Rick Obst graduated with a B.S. in Management from Arizona State University and with received his MBA from the Thunderbird School of Global Management. His work education has included experience with a regional  commercial real estate developer, commercial property management, commercial leasing, hearing property tax appeals, commercial appraisal and feasibility studies, business plan writing, Small Business Development Center real estate consultant, community college instructor, CFO for a regional long-term care company, and a residential client care coordinator.  My entrepreneurial bent has led to helping found and operate a commercial property management company, audio tour tape company, a medically supervised bariatric center, and a small business consultancy. Rick became a Virtual Assistant almost by accident a little over five years ago when a top realtor who knew his skills approached him about working on some projects. The word spread rapidly and other top realtors began contacting him to help them generate leads and market themselves and their listings on the internet. A loan originator with an Oregon mortgage company asked Rick to become a part-time assistant in February 2010. He learned how to take and process a mortgage loan application. He then caught the attention of the area manager, so in December 2010, he went full time at the bank to provide marketing support for 35+ loan officers in Oregon and Northern California. In addition, Rick continues to work closely with his realtor clients. He is located in Eugene, Oregon. So far, he has had no need for a website to advertise his own business as a virtual assistant, with word of mouth bringing him plenty of clients. His information can be found at: http://www.activerain.com/rickobst

Don’t Start House Shopping Until You Know What You Can Spend.
It makes no sense to walk into your local grocery store with a long shopping list if you have no idea how much money is in your bank account. Similarly, there is no sense in beginning to seriously look for houses until everyone has some idea of the available budget. With the increased down payment percentage being required by most banks (thanks to the foreclosure mess), it’s vitally important your real estate buyers have enough of a cash down payment to close the deal. Years ago, it wasn’t unusual to find a mortgage requiring only 5%. In your dreams today. Don’t be surprised to find lenders requiring 20% or even as much 25% cash upfront to buy a house. You might be surprised how few home buyers are aware of this recent development. The best solution of all is to procure a pre-qualification letter from the lender before any house hunting commences.

That FHA Appraisal is Intended to Protect the FHA
Since 1934, the Federal Housing Administration (FHA) has been in the business of helping low income Americans afford a house. The problem is that too many consumers think this means the agency will move heaven and earth to accept responsibility for trouble areas like leaky roofs, shaky foundations, or non-functional plumbing systems. While it’s true that the FHA pays for a house appraisal prior to providing financing, this appraisal is for the benefit of the agency, which is putting money into the deal, and NOT for the consumer. A prospective FHA borrower should provide for their own inspection of the premises to establish to their own satisfaction that no surprise maintenance issues are lurking out there. To drive home the last point, FHA last year developed a new form to be signed by all purchasers of existing houses involving an FHA mortgage. The form is entitled: “For Your Protection: Get a Home Inspection”. It says that “FHA does not guarantee the value or condition of your potential new home…” This is why its so important for you, the buyer, to get an independent home inspection.”

Financing Closing Costs
Often a buyer decides he or she wants to finance the closing costs of a real estate transaction. “Closing costs” refers to incidental expenses incurred while buying a house that don’t directly relate to the price of the property. The larger question: Is this a good idea? The answer: It depends. The sometimes overlooked fact is that tacking an additional few thousand dollars onto the loan might raise the interest rate or mortgage insurance for the entire loan. This could be a substantial hike in total amount to be paid back. Trying to explain the nuts and bolts of the numbers behind it all, complete with phrases like “pricing notch point”, might make your client’s eyes glaze over, but he’s liable to thank you some day for saving him thousands of dollars. This short article provides a good summary of how financing closing costs might or might not work in a client’s favor.

Lease Purchase Agreements
Under the present unsettled market conditions, many buyers find they don’t qualify for traditional financing, thus ponder the idea of a lease-purchase agreement. We would never say this is a bad idea in all circumstances, but would suggest that anyone seeking to enter such an arrangement make darn sure they know what they’re signing. Lease purchase agreements operate on the rent-to-own business model, where they buyer puts down a 1% to 5% down payment based on an agreed price, then makes monthly rent payments that are credited towards eventual purchase of the home. But the devil can be in the details. It’s not unusual for a large development company to tilt the contract in their favor by allowing for the eviction of a renter/buyer for a single monthly payment arriving a single day late. This, friends, constitutes a bad agreement and you should counsel your clients not to sign one. This type of agreement is designed to create profits for the company by “churning” through multiple potential buyers, and collecting multiple down payments along the way.

