California….Best Bet.

I want to share the latest TIME magazine cover article…

“Despite Its Woes, California’s Dream Still Lives”

by Michael Grunwald, October 23,2009.

Please read Mr. Grunwald’s article, you will be able to understand why Market Advisors is currently building its residential investment portfolio in select communities in California.

“It’s still a dream state. In fact, the pioneering megastate that gave us microchips, freeways, blue jeans, tax revolts, extreme sports, energy efficiency, health clubs, Google searches, Craigslist, iPhones and the Hollywood vision of success is still the cutting edge of the American future — economically, environmentally, demographically, culturally and maybe politically. It’s the greenest and most diverse state, the most globalized in general and most Asia-oriented in particular at a time when the world is heading in all those directions. It’s also an unparalleled engine of innovation, the mecca of high tech, biotech and now clean tech. In 2008, California’s wipeout economy attracted more venture capital than the rest of the nation combined. Somehow its supposedly hostile business climate has nurtured Google, Apple, Hewlett-Packard, Facebook, Twitter, Disney, Cisco, Intel, eBay, YouTube, MySpace, the Gap and countless other companies that drive the way we live.”

Read On !

Are Home Sales Really on the Rise?

I know I’ve said this many times before, but for those of you who are new readers of REO Weekly and our blogs, let me reiterate that Market Advisors continually monitors and tracks the current movement in the foreclosure/REO market.  We use many sources to stay current with what is happening in this sector.  We are very dependent on clean reliable data in this area because we want to have good REO inventory available for our fund for some time to come.  In the process of staying close to this market we often find that what is being printed in “main-stream” media isn’t always a true reflection of what is really happening.  Many of you know that I tend to write about these misleading “trends” a lot because I believe we all need to know what reality is and what needs to be “cleaned up” before we can expect to see any true stabilization in this market.

One of our more reliable sources of information about the foreclosure/REO housing market comes from the Mark Hanson Website and more specifically Mark’s well researched blogs.  I’ve written about Mark’s blogs in the past because he does such a great job of laying out the facts for all to see.

Marks most recent article entitled: Existing Home Sales Reality is no exception.  In it he talks about the reality of the fantastic growth in home sales that we keep reading about.  First he normalizes the data by factoring out “seasonality” and then he puts it all into perspective by addressing the dynamic impact that all of the government backed foreclosure moratorium and mortgage modification programs will or have had.  He also presents a pretty convincing argument for an upcoming “foreclosure surge” as a back-lash of  HAMP (Housing Affordability Modification Program).

Take a look at Marks blog for yourself and see what you think.  We all need to be on top of this information so we can navigate these turbulent waters effectively.  Arm yourselves with the facts and you too can enjoy great success in these crazy times!

Paul Davis, Market Advisors

Building A Successful Real Estate Portfolio

Investing in this foreclosure real estate market requires a determined effort to search through the quantities of foreclosures available and find the “diamonds” hidden within. Not an easy task…but certainly rewarding.

At Market Advisors we measure acquisition opportunities through a matrix of parameters to “mine” the target properties which best fit our portfolio at Market Advisors Real Estate Fund LP. Here are two basic principles which are the foundation of our search…

• Location
• Price Imbalance

OK so location is obvious (or is it?) and I certainly have covered our location principles in our Webinars.

But, some of you may ask what I mean by price imbalance? In our definition it is ” short term value loss” meaning prices depressed by short term circumstances that can be remedied. This is not simply supply and demand, but a circumstance where a property is priced below its current market due to; condition, or lack of lender availability.

These opportunities are few and far between within a target community or location, but when they surface they are “diamonds in the rough”.

Maximize and Energize Your Retirement Portfolio.

Today I am attending PENSCO Trust Company’s “Advanced Education Seminar” in Las Vegas. Several excellent and timely topics that have me thinking about our Readers and looking forward to sharing some valuable tips to help you maximize the returns in your retirement portfolio.

