Since I began teaching back in the 1990′s, I have had the privilege to work with some unbelievable people. Dedicated Students who made the decision to change their path and take a new direction with their life. They chose to work with me in my hands-on lab to  become a real estate investor.

As with many of my successful lab students, we built a personal continuing connection. I try to stay in touch with my graduates for many reasons. To name just a few…

• To consult with deal, money or just business advice;
• To learn from their successes (and be proud of them, Client Testimonials);
• To share their success in a Webinar as a Successful Client Guest Panelist;
• But mostly to build connections.

Connections that I never know where they will lead. Which brings us to the point…

Find Hard Money

I have recently connected with two of my successful  lab graduates. Both, joined me in my Strategy Session on How to Find Private and Hard Money. Both are Money Raising Machines. I’m thrilled to have them share their critical insight. You can watch the video replay HERE .

Money Raising Machine

One attended Lab way back in 2001. He has stayed in touch with me over the years, has shared his progress; joined me on webinars and at conferences. Maybe best, I now know him on a personal level and count him as one of my better friends. He tried to retire in 2005, but couldn’t stay away and came back full force in 2009. Since then, he has built a deal money raising machine and that last year alone closed over 200 deals.

Hard Money Lender

The other attended lab in 2006. He recently re-connected through another one of my graduates. His path was different  after Lab. He has built a thriving hard money loan business. Rather than flipping houses, he works with investors funding the money to close their deals. His income is points, and a spread on the interest monthly. He has over 350 money partners who have placed their money in his investors’ deals. Last year he has matched up money to over 160 investor deals.It was a few of those loans to other successful lab graduates, that got us back together.

I loved what I have learned about both of these outstanding students, and am honored to be able to share the details with you. Hearing of my graduate’s success makes me so proud of what I do. These two men are money raising and deal closing machines. I can not wait to share them with you.

We will talk about:

• What they would do if they were starting over today.
• What would they do different.
• What did they do right.

I can’t wait for you to hear the details.

Learn about Hard Money and Private Investor Money

Here’s a great new article from apartment foreclosure investor, Michal Ballard who is now up to 1800 multi-family units nationwide and growing. He recently shared in his last apartment investing webinar this story, plus had a new client share their first deal success as well. If you missed that call, you can see the free video replay here.

In my last blog about Apartment Foreclosure Investors, I outlined the macro situation for C to B class apartments facing re-finance risk, what the size of the market for these assets appears to be, and what kind of potential these deals have over a 3 to 10 year investment horizon.

This month I want to feature an individual project of which I am intimately aware as it is a deal one of my students has been working on.

In the interest of anonymity I will keep the market and names out of this article, but I will outline the actual statistics of the deal and the trends that this project has enjoyed. This should help paint the picture of WHY we are jumping into the apartment foreclosure market with both feet right now.

This particular project first got our attention when it was priced at $1,100,000 for 92 units.  At the time $12,000 per unit for units attracting around $5,000 per year of rent or a 2.4 GRM seemed very attractive.  We had a project that passed our first cut, now we had to find out the story.

As it turned out the project was on very hard times, while it had been been purchased a few years earlier for $1,800,000 the owner had pretty much given up on the property and occupancy had fallen to under 30% with many of those residents not paying any rent at all.  There were at least 60 down units and the property had a very bad reputation.  The good news was that there was a project adjacent to this one that was very similar (same number of units, contemporary construction, same rents) that was fully occupied (92%) and had sold about a year earlier for $1,800,000.  This gave us hope that the issue was one of management not of the overall market.

We tendered and offer of around $900,000 but found out that the project was already under contract… Strike one.  We set about to looking at other projects but kept this on the back burner.

A few months later we received a call that the project had fallen out of escrow and were we interested in putting in another offer.  We were and we put in a very low offer of $699,000 all cash offer no financing contingency, we also put a few other magic words in that would help us a lot later.  After a lot of back and forth our offer was accepted…..now we had to locate the money.

After a trip to the project to survey the actual neighborhood and general condition of the project we performed an exhaustive due diligence analysis and developed a multi-pronged plan of attack for the property.

Over a frantic 3 month period we accumulated the required cash and due to some of our magic LOI clauses we were able to convince the seller to carry $200,000 himself making the money raise much less stressful.

