Biblical Wealth Strategies With Real Estate

I’ve heard the statement many times. “You know, I’ve been wanting to get into real estate, but…”

How do you finish that sentence?

“I don’t know how or where to get the money.”
“It’s too risky.”
“Is it biblical?”
“It would take too much time.”
“What if it doesn’t work?”
“It seems like real estate investors take advantage of people.”
“What about a real estate bubble or a market downturn?”
“I’ll start when I get in a better financial situation.”
“I don’t want to deal with clogged up toilets in the middle of the night.”

These thoughts and many others can prevent us from achieving God’s best for our lives and realizing our full potential.

Whether your desire is to quit your job and get into real estate full-time, or you just want to add some appreciating assets to help in your retirement, or restart in real estate because you did it the wrong way, I believe everyone should have some form of real estate in their portfolio!

We know that real estate investing is one of the best avenues to create wealth. God created real estate, and it’s valuable because He is not making any more of it!

And it is interesting to note that if you study the lives of some of the wealthiest people in the country, past and present, you will find that even though there is a diversity of investments and businesses, one common thread in almost every one of them is real estate.

I mentioned in the first session, about how many of us have thought at one time or another, “Man, why didn’t I buy that piece of real estate back when?” What makes us think that things will be different ten years from now if we don’t act and start buying real estate now? I believe ten years from now, we’ll be wishing we had bought more real estate when “prices were so cheap.”

Most of the time, we don’t take action because we don’t know how or where to get the money. Maybe you believe that real estate investors take advantage of people. Maybe you’re afraid of a real estate bubble or a market downturn. All of these reasons boil down to one thing: FEAR!

Perhaps you have heard the “horror” stories of people who tried real estate investing, and they had a bad experience with “problem tenants” or “maintenance headaches.” They don’t hesitate to tell you all the reasons why real estate doesn’t work. These are the people who usually just dived headlong into the world of real estate investing without educating themselves. Some of these well-meaning people will consider themselves experts since they have bought a house or two, but chances are they did not buy it right, they did not finance it right, they did not market it right, they did not manage it right, and now they are blaming everything but their own lack of education. I’ve made some mistakes in my real estate businesses, but I’ve learned from them and I move on!

Most people simply buy real estate rather than first investing in learning about real estate. With the real estate materials provided to you through EPIC Wealth Strategies, you can be on your way to learning the correct way to invest in real estate – with excellence, honesty, and integrity.

The Scriptures are full of references to God’s commands of possessing land. In Deuteronomy 1:8, God says, “See, I have set the land before you; go in and possess the land.” Similar verses are Deuteronomy 3:18 and 4:22. Psalms 37:22 says, “Those the Lord blesses will inherit the land.” Psalms 37:29 says, “The righteous shall inherit the land.” Psalms 135:12 says, “And He gave their land for a heritage.” I Chronicles 28:8 says, “Be careful to follow all the commands of the Lord your God that you may possess this good land and pass it on as an inheritance to your descendents forever.”

In fact, “land” is mentioned in the Scriptures over 1,700 times, so apparently God places quite an importance on it. In today’s terms, you can substitute the words “real estate” in the place of “land” (sorry, the word “real estate” wasn’t translated from the original Greek and Hebrew). God created real estate, and He created it as a good investment. We’ve seen the world latch on to the idea of real estate investing, especially in recent years. But as Christians, we can’t back down from something God said is good just because the world has latched onto it. As with the story of the talents in Luke 19, God expects us to make a good return on His investments, and you can do that in real estate.

This entire series is based on Multiple Streams of Income, with real estate being one of the three main asset classes you should invest in. But even within real estate itself, there are ways to diversify your property portfolio through various property types, locations, and buying/selling strategies. Later, we’ll look at the many ways you can diversify your real estate, even through various commercial property types, but before we do, let’s look at some of the reasons why real estate is one of the best investments you can make…

[This article is excerpted from the beginning of CD #5 of the 7-CD Audio Program “Multiple Streams of Income for the Christian Entrepreneur” available from EPIC Wealth Strategies. For more information, visit or download the free report “Twelve Biblical Wealth Principles” at .]

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How to Choose a Real Estate Company

Choosing a real estate company is perhaps the single most important choice you can make when buying or selling a property in the U.K. The purchase or sale of a home is often the largest financial transaction the average person will make. Doesn’t make sense to have a capable and experienced real estate firm as your side to guide you though what can be a complicated process, both legal and financial? Although realty services are not a required component of purchase or sale transactions, real estate companies can help you avoid many of the pitfalls and obstacles associated with buying or selling your home. In this article, we’ll present some tips for choosing a real estate sales agent or company.

How to Select a Real Estate Company

Although the likelihood of experiencing problems with a real estate transaction is low, a real estate agency can coordinate all the aspects of the sale, including home inspection, property survey and legal and financial services. A good place to start the selection process is to ask your family and friends whether they’ve ever used real estate firms to buy either residential real property or a commercial location. Once you’ve gotten a couple of testimonials from people you trust, the next step is to interview representatives from the leading real estate companies. This is something a lot of people fail to do. It’s not enough to just accept the word of others about the real estate company. You should also be sure that you’re when you’re buying or selling real estate you select someone with plenty of experience in the real estate profession.

