation, ducts, floor tiles, and even exterior siding.

Asbestos has been the main cause for the sky-rocketing cases of mesothelioma, a very deadly form of lung cancer. The material tends to break into tiny breathable flakes that inevitably make their way in to the occupants lungs.

Formaldehyde

Formaldehyde is a gas used in building materials that can cause several medical conditions. Wheezing isn’t uncommon after exposure to formaldehyde, irritation to the eyes and skin is also common. Formaldehyde is responsible for the epidemic known as sick building syndrome, or SBS. It is an illness that is caused from lack of air flow and quality. Most people who suffer the symptoms of SBS feel fatigued, nauseous, they can get a headache, and develop an ole factory sensitivity to odors.

The main uses for formaldehyde lies with insulation. Extracts of formaldehyde have been used in the creation of residential and commercial real estate, mostly for electrical components.

Environmental Hazards for Real Estate Investors

Radon

Radon is, probably, the most dangerous of the hazards, simply because of its radioactive nature. Most home owners are unaware that radon is a radioactive gas trapped beneath the surface of the earth. It forces its way up through cracks and openings below the foundation of a building. If the house  or building is air tight, as many are, the radon can slowly build over time and fill the entire building.

The biggest danger related to radon gas is the fact that it’s radioactive. Lung cancer is radons most common side effect, caused from the gas mixing with oxygen. There are radon detection kits available to detect the levels of radon at your property.

Mold

Mold comes in multiple types and species. When there is moisture on food or any other organic substance, like wood, paper, or even leather, there is a good possibility for mold growth.

Mold growth damages what ever it grow on, weakening weight supporting beams, walls, ceiling and roofs. Mold damage can stop a property sale in its tracks, so be sure to have a professional do a thorough inspection to avoid any unpleasant surprises later on.

If the mold isn’t  found, or is purposely hidden, it can cause long term destruction to the property and cause a certain amount of damage to the buyers as well. Molds, very often, cause allergic reactions, asthma attacks and other medical problems to unsuspecting buyers, who later have sued the seller for liability, due to failure to disclose.

Be smart when you invest, inspect, inspect, inspect! Real estate agents, investors, or every day home buyers can use this information to make sure they’re not getting the short end of an unpleasant stick.

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Face it, real estate investing is a complicated, risky, and time consuming process that is not for the faint of heart. Investing in real estate can gross large amounts money in relatively short periods of time. It can, also, utterly destroy your livelihood if it’s not done with patience and a little guidance. Below, is a list of 10 tips I’ve accumulated to help you make the proper investment decisions.

1. Inspect the property thoroughly. This is the most important aspect of any real estate purchase. Hire professionals to come in after your initial inspection. You can, also, check with neighbors about the history of the house, who lived there, did they take care of it, were they breaking things and always causing a ruckus. If that is the case, an in-depth inspection must be done, you never know what a person can do to a house they know they’re leaving.

2. Specialize in one type of real estate. There are many different types of real estate in the world, trying to be trade-smith of them all is going to bring more frustration than profit.

3. Get to know local and state tax law on a personal basis. Local and state tax laws can have a huge impact on the final price of loans and payments, which will have a direct influence on your cash flow.

4. If you’re renting out the property in question, get to know the tenets. It’s very tempting to take the first tenet who has the cash needed on hand. While, it is important to get a cash flow moving from a that property, it’s equally important to get tenets who won’t destroy your rental. In the long run, following this tip will save you more money than you’ll profit by rushing tenants, unchecked, into your properties.

5. Learn when to cut your losses. Losing money can cause anyone’s hair to turn grey and fall out. It’s one of the most stressful situations an investor can be in. So, be honest with yourself and note any problems that are going to affect the cash flow of any given property. If necessary, realize you’ve gotten in over your head and deal with the problem accordingly.

6. Get a mentor. A mentor can be save a new investor a tons worth of personal setbacks and frustrations along their chosen career. A mentor, even paid, can give vital pointers in the art of real estate negotiation, how to handle short sales, REO’s, and foreclosures.

7. Once a surplus of cash has been created, the best avenue for that cash, if you’re interested in growing your career, would be to start your own real estate business.  At this point, you need to be very experienced, 5-10 yrs. minimum, and have a high level of confidence in your own ability to find, rehab, and sell properties.

Use these tips and your own business savvy common sense and you’ll find your way through the real estate maze to get that all elusive profit.

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What do investors think of a real estate market in which home prices are at best stagnant, but still falling in many areas.  There’s no appreciation to speak of in much of the U.S.  The “glass half empty” real estate investors would be troubled about their inability to buy, repair and flip for a nice profit.  They would be working many times harder to turn up a flip deal that isn’t so risky as to make them lose sleep at night until it’s finished and flipped.

Then there’s the “glass half full” group who see amazing opportunities in today’s real estate market climate.  And, even better, it’s not short term flip money requiring another flip to keep the cash flow rolling.  Things have changed, but certainly there’s great opportunity for those real estate investors who recognize the trends developing and act on them.

There is a growing group out there who either were previously homeowners who lost their equity and homes, or would-be first time home buyers; and this group is beginning to say things like “we may rent for the rest of our lives.”  With one study showing the average American home ownership before the recent crash being about 8 years, it’s easy to see why this group of people is growing.  They don’t see an upside financially to home ownership.  While things can, and probably will, change at some point, few see any possibility of rising home prices in the near future.  At least they don’t see prices rising at a pace that will allow them to recoup their investments with closing costs to buy and sell.

This is a wonderful market for the real estate investor who recognizes the opportunities in buying homes and holding them for rental income.  In July, the U.S. Commerce department reported that the percentage of home ownership had declined, a trend that seems to be ongoing.  These people didn’t leave the country, just their status as home owners.  They all became renters.  With more renters, deep discount home prices, and historic lows in mortgage interest rates, the glass is much more than just “half full.”

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Five short minutes or less.

That’s all the time you need to spend on DG.com every Monday morning.

Why?

Because Monday mornings I put up a new blog video to get you off to a great week!

My tech guy tells me you haven’t seen the video for this week yet

I want your feedback! I’m working hard to encourage you and give you tools to help you get what you want out of your life.

This week I give you part two of a challenge, if you do it, you’ll notice a difference immediately.

Take a look see and tell me what you think will ya?

Click Here to Watch

All the best, truly…

Dean Graziosi
Real Estate Expert
www.DeanGraziosi.com
Call my success academy any time at 888.286.7712

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