The project closed and we were ready to put the plan to work. Units were prioritized into 3 types of conditions; soft, medium & hard down.  We set about to bring the units up in a general reverse order bringing the softs up first the mediums next and then the hard down units.  We also embarked on a concurrent curb appeal, law and order, and safety rehab.

Surveillance systems were installed a courtesy officer was hired, we made several trips to the local precinct to outline and reiterate our commitment to zero tolerance for any type of lawlessness on our property.

Landscaping projects were embarked upon, exteriors or buildings were cleaned and shined, as units were brought up to rent ready.

Non-paying residents were given one warning to catch up on their rent or vacate and by the time all the dust settled we had about 22 paying residents for a grand total of about $7,000 a month of collections in August and September……then the upgraded units started to come online.

The project has quickly gone from 22 paying units to 65 units leased, which will generate around $25,000 of collections against roughly $15,000 of expenses.  The only thing that is holding back the occupancy is the speed at which we can get units renovated and within 2 months.

Just a little shy of one year after purchase, this property will fulfill the definition of stabilized and long term institutional financing can be place on the property. Virtually all of the debt and equity will be repaid and the equity holders will enjoy quarterly distributions on this project while they can put their money to use in another project that my student already has in his sights.

How did he know this would work?

What did he put in his LOI that made the seller help him with financing?

How come I would recommend that he take the plunge on this property while telling him not to on several others?

Well that’s about a two day long discussion next month with only 18 investor clients. (Details on this one time only special event here.)

“We believe the apartment market is set to explode, with steadily rising rents and occupancy that will justify new construction,” said Economist John Burns, Real Estate Consultant.

Why is John Burns bullish on the apartment market?

1.  Pent-Up Demand: We recently calculated 3.4 million units of pent-up household demand, which is the aftermath of the recent recession and lackluster recovery.  The largest segment of this demand is young adults, who have either moved back in with their parents or taken on roommates. We expect this demand to materialize over the next few years, with most of the demand entering the apartment market because of the inability to qualify for a home loan and uncertainty over their employment status.

2.  Modest Job Growth:  Job recovery has been slower than expected which is keeping unemployment high.  This uncertain recovery is enough to convince consumers that renting is far safer than taking on a mortgage.  We believe job growth will approach 2% by 2012.

3. Government Policy:  Nineteen years of  uninterrupted and more aggressive government interventions toward home ownership is about to reverse itself. (More at www.realestateconsulting.com)

My colleague and Apartment Market Expert Michal Ballard has been experiencing this Market Explosion firsthand.  His projects, as well as his studetns, are seeing double digit rent increases with extremely low turn-over rates and rising property values.

There are Four (4) Important Aspects to Michal’s Success in Apartment Market Investing:

1) Find the Right Markets (Not all Markets are Ripe for Apartment Deals).

2) Find the Right Deals (Make Sure Your Project has Immediate Upside Potential).

3) Find the Money for Your Purchase (This is a Biggie. You have to Learn How to Put ‘Money People’ Together).

4) Close and Operate Your Deal (The Forgotten Step – Deal Management).

Learn how to invest in the apartment market.

Learn How to Identify and Implement these 4 keys by Investing in the Apartment Market, Listen to Michal’s Professional Investors Webinar from April 25, 2012 (replay below). If you have questions, comments or ideas on how to profit from this lucrative real estate foreclosure trend. Comment below. We would love to start a conversation.

Have you been following the apartment investing market? It is exploding.

Our clients are reaping real profits finding and closing wholesale apartment deals. You should be too. Our stagnant economy has created bigger apartment profits than anyone has projected. Foreclosure Apartment Investor Michal Ballard is excited about the apartment market. Both his, and his students’ apartment investing businesses are booming. The deals they have closed this year and projects in the works are way beyond their goals. Join us Wednesday Evening for the details and learn how Apartment Profits can be yours in 2012 and beyond.

You will hear first hand how Michal and his clients, who are just like you, share how their profitable apartment deals transformed their lives. This is your last chance to hear Michal’s money making insight live for quite some time. Make sure you register for this FREE training.

