An extreme amount of student loan debt is currently burdening the majority of college attendees within the United States. We’re talking about an average of 1.4 trillion dollars. Even more unsettling, this statistic doesn’t include the debt accumulated by Parent Plus Loans. Though these loans are deemed the parent’s responsibility, it is oftentimes agreed upon by the student to pay it back. This amount is estimated to be an extra $89 Billion.
Whether you are a student or parent worried about the burdens of educational finances, ICG is here to educate you on the valuable potential of a real estate investment.
Paying Back Student Debt?
Consider the possibilities of a positive investment. Though it might be intimidating to accumulate more debt, it could be life-changing to educate yourself on pertinent information that, if begun early enough, could initially obviate the need for student loans. ICG will guide you through the steps to build equity, pay for your kids’ or grandkids’ college, and also plan for a powerful retirement. Stay updated with recorded events and watch Adiel Gorel explain the importance of single-family home rental investments.
Want to Secure Your Child’s Future?
College may seem way down the line for your child, but it arrives sooner than expected, causing you to panic about the financials. ICG will provide you with the tools to solve this worrisome predicament. Investing in a single-family home may not seem in the cards right now, but it is an excellent way to provide funding for your child’s education. Working with real estate investments for over 30 years through historic recessions worldwide, Adiel Gorel presents easy-to-follow investment plans that go beyond securing future financial stability, by focusing on your wellbeing as a foundation for future success.
Investing in you or your child’s education should be of top priority. Join our worldwide sessions when you become a member, and gain deeper access to a variety of educational resources that simplify all your investment questions with doable answers. For a more in-depth look, attend ICG Real Estate 1-day Expo on September 7th, 2019 near the San Francisco Airport. Contact us for details and for complimentary tickets at email@example.com.
In a Fortune Magazine article by Chris Morris, published in February, it is reported that in January 2019, there was more inventory available and houses sat on the market about a week longer than in January 2018.
As of January, there was an available inventory of 1.59 million homes overall, versus 1.53 million in December 2018. Of course, the article is lacking by treating the entire country as one monolithic real estate market. Needless to say, there are hundreds of markets, and they don’t always perform in lockstep.
Nevertheless, there is a subtle shift, even in mentality, that is more favorable to buyers as opposed to sellers, who until recently reigned supreme. Since we are primarily buyers (and then we hold for the long term), a buyer’s market is a positive for us.
It is interesting to note, and one of the reasons I am posting this blog based on an article several weeks old is that while in January 2019 sales were flat, in February 2019 sales surged up, but then dropped only slightly. This is likely to continue to lower rates and sellers having to adjust expectations. Overall, we can see that while there is a shift towards buyers in many markets, the market is still hovering near a relatively stable point. With the low-interest rates and more friendly sellers, this becomes a positive for the investor.
We like to buy brand-new homes. Clearly, the sellers for us are builders. Some builders don’t want to sell to investors. Our market teams successfully convince the builders that it pays to work with our investors, as they get good volume from us. As the mood changes, these very builders may become more receptive to working with buyers, and perhaps even offer more incentives.
This will be discussed in more depth in a podcast on our Premier Members area soon. We will also talk about this during our next ICG Real Estate 1-Day Expo on May 18, 2019
As we head into spring, there is a saying, “…spring is in the air.” And that is not the only thing being felt in the air. There seems to be a persistent notion that the “real estate market” has been going up for too long and is due for a correction. People also point out that the last big recession started in 2008, and perhaps the “cycle” is indicating that the new one may be upon us.
Of course, there really is no “real estate market” in the United States. There is the Phoenix market, the Dallas market, the Kansas City market, and the markets in every other metro area, such as Los Angeles, San Francisco, and so on. Not every local real estate market behaves in the same way others.
All markets do not experience a boom
Even during the major boom of 2004 to 2006, not all markets went through the boom. Some entire states “sat out” that of that one. Similarly during the big recession, between 2008 and 2011, not all markets tanked. In fact, most of the markets that tanked were the ones which had boomed before.
