One Simple Step to Security

If you ask one hundred people to name the best investment they ever made, almost all of them will say their home.  If it was such a great investment, why didn’t they buy two?

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 Did they earn any income form it? No

  Did they use creative financing? No

  Did they get any special training to buy it? No

  Was it an asset? No  - It was a liability, at least until they paid it in full because they had to pay the mortgage every month.  Some investment!

What if you had bought two home?  Well, in thirty years, your house would have been owned free and clear.  Also, the other house – that you rented-  would have been free and clear too because the renter would have paid off the mortgage.  Then you would have had income from the rent to cover those utilities, and plus enough to pay for gas, food, and an occasional movie.  That’s a better life than most Americans achieve.

If all you do is find a way to purchase your own home and one other, you’ll be ahead of the game.  You’ll be in the top 5 percent of American who won’t become burden to their families and friends, and you won’t be begging for handouts from the government.  You might even find yourself in a position to help others in need.  All because you bought one house to live in and one house to rent out!

These two strategies sure give a lot of hope to a lot of people who don’t know what’s coming around the bend.

Excerpt Nelson- Bell, K. (2007) Nothing Down for Women – The Smart Woman’s quick start guide to real estate investing.

By Lorena Tankersley SFR, CHRE.  Lorena is Listing and Short Sale Specialist with JoshuaTree Realty and president of the Women Investment Group (WIG).  You can find her at www.WomenInvestmentGroup.com

Ask me how to list your home for $1,700

A Man, Family, Company or Government

Throughout history women were taught and expected to be financially independent on someone else for their financial well-being.  Today that would be a dangerous position in which to be.  Times have definitely changed.

A Man

Historically, it’s impossible to talk about men, women, and money without talking about sex.  Sex, money, and women are closely interwoven, and often we don’t even see the impact one has on the other because we’ve been raised for generations to accept this as the standard in society.

By the time we are 16, some even younger, we as women, or girls, are aware of the tremendous power we have over men – the power of sex.  While most teenage boys are still awkward and goofy, we girls begin to notice that boys as well as men begin to look at us differently.  Often when we are very young, we begin to notice that grown men will smile at us, some will whistle, some will make obvious advances, and others will just stare and drool.

It is this sexual need that men have that gives us women such immense power early on, and begins to shape our view about what to do and how to act to get what we want in the world.  And the formula works…as long as we are young and sexually attractive.  But time marches on, and things change.

We all heard the stories …--“ I didn’t leave because of money.  Even though the marriage wasn’t good, at least I was taken care of financially.  It scared me to think that I’d out there on my own. I haven’t worked for 20 years. I don’t know if I can make it on my own.  Yes, our marriage has been falling apart for years, but my one saving grace was that I was OK financially…”

Please know I am not anti-men.  I love men.  I just do not want to be financially dependent on them.  And so many women are today.

Too often I meet women in their 40s or 50s who are divorced and struggling.  The story is pretty much the same: “ We were so happy when we were young.  Then we grew apart. And he left me for a younger woman. For the first time in my life I am on my own.”

Unfortunately many marriages do not pass the test of time.  The divorce rate is up; one out of two marriages ends in divorce.  I am not saying plan on divorce.  I am saying be realistic and set yourself up financially to succeed no matter what happens.  Whereby sex gave us power when we were young, money puts us in control as we get older.

A Family

Some of us have the luxury of being able to count on the wealth of our families to carry us through the years.  But that certainly is not the majority.  Several of my friends, instead of depending on their families to take care of them are now the ones taking care of their families.  The cost of elderly care is more and more expensive and the time taken out of work can take a toll in our finances.

Have you heard the story of a lady with a wealthy father?  The father had amassed substantial holdings in real estate, business, and stocks in his lifetime.   Her father remarried.  His new wife had his will amended to award all of his holdings to her side of the family so when he passed away,  my friend got nothing of her wealthy father’s estate.  This story is becoming more and more common.

My point in these examples is not to dwell on everything that could go wrong.  My point is to stress how essential it is to be prepared for whatever might happen. And to encourage you to tell yourself the truth about who or what you are depending upon for your financial future.