Here is what you will learn for FREE…

• WHAT has happened in the housing and apartment markets in the last few months changing our outlook drastically.
• Why NOW is the time you need to get your Apartment Investing business off the ground.
• WHAT kind of results our clients are seeing from their distressed apartment deals (using none of their own money*).
• HOW you will get started finding these great deals and how to raise the money to fund them, right now, with Michal’s expert help.
• WHY Michal is taking time off from training to focus FULLY on apartment buying for the rest of 2012.

*Regarding Deal Money…

You will hear first hand how Michal and his clients are funding their deals with 100% private money (through syndication) and NOT using conventional financing until after the project is stabilized. And they are building in nice paydays for themselves every step of the way – at purchase, at refinance, at sale.

We started our Apartment training less than a year ago and already one client has added put more than $500,000 to his Net Worth. His life has changed. Isn’t it time for you to change your life?

Join Michal and I Tomorrow, this Wednesday.  Register Now for FREE

Just 6 months ago I shared how the apartment investing market is turning the corner and has a tremendous run ahead of it. Boy did we hit the nail on the head. In case you missed Apartment Investors: An Optimistic Bunch, here are the key highlights…

A YEAR AGO, THE TERM “CAUTIOUS OPTIMISM” was a popular forecast for 2011, a middle ground between the hangover of a nasty recession and the hope inspired by improving fundamentals.

However, as values and access to capital continue to improve, however, multifamily professionals are starting to drop the caveat from that forecast. Value-add deals are returning to vogue and acquisition activity is heating up well in advance of the typical fourth-quarter busy season.

“We’re obviously bullish that we’re at the beginning of a development cycle, so we’re putting a lot of time, energy, and resources there,” says Jay Hiemenz, CFO of Phoenix-based Alliance Residential. “And the cap rate compression, coupled with better fundamentals, has made deep renovations feasible again.”

SWEET DEAL: In April, Alliance paid just $3 million for The Pueblos, a high-end condo community in Las Vegas that was only about a third finished when its $8.7 million construction loan was foreclosed on.

Alliance isn’t alone in its optimism.

“You haven’t seen any new supply added for the last two years and that really creates a lot of bullishness for early-cycle development,” says Derek Ramsey, CFO of Charleston, S.C.–based Greystar. “We feel like there’s pent-up demand, that even with lackluster job growth, the earlycycle deals coming out of the ground should perform extremely well.”

Indeed, what the data, along with interviews with active industry players like Ramsey, indicate is that multifamily firms are chomping at the bit, ready to feed these growing appetites more aggressively than at any point since the Great Recession.

And as this optimistic bunch forges ahead, they are all too cognizant of the following five market factors influencing their every decision.

#1. Price is what you pay; value is what you get.

#2. Turning down leverage is probably smart.

#3. Value-add and trending rents are back.

#4. Distress has not gone away.

#5. The bottom line can always grow further.

HOW LOW CAN CAP RATES GO?

Last year many borrowers thought they were facing a once-ina-lifetime opportunity when the yield on the benchmark 10-year Treasury hovered around 2.4 percent in the autumn. Yet, the benchmark hit 2.1 percent August 10, 2011, keeping mortgage rates at historic lows.

Bring together a wave of hungry capital-targeting multifamily plus surging fundamentals, and you’ve got the formula for cap rate compression. So multifamily finance pros aren’t shocked that values have improved—it’s the rapid pace of that improvement that’s surprising. Indeed, few saw this coming.

In last year’s CFO Strategies Survey, 78 percent of respondents believed cap rates would stay flat or rise this year—yet they have continued to compress. In this year’s survey, 83 percent expect cap rates to stay flat or start rising in 2012. Still, other CFOs have been bolstered by the Federal Reserve’s pledge in August that it would keep interest rates low for the next two years. And they also see the ever-improving debt and equity markets as proof positive that cap rates will continue to remain compressed, or even fall a little further, in 2012.  Apartment Investors, Read the Full Story Here.