Some states did not move down very much, even during the recession. This is an important point. If the San Francisco Bay Area (for example) does go down and corrects for its fast rise over the past few years, it is not “an automatic” that affordable markets like the Sun Belt states, (like the markets in which we invest) will do the same.
During past recessions, the rentals actually were better than usual. The reason is likely that if a tenant had been saving up to buy their own home, during a recession they are likely to shelve those plans till better times. Thus, even more, people rent than during stable conditions. Even if a downturn hits, the investor would likely benefit by just sitting and doing nothing, letting the loan balance pay down and get eroded by inflation, while enjoying lower vacancies.
How the Dodd-Frank bill helps
In addition, measures taken by congress after the last recession, like the Dodd-Frank bill, have mitigated the unbridled risk in lending that existed prior to the 2008 recession. My belief is if and when a downturn occurs, its magnitude is likely to be lesser than the last time.
One of the riskiest things, ironically, is that people delay buying solid investment homes, especially with today’s fantastic interest rates. I have met people from my past who never got started because there was always a recession around the corner, or a boom, or some other news item. Some of these people can be quite regretful 14 years later, realizing they could have changed their financial future but didn’t.
We will discuss this and many other issues at our 1-Day Expo on May 18th. I will also address this topic during our first webinar tomorrow–our official launch of the Members area on our website! Learn all about it and get on board at icgre.com/MEMBERS. Join us and stay informed!
In a blog on RentCafe, by Nadia Balint, from April 2018, this is some of the information shared:
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.”
Oklahoma City leads the 10 Top Metros with the largest share of Single Family Home Rentals:
his 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 firstname.lastname@example.org, and mentioning this blog. Looking forward to seeing you!
In a Wall Street Journal article from August 19th by Josh Mitchell, it is reported that housing starts are sharply up for the year and have seen a strong uptick in July. Housing starts bode well for a general housing recovery. We have already begun to go back to our old buying style of buying new homes from developers in Oklahoma City.
I am relatively sure in the coming months we will be seeing more attractive opportunities in buying brand new products in other markets as well. It took a long time for the builders to be able to put out a competitive product for real estate investors, as they played a serious “second fiddle” to existing homes, which were priced well below what they could offer.
We are pleased to see the trend as it was always our opinion that a prudent and safe real estate investment certainly includes brand-new homes with a builder’s warranty, with a fixed-rate 30-year loan paid off by the tenant and eroded steadily by inflation (as it is not pegged to the cost of living). This mode of real estate investment serves as the foundation of building a solid financial future and achieving long-term life goals of a solid retirement and sending our kids to college.
Builders have the ability to offer the buyers many “goodies” at a cost to them- that is much lower than the retail cost (an example might be a covered patio which costs $6K but only costs the builder $2K to build). This can create an attractive package for the investor.
We will have builders and new properties available at our upcoming 1-Day Real Estate Expo near SFO on Saturday, September 13th. I am looking forward to seeing you.
I am enclosing the full WSJ article for convenience:
U.S. Housing Starts Up Sharply in July – Renewed Strength in Housing Market Could Boost Economy
By Josh Mitchell
Updated Aug. 19, 2014 11:03 a.m. ET .
WASHINGTON—Home construction surged in July, a sign that renewed strength in the housing market could boost the economy in coming months.
Housing starts climbed almost 16% last month to an annual rate of 1.093 million units, the Commerce Department said Tuesday. That marked the highest level of construction since November, driven by a pronounced rise in new apartments.
Home construction rose 22% in the year through July, and a rise in applications for building permits last month suggests further gains this year. That could ease concerns at the Federal Reserve of a weak housing sector weighing on economic growth this year.
”With housing starts up 22% over the last year, the Fed’s concern about a ‘slow’ recovery in the housing market looks misplaced to us,” Economist John Ryding of RDQ Economics said in a note to clients. But details within Tuesday’s report raised questions about whether the construction gains will be sustained. Last month’s rise appeared to be due partly to a rebound in construction in the South after rainy weather caused delays earlier this summer.