The bottom line is this: keeping the client from shooting himself in the foot is good for your business. Generate trust and there’s a good chance he’ll be back another day, with another deal, and ready to pay you another commission.

The AIPIS Team

Flickr / cornflakegirl_

There was a serious change in American economic policy in the early 1970s, when President Nixon took our nation off the gold standard. The result has been more than four decades of eternally creeping inflation, and inflation kills savings accounts. The basic problem is that your money loses purchasing power at whatever the prevailing inflation rate is. For an example, let’s say annual inflation averages about 4%, which is what the government claims, though we’re certain the actual number is much higher.

This means that if your nest egg is stashed in assets that pay less than 4%, you’re losing money while “saving.” With most “safe” methods of saving, such as interest-bearing checking accounts, money market accounts, T-bills, or certificates of deposit, all paying under the inflationary rate, you are not making progress towards the land of financial independence. In fact, you’re going backwards. Such choices might be better than burying your money in a Mason jar in the back yard, but just barely.

That’s why it’s critical to impress upon your clients the truth of the Savings vs. Investing paradigm. You can call it what you want but if it’s not earning you more than inflation, you’re not improving your situation. At the very least you should steer people towards mutual funds with a long term track record of at least 10% annually.

Even better would be to sit down and work through an example of the myriad ways to profit from income property investing. This is not the time for high pressure sales. This is the time to communicate as friend to friend in the spirit of providing the insight of your expertise. If you can get them to listen and truly open their minds, there’s no reason you shouldn’t be cultivating a lifetime customer and recurring commissions.

Consider this. Most people have some inkling that they should be investing in real estate. Here’s your chance to prove to them exactly why.

The AIPIS Team

Flickr / RambergMediaImages

This means the rest of the world is trying to to prop up sputtering countries like Italy, Greece, and Portugal by pumping much-needed dollars into their economies. You’ll remember that, despite many tales of its imminent demise, the American dollar is still the world’s currency, especially now that the euro is looking positively anemic.

Here’s where it gets interesting.

Think back over the past few years. Does it seem that our own economy has been a model of robust virility? Umm, not exactly. We’ve been mired in the midst of something of a Great Recession in recent years, since about 2007, and any money tossed towards Europe contributes directly to our own massive indebtedness. Here at AIPIS, this seems akin to jumping into a leaky lifeboat clutching an anvil.

As a real estate or mortgage professional, it makes sense to be aware of what is happening in the rest of the world so it doesn’t catch you completely off guard if (when) the whole thing blows up. For a quick recap of the unfolding of the European debt crisis, here is a time line of major events over the past few years.

Feb. 2, 2010 – The Greek government acknowledges it has a serious problem and outlines a plan to reduce budget deficit from 13% of GDP in 2009 to 3% of GDP in 2012. Houston, we have a spending problem. Sound familiar?

Feb. 3, 2010 – Spain formally announces they have a spending problem also. Their deficit numbers look almost as bad as Greece’s.

Feb. 11, 2010 – With Greece’s fiscal nightmare threatening to spread to other European nations, EU leaders say there’s nothing to worry about. Help is on the way. Problem solved.

March 2010 – The new austerity measures implemented by Greece outrage a populace grown used to living on the largesse of government programs. Typical result – rioting in the streets.

May 2010 – The battered euro continues to tumble in value as Portugal joins the financial-disaster-waiting-to-happen line.

Over the next few months, Spain sees its triple-A credit rating downgraded to double-A-plus, while Moody’s Investors Service cuts the entire nation of Greece to “junk” status, citing “considerable uncertainty” surrounding the measures underway to strengthen the economy. Portugal soon joins the downgraded party and, in August, Ireland is hit with a downgrade. More follow for the countries involved over the next year. We could provide the gruesome details, but what’s the point? It’s simply more of the same.

What is important is to look more closely at why this house of cards came tumbling down at this precise moment in history. In a nutshell, it goes like this. These European countries got themselves into trouble by selling bonds to raise money to finance their free spending ways. Unfortunately, when banks consider you to be more of a credit risk (as a result of downgrading) you pay the financial price with a higher interest attached to money that is loaned. Countries like Greece, Spain, Portugal, and Ireland were already in serious debt but decided to borrow more to try and fix the problem.

