Good time to become a real estate mogul?

This past week, Robert Kiyosaki, author of "Rich Dad, Poor Dad," one of the best-selling personal finance books of all time, dropped by my radio show to talk real estate.

Yes the waters are rocky, the mortgages may be harder to come by, but particularly if you're interested in buying rental properties with an eye toward becoming a bit of a mogul yourself, Kiyosaki says now is as good a time as any.
The stats seem to bear him out. Home prices fell 1.7 percent in the third quarter of this year, according to the S&P Case/Shiller Home Price Index and many experts, including Kiyosaki, are predicting a continued decline. He says to people like him and Donald Trump, his co-author on a volume called "Why We Want You To Be Rich," (Rich Press) the fact that prices are going to plummet even further is good news: It makes buying even more lucrative.

But investing in rental properties isn't a decision to be taken lightly. It requires a whole lot of know-how and (preferably) a shining credit report. You also need a firm understanding of exactly what you're signing up for, which means knowing your local market inside and out.
Here's how you can turn today's bleak market to your advantage:

Get your credit in shape
True, you can probably purchase a property with a middle of the road credit score. But do you want to? A low credit score means a high interest rate on your mortgage, and that increased expense is going to cut into your overhead pretty dramatically.

So, take the next 12 months to improve your credit score before diving in. Pay your bills on time, turn down offers of new credit and reduce your outstanding balances. Based on Kiyosaki's prediction, you'll still have time to get in while the getting is good.

Study up
Jumping in without knowing the basics is the wrong move. Before you sign on any dotted lines, take the time to read a few solid (and up-to-date) books on real-estate investing. Once you feel you have a pretty good — albeit broad — handle on the subject, you can start scoping out the market where you plan to buy.

"You need to go out and see the area for yourself. Look at a lot of properties, get a handle on what they are renting for, and how much insurance and property taxes will be so you don't have any surprises," advises Thomas Lucier, an investor in Florida and author of "The No-Nonsense Real Estate Investor's Kit," (Wiley, 2006). Do it in person, but also check out the classified sections of your local newspapers to get a feel for the rents.

Spot a good investment
Location is key, obviously, and a good rule of thumb is to not buy rental property in an area where you yourself wouldn't be willing to live. That means looking at crime rates, as well as walking the neighborhood during the day and after dark. It also means looking at things like the age of the property (an older building can mean more repairs), and enlist the help of a good inspector who will spot any structural problems. If your inspector finds something, you can then weigh your options — often, these kinds of issues can be used as bargaining chips to lower the price, but if they're severe, you may want to just move on.

Start small
Lucier suggests a duplex that will allow you the ability to live in one side and rent out the other. Even Kiyosaki, who says he now only buys apartment buildings with more than 300 units, started with a small condo on the island of Maui, Hawaii. "I've ridden the market up and down, and that's how I got smart," he explains. As you gain experience, you can slowly begin to expand your portfolio.

Focus on cash flow
The key to making money off of your investment properties is thinking in terms of cash flow rather than capital gains, says Kiyosaki.

"When I buy a piece of real estate, my first question is what's my cash flow? What's my rental income from the property? A property is only worth its rent." That means adding up your mortgage payments, property taxes, insurance costs and maintenance, and subtracting that figure from what you can reasonably charge for rent. The amount that's left? It's your salary. Increase it by becoming a do-it-yourselfer, if you have the time and skill to fix a leaky faucet.

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source: msnbc.msn.com

Housing crisis killing holiday-shopping spirit

Jackie Castleberry won't be playing Santa Claus this year.

She usually buys her grandchildren, nieces and nephews lots of gifts around the holidays _ bicycles, educational games, clothes — but this year she is just struggling to keep her North Las Vegas, Nev., house.

The interest rate on her four-bedroom home loan shot up in October and she is $6,000 behind on her payments. She now owes $168,000 on her home, which once was worth $220,000 but is now worth about $150,000. In the past, when times were tough, she would borrow against her home's equity — that's no longer possible.

"I was always seen as the person that's giving, but it's kind of affected this year," said Castleberry, a former casino buffet supervisor who now makes $11 an hour, 30 hours a week, supervising children before and after school. "This year, I can't see anything right now as far as gifts."

Castleberry is just one of thousands homeowners nationwide who can no longer finance their spending by tapping into their once inflated, now depreciating home equity. Others can no longer afford their higher monthly payments due to a reset in their adjustable rate mortgages and have been foreclosed.

The crisis is taking a toll on consumer spending, particularly in areas that have been hit hardest like Florida, California and Nevada. And it is one of the biggest factors behind what is expected to be the weakest holiday season in five years.

Nevada, California and Florida have posted the highest foreclosure rates in the country for the past several months, according to Irvine, Calif.-based RealtyTrac Inc. In October, Nevada reported one foreclosure filing for every 154 households; California's rate was one for every 258 households; and Florida had one for every 273 households — up nearly 165 percent from October 2006's total.