1. Make sure your retirement accounts are taking adavantage of all the opportunties available. (Go to our FREE Webinars to find out from the experts)
2. Be sure to diversify your portfolio into real estate. (Foreclosure opportunities are providing excellent returns for your retirement portfolio)
3. Find out more about how you can take control of your retirement funds and invest in assets you know and understand. (Find out more here)

Stay tuned for more from Las Vegas.

Hurray – The Recession is Over!!

I know, the economy is on a recovery course and according to Fed Chairman, Ben Bernanke and Treasury Secretary Timothy Geithner, the recession is over (or almost over!).  So, now that our recession is over – all we need to do is solve our Credit Crisis!

You might be saying, aren’t these both the same?  Well I don’t think so – let me explain.  In the simplest of terms, this whole catastrophe was caused by banking institutions developing such loose credit facilities that almost anyone who could sign their name could borrow money.   Well we all know now, that was the catalyst that caused the near collapse of our financial system.  So how have the banks reacted to this crisis?  Well they have tightened up credit facilities so much that not only individuals but small to mid-sized businesses find it almost imposable to get credit any more.

This is a real problem because all of our small to mid-sized businesses need these credit facilities to manage their businesses.  You see small businesses (1 to 49 employees) and mid-sized businesses (50 to 499 employees) account for over 90 Million employees in this country.  That’s about 85% of our employment force and because of our current crisis that is also the sector from which most of our unemployment is emanating.

Unemployment is a key factor in this crisis and these small to mid-sized businesses (our largest employers) are dependent on the small to midsized regional financial institutions for their credit facilities.  Unfortunately, these are not the financial institutions that are being “bailed out” by the Feds!  Consequently, these small to mid-sized financial institutions are “falling like flies” around the country which means all of the small to mid-sized business that are dependent on them are cutting back and/or failing as well –more unemployment!

You see, our current credit crisis is at the heart of unemployment and unemployment is driving foreclosures.  It’s a vicious cycle that has to be broken before we can see true recovery.

In a recent article (link to article here) by Alan Zibel, an AP real estate writer, it is reported that foreclosures have risen 5% from the summer to the fall of this year.  Here is what Alan says is the reason for this rise:  “Unemployment is the main reason homeowners are falling into trouble. While the economy is likely out of recession, the unemployment rate – now at a 26-year high of 9.8 percent – isn’t expected to peak until the middle of next year.”

There was another article written last week by AP writer Ivea M. Augstums titled “Bank of America loses $2.24 billion”.  You can read the article here but in it Augstums explains that B of A’s third quarter loses provide “further evidence that consumers are still struggling to pay their bills.”

Ivea also wrote: “The bank’s earnings follow the pattern set earlier this week by Citigroup Inc. and JPMorgan Chase & Co., which also reported more loan losses during the third quarter as consumers struggled to keep up with their credit card and mortgage payments.” And here is and obvious conclusion: “Together, the reports depict a financial industry that is still deeply troubled……….”

This is just one more reason why we at Market Advisors are so intent on keeping our eyes focused on the unemployment numbers and when they truly start to show sustained recovery, like our current stock market, then we believe that we will truly be in a Credit Crisis recovery as well.

Paul Davis, Market Advisors

Why It’s Time to Retire the 401(k)…Comments

Did you see the cover of TIME Magazine this week? Interesting article on the “state of the 401K”. Written by Stephen Gandel, the article mostly covers the loss of significant retirement assets by individuals throughout the USA over the last 18 months. Basically almost 30% or more of retirement account values have been lost due to the stock market correction. Mr. Gandel does a good job of highlighting troubling examples of certain individuals, and then mostly draws attention to the debate of how retirement accounts should be insured (such as the way of pensions) and not tied to the fluctuations of wall street (which is the way of the mutual fund industry).

I find it quite intriguing though that not once in this massive cover story is there any mention of individuals being able to place their retirement funds under their own control and invest in assets that they know and understand other than from a menu of “mutual funds”.

Perhaps if hard working people were more aware of the choices that are available to them with “self-directed IRA and other qualified plans” the financial meltdown of the last 18 months may not have been as severe and painful.

Read TIME cover story.

Nearly 50% of American households to owe NO 2009 Federal taxes!