If this isn’t a disaster waiting to happen, we don’t know what is. The European debt crisis is a direct result of the same economically brain dead policies that we have been following in the United States as well. Remember that the previously unassailable American credit rating was itself downgraded several months back? Our economic house of cards has some uncanny resemblance to these blowouts in Europe. So far, we’ve been kept from implosion only by the sheer grace that our currency is still the world’s reserve but if you don’t think China isn’t hellbent on changing that, you’ve got another think coming.

As a superpower in swift decline, how long will it be before we come to the stark realization that Europe’s crumbling economic picture could be a snapshot of our own future. Meanwhile, Mr. Bernanke and Obama continue to switch on the printing press in order to send funds to struggling EU members. Money that is financed by the selling of – high interest debt.

Now that REALLY sounds familiar.

The AIPIS Team

Flickr / endiaferon

If the weatherman came on and reported that the average temperature in the United States today is 65 degrees, does that help at all? Probably not.

The point is this. There is no national housing market and any government agency or national organization that reports national trends might as well be speaking Martian. The secret to your success as a property professional is to keep your finger on the pulse of the local geographic area where you live and work. You need to be able to drill down to the neighborhood level, and then know which parts of that neighborhood are good bets to buy property and why.

The national housing market simply doesn’t exist. Factors that drive the ebb and flow of local house prices are simply too specific to paint with as broad a brush as the sound bites that cable television commentators like to latch onto. What does this mean to you? Keep your thoughts local as you go about the business of earning a living. There is only one of you, and the need for sleep somewhat limits the amount of area you can cover during a lifetime.

Far better is it to know your neighbors. Know the local businesses you patronize. Over time, these are the people who will become your friends and clients. These are the people who will ultimately determine your success as a real estate agent, not a quarterly collection of government statistics. The bottom line is that, to be successful, you can’t afford to waste your precious time on things that don’t matter, especially when they come at the expense of those that do.

If you’re interested in learning more about what makes a housing market local, consider signing up for Jason Hartman’s next educational event: Meet the Masters of Income Property Investing. This intensive two day course will be held in the Spring of 2012. Early Bird prices are still in effect. Learn more about this amazing weekend of financial independence here.

The AIPIS Team

Flickr / Mr. T in DC

Jason Hartman is no guru, and we say that with pride, but he is an acknowledged expert. In the Internet Marketing Age, the term “guru” has been co-opted by a fast-talking breed of hucksters who package a pitifully thin amount of information in a high-priced package, toss their line in the water and see who bites. Sadly, often thousands or hundreds of thousands take the bait.

For more than two decades, Jason’s innovative real estate company has stood for integrity and education, two factors the real estate industry could use more of. As part of his education platform, Jason schedules monthly conference calls which are free to members and cost a modest $20 for others.

If you’re sick and tired of hearing about all the money other people are making through an investment property strategy, don’t miss tonight’s call. On this call we will not only reveal the steps YOU need to take from here on out in order to create that lucrative portfolio you have only dreamed of, but we will provide stories of actual investors who have been in your shoes and have now created a retirement plan fit for a king.

Here are some of the topics which will be covered on the call:
- Amount needed for each investment property down payment
- Innovative strategies others have used to save up for down payments quickly and easily
- Learn the investor budget: How to continue buying income property on a regular basis
- How to continue buying and financing property after the 4-property limit
- The right times to take advantage of seller financing
- The perfect amount of reserves needed in order for YOU to have CONTROL over your investment portfolio, not the other way around!
- The amount of income property/equity needed in order to retire in the lap of luxury
- How to work your family into your wealth-building model

Go HERE to get registered right away.

The AIPIS Team

People choose these because they’re allegedly safe. The problem is that the ludicrously low rate of returns are doing a worse disservice than you may realize. How much does your savings account or certificate of deposit pay? Less than 5% probably. In many cases, not even half that. While people who regularly dump their money into savings assets feel they’re at least making a little forward progress, inflation is working very hard to make sure they don’t. They government reports a yearly inflation rate usually in the 3% to 4% range. This means your dollars are losing value at that pace.

This should immediately reveal that you have to make at least the annual inflation rate in order to just break even. Anything less and you’re losing value on your money while it sits there. But the real problem with these savings “assets” is we suspect inflation is much higher than the government lets on. Did you know they don’t figure the costs of gasoline or food into their calculations?