Such rebounds are typically temporary. Also, the bulk of the increase was due to surging apartment construction, a volatile category that can mask underlying strength in the market. And it’s unclear whether the housing market will be able to maintain momentum if mortgages rates rise, as many economists expect them to as the Federal Reserve moves toward raising its benchmark short-term interest rates from near zero.
Amid the prospect of higher costs and weak income growth, Fannie Mae’s economics group downgraded its forecast for home sales and construction on Monday. It now expects construction of 1.43 million single-family units this year and next combined, down from an earlier forecast of 1.61 million units.
A measure of affordability, which takes into account interest rates, home prices and median household income, hit its lowest level in six years in June. That reflects a run-up in home prices.
Interest rates have fallen back to year-ago levels in recent weeks after rising late last year. The average rate on a conventional 30-year mortgage stood at 4.12% last week, down from 4.53% in the first week of the year, according to Freddie Mac.
But overall the report boosted hopes of a stronger housing recovery. In July, applications for building permits, a construction bellwether, climbed 8.1% to a 1.052 million rate. That suggests construction could pick up further in coming months. Sales of previously owned homes have picked up in recent months, buoyed by historically low interest rates, mild weather, and stronger job growth in the U.S. But sales of new homes have moved sideways. The latest pickup in home construction could signal builders are gaining confidence that overall sales will rise as the broader economy gains momentum.
From a year ago, home construction was up 21.7%. The home-construction market has steadily recovered from the depths of the recession but has yet to regain its strength from the levels that preceded the boom years in the 2000s.
At the height of the housing boom in 2005, just over 2 million homes were built. After the crash, housing starts fell to 554,000 in 2009, during the recession. Tuesday’s report showed that starts on single-family homes, which reflects the bulk of the market, climbed 8.3% in July from June.
Construction of multifamily units—mostly condominiums and apartments–rose 33% to a pace of 423,000 units, the highest level since January 2006. That category is more volatile. Other recent signs point to a strengthening housing sector.
A measure of home builder optimism rose two points to a reading of 55 this month, the National Association of Home Builders said Monday. Existing-home sales rose in June to the highest level since October, the National Association of Realtors said last month. The trade group is expected to release July’s data Thursday.
Write to Josh Mitchell at email@example.com
In a recent article in the Wall Street Journal by Joe Light, it talks about the decline in house inventory created due to the drop in short sales inventory. There are references in the article to the inventory shortage being negative for some markets. Needless to say for the real estate investor, having lower inventory usually translates to appreciation. As sellers are more and more on the sidelines and the overall inventory goes down, the old supply-demand equation rears its (pretty) head resulting in price appreciation. This of course is a two-edged sword. It’s great for the properties you had already purchased, but it is not so great for the ones you eye buying in the future. The very drop in short sales itself has to do with appreciation. As houses get closer to parity with their loans, short sales don’t make sense anymore.
Another reason, of course, is the expiration (in December) of the Mortgage Forgiveness Debt Relief Act (passed by congress in 2007). With the expiration of the Act, sellers are now liable for taxes on the forgiven portion of their loans during short sales, naturally creating reluctance on the part of sellers to go that route. In the meantime we are seeing financing improving for investors and even some initial programs here and there for the foreign buyers. Stay tuned. We will be discussing the state of the market on short sales at our next Real Estate 1 Day Expo, on September 13th. You can register here.
Below, for convenience, is the entire WSJ article:
Drop in Short Sales Trims House Inventory
By Joe Light
June 20, 2014 9:43 p.m. ET
Short sales of underwater homes have fallen sharply amid the expiration of a key tax break, a situation that could slow the housing recovery and further limits an already thin supply of houses for sale. Such sales, where owners sell their homes for a price below the balance on the mortgage, reduce the number of houses that end up in foreclosure. In most cases for the sale to proceed, lenders must approve the purchase and agree to forgive the unpaid portion of the mortgage owed by the homeowner.
