Ding Dong Your Debt is Calling!

Ding Dong is the universal written symbol for a doorbell.  It’s also the universally understood name for someone that isn’t quite right in the head ….if you know what I mean.

Will, I’m not afraid to admit it, I’ve been a Ding Dong more times in my life than I care to remember!    But I don’t have to be that person any more, at least where debt is concerned, and I’m helping others shake that moniker as well.

Listen to this story:  A client, we’ll call him Bob Smith, comes into my office.  Old Bob has a ton of credit card debt and the minimum payments have been climbing lately.  The credit card companies are lowering the available credit, raising the interest rate and increasing the minimum monthly payment!

So Bob comes to me for a solution, what can he do?  Well first he can use some of the equity in his home to pay off the credit card debts.  We turn his 6.5% 30 year fixed rate mortgage into a 5.375% 30 year fixed rate mortgage.  The debt consolidation saves him almost $700 per month!

Good right?  Yes, but it gets better.  Next we tell Bob he still has a problem.   You see, the equity in the home was a safety net and we need to get that back as quickly as possible.  We show Bob how to use a portion of the payment savings to build his equity back up rapidly.

With our software we run a scenario using his regular income and the $500 in payment savings as discretionary income.  The program tells Bob how to pay his bills and if he follows the instructions Bob will pay off his new 30 year mortgage in just 8.5 years! 

It gets better.  You know that equity we used up paying off those credit cards?  He gets that back in 2.75 years!  Bob’s life is changed and he’s DEBT FREE in just 8.5 years.

Ding Dong your debt is calling! and it doesn’t have very nice things to say.  Do you want to know how to tell your debt to take a hike?  Give me a call, interest rates are low, low, low and with our special debt repayment software we can have you debt free in no time!

Michael Gross is President of Dividend America Mortgage.  He has been a builder, a Realtor and a real estate appraiser.  He uses all of his expertise to show others how they can use a mortgage to create wealth through home ownership and now he’s helping people get out of debt in 1/3 to 1/2 the time.  Contact Michael at 770-350-7373 or mgross@dividendamerica.com.

Debt Free as easy as 1, 2, 3!

In my last post I talked about the seriousness of debt in America.  I was …and still am… incensed that the Treasury and our government think that the only way out of our current economic crisis is to have Americans spend more!  It’s craziness!

I have taken a new approach and it is unbelievabley exciting.  I am using technology to get myself out of debt.  If you have a moment I want to tell you a little story about my own situation.

You see, I own a mortgage company, and we’re not doing so well right now.  LOL.  But that’s okay, I’m blessed with a beautiful wife, good health and the God given talent to know when I have to change my business and my life to succeed.

I own a home in the burbs and two investment properties.  I have about $20K in debt associated with my business.  Total all the money I owe and it is over $750,000.  That’s three quarters of a million dollars!  It’s a little daunting to think I owe this much money, especially since I’m not wealthy by any stretch of the imagination.

My rentals break even every month, my mortgage biz is in the tank and my wife got laid off from her architecture job.  Thank the good lord above for the severance package.  Anyway, we would love to lower the interest rate on all of our mortgages, but with an income equal to our debt payment every month, we don’t qualify.

So I sat down to try and figure out how I could get out of debt.  Sell the rentals?  Not in this market, I’d take a huge loss.  Sell the primary, same thing, and I lose all that equity.  Then I found a better answer….

Technology!

There is a lot to be said about technology and what it has done for our country and our standard of living.  Now there is a tool that can help me become DEBT FREE in a very short period of time.  Under my current repayment structure, I will be debt free in 35-37 years (that’s because of some of the interest only mortgages I have.) 

However, using this software and paying my bills the way the software instructs me to, I can be DEBT FREE in 16 years without changing my income structure.  How is this possible you might ask?  I know I did, I couldn’t believe it!

Well I did some research.  The software recognizes long-term debt in two categories, open ended and closed ended debt.  In the closed end debt your interest payments are static and are set on an amortization schedule that gives the advantage tot he bank.  You pay them the interest first and the majority of the principal is paid at the back of the loan.  Good for the bank, bad for you.

