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Recap of the March 9, 2019 ICG Real Estate 1-Day Expo

Crowd at the ICG Real Estate 1-Day ExpoOur ICG 1-Day REAL ESTATE Expo took place on Saturday, March 9th. It was a huge success; thank you to everyone who joined us. Throughout the day, we had 750+ attendees, with over 550 people in the main room at the same time. Great energy! Some of the attendees were KQED donors, who purchased the Remote Control Retirement Riches with Adiel Gorel Master Package. The donors received two tickets as part of their donation to KQED. It was an honor to have KQED members at the event, and what a thrill to explore our tried and true method with so many new folks. There was a good mix of investors: brand new investors, very experienced investors, and everything in between.

Market teams, property managers and expert guest speakers

The questions from the audience at the ICG Real Estate 1-Day Expo were excellent and I enjoyed answering all of them. I had the main market teams present, and some of the property managers within our national infrastructure there as well. Scott Webster from All Western Mortgage described regular FNMA (Fannie Mae) 30-year fixed-rate loans (some at just under 5%, which, for investors, is a low rate). He also described loans available to people who can’t get the FNMA loans, by virtue of owning more than the FNMA limit. He also outlined loans available to foreign investors. The attendees enjoyed the three expert guest speakers: CPA Joshua Cooper talked about the Opportunity Zone and other tax issues. Joyce Feldman talked about using insurance as the first and probably most important line of defense, and Lucian Ioja talked about optimizing real estate investing in the larger context of financial planning.

New offering on our website

Many new investors joined our QUICK LIST, to whom we send property sheets when we get them from the various markets. Those who joined the list will also receive event invitations and updates, throughout the year. (You can also join us, by texting QUICKLIST to 57838, or by emailing info@icgre.com and request to be added.)

I also introduced the NEW Members Area on our website. The Members Area will be an exciting treasure trove of information, offered in two tiers. It will be fully populated with podcasts, FAQ’s, and other useful information. It is a work in progress right now that we are truly excited about. There will also be webinars on specific subjects offered, as well as special one-on-one “Connect for Success” meetings with Adiel Gorel. We enabled people to join the membership area at a special discounted rate, as an “early member” which is good until April 10th only.

If you were not able to attend the ICG Real Estate 1-Day Expo you can still take advantage of our early member discount. Just use the code MARCHEXPO at checkout to receive 20% off, only available until April 10th. Also, for our early members (at either level), you will be able to attend two LIVE webinars that I will be recording before the “official” May 1st launch.

Everyone’s “membership clock” will only begin to tick on May 1st. Thus, by taking advantage of this discount you are getting a “backstage pass” as we get all our content loaded, and your payment will cover the time starting May 1, 2019. We are excited to have you join us, and will be working diligently to provide useful content to help you secure a strong financial future.

Next Expo May 18th

Many of the attendees from the March 9th Expo registered for the next 1-Day Expo, on Saturday, May 18th. We will have a new market available, three expert guest speakers, and of course loads of Q & A. You can register now for the May Expo here.

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Mortgage Applications Rise as Rates Settle at Relatively Low Level

Mortgage ApplicationIn a recent article on CNBC by Diane Olick, it is reported that weekly mortgage applications have risen by 5.3%. It is quite likely driven by the low rates, which may now last longer than previously expected. In general, purchase demand is weakening in the more expensive markets due to affordability issues.

Interest rates

Homeowners’ interest rates on mortgages are now about 4.65%. Investors always have higher rates, but can still get rates in the relatively low 5’s, which historically (for investors) is one of the lowest rates in the past few decades (only higher than the mid 4’s from about a year and a half ago, but much lower than most historical rates over the past few decades).

For us, as investors in new single-family rental homes in the Sun Belt states, demand for mortgages is up, and so is the demand for housing. Yet price increases over the past year have not been sharp. This makes some large metro areas in the Sun Belt affordable and sensible to the investor.

I have said countless time how special it is to get a 30-year fixed-rate mortgage which never keeps up with the cost of living (neither the PI monthly payment nor the remaining mortgage balance). Thus, inflation constantly erodes the real value of our loan, while the tenant’s rent is paying it off. To be able to get such 30-year fixed-rate loans at today’s rate is an extra special gift (for reference, when I started buying homes in the 1980’s, rates on investor mortgages were about 14%).

Investors should buy in the Sun Belt

Investors will be well served to buy new, good homes in good metro areas in the Sun Belt, getting a 30-year fixed-rate loan if they can (FNMA only allows 10 per person or 20 for a couple where both spouses can independently qualify). Many of our investors have exceeded that threshold. However, those of you that still can get these great loans, would be wise to use them.