What is occurring within companies and government will highlight additional reason why depending upon your family for your financial support may not be your optimum choice.

A Company or A Government

The October 31, 2005 issue of TIME Magazine rant the cover story with the headlines – The Great retirement Ripoff.  The article explains how major U.S companies have used up or literally stolen the pension of its workers out from them.  Government legislation allowed companies to simply walk away from the promises they made to their employees to provide monthly retirement payments and healthcare benefits throughout the employee’s retirement years. 

The article went on to state, “A TIME investigation has concluded that long before today’s working Americans reach retirement age,  policy decision by Congress favoring corporate and special interest over workers will drive millions of older Americans – a majority of them women – into poverty, push millions more to the brink and turn retirement years into a time of need for everyone but the affluent.”

The writer highlighted five case studies of people who had fallen victim to  the pension problem.  Every one of the five cases was a woman.   One 69 year old woman was cut off from her $1,200 monthly pension check which she was granted as a result of her husband’s death while working on the job.  Today she collects aluminum cans to generate an extra $60 per month to survive.

Another woman, 60 year old, worked for Polaroid Corporation for 35 years starting as a file clerk and worked her way into the executive boardroom.   She participated in an employee stock ownership plan (ESOP).  She gave up eight percent of her salary to pay for this plan with the expectation that she would have thousands in retirement when she cashed in her shares.  The company’s shares plummeted in value and because of poor business decisions and intervention by Congress this woman lost between $100,000 and $200,000.  On top of that she was excepting tens of thousands of dollars in pension payments and benefits. When all was said and done she received a one-time check of $47.

The five women featured in this article all though they were set to be financially secure in their retirement years, and now they face poverty. This is outrageous.  And there does not appear to be any indication of the pension system being resurrected in the future.   It will likely become a thing of the past.

And this is not just happening to women, it is happening to countless husbands and family members as well.  This crisis is not gender-specific.

So, again, if you’re counting on your husbands or family for your financial lifeline take this into account.

The Government – As far as the government is concerned both the Social Security system and the Medicare system are basically bankrupt.

It’s Your Choice

So a man, family, company, or government may be there for you in the future…I just wouldn’t count on it.  I would not stake my entire financial future on something over which I do not have full control.

It simply comes down to making a decision – do I seek financial independence for myself or financial dependence? It is a conscious choice.  If you choose financial dependence then know that you are agreeing to allow someone else in your life to be responsible for your financial well-being…and accept the good and the bad consequences that go along with that.

If, on the other hand, your choice is financial independence then you are choosing long-term freedom over short-term comfort.  You’re deciding on the harder road up front – the road from which many women turn away – in order to have the easier, rewarding road in the future.

I am certain that many women who truly commits to taking control of her  own financial life will succeed.  Women are doing it every day.

Kiyosaki, K. (2006) Excerpt Rich Woman – Because I hate being told what to do! Rich Press

By Lorena Tankersley SFR, CHRE.  Lorena is Listing and Short Sale Specialist with Keller Williams and president of the Women Investment Group (WIG).  You can find her at http://www.womeninvestmentgroup.com/

To get the most current Neighborhood Market Activity report for your area go to http://www.buyandselllittletonarea.com/

The Stupid Thing We Woman Do

The Stupid Thing We Woman Do

We women truly do some ridiculously stupid things in our lives – all revolving around money.  I think it’s time we simply get smarter on the subject.

            Am I saying women are stupid? Absolutely no.  Nothing could be further from the truth.  I am saying that we do some incredibly foolish things.  And most of these silly things are directly related to money. 

            Here is a list of a few of the stupid things that many of us women do when it comes to money:

·         We marry for money.

·         We stay in a bad marriages or relationship because we’re afraid we can’t make it financially on our own.

·         We let a man make all our key financial decisions.

·         We accept the myth that men are better with money.

·         We accept the myth that men are better at investing.

·         We won’t challenge a man’s financial decisions because we don’t want to rock the boat and hurt his ego.

·         We take financial advice from supposed “experts” because we do’t think we’re smart enough.

·         We keep quiet to keep the peace.