In an open ended loan, an equity line or a credit card, the interest calculation is dynamic.  Interest is calculated based on the average daily balance.  The software picks strategic times throughout the year and within the am schedule of the closed end loan and uses the open end debt to pay off chunks of principal in the closed in loan. 

This strategy is important because the larger the chunks of principal that are paid on the closed end loan, the more principal reduction you will achieve with the regular payments on that loan.  Once the debt is transferred to the open end loan, the software has you transfer income into that loan to lower its balance immediately.

At first blush this sounds a little scary, but here’s the important part.  You pay your monthly bills out of the open end loan.  This has a two fold effect on your debt.  First, it lowers the average daily balance of the open ended loan.  This means that you are actually paying a lower effective rate on the principal balance that was ‘in’ the closed end loan.  Second, it gives the ability to operate your home finances in the same fashion you always have, there is very little change to the way you live your life.

Under this program I will save over $450,000 in interest payments.  Even if I sell the investment properties in 7-10 years, I will increase the equity in those properties by more than 10 times the current schedule!  That will mean hundreds of thousands of dollars in my pocket.

Do you want to be DEBT FREE?  I am so excited about this program I have added it as a product in my company.  If you can’t refinance and you want to get out of debt, or if you can refinance and create lower payments and you want to use that payment savings to get out of debt faster, I would like to show you what I can offer.

Give me a call and become debt free today.

Michael Gross is the President of Dividend America Mortgage and has been in real estate for over 20 years. He has been a builder, a Realtor, an appraiser, and currently he is a lender and an active real estate investor. He uses all of his experience and knowledge to show individuals how to properly use a mortgage as a tool to help create greater wealth through real estate investing. For more information on residential and small commercial loans please call 770-350-7373 or email mgross@dividendamerica.com

Playing the Real Estate Game – The Offer Phase

Today I want to talk about making offers.  I often think I should devise a game to teach people how to make offers.  I’m not talking about negotiating, just making a plan old, vanilla, down and dirty offer.

Real estate can be a trying business at times.  Especially at times like these.  With tons of foreclosures on the markets and agents fielding calls from every nare-do-well on the block asking inane questions and basically wasting their time, it’s tough to get anyone to accept your REAL offer to purchase a property.

Right now I’m playing the real estate game in the offer phase in hopes that I’ll get to up the stakes and get into the negotiation phase.  But first I have to get somone to take me seriously. 

I’ve had several conversations with ‘duty’ agents who promise to call me back but the promise is never kept.  I call the office to try and locate the listing agent but they will not accept any calls and will only deal with other licensed agents.  Highly FRUSTRATING!

So what do we do?  We play the game, and trust me, it is a game.  Here’s how the game works.  Sometimes you are just dealing with inept agents or agencies that make their money off maintaining the listing.  They can care less if the property sells, they make a fee to maintain the property.

Other times you are dealing with agents that see opportunity in a particular piece of real estate and they want to squelch offers on the property so that they can buy it for themselves at a future date.  Unethical?  You bet!  Do they care, NO!

So it’s a game and I understand the rules.  So here’s what I do.  First, I’m tenacious!  I bully, cajole, call-call-call and then call again.  I’m relentless, I’ve got nothing better to do all day than to try and get my offer presented on this property.

I’m calling to gather information.  I want to see the inside, I want to know the taxes, the MLS or FMLS number.  I want details. 

Once I’ve gathered the details, I call MY agent.  I always teach that investors should use an agent.  You should have a Team of Trusted Advisers and high on the team list should be a Realtor.  Notice I said a Realtor, not just a licensed agent.

So the rules that the listing agent gave me were that they only deal with agents.  Fine, I’ve got one!  And she’s tenacious just like me!  If she feels like I’m offering to high, she gives me a cross look and shakes her head.  Okay then, what?  Lower!  How low?  Well, how about 50% of the asking price!  LOL  You go girl!

I’m playing the game.  Now instead of being frustrated, I’m the one doing the frustrating.  I’m winning, offers are being accepted.  I’m playing the offer phase!  When I win this phase of the game its on to the next phase, The Negotiation Phase.  Stay tuned……..

