Chris McLaughlin

Mid-Day Market News & Commentary by Chris McLaughlin, November 24, 2008
http://www.shortsalesriches.com/welcome.html

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It is up for one more day ... if you missed this amazing fr'ee webinar, now is the time to check it out:

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Don't miss it - everyone that has watched it says it is perhaps the most useful tool in understanding what's going on in the real estate market, and how to make money in today's environment!
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So what's happening today?

Just another massive government bailout. This one for the ridiculously bloated Citigroup. Yes folks, Citigroup announced that it would be laying off 53,000 of its employees a few weeks ago. But did you know that at its peak, Citigroup had 375,000 employees?

Has anyone been into a Citibank branch lately? Have you been into your bank's branch? Heck no, we hate going on there ... we want ATMs, drive thrus, and minimal hassle. We want online banking, not "wait in line banking." And for those banks that didn't get it, and are now bloated with over 300,000 employees, never fear - Uncle Sam is here!

So our government stepped in, yet again, and said Citigroup was too big to fail, just like AIG. I guess the lesson here is get big, get fat, and then you'll be too big to fail, huh?

The US will give Citigroup another $20 billion and it will guarantee up to $306 billion in risky loans that the company has taken on. The government gets $7 billion in preferred stock and warrants on 254 million shares with a strike price of $10.61 (the stock trades at half that right now).

Thought: Citigroup is a global company. It has offices everywhere in the world. More than half its revenue comes from outside the U.S. Why on Earth is the U.S. government on the hook for this entire bailout? What aren't other governments stepping up as well? Will this not affect Japan? Will this not affect Europe?

We're doing the bailout simply because ... we're use to it. We bail out everyone that screws up. Everyone that wastes taxpayer money. Everyone that runs a bloated business so top-heavy with bureaucracy that no one can breathe.

I don't know about you ... but if you think these constant bailouts are a good thing, just start wondering what message we're sending.

Screw up, and we'll bail you out.

Ok, enough of my rant ... let's move on to some other news.

The National Association of Realtors announced today that October sales dropped 3.1% to 4.98 million, down from 5.14 million in September. Median sales price slid 11.3% to $183,000, a level equal to that of March 2004. Lawrence Yun, NAR chief economist, said consumer hesitation is understandable. "Many potential home buyers appear to have withdrawn from the market due to the stock market collapse and deteriorating economic conditions," he said. "We have favorable affordability conditions, but we need more than that to give buyers with jobs the confidence they need. This is why a housing stimulus is so critical now to encourage more buyers to draw down the inventory and stabilize home prices. Without home price stabilization, there will not be an economic recovery."

And now on to our real estate education section...

Understanding New Mortgage Rules

In an effort to make it easier for borrowers to save money and understand the paper-work they are singing, the Department of Housing and Urban Development (HUD) has released the first major reform to mortgage rules in more than 30 years. Here is what short sale investors and others need to know about the new guidelines:

•1. The new Good Faith Estimate (GFE) and revised HUD-1 are not required to be used until January 1, 2010...not 2009 as many have reported.

•2. The new GFE will be three pages long instead of four and must clearly answer the following "key questions":

•· What is the term of the loan?

•· What is the interest rate of the loan?

•· Is the interest rate fixed or variable?

•· Is there a pre-payment penalty?

•· Is there a balloon payment due?

•· What are the total closing costs?

•3. The new GFE will be designed to co-ordinate to the HUD-1 Settlement Statement and is likely to require a "closing script" be read to borrowers. Fees are to be broken down into major categories with total estimated charges displayed prominently on the front page. HUD is also likely to limit the types and amount of fees that can be changed with Yield Spread Premiums to be "disclosed in a more meaningful way".

•4. Loan originators will not be able to request tax returns or other verification of information until after an applicant has received the GFE and has made a decision to continue the process.

For More Information

To download or preview the new HUD Good Faith Estimate form(s) visit:

http://www.hud.gov/content/releases/goodfaithestimate.pdf

To download or preview the new HUD-1 Settlement Statement visit:

http://www.hud.gov/content/releases/goodfaithestimate.pdf

More on Tuesday!