Mark Zandi, senior economist with Moody's Economy.com, said the housing downturn is "weighing increasingly heavily on retailers and will play a significant role during the holidays." In the second half of 2006 and the first quarter of 2007, mortgage equity withdrawals were at a peak of $850 billion on an annualized basis, Zandi said. But in the third quarter of 2007, that number had fallen to $550 billion.

Nevada's overall sales tax revenue was down 4.7 percent in August from a year earlier — marking the first drop since right after the Sept. 11, 2001, terrorist attacks.

"The decline in house prices and homeowners' equity is making it difficult for homeowners to pull out equity for their homes, and therefore they don't have the cash to spend as aggressively," Zandi said.

And that's also hurt people employed in the real estate and mortgage businesses.

Last year, Leo Rojas could spend liberally on Christmas gifts for his 7-year-old son and 14-year-old daughter and the employees at his Miami-based mortgage company, which was processing 50 home loans a month. He bought a video game system and a slick toy all-terrain vehicle for his kids and Movado watches, expensive pens and Walt Disney World trips for his workers.

But this year, his company is processing five loans a month. He has closed offices, laid off employees and is selling cell phones to make ends meet. He estimates he'll spend about a quarter of what he spent last year on gifts, with his children getting a phone, clothing and perfume or cologne.

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Mortgage crisis inflicts collateral damage

The national surge in mortgage defaults is claiming more victims than just the thousands of subprime borrowers facing the prospect of losing their homes.

Social service agencies say homeless rates are on the rise not only as families lose their own homes to foreclosure but also as renters are evicted after their landlords default. Financial analysts warn that state and local governments will soon feel the pinch of sharply reduced property tax revenue. And counselors say divorces and reports of abuse are rising as families burdened by impending foreclosure take their stress out on one another.

The ripple effect illustrates the wide-ranging impact the subprime mortgage crash has had not only on the U.S. economy but on society at large, said Robert Reich, who was labor secretary during the Clinton administration.

“Understand that houses are the most important assets most Americans have, and they are seeing those assets disappear,” Reich said.

Little recourse for renters
Especially hard hit are families that rent their homes from landlords facing foreclosure. RealtyTrac, a national real estate network that specializes in foreclosed properties, estimates that more than 20 percent of foreclosures involve investment properties; when landlords lose those properties, their tenants lose a roof over their heads with little warning.

Mona Hoeft, a rental assistance technician with the Olmsted County Housing and Redevelopment Authority in Rochester, Minn., said her agency was being swamped with calls for help from families who were being tossed out on the street.

“Unfortunately, there’s not much a tenant can do other than move,” Hoeft said. “There really is no protection for the tenant.”

Congress is considering a measure to require landlords to give tenants 90 days’ notice before they can be evicted. But even if it passes, it will not be in time to help thousands of renters like Sharron Shagonaby, 67, who was never late on the $900-a-month rent she paid on a house in Holland, Mich. She was forced out two weeks ago when her landlord defaulted on his loan.

“I just can’t see how people are so cold that they would actually put me out on the street when I didn’t buy the house,” said Shagonaby, who uses an oxygen tank and is debilitated by diabetes.

“I didn’t forfeit my payment," said Shagonaby, but she fears that she will have trouble finding a new place to live.

“People that you apply to for a house won’t believe that,” she said. “They won’t even look at if you were really evicted — [they think] you’re just making up some story.”

Shelters feel the stress
Darryl Bartlett, executive director of the Holland Rescue Mission for Women, called Shagonaby an example of “a new kind of homeless — those that are the innocent victims.”

“We did not plan for large numbers of people who are being foreclosed on becoming homeless,” Bartlett said. “That was not in our plan.”

Eugene and Kathleen Pobol were packing up their rental home this week in Bakersfield, Calif., after getting an eviction notice.

“We’re between a rock and a hard place, and basically we’re up the creek without a paddle,” Eugene Pobol said.“Here we are, tenants, paid our rent on time, went through credit checks and everything else, and now, all of a sudden, the landlord’s going bad on a mortgage,” he said.

Officials at the Bakersfield homeless shelter said they were at capacity but that more families wanted in. The shelter took in seven families in one day this week, said Louis Gill, the shelter’s executive director.

“I’m definitely concerned now that we’re receiving phone calls from people going through foreclosure,” Gill said. “We’ll have to see what kind of additional burden that puts on the emergency systems.”

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As loonie surges, Canadians snap up US homes

CHANDLER, Ariz. - Two hours after his flight landed in Phoenix, Calgary resident Doug Farley already was cruising the city's vast stuccoed suburbs in search of the one attraction Canadians cannot seem to get enough of these days: cheap homes.

There are thousands of them here: almost new, unoccupied and dropping in value. The mortgage meltdown, combined with a surging Canadian currency, has Farley — and many of his countrymen — dreaming of winter golf on grass that's always green.

"My dollar's the same as your dollar, finally," Farley said, grinning as he peered through a pool fence at a sparsely populated condominium complex in Chandler, a Phoenix suburb.

For moderate-income Canadians like Farley, the race is on to take advantage of the "loonie," which in September reached parity with the U.S. dollar for the first time since 1976. Many are combing the Internet for anxious American home sellers and looking with an investor's eye at the condos they rented while on vacation in sunbelt states.