The idea that our public administrators can put out an inflation rate with a straight face, while excluding food and fuel, is ludicrous. We figure the real rate of inflation is around 10%, which means your savings is getting creamed. You’re not just losing money. You’re hemorrhaging it.

The trick is to quickly roll that money you saved into some sort of investment, one that has a decent chance of returning more than 10% each year. While some mutual funds have a decent long term track record exceeding this target, the stock market in general is a big Ponzi scheme crapshoot. It’s your job to educate your clients about how people are able to earn 30% or more through income property investing, allowing them to build wealth and achieve financial independence. You’ve got to help them understand the difference between saving and investing, and do it quick because inflation won’t wait.

The AIPIS Team

(Flickr / Sean MacEntee)

Rich Levin is a natural innovator. Long ago he noticed that what the most productive Agents actually do to reach high levels is very different from what the most prominent trainers and coaches were teaching.  So, Rich began to work one on one with Agents. One client after another achieved results beyond anyone’s expectation. Top Agents productions doubled and tripled. Mid level Agents became Top Agents. And new Agents quickly reached production that normally took many years to achieve. Rich recently completed and was certified as an e-Pro which is the only NATIONAL ASSOCIATION of REALTORS® approved Internet Certification Program.  The e-PRO Certification Course is an educational program is comprehensive and Interactive specifically designed to help real estate professionals thrive in the competitive world of online real estate.  Rich is committed to all aspects of the REALTOR’s® career and has completed this certification to ensure continual growth in both himself and his Clients. Rich is a master coach. The pure results of his coaching clients are the testament to this. People achieving production levels, incomes, lifestyles, and personal satisfaction beyond their highest expectations.  He is an entertaining and motivating speaker. He captivates his audiences. He reaches down where they feel it to shift their motivation and their thinking.

As with most things in life, we can answer with a solid, “Maybe.” Some do and some don’t. Here’s what you need to know on the topic. The primary distinction when it comes to inquiries is between hard and soft. A soft inquiry won’t harm your precious credit number one bit. The following falls into the category of a “soft” inquiry.

Self inquiry
Existing creditors
Potential employers
Businesses screening for solicitation

No matter how many of these types of credit snoops hit your record, don’t worry about the damage. It won’t hurt a bit. But pay heed to the other main category of inquiries, called “hard” inquiries. A credit check is considered a hard inquiry if it is generated by a new creditor you have given your social security number and authorization to check. It seems like this would tend to penalize a borrower looking for the best rate, doesn’t it? Yes, as a matter of fact it does. Credit rating companies want to be able to differentiate between distressed, high-risk borrowers looking desperately for funds anywhere they can find them, and legitimate borrowers doing their due diligence before taking out a loan.

Toward this end, Fair-Isaac, the developer of today’s credit scoring rules, has implemented what is known as the “ignore” rule. The ignore rule throws out mortgage, auto, and student loan inquiries made 30 days prior to scoring. This means that a recent flurry of legitimate activity on your part won’t end up penalizing you with a lower credit score.

This is a good rule but consumers should be warned that not ALL types of credit inquiries are ignored. A big one that is NOT ignored are multiple credit card requests. Your friendly neighborhood credit rating company is going to interpret these types of pings as signs of distress. Keep this in mind and don’t end up dinging your credit score through a barrage of credit card interest rate shopping.

Not exactly fair, but that’s the reality for now.

The AIPIS Team

(Flickr / Infusionsoft)

Here’s the lowdown. You might make some money along the way selling houses to people who just want to move into the American Dream. Nothing wrong with that, but it’s not where the serious money is at. To make real money as a realtor, you need repeat business. This is the case in any almost any area an entrepreneur chooses to pursue. As they say, 80% of your business comes from 20% of your customers. Repeat customers are solid gold! The problem with real estate is that a person buys three, maybe four, houses in a lifetime.

Here’s what we teach at AIPIS. If you’re going solely after the American Dream market, you’re misplacing your energy, to a large extent. What you need to be looking for is investors. A serious investor who develops a relationship with a realtor he likes might buy dozens of properties in a single year. And he might do that every year! Or maybe he’s only good for five properties a year. Or three. Or even one. You’re still better off than with the family who buys a house and keeps it for the next twenty years.