Fast forward to today. Foreclosure Apartment expert Michal Ballard, and his clients that he took under his wing last fall are closing deals. And not just any apartment deal. To quote Michal…

“It’s unbelievable. Nothing like I expected a year ago when we first brought this information to your clients Alexis.  The deals I am seeing now are crazy. Can you imagine buying buildings for 2-3 times rent and getting 16-18% cash flow returns within the first year? It’s like we are holding a clown machine and they are spitting out clowns to us! And our money people cannot get enough… with the 30% overall returns they are seeing they are clammering for more and more deals. We are busier than a hornets nest!”

They have been doing deals, and A LOT of them… using 100% outside private money (through syndications) and building in upfront paydays, equity sharing, monthly income and more paydays after they are stabilized and refinanced, and of course the big payday once it is sold.

Currently, Michal has 9 deals in process, plus more in the pipeline. He expects to close another 6-8 projects by year end.

To say he is very busy, is an understatement. We are fortunate to have Michal back ONE LAST TIME in our Professional Investors Webinar “Earn Huge Profits Investing in Apartment Foreclosures” this Wednesday Only at 6pm PDT. And now you may join at no charge.

Since this the last time we will have Michal for quite some time, we wanted to make sure all our clients had access to this important information for FREE. Please register here now and login early. Our Free Spots are filling up fast and I am expecting a sell out. Talk to you Wednesday!

Many apartment buildings are now facing foreclosure because of lower prices from original purchase, 5-7 year mortgages becoming due and stricter underwriting guidelines making it impossible to refinance. For the astute buyer of apartment buildings these apartment building foreclosures could represent an investment windfall.

For many homeowners, it simply makes no economic sense to continue paying for their mortgages when the underlying asset is no longer worth what they owe. As all eyes are currently watching the residential real estate market, the commercial side of real estate has hardly begun to realize the problems that may be looming on the horizon for many apartment building owners.

Homeowners who are able to continue paying their mortgages may decide to hold on to their property for a few years and hope that real estate prices recover. They are able to make this decision because they have 30 year mortgages.

In contrast to residential mortgage holders, many investors in commercial real estate are holding on to 5-7 year mortgages. This means that they will be forced to refinance their properties when the notes become due and it couldn’t be happening at a worse time. Many apartment buildings rose in value right along side residential real estate prices and too many of these owners paid too much for their properties because they figured that as long as they were seeing a net profit every year from their rent collection then they had nothing to worry about.

Apartment Foreclosures, Building Owners facing a dire situation

During the real estate investing frenzy apartment building buyers didn’t take into account the possibility that real estate prices would drop so precipitously is such a short period of time. Now, many apartment building owners are facing a dire situation.

For example, let’s assume an apartment building investor purchased an apartment building in 2007 for 1 million dollars. He came out of pocket for $200,000 and he financed the purchase with a 5 year balloon note that becomes due on January 1, 2012. He financed 80% of the purchase price. In the last years, however, the market price of his apartment building has dropped 20%. It is now appraised by the bank as being worth $800,000.

Unfortunately, when he goes to the bank to get a loan, the loan officer tells him that the bank has changed their underwriting guidelines and they are now only willing to finance 70% of the appraised value of the property. Now, he is only able to finance $560,000. The problem is that he still owes just around $800,000 on the property. The difference between $800,000 and $560,000 is $240,000.

Unless the apartment building owner can come out of pocket to pay this additional $240,000 to the bank then he will eventually be forced into foreclosure. It is safe to assume that many apartment building owners will make the same choice that thousands of home owners have, to walk away from the mortgage and the property, chalking it off as a lesson learned.

This is a windfall in the making. Close to $4 trillion dollars in foreclosure apartment deals will change hands over the next 5 years.  There could be thousands of properties, in good condition, appearing on the market at rock bottom prices. Have you seen great apartment foreclosure deals in your area?  Do you know where to look?

Learn Apartment Foreclosures

If you would like to seize this opportunity, read “Apartment Foreclosures = Huge Profits,” then join me with Foreclosure and Apartment Industry Expert, Investor, Syndicator and Foreclosures.com Coach Michal Ballard in our LAST Professional Investors Webinar & Call – and now it’s FREE.

Details and Registration Here or Call 800-310-7730 x2. Talk to you then.

2012 will be a great time to fill your own nest using other people’s money. Lenders and investors of all  types of money – private, conventional, insurance, government backed, you name it — are flocking to the apartment market. Do you blame them? Apartment investing is in the early stages of a tremendous run. Who doesn’t want in?