If you have been following Market Advisors at all – either through our blogs, our newsletters or our webinars – then you know that we are Real Estate Syndicaters in the Foreclosure and REO market.  Our success is dependent on our ability to find and purchase choice properties at unbelievably low prices, rehab those properties (when needed) at amazing savings and rent those properties long term (3 to 7 years) at top dollar.

Now if the real estate markets we are “playing” in stabilize and begin to rebound before we have filled our portfolio then we have missed out (don’t worry that hasn’t happened yet!).    Consequently, we are consistently monitoring many leading indicators of market trend and these indicators are real numbers based on supply and demand economics.  Factors that affect this real estate market are things like unemployment, notice of default NOD) filings, foreclosure filings and notices of trustee sales.  We also track the number of REO’s that hit the market as compared to the number of NOD’s and foreclosures that drive these REO numbers and, by the way, there is a huge discrepancy between these two numbers.  That means there is a very large “pig in the python” backlog of REO’s that will be breaking loose sometime in the future to drive real estate prices even lower.

I just came across another indicator that was a shock to me but not much of a surprise in light of all of these other factors that are still trending away from recovery.   A senior writer from CNNMoney.com, Jeanne Sahadi, wrote about this last week and here is what Jeanne had to say:

“In 2009, roughly 47% of households, or 71 million, will not owe any federal income tax, according to estimates by the nonpartisan Tax Policy Center.”

That’s nearly 50% of American households that will not be contributing anything to our national budget next year!!  Scary isn’t it?  How are we going to keep all of these government programs and “bail-outs” going with this drastically reduced revenue?  Well the answer is we can’t – beware the perfect storm is building!  With all of this on the horizon, we at Market Advisors are confident that we will be able to fill our portfolio with choice properties at unbelievable prices!  Don’t miss out on this unique opportunity – come join us.

Read Jeanne’s article here.

Paul Davis, Market Advisors

“7 retirement account mishaps that cost big”

I came across this article written by Sheyna Steiner of Bankrate.com. And I wanted to point one of the mishaps that are referred to, that I find particularly important.

Letting old accounts languish

It amazes me the billions of dollars left in old 401k accounts that were set up with previous employers. Take control of those funds and put them to work in investments that you enjoy and understand! It’s simple to do.

If you want to read all of Sheyna’s article click here.

SO WHAT IS “SHADOW INVENTORY” ANYWAY?

Shadow inventory is still a big mystery to many of us in the real estate industry, but we all know, through sheer logic, that it is real.  Just think about it, if you look at the number of NOD’s (Notice of Defaults) and NTS’s (Notice of Trustee Sales) that have been filed over the last year and compare that to the total number of REO properties that have hit the market there is a huge discrepancy.  Even if you take into consideration the number of short sales closed and the number of trustee sales completed, there is still a large discrepancy between the number of home going into foreclosure and those coming out as REO’s at the other end.  That discrepancy is the “Shadow Inventory”!

One of our REO Weekly readers and a friend of Market Advisors, Edwin Carvallo, introduced me to a fantastic resource of research and commentary on this very topic – Mark Hanson.  Mark has a huge following and he tends to be a key resource for definitive commentary on the ebb and flow of the residential real estate market.  Here is a bit about Mark:

“Mark Hanson is a seasoned mortgage banking veteran who specializes in wholesale and correspondent sales, operations management, and bringing financial institutions into new lending markets. His primary focus has been on residential mortgages – working closely with most mortgage and Wall Street investors.”

“His years of on-the-ground experience, extensive research, and access to proprietary data, that few have available, has led him to make an extraordinarily large number of early and accurate predictions about the great mortgage and housing meltdown and company-specific events.”

Well it just so happens that Mark’s most recent blog is all about this mystery of the “Shadow Inventory” and it is titled: Shadow Inventory has a Whole New Meaning.  I would really encourage you to take a serious look at Mark’s blog and you will see why we at Market Advisors are so confident that we will have plenty of great deals available to us for the coming 12 to 18 months (or more!).  You should join us and ride this wave!!

Paul Davis, Market Advisors