We’re not saying that you shouldn’t tend to the family man if he comes looking for you but it simply makes sense to put your energy into that which stands to make the most money. How does this tie into low home ownership? It’s pretty simple. A low home ownership rate doesn’t mean that less money is being spent on lodging – people still have to have a place to sleep at night – merely that it’s targeted in a different direction. Where is it going? Rentals! The rental market is booming and won’t likely be slowing down any time soon.

What are you going to do about it? The first thing we suggest is to get into income property investing yourself and become a landlord. The second best option is to start looking for investors to turn into clients.

If you’re interested in more about the lower rate of home ownership in America, please read the following article from the Mortgage Banker’s Association Research Institute for Housing America. It’s eye opening stuff…

The drop in the homeownership rate from an all-time high of 69.2% in 2004 to 66.4% in the first quarter of 2011 reflects a decline from unsustainable levels to something closer to historical averages, according to a study released today by Mortgage Banker’s Association’s (MBA) Research Institute for Housing America (RIHA). While the homeownership rate may have bottomed out, it could fall another one or two percentage points because of tightened credit and other factors, the paper says. Titled ”Homeownership Boom and Bust 2000 to 2009: Where Will the Homeownership Rate Go from Here?,” the study was conducted by professors Stuart Gabriel of UCLA’s Anderson School and Stuart
Rosenthal of Syracuse University. They found that the increase in the homeownership rate in the middle of the last decade extended to all age groups but was most pronounced among individuals under age 30. These increases coincided with looser credit conditions that enhanced household access to mortgage credit, along with less risk-averse attitudes toward investment in homeownership. Following the crash, these trends have reversed and homeownership rates have largely reverted to the levels of 2000.

“How much more might the homeownership rate fall? The answer depends on uncertain forecasts of attitudes towards homeownership
and changes in the credit market and economic conditions,” concluded Rosenthal. “If underwriting conditions and attitudes about investing in homeownership settle back to year-2000 patterns and, if the socioeconomic and demographic traits of the population look similar to those of 2000, then the homeownership rate may have bottomed out and will not decline further. If, instead, household employment, earnings and other socioeconomic characteristics over the next few years remain similar to those in 2009, then homeownership rates could fall by up to another 1
to 2%age points beyond 2011. Those declines are likely to be greatest in cities and regions in which house prices were most volatile in the last decade.”

Key findings from the study include:

-A combination of changes in mortgage credit standards and attitudes towards investment in homeownership likely contributed too much of the boom and bust in homeownership over the decade. As credit conditions loosened in the first part of the decade, many people of all ages who would have remained renters instead became homeowners. With the financial crash, the recession, and tighter credit conditions, homeownership rates have fallen back to levels close to those of 2000 for most age groups.

-Changes in the population’s socio-demographic composition and economic attributes also served to lower homeownership rates between 2000 and 2009. For all household heads age 20 to 80, demographic-socioeconomic shifts pushed homeownership rates down by roughly 2 additional percentage points over the period. These effects were notably different across demographic groups, however. For example, among individuals 25-35 years old, shifts in their demographic-socioeconomic attributes pushed homeownership rates down by nearly 5%age points over the
2000-2009 periods. For African Americans the analogous value was only roughly 1 percentage point.

-Individuals appear to have been more risk-seeking in their approach to home buying in the first half of the last decade. This changed to a more risk-averse posture following the real estate meltdown.

-Between 2000 and 2009 there was a one percentage point increase in the homeownership rate. But, were it not for the shifts in access to homeownership through easier credit and the changes in socioeconomic conditions, the homeownership rate would have actually fallen between 2000 and 2005, rather than increasing.

-Homeownership is deeply embedded in American culture and long has been a symbol of economic achievement in the United States.
The recent sharp decline in the homeownership rate has symbolic as well as tangible adverse effects on the economy, with home sales and construction activity remaining near all-time lows,” said Michael Fratantoni, Executive Director of RIHA and MBA’s Vice President of Research and Economics. “This is another in a series of studies that RIHA has issued on the issues of household formation, borrower attitudes after the recession and homeownership. Single- and multifamily lenders, other participants in the real estate finance industry, and policymakers can utilize this research and assumptions on homebuyer behavior and credit availability to form their own forecasts regarding the likely path of the homeownership rate and implications for the mortgage market going forward.”

The AIPIS Team

(Flickr / striatic)