·         We hang on too long because (at least financially) we’re “comfortable.”

·         We’re left behind for younger women…because we hung on too long.

·         We hope the man will change.

·         We settle for “ok” in life when what we really want is “Great.”

·         A Man is lost but won’t ask for directions…and we follow him.

·         We sell ourselves short.

·         We put up with all the inequalities on the job, for a paycheck.

·         We feel guilty working extra hours and not being with our kids.

·         We get passed over for promotion we deserve…and stay.

·         We accept less pay than our male equivalents and often end up doing their work.

·         We miss our kid’s soccer games and recitals because we have to work.

·         We often look into the future and think, “Someday…”

Most of us have done one or more of these stupid things.  The bottom line is that many of us sell our souls in the name of money.  The real crime is the toll it takes on our self-esteem, our confidence, and our self-worth.

Ladies, what are we talking about? Investing. But it’s actually about much more than that.  It’s about women taking control of their lives. It’s about dignity. It’s about Self-respect.

Kiyosaki, K. (2006) Rich Woman – Because I hate being told what to do! Rich Press

By Lorena Tankersley SFR, CHRE.  Lorena is Listing and Short Sale Specialist with Keller Williams and president of the Women Investment Group (WIG).  You can find her at www.WomenInvestmentGroup.com

To get the most current Neighborhood Market Activity report for your area just call 303-981-6539 .

Stop Paying Your Landlord's Mortgage!

Stop Paying Your Landlord's Mortgage!

It's staggering when you think about the cost of living, especially if you're a renter and not a home owner. If you are currently paying $1,000 a month for rented housing, then over the next three years, your property management company will effectively have reaped $36,000 of your hard earned cash! You're paying their mortgage when you could be building equity in your own property.

What if I don't have the money to buy a home right now?

There are many loan programs available that offer low and no down payment options. Some programs permit gift money as a down payment, and often sellers are willing to make a contribution to your purchase if they want to sell the home quickly.

There are many benefits of home ownership to consider, most of all, tax deductions. Let's take a look at how advantageous this can be as a homeowner:

How much is tax deductible?

Tax deductions vary, but the IRS has laid out solid rules. They also have several tax publications full of helpful information worth taking the time to read. Publication 530, Tax Information for First-Time Homeowners, is very thorough, as is Publication 936, Home Mortgage Interest Deduction. For quick reference, you can refer to Tax Topics 50S, Interest Expense, and 504, Home Mortgage Points.

These publications often refer to local and state guidelines, so you may want to consult a CPA to answer all the questions that arise from reading these materials. Here are a few tips you should know up front:

Real Estate taxes are deductible on a primary residence. Real Estate taxes are paid at settlement or closing, or through an escrow account.

Mortgage interest is deductible on a loan to purchase, build or improve your home. Your lender will provide you with a Mortgage Interest Statement (Form 1098) to list the total interest paid during the year. This should include any deductible points paid for that year.

Pre-paid interest is deductible in the year it is paid. At the close of a real estate transaction, borrowers usually pay for the interest on their loan that falls between the closing period and the first of the next month. Mortgage payments are made "in arrears" so when a loan is closed mid-month, there is interest due to the new lender which must be paid in advance.

If you are building a home, the interest on the construction loan is deductible. The construction period cannot exceed 24 months prior to the date that you move in if you claim this as your primary residence.

To get the most current Neighborhood Market Activity report for your area just call 303-731-5537 for a 24hr Free recorded message.

By Lorena Tankersley SFR, CHRE.  Lorena is Listing and Short Sale Specialist with Keller Williams and president of the Women Investment Group (WIG).  You can find her at http://www.womeninvestmentgroup.com/

Loan Modification vs. Short Sale vs. Walk Away- Which is Best?

I have written about short sales and other owner options when avoiding foreclosure in the past. In this article, I will discuss the pros and cons for each of the options to the countless “underwater” homeowners in foreclosure throughout our country. Should you modify your loan with your lender; sell your house as a “short sale” with the lenders approval; or walk away and allow the lender to foreclose? (You may also do a Deed in Lieu of Foreclosure.)