Apartment Investing Highlights

Here are a few highlights from a new report from Co-Star “Apartment Investing Mortgage Activity Enjoys Upswing after 3-Year Slump: Low Interest and Cap Rates Keeping Buyers in the Market”.

• The apartment mortgage market continues to experience an increase in lending from GSE’s, FHA, portfolio lenders, banks, thrifts and commercial mortgage-backed securities issuers, according to new research from Fannie Mae.
• Fannie Mae and Freddie Mac saw the first increase in their total dollar volume of multifamily mortgage and securities acquisitions (purchases and securitizations) in 2011 year after 3 years of declines.
• During 2011, there was also an increase in multifamily CMBS issuance, totaling 16 deals. Life insurers had their second best year on record in multifamily in 2011, reaching $11.1 billion in commitments on 517 loans. This is a significant increase from $4.6 billion in commitments on 244 multifamily loans in 2010. At $11.1 billion, multifamily represented nearly 25% of all life insurer commercial real estate loan commitments last year.
• Banks and thrifts saw a significant increase in total net multifamily real estate holdings during 2011, with the FDIC reporting a net increase of $5.8 billion.
• Fannie Mae expects the 2012 multifamily mortgage activity level to be similar to 2011 as interest rates likely remaining near or at current levels; low cap rates keeping apartment buyers and sellers in the market; apartment sales staying healthy due to new apartment construction coming online; and continued improvement in job growth.

The Mortgage Bankers Association has also reported that multifamily lending is up and believes that banks will continue to keep their sights on lending in the apartment market. The Federal Reserve Bank’s policy of keeping interest rates low for at least two more years certainly supports that notion.

The consistently low vacancy rates in apartment buildings in key markets across the USA is proving a safety net for lenders and investors, especially now during economic uncertainty.

As we have been discussing for quite some time, the number of renters seeking apartments is at its highest level in more than a decade, as more families opt for apartment life rather than home ownership as a means of containing living costs.

Throughout the country, the number of families living in their own homes has fallen from more than 69% to about 65% since 2004. And the nationwide level the apartment vacancy rate has dipped to only 6% with the key market hovering at or below 1%.

However, the banks remain concerned about the reputation and experience of its borrowers and, after the “run-away” conditions that existed through 2009 in the commercial real estate market and have tightened up their current apartment lending standards.

Cash is king in the apartment investing market. And there is alot of money on the sidelines waiting to be placed.  Moneymen are at a loss as to what to do with their caches of cash.  Government and corporate bonds aren’t paying much in the way of interest these days; they provide safety but they offer meager returns.

Great Apartment Investing = Right Project + Right Market + Right Price

But when you buy the right apartment project, in the right market, at the right price, add value, raise the rents and then refinance in one year to return investors monies, and then selling it in 5 years - it is not unusual to see 40% internal rate of returns.

These returns are getting money people’s attention. Now all you have to do is go land those deals and match the money to them. Not a penny of the deal needs to come from your pockets. You can either flip the deal to an investor for a quick finders fee plus smaller equity stake in the project – or you can stay in the project, help raise the money and insert yourself in for a larger equity stake in the deal.

In both cases, you are not using any of your own cash or credit. You are making money for bringing the deal together.

Apartment Investing is an extremely lucrative, yet complicated business. If you want to do it right, and be taken seriously with the players who control the keys to the best deals, you will need to surround yourself with someone who has the track record and credibility and help you get in and get deals done. Do you Invest in Apartments now? Chime in and let me know what you think of today’s Apartment Market.

Learn Apartment Investing

That is why we have asked Michal Ballard, active apartment foreclosure investor and syndicator and expert instructor and coach to help our investor clients. He has agreed to share his insights for FREE in his Last Professional Webinar “Earn Huge Profits Investing in Apartment Foreclosures” this Wednesday night only.

We expect a full house, so please register here now and login early to the webinar.

You won’t see much of this sign in 2012. The apartment market is officially a “landlord’s market” with the national vacancy rate expected to fall to 4.6% this year, according to REIS, a commercial landlord research company (analyses’ 40 units or higher projects). This translates to rents will continue to rise in 2012 and beyond. What a great time to be an apartment investor.