Short sales had been especially common in recent years in hard-hit states like Florida, Michigan and Nevada, where most homes remain valued at prices that are substantially lower than during the housing boom. In March, about 5% of home purchases nationwide—some 18,258—were short sales, according to mortgage-technology-and-services firm Black Knight Financial Services. That was down from 6.4% in February and off sharply from the 19.7%, or 51,909, that were short sales in January 2012.
This year’s drop can be traced in part to the December expiration of the Mortgage Forgiveness Debt Relief Act, which Congress originally passed in 2007. Before the act, when a home was sold through a short sale and the lender forgave a portion of the mortgage debt, the seller would typically be required to pay income taxes on the amount forgiven. The act made the forgiven debt tax-free, which paved the way for short sales and helped speed the housing recovery.
“It’s a big concern,” said Veronica Malolos, a real-estate broker in Kissimmee, Fla. Ms. Malolos said some underwater sellers delisted their properties in January and February after learning that the tax provision wouldn’t be extended. Ms. Malolos’s clients Javier and Mayra Gonzalez in Kissimmee said they tried to sell their home last summer after Mr. Gonzalez found a new job but took it off the market in the new year. The couple received offers of about $145,000 on the home, on which they owe about $206,000, including debt from a home-equity line of credit, but their bank wouldn’t accept them. Because the mortgage act wasn’t extended, the couple estimate they would owe about $15,000 in additional income taxes based on the $61,000 difference, something they say they couldn’t afford.
This year, the couple’s bank began foreclosure proceedings on their home, but they said they are working things out with the bank and are staying put, even though Mr. Gonzalez now has a commute of about an hour and 40 minutes each way to his new job in Vero Beach. Short sales also have tumbled because of rising home prices, which pushed many homes back above water or closer to it. The median existing-home price nationwide was $201,700 in April, 5.2% higher than in April 2013, according to the National Association of Realtors. In the first quarter, about 19% of homes were worth less than their mortgage, according to the real-estate-information website Zillow, down from 31% a year ago.
With would-be short sellers on the sidelines, the housing market may take longer to work through remaining underwater homes, restricting the already tight home inventory on the market. If some potential short sellers decide to go through a foreclosure instead, that could cause higher losses for mortgage-bond investors, or companies that guarantee payment of mortgages, which tend to recover less in a foreclosure because of the costs of carrying a home.
The Senate Finance Committee in April passed a bill to extend the forgiveness provision, along with many other tax breaks that had expired. But the bill stalled in May after Senate Majority Leader Harry Reid and Republicans couldn’t agree on how to amend the measure. Now some analysts don’t expect Congress to move on a bill until December, after the midterm elections. Any extension would likely come as part of a wider package of tax-break extensions. “This is trapped, and there’s little hope of prying it loose,” said Jaret Seiberg, financial-policy analyst for Guggenheim Securities LLC.
In the meantime, real-estate agents say sellers are loath to consider short sales on homes, even when facing foreclosure as the alternative. That is a problem not just for troubled homeowners, but also for banks and mortgage giants Fannie Mae and Freddie Mac, which typically lose more money when homes are sold through a foreclosure than through a short sale. In the first quarter, for example, Freddie Mac said that in short sales, it recovered 68.4 cents for every dollar of unpaid principal. In foreclosures, Freddie recovered 64.4 cents for every dollar. “There are still millions of homes underwater, but short sales have fallen off considerably,” said Mark Zandi, chief economist at Moody’s Analytics. “It’s gumming up the system” and could be limiting home-buyer activity.
Write to Joe Light at firstname.lastname@example.org
Florida has emerged as the “Go To” state in 2014.
While Arizona and Nevada are excellent; Texas, Oklahoma and a slew of other states, are relatively stable. It’s Florida that embodies the post-recession sweet spot.
The home prices in Florida markets are still way below the bare construction costs. Even though there is steady price appreciation, values are still very attractive relative to new homes. We have already touched upon the reason: the foreclosure process in the state of Florida is judicial and has been extremely slow. As a result, the flow of homes into the marketplace is more steady than in Trustee Sale markets.