Modify Your Loan

Ideally, you want to stay in your home if you can afford it and it makes financial sense. The big question is, “can you? and “does it?” To begin, you should ask your lender. It’s hard to say how willing your lender will be to modify your loan, until you ask. There is a lot involved in this process as your lender is going to want to completely review your financial picture with tax returns, pay stubs, financial statement, bank statements and a letter explaining your hardship. Most homeowners fall short here and don’t take the time to put this information together, simply giving up. That is not good.

If you have a government backed loan and want to modify your personal residence, you have a better chance of a successful modification falling under the “Making Home Affordable” plan. Conventional, jumbo and subprime loans do not fall under this plan and each lender will have their own terms for modification (some lenders are good and some are horrible). In most good lender situations, the lenders will offer a reduced payment and/or interest rate for a short period of time, until you get back on your feet.

However, if your principal balance greatly exceeds the market value, and you request a reduction of that loan balance as a part of your loan modification, don’t expect to the lender to agree. As much as our politicians and press like to discuss how lenders are writing down loans to help people stay in their homes, I haven’t seen or heard of one write down to date. If you have, please let me know which lender is approving principal write-downs and I will share this in my blog.

The “pro” to a loan modification is you get a reduced mortgage payment. The “con” is that even after the modification, you still not be able to afford the home and it may not make financial sense to stay in the home. If that’s the case, it’s time to make the decision to sell. You can sell voluntarily through a short sale, or you can sell involuntarily through losing the house to foreclosure. Either way, it’s time to cut your losses, downsize and move on.

Short Sale

Through a short sale the lender agrees to accept less than the balance owed on the mortgage at sale. On purchase money loans, the deficiency balance is forgiven, typically. Some of my clients have reported that some mortgage companies are asking borrowers to agree to accept liability for the deficiency balance. Don’t’ assume anything. Make sure you review your original Deed of Trust carefully (get legal and tax advice) and make certain you understand whether the deficiency balance is forgiven.

Currently, short sales are being approved in record numbers and in half the time because lenders do not want to own a distressed property they may have trouble selling later as an REO. Banks would much rather see the homeowner sell the property under a short sale, and lose the deficiency balance, than be forced to take the property through foreclosure, and take on more costs and market risks.

To successfully sell your home under a short sale, you must hire a professional Realtor. This is not the time to do a “for sale by owner.” You must make sure you go into escrow with the right buyer who will hang in there while you wade through the maze of lender requirements. There is a ton of paperwork again (tax returns, pay stubs, financial statement, bank statements and a letter explaining your hardship), calls to postpone your auction (don’t assume the lender will do this automatically), BPOs (brokers price opinion), lender appraisal, buyer contingencies, HUD1 statements, short sale approval letters, clear title and a lot of follow-up calls and emails. Oftentimes the lender will counter your buyers offer, so your buyer must have “wiggle room” in their price, ready to go up if the lender asks. A short sale is not for the weak at heart and takes a lot of tenacity and persistence.

The biggest “pro” to a short sale is the lender approves a significant write-down of the mortgage balance in exchange for cash from a new buyer. The homeowner is in control of the sale, not the bank. You will spare yourself the social stigma of the “foreclosure” word. Your credit is much less impacted than with a foreclosure. A short sale may be considered to be a derogatory mark on your credit even though credit bureaus do not show the word “short sale” on your credit report. It may say “paid in full for less than agreed” or “settled for less,” among other categories. Some clients have reported negative FICO score drops from 50 points to 130 points.

You may qualify to buy another home with a Fannie Mae-backed mortgage within two years, regardless of whether the home is your primary residence (FHA wait is 3 years). The lender has removed a non-performing asset from its books. And the buyer got a home that was cared for by a willing homeowner through close of escrow (versus a stripped home after foreclosure auction).

Outside of being a pain in the “you know what” (and complete time suck), another important “con” about short sales is the lender is required to file a 1099C if the debt forgiven exceeds $600. This may create a tax liability for the former property owner because it is considered “income.” However, the Mortgage Forgiveness Debt Relief Act of 2007 provides tax relief for some loans forgiven in 2007 through 2012. (See the IRS document “The Mortgage Forgiveness Debt Relief Act and Debt Cancellation.”)