Michael Gross is the President of Dividend America Mortgage and has been in real estate for over 20 years. He has been a builder, a Realtor, an appraiser, and currently he is a lender and an active real estate investor. He uses all of his experience and knowledge to show individuals how to properly use a mortgage as a tool to help create greater wealth through real estate investing. For more information on residential and small commercial loans please call 770-350-7373 or email mgross@dividendamerica.com

Ready, Set, Vote!

The votes are in and will be counted this evening and one thing is for sure.  We will have a new president and he will have to change the direction of the economy. 

This will be profound for real estate investors.  We have seen a constantly declining or stagnant market for almost two years.  Credit has been tight and buying has been difficult.

The time is right to get started.  Be early out of the gates and get out there and start making offers.  No matter who is elected, we should begin to see a loosening in the credit markets. 

We will see Americans begin to shrug off their hesitation and begin to make decisions that affect their families.  Many experts believe that we will finally see a bottom to the recession and that we will begin to see a slight uptick in the economy as early as the spring of 2009. 

Election 2008 is behind us.  Senator Obama or Senator McCain will be our president.  History has been made!  As real estate investors we should be euphoric and we should get out their and start making business happen.

Remember that a rebound in real estate has lead the way out of almost every recession.  Be part of the solution for American.  Our country needs us, be positive, be proactive.

You have voted at your polling place and made your voices heard, now vote with your entrepreneurial spirit and show America what we can do!  Real estate investors unite!  Go out there and turn this economy around!

We can do it, if only we will try.  Remember; ” Keep away from people who try to belittle your ambitions. Small people always do that, but the really great make you feel that you, too, can become great.” – Mark Twain

So go out and be great!

Michael Gross is the President of Dividend America Mortgage and has been in real estate for over 20 years. He has been a builder, a Realtor, an appraiser, and currently he is a lender and an active real estate investor. He uses all of his experience and knowledge to show individuals how to properly use a mortgage as a tool to help create greater wealth through real estate investing. For more information on residential and small commercial loans please call 770-350-7373 or email mgross@dividendamerica.com

Being Short Ain’t So Bad

Being short can be tough.  You can’t see over things and in large crowds.  You need someone to let you sit on their shoulders if you want to watch the parade.  It’s a tough life being short!  Unless you’re this kind of short…

I’ve been a traditionalist most of my real estate investor life.  I find foreclosed listings, make a low offer and dicker-n-bicker until I get what I want or until I’m forced to move on.  But lately a new strategy has caught my eye and some folks that may be way brighter than me have got me to thinkin’! …..hmmmm…..

There are many ways to purcahse properties at a discount.  One way is the short sale process.  If you are not familiar with short sales, you need to get educated.  A short sale could be an additional strategy you use to locate opportunities.

Remember that historically the real profits in real estate are generated at the purcahse.  Then more profits are generated over time.  You should also deploy as many strategies as possible to locate properties that you can purchase at a huge discount. 

One of those strategies should be the short sale strategy.  So what is a short sale?  Simply put, a short sale is when you, the investor, get a lender to agree to take a payoff that is less than the what is currently owed on the property.

Now there is a process and you must understand the steps in the process in order to be successful.  I suggest investing in a course about the process.  They should give you the contracts and scripts you need to make deals happen.

You can find courses at most real estate investor associations.  Some real estate schools even offer courses on how to be successful in this lucrative field.  So in this case, if you are a real estate investor, being short ain’t so bad!

Michael Gross is the President of Dividend America Mortgage and has been in real estate for over 20 years. He has been a builder, a Realtor, an appraiser, and currently he is a lender and an active real estate investor. He uses all of his experience and knowledge to show individuals how to properly use a mortgage as a tool to help create greater wealth through real estate investing. For more information on residential and small commercial loans please call 770-350-7373 or email mgross@dividendamerica.com

Spice up Your Investing

As the Spice Girls so aptly wrote in their song  …..So tell me what’cha want, what’cha really, really want.  I wanna, I wanna, I wanna ……  I tell you what I want!  I want some sense and sensibility to be put back in the markets!