Reach out to our office to schedule a time with me if you would like to discuss this further at (415) 927-7504 or email info@icgre.com.

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Natural Disasters, Insurance and Real Estate Investing

Tornado Natural Disasters

I am often asked about the potential dangers of hurricanes, tornadoes, and other natural disasters in regards to investing in single-family rental homes.

Every state/city in the U.S. is subject to (some type of) natural disasters that bring various risks (with few exceptions). Along the coasts, hurricanes happen, in the middle of the country, there are tornadoes, in other states, we have wildfires, earthquakes and more.

How insurance handles property damage when natural disasters hit

Pay attention to is how insurance handles damage from such events. For example, despite hurricanes being more frequent in recent years, their coverage by insurance is still quite good, so that minimizes risk greatly. We are always here to help you assess the fine print, too.

Tornadoes are more narrow in scope and thus usually don’t even hit homes in the major metropolitan areas at all, despite striking parameters. For example, Oklahoma City does have some tornadoes; over nearly 15 years, our real estate investors bought over 1,200 single-family homes and not one home purchased has been hit by this natural disaster.

Joe Pryor, our main Oklahoma City broker, has not seen any homes hit by a tornado that he knows, and he has lived there for decades. Even if that were to happen, insurance coverage is very good. The insurance premiums in Oklahoma City are quite low, indicating that the insurance companies themselves must consider the risk to be minimal.

Questions about tornadoes and hurricanes

The irony is that most questions about tornadoes and hurricanes come from people who live in the San Francisco or Los Angeles areas. Now, these are areas with real risks – earthquakes – which are poorly insured. In fact, one would need to be pretty brave to own an expensive home in the San Francisco Bay Area, where earthquakes can cause severe (if infrequent) damage, while earthquake insurance is usually very incomplete, with relatively poor coverage.

Feel free to post questions about your concerns and let’s discuss. What concerns you may just concern others. You may also email me at info@icgre.com.

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Buying a Home to Live in Versus Renting

Buying a Home to Live in Versus Renting

 

A classic question I get when talking to a would-be real estate investor is: “Shouldn’t we buy a home to live in first before buying investment homes?”

The answer is – it depends on where you live.

When considering owning your own residence, there are various layers of reasoning.  Some are logic and numbers-based.  Some are emotional, traditional and familial.

Owning your own home can be associated with safety, security, having “arrived”, satisfying family members’ aspirations, the stability of having a (hopefully) permanent place to live, and so on.

Of course, everyone has a different set of emotional considerations when it comes to owning a home.  These vary from person to person and, needless to say, are hard to quantify.

In this post, I will address the logical, numbers-based approach to the question of whether to buy your own home as your first real estate move, or rent and buy investment homes instead.

The numbers tell the story when considering buying a home

If you are considering buying your own home, the price of the home matters, the rent required to rent that same home matters, the local property taxes matter, the mortgage interest rates matter, dwelling insurance rates matter, and even the new 2018 tax law weighs in.

If you live in a market where property taxes are relatively low (say, between 1 and 1.7 percent of the home price per year), and insurance rates are reasonable, then if you are considering buying a home under about $400,000, that should be a “no-brainer” as your first step.  Between $400,000 and $500,000 would still be a reasonable range to consider buying the home.  In such a market, once you step up to the $500,000 range and above, the math may well start to turn as you climb higher in price, in favor of renting a home in the area in which you live.  Following that, owning rental homes in more optimal markets makes sense.

Watch out for high property tax and high insurance rates

In markets where the property taxes are high (like in Texas and Oregon), and insurance rates are high (Texas again, for example), the “no-brainer” number may shrink to $300,000 or so, while the range above which you may consider renting your own home while buying affordable investment homes in other markets, will likely be $400,000 or above. This is because with high expenses for property tax and insurance, (which as a homeowner you would be paying) the overall numbers and logic “turn the corner” faster.

Certainly, in expensive areas like the San Francisco Bay Area, Los Angeles, San Diego, New York City and others such markets, it is usually far more logical to be a renter, while owning rental properties in affordable markets, where rents are actually quite high as a percentage of the home purchase prices.

Our next quarterly expo is December 1st near San Francisco Airport. Email us at info@icgre.com and add “Read your blog post” in the subject line and come as my guest. We will get back to you with registration information. Learn more about the event at icgre.com/events.