See you at the top!

Chris McLaughlin, J.D., M.B.A.
web: http://www.shortsalesriches.com/welcome.html

P.S.:

This is hilarious!!! You have to go watch this RIGHT NOW:
http://www.youtube.com/watch?v=gq3jHJuJz6E

Nathan gets his hair cut ... but he has a short sale closing scheduled at the same time ... what does he do? Click to find out.

See our other entertaining videos at: http://www.youtube.com/shortsalesriches

P.P.S.:

You did go to our webinar, right? Here's that link again:

http://www.shortsalesricheswebinar.com

Mid-Day Market News & Commentary by Chris McLaughlin, November 11, 2008
http://www.shortsalesriches.com/welcome.html

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Now I'm madder than I've ever been at bureaucrats. You owe it
to yourself to read this, and then forward it on. Because the
word needs to get out about these clowns.

Did you see the latest joke from the government
about the so-called foreclosure bailouts? Yeah, clients
have to be 90 days behind on their payments, and Fannie
and Freddie may push their mortgage out from 30 years to
40 years!

Does our taxpayer money pay for such stupidity? They just
extended the foreclosure mess by another 2 years
with such an absurd proposal.

Think about it. You've got a buddy who's underwater on his
house but can probably afford to carry the mortgage. Now he
hears all about the government bailout, and he's madder than
hell that some folks are gonna get a free ride. So what does
he do? He stops making his payments in order to qualify for
the 90 day behind rule.

The government proposal actually will INCREASE, not DECREASE, loan
defaults. Do any of these people who make these rules have a clue
how real estate works? Do they know how mad people are about
bailing out Wall Street and leaving Main Street hanging?

I bet the executive from AIG doesn't have to wait 90 days to
get help, huh? He's got $150 billion reasons to thank Uncle Sam,
meanwhile Realtors are struggling and the bureaucrats don't
understand basic economics about supply and demand.

So what was a huge problem...with 4 million people behind on
their payments...is now a catastrophic problem. All due to
outright government stupidity.

In the worst economy since the Great Depression, this is what
the government offers us? Pushing loans from 30 to 40 years,
adjusting interest rates? Please...

Hasn't anyone ever told these morons that the only way to solve
this crisis is to stimulate DEMAND for homes. By focusing
on supply, all they are doing is creating more problems and
giving more false hope to millions of homeowners.

How about a $7,500 tax credit that doesn't need to get paid
back?

Ok, enough of my rant. It is time to take action, and that's
just what I'm doing. I'm going to explain, in detail, just
how you can forget about the government's stupidity, and make
serious cash in this market. Frankly what would have been over
in 2 years just got pushed out to at least 4 years.

But I'm limiting this webinar to just 30 people. That's it.
The personal attention will let people ask questions about the
bailout, how they can do even more short sales, and how they can
make serious cash in the worst economy since the Great Depression.

The title of the webinar:

"Government Morons Just Made the Foreclosure Crisis Worse.
How You Can Profit From Their Stupidity."

So go now to register for the webinar that's held on Thursday night at
9 PM EST, 6 PM PST, while there's still room:

http://www.thursdaynightwebinar.com

Now, on to our real estate investing education section...

Asset Classes that Outperform Inflation

Now that Senator Obama has become President Elect Obama, short sale investors would do well to take note of the risk of increased inflationary pressures; after all, the funds to finance broad economic stimulus packages and other spending programs must come from somewhere. With the federal government already running record-breaking shortfalls, the risk of inflation continues to be a major source of concern.

In a search for asset classes that outperform inflation, the average investors doesn't have unlimited resources like those of Buffet to purchase underperforming (but highly volatile) corporate stocks or bonds. Likewise, gold, silver and other assets are known to be equally volatile in the short term. Thanks in large part to favorable tax treatment and the use of leverage afforded by mortgage loans, real estate remains one of the most accessible asset classes historically known to outperform inflation over the long term.