And, I finally think that is going to happen.  In my BrainsNotIncluded blog (www.brainsnotincluded.com) I’ve railed against the way that the Feds and the Sec. Tres. have handled this crisis.  But I think what they have been trying to do is finally taking hold.

Secretary Paulson threatened the banks to ‘apply for and recieve’ the government infusion of $250 billion of the American people’s money and then forced them to start lending it to each other.  This seems to be loosening things up.

With the Feds in charge of Fannie and Freddie and with some sensibility is coming back into their underwriting guidelines, credit markets are becoming unstuck.

So what does this mean for you and I, the real estate investor and professional.  Here’s what it means, 100% programs have come back.  Now people with a 620 credit score can get 100% financing again.  It comes in the form of a 90% first mortgage and 5% second mortgage.

So how can this be done?  It’s part of an affordable housing program and since the first mortgage has MI on it, the lenders feels safe.  Now this loan is for the purchase of a primary residence, so how does it help investors.  Simple, it allows us to start acting as dealers again.

So here is what I want!  I want some smart investors to get out there and start buying again.  I want some deals myself.  If you can’t buy because you don’t have the money then give me a call and let’s do a deal together.  I have the money players and i can bring it to the table.

I want people aren’t greedy, who want to share the wealth and who want to grow together.  I want people that can do short sales, that understand the bird dog concept and that will stay away from the risky areas of town.  I want someone that understands the suburban markets and the starter homes.

Are you what I want?  Are you what I’m really, really, really lookin’ for.  If so, respond to this post and let’s talk!

Michael Gross is the President of Dividend America Mortgage and has been in real estate for over 20 years. He has been a builder, a Realtor, an appraiser, and currently he is a lender and an active real estate investor. He uses all of his experience and knowledge to show individuals how to properly use a mortgage as a tool to help create greater wealth through real estate investing. For more information on residential and small commercial loans please call 770-350-7373 or email mgross@dividendamerica.com

Ladies and Gentlemen, Elvis has Left the Building

Do you remember the old saying; ‘Ladies and gentlemen, Elvis has left the building!’  The reason that the saying exists is because after an Elvis concert the concert hall would stay packed and people would not leave.  They would linger, not knowing what to do next.  Would he come back, was it all over, they had no ability to make a decision. 

Well, a similar thing has happened in the stock market and in the credit markets and everybody is milling around and wondering what to do.  Wonder no more, some important changes are happening and you need to take advantage of them.

The recent take over of Fannie Mae and Freddie Mac and the failure of Lehman Brothers and even the lifeline thrown to AIG have a positive side.  Even though our retirement accounts and stock portfolios are taking a beating, the stock market and bond market are finally working in unison.

Traditionally, when the price of stocks decline it causes the price of bonds to increase. This ying and yang of the financial world is caused by a desire by investor to find safe investments when the economy goes bad. Traditionally the fixed income Treasury Bond market has been the safe haven. But recent ‘structural’ problems related to the credit crisis had left investor with no place to hide.

Enter the Feds! The take over of Fannie Mae and Freddie Mac helped to right the markets. The take over caused a reduction in the spreads between the yields on Mortgage Backed Securities (MBS) and the Treasury Bonds. The actions by the government sent a clear message that our government would support our banking system and this caused the spreads to decrease to normal levels. Now this gobblee-gook doesn’t mean a whole lot too many people and explaining why this is important could take a whole day. We’re not here for an economics lesson so suffice to say that this is how the markets are supposed to work.

Many investors seeing that the markets are now working properly have begun to pour their dollars into the safety of government debt…..i.e. Treasury Bonds. As more and more investors purchase these bonds the price of the bond increases and as the price of the bond increases its yield decreases! Guess what happens to interest rates? That’s right, interest rates follow the yield. So as the yield decrease so do the interest rates.

This structural change in the market place has provided another great opportunity for home owners. Right now interest rates are below 5.5% – today they are as low as 5.25% on a 30-Year Fixed!(this is for a primary residence, of course the interest rates on an investment property would be slightly higher.) We don’t know how long this will last. Any sign of inflation, a weakening dollar or oil climbing above $110 per barrel could make all this opportunity melt away like butter in hot iron skillet.