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Recap of Our September 2018 ICG Real Estate Investment 1-Day Expo

Crowd shot at ICG Real Estate 1-Day Expo

Starting the day off with hundreds in attendance!

September 8th we had our quarterly ICG 1-Day Expo. It was spectacular.

Market Teams and Lenders

The market teams from relevant U.S. metro areas were present. The property managers were there too as always. Our main brokers and some of the builders (who construct the homes) came to the event as well. What a treat!

We had lenders specializing in both the conventional 30-year fixed rate loans, for investors in all 50 states. Lenders were in attendance who can make loans to people who are over the limit to get the regular (standard loans), as well as issue loans to foreign investors for U.S. rental homes.

I conducted lengthy Q&A sessions and gave the opening keynote speech and a  couple of seminars. At the end of the day, there was a recap of the expo. During the breaks and lunch, I talked with investors, answered questions and enjoyed their company.

Expert Speakers and Hundreds in Attendance

We had a CPA talks about the new tax law and how taxes are optimized for rental home investors. There was an expert who discussed getting college grants for our kids (or grandkids), as many of us still need help (and think we earn too much to qualify). Our last expert spoke on the new structure of reverse mortgages, which has become highly regulated and different than we have previously known. It is useful to understand how all of this works as many are ready to make use of the reverse mortgage, and those of us not quite there learned a lot too.

Hundreds of people were in attendance – one of our best expos to date because it was a wonderful mix of seasoned and brand new investors. We also had many new people who had just been exposed via the PBS Special “Remote Control Retirement Riches with Adiel Gorel.” Also in attendance were veteran ICG investors. The mix was very useful, as the mere questions asked were a great source of learning for everyone. Our veteran investors love talking to people and helping them learn more about the process and to share their experience. It is like a family reunion every quarter! Many investors come to share stories that have been investing for decades – they like to reconnect. The best part is learning how their lives have evolved and to see their dreams coming true for their future.

People All Came Together for the Quarterly ICG 1-Day Expo

The market teams were available in an airy, spacious and enjoyable space all day, to answer any questions and interact with investors new and old. They brought property offering for us to examine.

The day was highly enjoyable! People were from all over the San Francisco Bay Area, and many flew in from other states to attend the event, which was near the San Francisco Airport.

Many of the attendees have already registered to attend the next Quarterly ICG 1-Day Expo on Saturday, December 1,  2018.  We will have a brilliant attorney to discuss Asset Protection, LLCs and other structures, and the correct way to implement it while avoiding common mistakes.  We will also have an expert on credit optimization, so that we can qualify for the best rates possible, using special procedures that will be outlined.  We are still evaluating several exciting experts to choose the third speaker.

In addition to the most relevant market teams, updates and so on, there will be a NEW MARKET introduced on December 1st.

Everyone reading this blog can register for free, just contact us at info@icgre.com and in the subject line write: “Read your blog, please sign me up for free on December 1st!” You can register up to three guests (also for free).

Looking forward to seeing you!

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Making It Happen: Becoming a Solid Single-Family Rental Home Investor

Retired couple enjoying retirement with the help from an Investor

Life Happens in Real-Time Not on Paper

Many would-be rental home investors waste years before getting started.  Some of the reasons for that are:  too busy, fear of the unknown, the all-too-known paralysis of over-analysis, and lack of information.  Conversely, the notion that they might never have enough information or money, and need to spend more time researching and studying before they act.  Exacerbating this phenomenon, many new investors make what we call “rookie” mistakes when they finally do get going.

Cash flow 

The most typical rookie mistake is believing that low-quality homes in bad areas in lesser cities will provide better “cash flow” (foreigners like to call it “yield”). While cash flow may appear to be better ON PAPER for such lesser properties, life doesn’t happen on paper. In real life, these bad properties usually end up wasting even more years of the investor’s time (and also the investor’s money).

Get started on the right foot

There are ways to get started fast (and correctly). They are:  buy the right type of property (s), get the right (type) of financing, and use the proper management. Using these simple steps, the new investor can get off to a good start regardless of how much time or knowledge they have.

Remote Control Retirement Riches 

On my Public Television special titled “Remote Control Retirement Riches with Adiel Gorel”, which will be airing through the weekend and into early September on Public Television stations across the country (KQED-TV in the San Francisco Bay Area, for example) this coming weekend, August 24th and 25th, I cover these points. Of course, I cover many other important related topics as well.

In the package I have created for the people who pledge to help Public Television, I have included two newly-written books, an extensive video course complete with motion graphics, three booklets, a quiz, and a newsletter. The package also comes with the DVD of the show, as many may miss the showtimes.