With media pundits calling for deflation followed by inflationary - or even hyper-inflationary pressures that result in the eventual index of the dollar - every short sale investor should take note of the long viability of investing in real estate. Not only does real estate provide an inflationary hedge but if the dollar is eventually indexed, hard assets are one of the few ways to retain purchasing power.

When speaking of inflationary pressures it is a good idea to keep a few basics in mind including:

•1. CPI - Consumer Price Index is the notorious "basket of goods" used to determine the official rate of inflation for the nation at large.

•2. Personal Rate of Inflation. Many "real" people have a different personal rate of inflation due to individual or family situations such as health and medical expenditures, sending a child to college or other life events.

•3. Investment Time Horizon. The level of inflationary risk you are able to tolerate largely depends upon your retirement time line and long term anticipated spending needs. For example, assume you plan to retire at age 60. According to government statistics, you can expect to live another 25 years...without a paycheck. The historical average rate of inflation is typically 3.5 percent with the current government rate approaching 6 percent. Clearly, inflation remains a major concern when it comes to retirement planning. Now consider the advantages to short sales:

•1. Instant Equity

•2. Favorable Tax Treatment

•3. Inflationary Hedge

•4. Ability to earn long term income and appreciation

More tomorrow...

See you at the top!

Chris McLaughlin, J.D., M.B.A.
web: http://www.shortsalesriches.com/welcome.html

P.S.: You are going to be on our next Webinar tonight aren't you? As Jim Rohn said: "If someone is going down the wrong road, he doesn't need motivation to speed him up. He needs education to turn him around." Get that education now:
http://www.thursdaynightwebinar.com

Mid-Day Market News & Commentary by Chris McLaughlin, November 11, 2008
http://www.shortsalesriches.com/welcome.html

Don't miss this webinar! We're holding another webinar on The Top 12 Strategies for Short Sales Riches TONIGHT at 9 PM EST, 6 PM PST. This is something you just don't want to miss! Register today:
https://www2.gotomeeting.com/register/324799291

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Now for the latest outrage of the week...

Executives from American International Group (AIG), the insurance conglomerate that was recently bailed out by taxpayers to the tune of $150 billion, held a party back in October that I blogged about. It cost over $440,000 and was held at the 5-start St. Regis Resort. They spent over $139,000 on rooms, over $147,000 on banquets, and $3,000 for in room dining. And because these executives have had a rough few weeks, they spent over $23,000 at the spa. Yeah, our taxpayer money was going to help support these junkets.

Now, our friends at AIG decided the get frugal. According to Brian Ross of ABC News, instead of wasting $440,000, they decided to meet in secret at the luxurious Pointe Hilton Squaw Peak Resort and waste just $343,000. But they saved on signage at least: they told the hotel to take all references of AIG down, including all logos and signs, and they instructed staff never to use the word AIG. Apparently some AIG executives are getting harassed by taxpayers ... go figure.

Don't you think some hotel staff member, worried about his or her job in this economy, is going to pick up the phone and rat them out? Well, that's exactly what happened. Who's the moron that thought they could keep this a secret? That guy needs to be fired along with the rest of these clowns.

I know, I know you say...Chris, you're always telling us to think positive, live a life of abundance and not of scarcity, and think BIG. Well these folks certainly thought big alright. But as I said before, when the village calls and asks where its idiot went, let them know he was at the Squaw Peak Resort working with AIG.

Ok, now back to the real world most of us live in...

The financial markets were under pressure today after disappointing results reminded investors that consumer confidence is weak.

It was no surprise to those in the housing industry that another homebuilder announced some disappointing news. Homebuilder Toll Brothers Inc. said that revenue plunged 41% to $691 million, with net signed contracts dropping 27% last year. Robert I. Toll, Chairman and CEO, said: "Unfortunately, the preliminary signs of stability we had discussed in early September, during our 2008 third quarter earnings call, were upended by the past month's financial crisis. Results of this crisis -- accelerating fears of job losses, a large decline in consumer spending, a significant capital crunch, increased credit market disruption, and plummeting stock market values -- all contributed to drive our cancellations up to 233 units."