The vacancy rate was 5.2% in the fourth quarter of 2011, down from 6.6% in the fourth quarter of 2010.

There is an overall trend away from home ownership and downsize for value. In Fannie Mae’s fourth quarter National Housing Survey 48% of renters said they can’t afford the purchase or upkeep of a home and 47% said they don’t have the credit to qualify for a mortgage.

In a recent survey of visitors to landlord rental listing site, Apartments.com 33.6% of those looking for an apartment this year are previous homeowners. Also, as the economy improves, more young workers will have the income needed to move out of their parents home and on their own and into a rental.

Obviously, some rental markets are tighter than others. New Haven, Conn., had a vacancy rate of 2.1% in the fourth quarter and New York had a rate of 2.4%, according to REIS data. These markets are essentially at full occupancy, as you can’t maintain 100% occupancy with normal turnover.

Nationally, average advertised one bedroom rents have gone up by 4.1% between March 2011 and March 2012. But rent hikes in more competitive markets have been much steeper. The average one bedroom rents in Chicago are up 11% from 2011, Denver is up 12% and Charlotte is up 13% from last year.

While tight conditions will cause many current renters to stay put, there will also be people who are forced to move because they can’t afford the rent increase. Those renters will downsize to more affordable apartment living.

Today’s Apartment Market will change your life…

If you want to profit in today’s apartment market, owning just one right project, in the right market at the right price, will literally change your life. Imagine buying one project a year, for the next 5 years, living handsomely off the income. Now imagine what your net worth will look like after you sell them.

Do you expect these low vacancies to last? Let me know below…

Learn to be an Apartment Landlord

Your timing has never been better to jump in. Find out more for free from expert apartment foreclosure investor and syndicator Michal Ballard in his Last Live Professional Investors Webinar. To make sure all of our clients not miss this critical information, we are allowing all foreclosures.com clients to join for FREE. Hurry register now, space will fill up fast.

Talk about an optimistic bunch. Professional Apartment Investors are all smiles when it comes to their upbeat outlook for the early part of the next great cycle, according to the annual CFO Strategies Survey, conducted by Multi-family Executive’s sister publication, Apartment Finance Today. Here’s just one of the many quotes in the report…

“We’re obviously bullish that we’re at the beginning of a development cycle, so we’re putting a lot of time, energy, and resources there,” says Jay Hiemenz, CFO of Phoenix-based Alliance Residential. “And the cap rate compression, coupled with better fundamentals, has made deep renovations feasible again.”

Alliance Residential is currently working on a $45,000-per-unit rehab of a 40-year-old community in Rancho Palos Verdes, Calif., looking to move rents by $750 a door. Alliance isn’t alone in its optimism. About 42% of multifamily firms are increasing their acquisition appetites.

Why the Apartment Investor Pros are Buying:

• Both the data and interviews with active players in the industry indicate that multifamily firms are feeding their growing appetites for deals more aggressively than at any point since the Great Recession.
• Financing is becoming more available, with many private-sector lenders growing more competitive.  Last year, only 16% of survey respondents borrowed from either life insurance companies or conduit lenders.  But more than twice that, 39%, expect to tap commercial mortgage or life insurance company debt over the next year.
• Availability of equity capital has also improved.  Nearly 60% of respondents believe equity capital is more available now than it was one year ago.  And 65% expect the market to stay just as healthy, or even improve, in 2012.
• And it is a great time to sell—the “cap rate conversion” and rebound in values has prompted many firms to reconsider their hold periods.
• Read the full report here.

How Apartment Market Big Bucks are Made:

When you buy with a high cap rate (percentage of net cash flow vs. purchase price, before debt service) and sell at a low cap rate (when the project is stabilized) - this is called “cap rate compression”.  This is how the big bucks are made in the apartment market.  This happens typically from adding value to a property, where then many outside investors bid up the price to purchase the project.

Cap rate conversion is a big reason why apartments are getting alot of attention lately.  “Cap rates compressed much quicker than anybody expected, and it’s become the new norm,” says David Messenger, CFO of UDR, Inc.