One of the booklets I have written Is called “Making it Happen”. It targets the exact barriers preventing an investor from getting started correctly.  This booklet also contains a self-quiz defining your readiness.

This booklet, coupled with all the other extensive information, and the PBS Special itself, which hits the important points, should get anyone up an running in no time. I will also happily support any investor, as we have already changed the lives of thousands, and I believe in continuing to change lives for the better.

For a partial list of the Public Television stations’ showtimes, please click here.

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Stronger Inflation Weakens Buying Power

The Power of the Dollar will be Felt at the Grocery Store when Inflation Weakens Buying Power

In an article on the front page of the Wall Street Journal on Saturday, August 11th, titled “Stronger Inflation Eats Into Paychecks”, by Josh Mitchell he discusses how rising inflation creates more expenses across the board, lowering the actual standard of living for most people. This is always true. Even in years when inflation is “lower” than it is right now. Inflation constantly erodes the buying power of the dollar and weakens people’s ability to live to a certain standard they may be accustomed to. Inflation is likely to also exist in the United States for the foreseeable future, due in part to the large budget deficit, and is unlikely to abate. In fact, as the article mentions, it is now accelerating.

As I wrote about in my books, mentioned in my upcoming public television special “Remote Control Retirement Riches With Adiel Gorel”, and specifically in my booklet (which is part of the package for pledgers who help support public television stations) called “How to Harness Inflation As Your Ally”, the very act of buying a solid, affordable single-family home in the right market (please refer to the same source materials, including the booklet “Where to Invest?”), and financing them with the incomprehensible 30-year fixed-rate loan, which NEVER keeps up with inflation, actually REVERSES the effect inflation has on you.

Instead of eroding your income and buying power, when you have a 30-year fixed rate loan on a single-family home (technically these loans are possible to obtain on 1-4 residential units), inflation keep eroding BOTH your fixed monthly payment, AND the loan balance (which goes down gradually with the 30-year amortization principal payments as well).

When inflation constantly erodes your DEBT, obviously you owe less in terms of real dollars. This is an integral part of why rental single-family homes in the United States (to the best of my knowledge the only country where such loans exist), can improve your financial future, enable you to have a potentially far more powerful retirement, send your kids and grand-kids to college (as many have done using this investment style under our guidance), and actually have a constantly rising average net worth (long term, since local fluctuations both up & down in prices can vary that temporarily). In addition, you are building up to the future when either the loan balance looks so small it can just be paid off (usually well before 30 years are up), or the loan is paid off and now there is one more free and clear home providing income for the rest of your life.

I recently came back from speaking and meeting with investors in a foreign country. They are simply SHOCKED at the fact that United States investors can get the 30-year-loan (which is why I called it “incomprehensible”. Foreigners can’t understand why U.S. investors don’t get and many of these “gifts” as they possibly can. The foreign investor usually cannot get these “miracle loans.” Ironically foreigners can appreciate what these loans really mean and how they turn inflation into your ally, instead of your foe, more clearly than most Americans.

Starting this weekend, on August 18th my Public Television special “Remote Control Retirement Riches With Adiel Gorel” will start airing on various Public Television stations across the U.S. In the San Francisco Bay Area the special will air on KQED. A partial list of the air times in various markets (the list gets updated all the time) is here. For additional air times for KQED click here.

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Increase in Renters Seeking Single Family Homes vs. Apartments

Oaklahoma City

In a blog on RentCafe, by Nadia Balint, from April 2018, this is some of the information shared:

“The U.S. housing market has gone through nothing short of a transformation in the last decade. The number of people renting their abode has increased significantly, in some cities surpassing the number of homeowners. The housing market quickly responded to this shift by adding millions of rental units in just a few years, with many U.S. cities witnessing a frenzy of apartment construction.

The most interesting part of this transformation, however, was the fact that the rental market expanded even faster horizontally than it did vertically. For the better part of the decade ending in 2016, single-family homes for rent were the fastest growing type of rental in the U.S., outpacing the formidable apartment boom seen throughout the country.

According to U.S. Census estimates, the number of single-family rentals (SFR) in the U.S. grew by 31% in the ten year period immediately following the housing crisis (2007 to 2016), while multifamily rentals (MFR) grew by 14%. In net numbers, single-family rentals in the U.S. increased by 3.6 million units in ten years, more than rental apartments, which increased by 3.2 million units. As of 2016, the U.S. Census counted a total of over 15 million single-family homes for rent in the United States and a total of over 26 million apartments for rent.”