There are fewer folks sipping $5 coffee these days. Starbucks reminded everyone that when a recession hits, folks are just fine with the fat guy from Dunkin Doughnuts making the doughnuts. Starbucks Corp. announced that there were no bucks coming in over the quarter. It earned $5.4 million versus the year ago period's $158.5 million. .

Now on to our real estate investing education section...

Savvy Short Sale Tips: KISS

Like the old adage KISS - Keep it Simple Stupid - sometimes the best advice is really the easiest to implement especially when it comes to successful short sale strategies. Here is a quick rundown of KISS tips short sale investors would do well to keep in mind...

•1. Enjoy the process. Short sale investing is fun when you allow it to be; get a plan of action together then implement it consistently. A plan and process takes the stress out of the equation while the profits and rewards keep it fun and enjoyable.

•2. Act rather than react. Those in control suffer less stress. Stay in control and work your plan rather than letting it work you.

•3. Put the X-factor back to work. Everyone is fascinated by the extraordinary but few people break away from the day-to-day doldrums long enough to stray far from their safety zone. If you are not continually growing and pushing the limits in your life then it's time to reassess your strategy; make it a priority to try something a little new or daring every few months. You might be surprised at the results!

•4. Learn from others. Sounds simple enough but pride, fear and a host of other hang-ups keep most people from asking questions. Rather than concentrating on your own specific limitations, make it a priority to find out how short sale investors made their fortunes. Get the nitty-gritty details about what worked - and what didn't work - then implement it in your own life.

•5. Stay motivated. It's important to read, learn, share stories and remain inspired. Let's face it; most people in the world will want to rain on your parade by telling you why it can't be done. Don't allow the noise in your life to interfere with success; make a point of surrounding yourself with stories of success instead.

•6. Eliminate negatives. Interviews, applications and other preliminary information is not there to help people make a positive choice - or say "yes" but rather to provide reasons to say "no". Think like the bank, broker or seller then put together a package that eliminates all negatives. Later you will have the opportunity to present the positives. Successful short sale investors know how to eliminate negatives and other common objections early in the game.

•7. Know your market. Location, location, location. It's simple advice that holds true for any real estate related transaction.

•8. Use the right tools. Every profession has a set of tools required to get the job done right; know the tools of your trade and then invest in only the best.

•9. Keep a portfolio. Track your own success and failures; what went right? What went wrong? Where did you just get lucky? Make sure the portfolio demonstrates your financial position, growth, trends and other pertinent information.

•10. Share success. Once you begin to experience your own short sale success make time to share your knowledge and insight with others. Not only does it return the favor but teaching someone refines your own skills and knowledge.

More tomorrow...

See you at the top!

Chris McLaughlin, J.D., M.B.A.
web: http://www.shortsalesriches.com/welcome.html
e-mail: info@shortsalesriches.com

Phone: (800) 452-7627

P.S.: You are going to be on our Webinar tonight aren't you? As Jim Rohn said: "If someone is going down the wrong road, he doesn't need motivation to speed him up. He needs education to turn him around." Get that education now:

https://www2.gotomeeting.com/register/324799291

Mid-Day Market News & Commentary by Chris McLaughlin, November 10, 2008
http://www.shortsalesriches.com/welcome.html

Don't miss this webinar! We're holding another webinar on The Top 12 Strategies for Short Sales Riches this coming Tuesday at 9 PM EST, 6 PM PST. This is something you just don't want to miss! Register today:
https://www2.gotomeeting.com/register/324799291

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The market was higher in morning trading as investors cheered a $586 billion stimulus package from the government of China. The China bailout is seen as assisting many of the multinational US companies such as Caterpillar or General Electric. But the sheer size of the stimulus package gives many hope that the US government will also propose a stimulus package that will jump start consumer confidence as well as housing demand.

