Freddie Mac Begins Renting Houses
Filed under: become a real estate investor, creative real estate investing, flipping real estate, make money real estate, real estate investment, real estate marketing
Freddie Mac Begins Renting Houses
market News & Commentary by Chris McLaughlin, January 30, 2009
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In overall macro economic news, the fourth quarter gross domestic product (GDP) plunged 3.8%, the largest drop since 1982. This means that the overall economy continues to slide as business and consumers tighten in the reins. GDP had dropped 0.5 percent last quarter. The drop marks the first time GDP dropped consecutively since the fourth quarter of 1990.
Freddie Mac announced today that it would permit homeowners who have lost their home to foreclosure to actually turn around and rent them back from Freddie Mac. “Keeping foreclosed properties occupied and in better repair will support local property values and promote a faster recovery in the housing market,” said Freddie Mac CEO David Moffett. And in a change of course from the lending practices of the past, Freddie Mac will request documentation from the new tenant (former borrower) to prove that they have enough income to afford the rent. What a novel idea!
Now, on to our real estate investing section…
Personal Protection Checklist
As the unemployment rate rapidly escalates to 7 percent and beyond, millions of Americans are taking a fresh look at their personal finances only to find they are more vulnerable than ever expected. Part of the short sales appeal is the ability to improve your financial future without having to depend upon elusive government “hand-outs” or unreliable safety nets.
Dare to Compare…
If you are not currently involved in short sales investing then ask yourself some tough questions about why – or why not. Dare to compare alternative investments, jobs or other methods of generating cash flow against short sales investing.
Your investment Capable of Operating as a Job Replacement?
Do You Have a Source of “passive revenue” even when not working?
Is Your Income derived from 3 or more sources?
Are you building equity and future appreciation against the threat of inflation and/or lower income earnings later in life?
Is Your business diversified and dependent upon more than one type of client?
If you answered “no” to one or more of the above questions then you are potentially at risk should a change of employment or investments take place. If you answered “no” to two or more of the above questions you are vulnerable to downturns in both job and investments…a situation that could wreck financial havoc on your future for years to come.
Savvy investors and average Americans are learning how to use short sales to insulate their own economic situation from the highs and lows of the market by building in additional sources of income, future price appreciation and diversification…without the need for back-breaking labor or extensive time away from family. Better yet, extensive tax breaks and write-off’s associated with real estate often benefit beyond the initial investment.
What’s Better - Silver or short sales?
When it comes to investing in alternatives designed to “hedge” your risk against the market, silver is a popular choice especially among many contrarian investors. Considered the “poor man’s” precious metal investment, silver has a long history of being used both as money and as an industrial metal. It’s also portable, easily liquidated and easy to store…but is it a solid investment? Given the choice, where would one rather invest their hard earned cash…short sales or silver? Let’s take a look and consider the evidence for and against each.
Common wisdom holds that both real estate and silver provide important protection against inflation…while it may be true that silver reached a high in excess of $50 (not adjusted for inflation) after the inflationary era of the 70’s, in large part it was due to a major move by the Hunt brothers in an attempt to dominate the market. Once that episode was put to rest via legislative intervention, silver experienced a continuous decline for the next 30 years…reaching a low of approximately $2.50 – NOT adjusted for inflation!
Clearly, anyone holding silver and was forced to liquidate during that period of time would have lost money…in fact, silver recently reached a high of $21 during 2008 only to drop by over 40 percent just months later. However, silver requires no maintenance, upkeep, taxes or insurance to support so buyers can hold it for years without experiencing high transactions or holding fees.
On the other hand, real estate has also been considered a long term hedge against rising rates of inflation. While real estate does require maintenance, insurance and property taxes to be paid on an annual basis it is also possible to offset or support the property through income generating activities such as rentals – without having to liquidate the property itself. While real estate also experienced major gains during the inflationary era of the 70’s…and a corresponding drop in many areas of the nation during the early 80’s…the majority of real estate holdings held their own during the interim years.
To compare silver against short sales, let’s take a long term outlook of what would have happened to $100,000 invested into each during 1980…
Average price of silver in 1980 was $48 which would purchase 2,083 ounces of silver. Today, the price of silver…NOT adjusted for inflation…is $11.30. That same 2,083 ounces of silver would be worth $23,538. Adjusted for 29 years of inflation and the actual purchasing power would be substantially less. Clearly the silver investor would not be pleased by the ‘hedge’ provided by silver.
Now let’s take a look at $100,000 invested in real estate during 1980. The average cost of a brand new home was $68,700 so you could have purchased 1.5 new homes or approximately 2 average sized re-sale homes. Even accounting for the dramatic declines in housing prices experienced throughout 2008, the average cost of a home still stands at roughly $180,000 or nearly 3x’s the original selling price of a home. Take time to calculate the numbers for yourself; any way you work it, short sales come out on top. Decide for yourself which is the wisest path to profit for the coming years: silver or short sales? Remember, all that glitters isn’t gold or silver…sometimes it’s real estate.
See you at the top!
Chris McLaughlin
http://www.shortsalesriches.com/welcome.html
P.S.
Sign up right now to ensure your reservation! The amazing Recession Proof real estate Investing webinar will be held this coming Saturday at 3 PM ET, NOON PST! There are only 30 slots left so jump on this now:
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P.P.S.:
Than Merrill opened the doors to “Wholesaling University” for a select group of people, but it all comes to a close tomorrow.
This is a once in a lifetime opportunity to become part of an exclusive Wholesaling coaching program taught by Than Merrill himself and a very select group of the top wholesaling minds in the country. Check it out right here:
http://www.wholesalingu.com/go?w=bwu&p=nathan
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About the author:
Chris McLaughlin is widely known as America’s top
real estate Attorney and investment Consultant.
* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month
* Long-time authority on real estate investing
and rapid flipping of distressed homes. Owns
portfolio of nearly 100 high-value, high-profit
properties
* Owner and Supervising Broker of one of Florida’s
largest real estate firms, running 4 different
offices, supporting nearly 450 agents, uniquely
positioning him to help thousands of investors
make money in the biggest market opportunity ever!
* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
in real estate Investing, Entrepreneurship, and
Wealth Building
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