10-year increase in single-family vs. multi-family home rentals in U.S.

Oklahoma City leads the 10 Top Metros with the largest share of Single Family Home Rentals:

This is very likely helped by the tendency of many Millennials to rent instead of buy. Millennials have not been valuing home ownership as much as previous generations. Many of them value flexibility and the ability to move. Nevertheless, many Millennials are getting into the family-formation phase of their lives, and thus prefer single-family homes with a yard for the kids, dog etc.

All this dovetails perfectly into our investment philosophy: buy single-family homes in good areas in good large metropolitan areas, finance them with 30-year fixed rate loans (which never keep up with inflation) whenever possible, and hold. That will vastly change and improve your financial future.

We will discuss this and a lot more at our ICG Quarterly 1-Day Expo on Saturday 5/19/2018 near the San Francisco Airport. I will be teaching and holding extensive Q & A sessions. We will have expert speakers on Asset Protection, 1031 Exchanges, and Financial Planning overall. There will be lenders present, 5-star networking, and presentations from market teams from the most relevant markets in the U.S. You can attend free, with a guest by emailing us at info@icgre.com, and mentioning this blog. Looking forward to seeing you!

#real estate, #real estate investing, #interest rates, #single-family homes, #rentals, #retirement, #college costs, #wealth

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Will Rising Interest Rates Ruin Your Future?

Will rising interest rates ruin your real estate investments

Interest rates are rising. In the past year mortgage rates went up by over 0.5%. Homeowner mortgage rates are now about 4.4%; investor rates are always higher, and are currently at about 5.25%. Historically, these are still very low rates. Even in the past 20 years, which saw some of the lowest interest rates in nearly a century, the average rate is about 6%; based on the past 7% and even 7.5% are considered low.

In the 1980’s there were periods where interest rates were over 14%. For many years, rates were in the “double digits.” There was a lot of joy when rates finally got down to a “single digit.” I recall everyone running to refinance to get the amazing new rate of 9.95%!

The single-family home investor

For the single-family home investor, given their ability to get a 30-year fixed rate loan, which miraculously never keeps up with inflation, these recent changes in interest rates should mean very little. I have seen thousands of people’s lives change dramatically over the years buying good solid single- family home rentals. The trick is to hold them for a long time (leaving it be–no refinancing for debt consolidation) and let inflation erode the fixed loan to the point of ridiculousness, while natural average price appreciation happens steadily (that includes booms and busts – on average single-family home prices have appreciated at least 1.5 times the rate of inflation historically).

So why do I talk about interest rate rises potentially ruining your future? 

That has to do with human behavior. I have seen many cases recently, of investors who understood the powerful future benefit of buying single-family rentals, and as it happens, were looking during the period when rates were super low (investor rates were 4.7%). A few months later, when investor rates are now 5.3%, I have been hearing investors saying “Well, I don’t want to invest anymore, since rates went up from 4.7% to 5.3%”.

THIS is how you can ruin your financial future. Over the years, I have seen it time and time again – investors not taking action, not cementing their future by actually investing in a single-family home rental. Rather, they would find a reason not to do it – “interest rates are too high now”, “I read the economy will tank”, “it’s too late”, “I am too old” etc.

Using a minute change in interest rates as an excuse not to move forward, especially at a time when rates, even for investors, are supremely low – like today, is simply not going to let the powerful effect of rental homes change your future for the better.

Take action now to change your financial future

I have seen many such cases in the past, for example: two friends were considering investing in houses, one thought “the interest rates were too high” and didn’t do anything. The other went ahead and invested. Once he saw it was easy and profitable, he invested again, and again. Today, the financial difference between the two friends is staggering. The one who owns the rental homes, bought over 15 years ago, is retired with great ease, has sent his kids to great colleges, and is wealthy. His friend – not so much. It’s almost heartbreaking.

Don’t let these minor perturbations in interest rates ruin YOUR financial future.

We will discuss this and a lot more at our ICG Quarterly 1-Day Expo on Saturday 5/19/2018 near the San Francisco Airport. I will be teaching and holding extensive Q & A sessions. We will have expert speakers on Asset Protection, 1031 Exchanges, Financial Planning overall, as well as lenders, 5-star networking, and market teams from the most relevant markets in the U.S. You can attend free (or with a guest), by emailing us at info@icgre.com, and mentioning this blog. Be sure to give us your name and the name of your guest. Looking forward to seeing you.

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