Walk Away – Let the Lender Foreclose

If the lender will not approve your short sale, foreclosure is the last option, although it presents major problems. The only “pro” to losing your house to foreclosure, is that it is the easiest of the three options to underwater homeowners. You stay in the house as long as you can rent free, you don’t have to clean up the house and open your door to buyers. You do nothing, and then move. So, foreclosure is the path of least resistance.

One big “con” to foreclosure is the hit to your credit and future borrowing ability. A number of sources have reported FICO score drops from 200 to 400 points after a foreclosure. Generally this credit score will remain on your credit report as a public record for 7 to 10 years. Best case, you may be eligible to buy another home in 5 years if the home was your primary residence. Without restrictions, the wait is 7 years. If you are an investor and do not occupy the home, the wait to buy with a Fannie Mae insured loan is 7 years.

Another big “con” to foreclosure, is the auction tends to bring significantly less money than a normal sale. If the sale brings less than the amount owed on the loan, the remaining balance of the loan is called a deficiency balance.

If the home falls into foreclosure, it is possible to mitigate the negative impact of a deficiency balance by filing bankruptcy. Generally speaking, deficiency balances are treated like any other unsecured debt in bankruptcy, meaning that they can be wiped clear by Chapter 7, and repaid over time through a Chapter 13. Although bankruptcy does not sound like a positive alternative, it may be the best solution if the mortgage lender will not allow the home to be sold through a short sale.

Make sure you consult with an attorney experienced in tax and bankruptcy law to understand all of your options to resolving your mortgage debt.

If you are upside down in your mortgage, and do not see a way out anytime soon, it’s time to take action. Losing your home to foreclosure has serious consequences. Don’t make the wrong decision. Call your lender and either work out a loan modification you can afford, or find a great short sale Realtor and get your house sold (with the lenders approval of course). But it’s time to cut your losses and move onto your fresh start. Loan modifications and short sales are legal, ethical and the right thing to do for you and your family.

I hope this column helps you make the right decision for your situation.

To get the most current Neighborhood Market Activity report for your area just log into Market Snapshot

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By Lorena Tankersley SFR, CHRE.  Lorena is Listing and short sale specialist with Keller Williams and president of the Women Investment Group (WIG).  You can find her at www.WomenInvestmentGroup.com

Smart Onwership - Women investing in real estate

Smart Ownership – Women Investing in Real Estate

“Asset protection” is one of those terms that cause eyes to glaze over and minds to wander.  Think of asset protection as part of a lifelong practice of Smart Ownership.  We real estate Investor devote so much of our time, money, energy and thoughts to building assets that protecting those assets should be at least equally important.  Let’s think of it as a Smart Ownership practice that is proactive, knowledgeable and wise stewardship of our assets in keeping with the people, priorities and principles that we value. 

                Most of us value ease over anxiety; our loved ones or favorite charities over the taxperson, our economic independence over financial dependence on our life partner.  If forced to make choices like those above, almost all of us would select the former.  However, these options are not always available.  A former rapper once chanted, “more money – more problems,” and real estate investing is one of those wealth builders that sometimes seems to come as a combo meal, with a super-sized side of problems.

                Asset protection has unique applications for women real estate investors arising from the unique ways in which investments, life events and lifestyle decisions interact in their lives.  For example, savvy woman, who are also moms, tend to be devoted to building wealth to pass along to their children – a Smart Ownership goal that is helped by estate planning.  Additionally, many savvy women have built greater-than-usual wealth while single, or independently while married.  The ability to protect and direct assets after a marriage or a divorce is also a Smart Ownership undertaking.

                In its purest form, Smart Ownership approach to real estate investing includes activities as diverse as smart pre-purchase investments analysis, values-driven mortgage decision-making, and vision-based exit strategy forecasting.  The started version of your Smart Ownership practice should address and account for at least these issues, which we will call the “Four Ds”: Death, Divorce, Disability, and Disaster.  The Four Ds are scary to some, and at least one of the four is inevitable.  Many of us will face two or three of them.  The ones that aren’t inevitable are largely unavoidable.  We have two choices: to avoid the inevitable and the unavoidable out of fear, or to face them head on.