If you know of any one looking to buy or who needs to refinance, they need to do it now. Don’t wait, get moving or get them moving before it’s to late.  Elvis has left the building and the entertainment hall is in turmoil. 

Don’t look back and regret not making a decision.  The exit signs are well lit.  You can be the one outside standing beside Elvis’ bus getting the autograph and adding value to your day just by being one of the first to make a decision.

If you have any questions please don’t hesitate to give me a call or to shoot me an email. I am here to serve.

Michael Gross is the President of Dividend America Mortgage and has been in real estate for over 20 years. He has been a builder, a Realtor, an appraiser, and currently he is a lender and an active real estate investor. He uses all of his experience and knowledge to show individuals how to properly use a mortgage as a tool to help create greater wealth through real estate investing. For more information on residential and small commercial loans please call him at 770-350-7373 or via email at mgross@dividendamerica.com

 

 

Real Estate and Your IRA

More and more people are becoming frustrated with the lack of growth of their IRA and 401K investments.  The stock market isn’t doing well and niether is the economy but there is one growth opportunity out there that many are turning to …. real estate.

With the proliferation of foreclosures, homes can be purchased relatively cheap and in many cases can be rented for positive cash flow.  The opportunity to purchase an investment at a discount and then have someone (a renter) pay for that investment for you is a huge draw in the current economic environment.

A large portion of the American investing public does not know that the IRA can be used to purchase real estate as an investment.  Others think that this is a tricky scheme.  The truth is that the IRS code allows for this type of investment through what is referred to as a Self-Directed IRA.

A Self-Directed IRA is managed by a custodian and the funds from the IRA can be used as a down payment to purchase an investment property.  The funds can be used for other real estate related ventures like lending to an LLC or consortium where the loan is secured by real estate or a business.  The funds can even be used to purchase mortgage notes.

The majority of investors use their IRA as a down payment to purchase a home.  This helps them to leverage a $50,000 IRA to purchase $100,000+ property.  Usually the benefits include positive cash flow of $150 to $200 per months as well as the ability to increase the value of the money invested in a relatively short period of time.

One scenario goes like this.  The investor invest $50,000 as a down payment to purchase a $125,000 property.  The property pays a return of $200 per month or $2,400 per year.  That’s a 4.8% return on the investment.  The property increases in value on average 5% per year.  The payments made by the renter provide the positive cash flow and reduces the balance owed on the mortgage.  At some point the property is sold.  If the property was held for 5 year then the estimated sales price would be $160,000 and the existing balance on the mortgage would be around $71,200.

Let’s do the math.  The investor’s input was $50,000.  He sold the property for 160,000.  He owes 71,200 plus he has to recoup his original $50K.  The gross profit is 38,800, plus the $2,400 per year for five years ($12,000) is $50,800.  Subtract approximately 7% of the sale price for transaction expenses and the gross profit on the transaction is $39,600.  The bottom line is the investor, using his IRA, has turned $50,000 into approximately $89,600.  That’s a 55.8% return over the 5 year period.  Not bad!

To read more about IRA investing visit my favorite financial information site, marketwatch.com.  Click this link: http://www.marketwatch.com/news/story/housing-market-beckons-more-invest/story.aspx?guid=%7B4740F69A%2D1CDE%2D4825%2D9122%2D7D7528968B61%7D

IMPORTANT NOTE:  A special type of financing is needed when you use your IRA to invest in real estate.  But, you’re in luck because I know exactly what you need and I can connect you with the people that can get it done for you!  Just email me or give me a call.

Michael Gross is the President of Dividend America Mortgage and has been in real estate for over 20 years. He has been a builder, a Realtor, an appraiser, and currently he is a lender and an active real estate investor. He uses all of his experience and knowledge to show individuals how to properly use a mortgage as a tool to help create greater wealth through real estate investing. For more information on residential and small commercial loans please contact me at 770-350-7373 or via email at mgross@dividendamerica.com.

Real Estate Revelations

Revolutions, revelations, revaluations! Oh my!  It’s the three R’s of real estate and what they brought us this time wasn’t good….but the bad times are almost behind us and it’s time to look to the future.

