Are You A Real Estate Investor Or A Speculator?

Are you a Real Estate Investor or a Speculator?
If you follow these items you too can make moves with the best of them! (to view a Real Estate Investment analysis click copy-of-fmrrworksheet)

• Determine Level of Liquidity - liquidity is the ability to quickly convert an investment into cash, without losing any of the principal that you’ve invested.

• Determine Level of Marketability - marketability is the ability to convert an investment into cash quickly, at any price.

• Determine the Impact of Leverage - leverage is the use of borrowed funds to finance a portion of the purchase price of an investment. The ratio of borrowed funds to the total purchase price is known as the loan-to-value (or LTV) ratio. A high LTV would result in high leverage, while a low LTV would result in low leverage.

• Evaluate the Investment Management Issues:
  1. Asset Management - this is where you monitor the financial performance of the investment and make changes as needed.
  2. Property Management - involves the overall day-to-day operation of the property and the physical maintenance of the building or buildings.

• Consider the Tax Impact of Your Investment Decisions: This includes such issues as:
  1. Classifications of passive
  2. Active and portfolio income and losses Capital gains taxes Income taxes
  3. Tax Credits, Tax deductions, Tax Deferments

• Evaluate and Reduce Investment Risk - risk is the possibility of losing either the principal invested and/or the potential income from the investment. We help you reduce investment risk in several ways
• Risk Analysis - This is the process of evaluating alternative investments based on their level of risk
• Shifting risk - structure your leases and rent agreements to shift the exposure of increasing costs to the tenants. This can include shifting the risk of rising interest rates, operating expenses or tax increases.

• (The Biggie) Due diligence prior to purchasing an investment property - Due diligence is the process of examining a property and related documents such as appraisals, inspections, environ mental surveys and title work in order to reduce risk.

Make sure to Review the (copy-of-fmrrworksheet) Investment analysis. If you would like to receive a analysis specifci to your property, feel free to contact me.. Your Mortgage Planner, William Doom, CMPS. 1.888.271.3437 x7

FOMC Cuts Rates To Target Zero

The Fed has taken Historic Action and has established a Target Range vs. a Flat Rate.
Target range for the federal funds rate of 0 to 1/4 percent.

(This should be interesting for Prime? Credit and Money is NOW Cheep. Didn’t we do this in 2001-2003?)

Given the overall decline in the U.S. Economy, the FED announced that it is determined to use every tool possible to pull the economy out of the current recession. The FED is sticking to its guns and will continue to purchase Government debt and MBS as one of the Monetary Policy Tools.

“over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant.”

Interest rates change constantly, but it is important to know that rates are cyclical. If rates are currently at historical lows then we know there is a strong probability rates will go up again, and vice versa. Certain economic indicators such as unemployment data, consumer price index, retail sales data, and consumer confidence all have an effect on mortgage interest rates. But the key factor to watch is the relationship between stocks and bonds.

As always if you are thinking of Refinancing or Purchasing feel free to contact me for your No Obligation Mortgage Plan William Doom, CMPS Your Mortgage Planner. (1.888.271.3437 x7)



Image Parsing the Fed Statement
The Wall Street Journal Online
December 16, 2008
http://online.wsj.com/internal/mdc/info-fedparse0812.htm

TALF – Term Asset Back Loan Facility

Image via WikipediaHenry “Hank” Paulson announced today they are using Tarp money to target consumer loans (credit cards, car loans, Home Loans) immediately.

The Name of the entity “TALF” – Term Asset Back Loan Facility. Six Hundred Billion will be allocated to Fannie Mae, Freddie Mac, and Ginnie Mae. The auto, student, and small business loan markets will receive $200 Billion to help thaw the markets. This announcement and injection gave the FNMA 30-YR 6% a HUGE boost this morning pushing it up over 115pb.

Mortgage Securities appreciated the injection and in return we saw rates drop across the board. This could be the first leg in the credit thaw. The TALF announcement overshadowed the negative GDP decline of -.5%, which is result of constriction in consumer spending (the largest in 28 years). The drop in rates is a positive, this should be first step in credit availability and hopefully will eventually lead to easing guidelines which will make it easier for homeowners to purchase and refinance. The credit may be in the market, guidelines are still tight.