Meanwhile, the nearly trillion dollar bailout is getting spent faster than many folks can count. The Federal Reserve and the Treasury Department announced another $40 billion will be committed to help bail out AIG, making the total bailout of the insurance giant around $150 billion. The additional $40 billion comes out of the $700 billion recently approved by Congress.

In other bailout news, Fannie Mae announced that it is burning cash and might need some more government help. The mortgage-finance giant reported a staggering $29 billion dollar loss in the quarter. Ouch.

And shares of automaker General Motors (GM) slid to a 60 year low today after analysts forecast that the company may run out of cash in April 2009. Analysts slashed their price targets for the company, with Barclays now targeting GM at $1 a share and Deutsche Bank taking its price target to $0. Some stock commentators believe that there will be limited government intervention to possibly bailout the automakers.

Circuit City filed for bankruptcy protection. The nation's electronics retailer will shed 700 jobs and will close approximately 20% of its stores.

Yeah, it was a bunch of bad news today ... but don't let it get your down, just learn more about short sales and REO properties. This is your time. This is your moment. Make it happen for you.

I just love this quote I found in the new book by Gary Keller, The Shift:

"God grant me the serenity to accept the people I cannot change, the courage to change the one I can, and the wisdom to know it's me." - Unknown

So now that you know it's you, and that this market is what you make of it, let's talk about the seven mistakes most Realtors and investors make with short sale investing.

The mistakes in short sale investing might come as a surprise to many in the real estate industry; after all, the media is filled with news about escalating bankruptcies, banks dissolving overnight and loss of consumer confidence...obviously it's a buyer's market. Unfortunately, availability doesn't translate into information so the majority of would-be buyers simple don't understand the who, what, how and why of short sales as evidenced by the seven biggest mistakes below:

•1. Thinking rather than doing. Short sale investors that think about buying but don't actually ever get around to putting a plan into action are not buyers or investors - just dreamers. Stop procrastinating and take action.

•2. Failure to follow the rules. Each and every bank, buyer or broker has a process that must be followed. One of the advantages of dealing with Short Sales Riches is the ability to learn a proven system that gets results rather than having to start from scratch.

•3. Improperly presenting your case. Make no mistake about it; successful short sale negotiations require a solid presentation to the buyer and the bank. Fortunately for you, there isn't any need to recreate the wheel - simply adopt what has been proven to work and begin building your own short sale profits.

•4. Failure to take risk. Playing it safe has a time and place but there are times in life when risk is rewarded; ask yourself, how have your stocks and bonds performed over the past few years? Is your job keeping pace with inflation? Can you afford to retire if the current financial trends continue? If you are like most Americans then it is time to take a chance on something different; something you are able to control, something everyone needs.

•5. Substituting Attitude for Accomplishment. With enough credit cards and lines of credit it's easy enough for nearly anyone to "act" wealthy but when times get tough suddenly things fall apart. Successful and wealthy individuals may not always look rich but they have staying power and actual accomplishments to prove their net worth. Forget finding fame and fortune overnight - success is typically the product of planning, preparation and tireless pro-activity.

•6. Last minute thinking. It never fails; a flood of offers at the final hour. Unfortunately, last minute thinking puts you into direct competition with all the other procrastinators and eliminates the opportunity to fix potential problems that may arise. Instead, jump in early before the sleepers wake up.

•7. Putting all your hopes into one property. This is particularly true of short-sale newbies; don't fall in love with a property. Keep your options - and mind- open to different types of properties. Keep the real objectives in mind; profit potential.

More tomorrow...

See you at the top!

Chris McLaughlin, J.D., M.B.A.
web: http://www.shortsalesriches.com/welcome.html
e-mail: info@shortsalesriches.com

Phone: (800) 452-7627

P.S.: You are going to be on our Webinar tomorrow night aren't you? As Jim Rohn said: "If someone is going down the wrong road, he doesn't need motivation to speed him up. He needs education to turn him around." Get that education now:

https://www2.gotomeeting.com/register/324799291

Mid-Day Market News & Commentary by Chris McLaughlin, November 5, 2008
http://www.shortsalesriches.com/welcome.html
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Want to learn how a 27 year old kid with no formal education makes over $100k a month flipping short sales? Check out our system now to http://www.shortsalesriches.com/welcome.html
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I know, I know ... you're a Republican and you just saw the headline "Election Means Housing Recovery" and you want to delete this e-mail, right? Guess what? I'm a Republican... but whoever won last night the headline would have been the same. Why? We've finally taken uncertainty out of the equation. People know who is President for the next four years.