It is no wonder that optimism has begun its reign in the apartment investing market.  There are increased opportunities to find and buy foreclosure apartment projects at a fraction of their replacement cost (read more in “Apartment Foreclosure Deals Abound“).  You truly have the perfect storm to profit from apartment finding or investing.  There is an increased amount of available financing (both private and public) for you to structure your deal without using any of your own cash or credit.

I’m very excited about the opportunities out there. Are you investing in apartments in 2012? Do you think I am crazy and there is nothing out there? Let me know by commenting below.

Become a Professional Apartment Investor:

Learn more from professional apartment and foreclosure investor expert, Michal Ballard from his “Earn Huge Profits Investing in Apartment Foreclosures“  Live, Free, upcoming Professional Investors Webinar. You’ll thank me for having him on. Talk to you then.

Yesterday’s blog, “Foreclosure Homes Surge = Opportunity and Responsibility”, talked about the scary data showing foreclosures are on the rise. The banking settlement is behind us; the recent weak employment market; and tight loan underwriting on new mortgages; all of this bad news adds up to another banner year for  foreclosures. I know this all sounds very grim, with doomsayers predicting the housing market will implode.

I think the doomsayers are wrong again! As always they are only telling half the story. Here are Alexis McGee’s 4 Reasons Home Prices Will Not Crash…

1. Rents are up, Interest rates are down.

• As America has downsized to affordable living, more homeowners have moved to rental living. Fact: Rents have been rising steadily over the last 2 years.
• When combined with low interest rates qualified borrowers are finding “the rent vs. buy” formula has tipped back to buying. Fact:Quicken Loans is advertising a 3.99% Fixed, 30 year loan.
• Mix in the strong stock market. Fact: The Dow Jones Industrials has been hovering around 13,000 for the last month. 

Result: Homebuyer demand is very real. In many markets across the country well priced move-in ready homes are receiving multiple offers. Often these properties are going for over “list price.”

(Read more about the split housing market here. )

2. Supply is in check.

Until home prices rise again, it doesn’t make financial sense to build homes. The profit simply isn’t there for the builders. Single family building permits are at all time lows. Although the backlog of foreclosures left from the banking settlement is now hitting the market, if new home inventory is not also coming to market, inventory of existing homes will remain tight, creating support for home prices.

3. Political will.

There are few things on which politicians these days can actually agree. One of the few is foreclosures are bad. All our legislators agree on  on propping up the housing market, and I guarantee that in this election year, government monies will support buying homes.

Folks, this is a Presidential election year. The odds of a collapse in housing prices would be similar to the bankruptcy of the US government. Could it happen? Sure, but that certainly isn’t going to be the case for 2012 (or any year for that matter).

4. Confidence.

The housing market is driven, in large part, by Americans’ view of their own economic future. As American’s, our cultural dream is to find a job, find a spouse, start a family and will be okay. Putting this life in a home we own finishes the dream.

Back to those doomsayers, the group who cling to their early predictions of housing market continued calamity. Remember this quote…

“[We] must trade the tape we have rather than the tape we want” Todd Harrison in “Reflections on the Financial Crisis”.

The quicker the backlogged foreclosure inventory clears – the quicker the housing market can get back to trading on its fundamentals – and not on fear.

Savvy investors, as I blogged in “Distressed Buying the Buffett Way” are doubling down in housing in right now. As Warren Buffett has said…

“People don’t lose money in recessions. It’s just a transfer of wealth. Which side do you want to be on?… and

“For every seller or lender hurt by real estate, there will be a buyer who will benefit from it.”

So doomsayers, comment below, tell me I am wrong, tweet a link with claims of my insanity. If you agree, drown out the doomsayers rumblings. There will be investors who changed their stars in 2012. Their children will live a very good life. Are you one of them?

Find out how to the  right steps before you buy the wrong foreclosure. I will be teaching how to crunch the numbers and do the right math to secure profits (and avoid losses) – live this Wednesday. Details here.

Is the worse behind us?

• Home sales are picking up.
• Home prices are stabilizing.
• The robo-signing scandal of the last year has caused foreclosure numbers to drop by more than a third — a four year low.

Sounds good, right?