The revolution took us by storm from 2002 to 2007.  A housing boom so exuberant it could not last.  The revelation of that caused a crash that has affected the world economy.  Now for the revaluations of all those properties and all the risk that the banks have assumed.

I am excited and yet, filled with some trepidation at the same time.  My elation comes from knowing that the Credit Crisis of 2007-2008 is almost at an end.  I feel a bottom and we are ready for a turn.  However, my worry comes from knowing that there is at least one more shoes left to drop before it is all over.

Which shoe it is and is it a size 6 or a size 16?  Who knows.  With the recent revelations and revaluations at Fannie Mae and Freddie Mac, it could be the size 16 that drops.  We can only hope the bears in the market are wrong and that a government bail-out of these two behemoths will not be necessary.

Regardless of what happens, real estate professionals need to be prepared.  The time is coming when we will be able to break out of the doldrums of the past 20 months and begin to do what we do, rebuild blighted communities and make profits doing it!

Are you with me?  Good, then let’s get ready to go to work!

Michael Gross is the President of Dividend America Mortgage and has been in real estate for over 20 years. He has been a builder, a Realtor, an appraiser, and currently he is a lender and an active real estate investor. He uses all of his experience and knowledge to show individuals how to properly use a mortgage as a tool to help create greater wealth through real estate investing. For more information on residential and small commercial loans please contact Mr. Gross on his direct line at 770-350-7373 or via email at mgross@dividendamerica.com

Housing Bill….Housing Debacle?

The Housing Bill passed both houses of congress with flying colors and now it seems that a threatened veto by the president has been reconsidered and he will sign the bill after all. So is the housing bill good or bad for America?

Let’s take a look at some of the finer points in the legislation.

· $7,500 Tax Credit – Yes that’s right, for those of us who buy a foreclosed home as a first time homebuyer, there is a tax credit. But wait, not so fast, the credit has to be paid back….

What, paid back? How is that a credit then? Sounds like Mr. Reed and Ms. Pelosi pulled a fast one. If you take the credit, you’ll have to pay it back in equal installments over the next 15 years.

· Increase in Conforming Loan Limits for Fannie Mae – Under the current system, home loans greater than 417,000 are considered to Jumbo Loans. Under this provision the new conforming limit will be $625,500.

This is good news for those of you were forced to take a Jumbo loan when you bought or refinanced your home in the past. If you have a loan amount between $417,001 and $625,500 it is time to investigate whether a lower rate is available! Call Today!

· FHA Revamped and Modernized – The good news is that FHA will be revamped and modernized and will act as America’s major subprime player in the mortgage market. The bad news is that the bill takes away down payment assistance.

If you are in trouble and on the verge of foreclosure, FHA may be the answer. Refinancing with an FHA loan is exactly what this new program is for.

However, if you are one of the more than 250,000 citizens each year that depend on down payment assistance in conjunction with an FHA loan, the Democrat controlled congress (you know, the ones who are ‘for’ the little people) just kicked you to the curb.

And, if you are a real estate investor, this means that your flip strategies with homes in the first time homebuyer market may be at risk. There are resources available to help you sell your homes using down payment assistance but they will now be very specialized sources and may require buyers to take certain home ownership courses to qualify. (for information on these sources visit dividendamerica.com and schedule a consultation)

The bill is a mix of good and bad, give and take. To be fair, this bill is more about giving stock market investors confidence in the mortgage market than about helping the everyday citizen.

As with all things government does, this legislation is a huge compromise that could have been better but is a step in the right direction.

For more information read the article on MarketWatch.com: http://www.marketwatch.com/news/story/fine-print-housing-bill-mutes/story.aspx?guid=8AA21F55-D848-4076-B9EF-282FEAD95B1D&print=true&dist=printMidSection

Michael Gross is the President of Dividend America Mortgage and has been in real estate for over 20 years. He has been a builder, a Realtor, an appraiser, and currently he is a lender and an active real estate investor. He uses all of his experience and knowledge to show individuals how to properly use a mortgage as a tool to help create greater wealth through real estate investing. For more information on residential and small commercial loans please contact Mr. Gross on his direct line at 770-350-7373 or via email at mgross@dividendamerica.com