Everyone understands that the Democratic Party is now in charge. There will be accountability - the blame game is basically over for the next two years: the Democrats must deliver or there will be lots of angry folks 2 years from now during the mid-year elections.

And guess what? The only way they can improve this economy is by improving housing demand and stabilizing prices. That means that coming up with more incentives for homebuyers is the key: you can't just focus on the supply side of the equation, if there aren't adequate incentives such as significant tax credits and low interest rates, buyers won't come out as strongly.

So assuming that all the lobbyists hired by builders and Realtors have working the halls in Congress, what is most likely to get done?

First, huge tax incentives must be given to buyers without strings attached. Right now they offer $7,500 for first time home buyers, but then they require the homeowner to reimburse the government $500 over the next 15 years. Look for the strings to be eliminated, the tax credit to be a true nonrefundable tax credit, and I wouldn't be surprised if it didn't increase to $10,000 or more.

Second, interest rates must be lower. Sure they are great at 6.5% historically, but we're talking about stimulating demand-and to do so, buyers need something that gets them off the fence. Look for the government to either buy down the rate or provide a guarantee whereby the lender, or Fannie/Freddie, is able to provide even lower interest payments.

Third, incentives must be given to investors, not just homeowners. There are plenty of short sales and REO properties out there ... we need to turn these into rentals owned by investors quickly, as the less supply we have on the market the better for price stabilization. So if Congress does provide a low interest rate environment, it needs to extend that not to just first time homebuyers but to the investor community as well.

Do I think all this will happen? Probably not. But something will happen, and that's great news for investors and Realtors!

Now on to our investor education section ...

Low Cost Asset Protection: Umbrella Insurance

One of the least expensive and most versatile forms of insurance every short sale investor should be aware of is the humble and often overlooked umbrella policy. For many real estate investors, tax advantages are one of the main reasons they decided to begin purchasing real estate. Unfortunately, for those investors with significant personal or professional assets the decision to hold real estate in their personal name can create excess liability and risk which reduces the overall benefits derived from buying and selling short sales.

In order to reduce personal liability and exposure, many short sale real estate investors opt for LLC's or other forms of ownership; however, the cost and complexity often discourages beginning short sale investors from taking proper steps to protect their interests. One easy method for those new to short sales is simply to purchase an inexpensive umbrella insurance policy.

Typically, an umbrella policy picks up where your personal liability insurance (homeowners, car or other) leaves off. A $1-million dollar policy usually costs less than $300 annually and is available through most insurance agents.

The added benefit of using an umbrella policy not only reduces the overall risk of losing your personal home and assets in the event of an accident or injury on the property itself, but it also protects the property and other short sales investments from other claims arising from auto accidents or other sources of potential liability including teens or other young adults still living at home (remember, parents are legally responsible for teenagers including auto accidents or other situations that can place all of your hard-earned assets at risk in the event of a claim above and beyond your insurance coverage).

To determine the amount of liability you need simply add up your net worth and compare to your current liability coverage for auto, homeowners, professional and other policies. Purchase an umbrella policy in an amount at least as high as the excess asset amount.

Don't let fear of lawsuits or personal liability exposure limit your decision to invest in short sale property; it's inexpensive and easy to get started without exposing your other assets to increased risk simply by purchasing an umbrella policy.

More tomorrow...

See you at the top!

Chris McLaughlin, J.D., M.B.A.
web: http://www.shortsalesriches.com/welcome.html
e-mail: info@shortsalesriches.com
Phone: (800) 452-7627

P.S.:
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