The news may not be what it seems. Recent changes in the banking rules (New Accounting Model: Banks Required to Book Projected Losses and Bank Accounting Change Provides Investor Opportunities) have caused lenders to pick up the pace on foreclosures that were stalled last year. I am guessing 2012 will be a bigger year than 2010 in Gross Numbers, and I mean Gross.

My morning reading found this on MSNBC.com “New foreclosure wave to hit ‘everyday’ borrowers. Subprime loans caused first, now job losses, economy will cause a bigger run.”

“Mortgage servicing provider Lender Processing Services reported in early March that U.S. foreclosure starts jumped 28 percent in January.

Although foreclosure starts were 50% or more lower than for the same period in 2010, we have turned up evidence of a large rise in new foreclosures between March 1 and 24 by three big banks – Deutsche Bank up 47%, Wells Fargo up 68% and Bank of America up 700%.

There are warning signs of a new wave of foreclosure are likely to hit much of the United States….”

Looking at the first two months of foreclosure activity for 2012, a trend is forming…

Default notices are up slightly (1%) overall, but increased 20% year over year in a dozen states (Hawaii, Maryland, Connecticut, South Carolina, Indiana, Pennsylvania, Florida and Massachusetts).

Auction notices are down slightly (2%), but increased 25% year over year in thirteen states (Kentucky, Illinois, Iowa, Pennsylvania, Indiana, Minnesota, Maryland, South Carolina and Oklahoma).

Bank Owned (REOs) are down 4%, but increased 20% year over year in seventeen states (Massachusetts, North Carolina, Florida, South Carolina, Georgia, Connecticut, New York and Illinois.)

Once again Nevada, California and Arizona posted the top state foreclosure rates, followed by Georgia, Florida, Illinois, Michigan, South Carolina, Ohio and Wisconsin.

According to foreclosure listings, Ten of the nation’s 20 largest metro areas by population have year over year increases in foreclosure activity, led by Florida cities of Tampa (64%) and Miami (53%) and include east coast cities Philadelphia (47%), and Chicago (43%).

Experts agree that the foreclosure numbers point to a gradually rising foreclosure tide as some of the barriers that have been holding back foreclosures are removed.

This wave of foreclosures has a big difference from the early years of the housing crisis, today’s foreclosures are mostly Americans with ordinary mortgages, who had conforming class A loans, whose ability to meet their payment obligation has been hit by the hard economic times. These are not the toxic subprime products with high interest rates, no money down and no proof of income. The evil mortgage broker’s handing out free money to fuel the housing bubble to its ultimate pop are not to blame. Those mortgage’s are through the system.

Today’s foreclosures are middle class, suburban and rural homeowners with conventional 30-year fixed mortgages at a reasonable interest rate. These borrowers put 20% plus down. Unfortunately, the current economy has left them  unemployed or underemployed and unable to make the payment. The new foreclosures of 2012 are traditional American homeowners who have been dealt the bad hands of the last 5 years. The national unemployment rate has fallen to 8.3% from its peak of 10% in October 2009, with nearly 13 million Americans jobless. Unemployment insurance is not enough to keep up with their mortgage payments.

From the MSNBC story, “New foreclosure wave to hit ‘everyday’ borrowers. Subprime loans caused first, now job losses, economy will cause a bigger run.”

“Zillow.com says more 25% of American homeowners were “under water” or owed more than their homes were worth in the fourth quarter of 2011. They expect the resurgence in foreclosures this year, combined with excess inventory of unsold, bank-owned homes hitting the market as well.

Plus, according to Amherst Securities 9.5 million homes are still at risk of default and in February it said it expected to see the uptick in foreclosures start to hit in March and April.”

Getting through the remaining foreclosures and dealing with the resulting flood of homes on the market in the wake of the bank settlement is a necessary part of the healing process for the U.S. housing market. For investors, this is not only tremendous opportunity, but a civic responsibility — invest wisely and help your community recovery quickly. Every house you buy, fix and sell to a new home buyer, improves the condition and quality of its neighborhood. Do it right. You will be handsomely rewarded by both investment profits and the great feeling of true significance.

It doesn’t get any better than this. Learn how to avoid costly mistakes, and take the right road to your investment profits, while making a difference in your community. Join us Wednesday for details.