Despite the great demand, this balancing out of the supply of homes has created a more tampered growth environment for the state of Florida. Many great markets will emerge after the recession effects wear off. For now, the sun shines on Florida!
Don’t forget to visit us at our incredible 1-Day Expo THIS SATURDAY, March 8th, near the San Francisco Airport. Details are on our website: www.icgre.com. We will have rare speakers, tons of education, lots of Q&A and many experts present. In addition, some of the hottest markets in the nation will be represented. A day not to be missed!
As you may have seen in the media lately, most of the best-appreciating markets have seen a significant slow-down in the appreciation rate. Even more accurately, I get news from our teams in the field that this is the case. You can see it in some of the fastest appreciating markets like Phoenix, and even in Las Vegas (despite the upwards pull of the inventory-suffocating SB321 which came into effect on 10/1/2013 and is a very strong pull on home prices).
Many other fast-appreciating markets are also leveling off. California markets and even some Florida markets have eased up some in the past couple of months. One obvious reason is seasonal – this is traditionally the slowest period of any year. However the rising interest rates have been keeping some would-be buyers at bay, and the prices themselves, having become higher – have put other buyers off. Some investorsare starting to feel that they missed the boat in places like Phoenix due to the 70% gain it displayed in the past two years.
Well even in Phoenix, after a 70% gain in prices and now on a “respite” from appreciation, the prices are not that much above construction costs. Builders are still struggling to beat the prices of existing homes, and the intrinsic value is excellent. The same holds true in Las Vegas. Florida was already an excellent value (recall we discussed the judicial foreclosure process in FL slowing down market absorption of foreclosed homes, thus damping supply shortages somewhat) and now is poised to produce even better deals. It is not hard to buy a FL property in Jacksonville or Orlando/Tampa for substantially less than construction costs.
For investors, there is good news in what is happening. Our limited “window of opportunity” seems to be extending more. It is an excellent time to pounce on attractive Single Family Homes. We will discuss this and lots of other relevant and important new market data at our 1-Day Expo THIS SATURDAY! We invite you to attend (free for you and associates if you mention this blog – just email us email@example.com). We will also have an OBAMACARE expert to guide us through the maze, and outstanding expert speakers in addition to lenders, and market teams straight from the trenches.
Looking forward to seeing you there!
I encounter many investors still tempted to get some flavor of an adjustable loan when using their available investment loans. There are extremely low-interest rates being offered on many shades of variable interest loans such as 1/1, 5/30 and so on.
Given that there is a virtual consensus among economists that we are headed to a high inflation period, it would not be the wisest move. When inflation is looming the need for fixed rate loans becomes even greater than it usually is. Fixed-rates are still very low, not far from the lowest rates in over 50 years. At this point, and before inflation rears its ugly head, it is definitely the time to lock in a rate forever.
Once you have locked in your 30-year fixed rate loan, inflation actually becomes your ally. It erodes the real monetary value of your loan, which never changes with inflation because it’s, well… FIXED! In a way, the very process of inflation will hasten the real-life pay down of your loan balance.
Many of you are eligible for a lot more investment loans than you might think. We will talk about this in detail, and also share strategies to increase the number of investment loans you can get at our incredible Real Estate 1 Day Expo on Saturday, December 7, 2013, near San Francisco Airport. More details can be found on our website www.icgre.com. We have been producing these events for over 20 years, and we always have the most useful experts to assist you.
This time there will also be a discussion of the new Affordable Care Act (Obamacare) and strategies on what to do, credit enhancement and repair (to be able to get all these loans), and an amazing lawyer battling the banks in court to share his insights and wisdom. In addition, market teams from the most relevant markets in the US will be there. Looking forward to seeing you!
ICG uses single-family home investments, bought in advantageous locations and the best U.S. markets. We enable you to enjoy the clout that comes from purchasing a multitude of houses, even if you only buy one.
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