"Now it's more than just the snowbird coming down and staying in a condo. It's people looking for business opportunity," said Frank Nero, president of the Beacon Council, Miami-Dade County's economic development arm in south Florida.

Canadian condo-builder Solterra Group of Companies also is riding the surge in the Canadian economy as it plans to snatch large chunks of land in Las Vegas. Michael Bosa, the company's vice president for development and acquisition, said the loonie has bolstered his company's bids.

"We're looking now aggressively," Bosa said. "We think we'll see more opportunities in the next six to eight months."

In Arizona, Jason Sirockman of Edmonton, Alberta, said he watched as home owners flooded the market with 58,000 homes, more than twice the amount in 2005 when home values peaked.

Now is the time to buy, he said. Alberta, a three-and-a-half-hour flight from Phoenix, is experiencing a modern-day gold rush from booming work in its vast oil sands.

"Fifteen of my friends are on buying trips down here, and we're all cheap," Sirockman said. He brought his family to Scottsdale this month while he submitted a lowball all-cash offer for a three-bedroom home.

"I don't want to take advantage of a guy who's having trouble in the market and is losing his shorts," Sirockman said. "But I have no problem with a guy from California who bought on spec and has five houses in Arizona and never lived in them."

Single-family homes and condos in the Phoenix metro area now sit an average of 99 days before getting sold. That's three times the wait for homes and four times the wait for condos compared with two years ago, according to the Arizona Regional Multiple Listing Service.

The market has shifted totally in the buyer's favor, especially those offering cash, said Jeff Russell of Alberta. Last month, Russell snapped up a patio home next to a golf course in Scottsdale with a $299,000 check. It was listed at $463,000.

"I was actually going to come down here and buy a seven-series BMW because cars are ridiculously cheap here," he said. "But I discovered that, forget cars, houses are on deep discount. I could never get anything on a golf course as nice in Canada for this type of money."

Real estate agents in Phoenix, especially those with Canadian ties, are hustling to reach potential buyers up north while the American housing market and the U.S. dollar continue to slump.

Rick Morielli, a former real estate broker from Toronto, received his green card in November, posted a Canadian realty Web site, took out some newspaper ads in Canada, and already he has about a dozen clients looking for homes.

"There's a real 'Wow' factor here for Canadians," said Morielli, who now lives in Phoenix.

"When I take them to a brand new subdivision, and for $210,000 can get them four bedrooms, 2,000 square feet, all appliances, brand new, that's something they haven't been able to buy in Canada for 10 or 15 years. In my opinion, everyone should be buying now."

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Blinding Plains storm causes multi-car pileups

CHICAGO - A blinding snowstorm blew across the Plains on Saturday, causing at least two deaths and dozens of injuries in numerous multi-car pileups and forcing authorities to close portions of several major highways.

One person died in a chain-reaction pileup involving as many as 80 vehicles, including several tractor-trailer rigs, on Interstate 40 in Amarillo, Texas, police said.

Many were holiday travelers, including some families with small children not dressed for the cold weather, police Sgt. Shawn McLeland. Other drivers spotted them and opened Christmas presents to provide warmer clothing for the children.

The tangle of twisted cars and trucks shut down the interstate for most of the day. Authorities believe the pileup was caused by blowing snow and the resulting zero visibility.

In northeast Kansas, at least one person was killed in a 30-car pileup on Interstate 70, prompting authorities to close a 40-mile stretch of the highway. The pileup occurred about 30 miles west of Topeka.

The fierce snowstorm caused another wreck involving 20 to 40 vehicles, including three tractor-trailer rigs, on Interstate 29 in St. Joseph in western Missouri. Police closed about 100 miles of I-29 to the Iowa state line.

10 inches of snow predicted in parts of Iowa
The Plains storm also blew heavy snow across Oklahoma and parts of Nebraska and Iowa, a region still recovering from a severe ice storm early last week that knocked out electricity for hundreds of thousands of homes and businesses.

"We may see some whiteouts in the open areas," said Craig Cogil, a forecaster with the National Weather Service in Des Moines, Iowa. Parts of the state could get between 6 and 10 inches of snow by Sunday morning.

Strong winds could make traveling hazardous all weekend, Cogil said.

Wind was blowing at sustained speeds of 25 to 35 mph with gusts to 45 mph in Oklahoma, where U.S. 412 near Mooreland in western Oklahoma was closed after 15 to 20 cars slid off the road or had been involved in collisions, authorities said.

The Oklahoma Highway Patrol said a six-car collision on U.S. 64 in the state's northwest corner involved an ambulance that was carrying victims from the scene of another accident. Low visibility forced the closure of some highways.

Air travel snarled
The storm also impacted flights at airports in the Midwest, as the busy pre-Christmas weekend travel was getting underway. The delays rippled across the country, affecting flights in the New York region.

In Chicago, flights in and out of O'Hare International Airport were delayed an average of two hours, and about 100 flights were canceled, airport spokesman Gregg Cunningham said.

Flights departing from Newark Liberty International Airport for O'Hare were delayed about three hours.

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