Please join me on my Blog while we discuss the Four Ds and the good practice of Smart Ownership.

To get the most current Neighborhood Market Activity report for your area just call 303-731-5537 for a 24hr Free recorded message.

By Lorena Tankersley SFR, CHRE.  Lorena is Listing and short sale specialist with Keller Williams and president of the Women Investment Group (WIG).  You can find her at http://www.womeninvestmentgroup.com/

When should you invest in real estate? The best time is now!!

When should you invest in real estate? The best time is now.

How to Invest in any Market

                Today’s market demonstrates that, no matter what the market is doing, you need to follow the basic rules of real estate investing.  Those who ignored common wisdom and failed to do their homework are paying the price.

                What is the common wisdom? It starts with the basics. Here are guidelines to help you get on the right track to sound investment decisions in any market.

GET SMART – There is no substitute for knowledge, even if you work with a real estate investment advisor.  Read, attend seminars and join reputable investment groups.  Make sure the information you get is worthwhile.  Read business journals and newspapers every day.  Go on the internet to find out what’s going on in business and real estate.  There are always changes.

MEAN BUSINESS – Start with the right frame of mind.  That’s true whether you are adding an investment property to your portfolio or evicting a tenant who has failed to pay rent.  You’re here to make money, not to be entertained or extend charity to dead-beats.

MAKE YOUR SUCCESS A TEAM EFFORT -  You may choose a turnkey real estate investment strategy.  It’s is difficult to someone just getting into real estate investing to know the right questions to ask or where to get answers.  Have a team of advisors and professionals to support your questions and answers.  Your Team can help you identify properties, negotiate sales, find lenders, and contractors, lease, stage, sell and manage your properties.

HAVE A GAME PLAN – Know what you are trying to accomplish up front.  Do you want cash flow? Are you investing for retirement? Do you have some other goal in mind? Your goals determine how you evaluate a property.  If it is long-term, hold such as a property for retirement, a property with less built in equity and a small steady increase in value every year for 20 years will work.  If you are looking for cash flow, buy an undervalued property with a larger deposit.   It is important to have an exit strategy.  How long can you afford your fix-and-flip property? If you are using hard money, do you have a plan to refinance?

RUN THE NUMBERS – It doesn’t matter whether your goal is to buy and hold or fix-and-flip – evaluate the numbers before you buy.  Use a serious property analysis software. Load details like the purchase price, rental income, vacancy rate, property taxes, management fees, maintenance cost, hoa fees,  and generate reports that provide an indication of how the property is likely to perform.

CONSIDER THE MARKET – Once you have decided on your goals and have a game plan, frame it all within the context of the market.  If your goal is to fix-and-flip, remember this is hard in a stale market while buy and hold may be the best strategy. 

LOOK AT THE NEIGHBORS -  Before you buy, look at a lot of properties.  Compare it to others in the neighborhood. That’s the only way you can effectively evaluate a property.  It always helps to have “comps”. The MLS is another good indicator of comparable properties offered for sale.  What are asking prices for active and pending homes? How long have comparables home been in the market? Then, drive the neighborhood

BE REALITIC – As you evaluate a property, don’t estimate costs.  Don’t take information at face value and don’t expect everything to work as planned.  In real estate, the best case scenario isn’t the one that usually comes up.  Be realistic about cost and potential problems and be prepare for foreseeable worst-case scenario.

JUST DO IT -  Whatever mistakes you might make investing in real estate, the biggest mistake and most costly mistakes you can make is doing nothing at all.  Figure out your budget, know what you want to do ahead of time and then go do it.  Just buy something!!

To get the most current Neighborhood Market Activity report for your are just call 303-731-5537 for a 24hr Free recorded message

By Lorena Tankersley SFR, CHRE.  Lorena is Listing and short sale specialist with Keller Williams and president of the Women Investment Group (WIG).  You can find her at www.WomenInvestmentGroup.com