Company-Affiliated Agents versus Independent Agents

Another point to remember is that this is a highly subjective process, so it’s a good idea to make a list of the attributes you’re looking for in a real estate company and the agents it employs. You may ask why not just go with an independent agent with little or no company affiliation, since their commissions are often lower. That’s fine, if the transaction goes smoothly. If it doesn’t, you’re probably better off with an agent from a company, because you’ll have some recourse to the agent’s superiors if the transaction encounters problems.

Choose the Right Type of Agent

When choosing an agent, also make sure that he or she has a good depth of experience with the type of property you’re buying or selling. Certain types of properties may require specialized knowledge, so don’t choose a commercial or industrial real estate company if you’re looking to buy a private residence in the U.K. Your real estate investment likely to be the largest financial transaction you’ll ever make. Be sure to choose a company that will act in your best interest to get you the best possible price.

Ian Clark is a real estate consultant and advisor in UK. He has extensive experience in all aspects of Real Estate Investment built over 20 years . He is also the Director of Midas Estates, an online real estate website offering property investment opportunities in UK and overseas. Midas Estates is a Real Estate Company with an aim to provide maximum capital growth for the clients as the majority of the clients are looking to secure financial security in the shortest time possible. Ian’s honest presentation of the real estate investing business, including both profit and risks is respected for his sincere, candid approach. He is highly regarded as one of the most sound, dependable source for the specifics behind the sometimes tricky and exigent facets of real estate investing.

To get more information and for a 30 minute no obligation absolutely free consult in how to make your property investment strategies work log on to

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Can Real Estate Still Be a Good Investment?

That’s a question we are all asking today. Why? Because of the many stock market investors who speculated in real estate, the problems surrounding sub-prime loans with the resulting foreclosures and bank failures, and falling home prices.

If the late Dr. David Schumacher, my mentor for the past 10 years and author of the now-famous book, The Buy and Hold Strategies of Real Estate, were still around, I know what he would say because he said it during the last downturn in 1990-1995. He would tell us not to worry. This is only temporary and part of the normal cycle of real estate.

It creates bargains that can benefit you. This cycle has been happening since Montgomery Ward began offering homes for $1,500 through its catalogs. As sure as the sun rises and the seasons come and go, real estate will make those who own it rich over a period of time. He would add that now is the best time to get great deals in real estate.

The Real Estate Cycle
Real estate is still the best investment possible. It always has and always will do well in the long run.

This is the fourth real estate cycle I have been through and none of the downturns were fun. However, if you have patience and look at the long term, your real estate will go up in value more than any other investment. Do not treat real estate as you might treat the stock market, worrying about the ups and down.

Since 1929, real estate has gone up an average of five percent a year; if you stay away from the obvious non-appreciating areas like Detroit, it is more like seven percent a year. At that rate, properties will double in value over 10 years with compounding. Add a federal tax benefit of 28 percent plus state tax deductions, the depreciation write-off for rental property, and the eventual pay-down of the loan and you have a strategy rich people have always used to accumulate wealth.

Over the past 30 years I have watched many flippers who buy, fix up, and sell. I do not know many who have much net worth or are wealthy because of flipping. It is simply a very risky way to make money.

Those who have prospered are the ones who are in it for the long haul and patiently watch their properties increase in value over time. This past downturn was created by speculators who all flipped at the same time, putting too many properties on the market for sale and rental. I guarantee that over the long haul, you will always regret selling any property you have every owned.

Buy and Hold
Since time passes by anyway, the buy-and-hold strategy is a great way to become rich. Dr. Schumacher experienced at least five real estate cycles and did extremely well, acquiring an eventual net worth of over $50 million.

You just can’t go wrong in purchasing an inexpensive condo, townhouse, or single-family home in a good location where there are jobs. Make sure you have a fixed-rate loan, make sure it cash flows, hold on to it for 10 to 20 years, and you have a property that has doubled or even quadrupled in value. When you need to retire, simply do a cash-out refinance to live on or to supplement your retirement pension.

For example, the first property I purchased for $75,000, a townhome in Lake Arrowhead, CA, is now worth $650,000. My first oceanfront condo, which I purchased in Long Beach, CA, in 1982 for $112,000 and used as my residence, is now worth $500,000. One-bedroom condos I purchased in Maui, HI, in the late 1990s for $80,000 are now worth $400,000. Homes I bought around the same time in Phoenix, AZ, for $75,000 are now worth twice that. I could go on and on and on.

What are your Options?
What are your options to building wealth today? The options are to buy real estate and build wealth or to not purchase property at all, to struggle a lot and have nothing to show for it.

1. You could do nothing. The 25 percent who do not own a home end up with no assets when they retire. They have a car loan and owe an average of $9,000 on their credit cards. Those who do not purchase rental property may be forced to work past age 65 to supplement their meager retirement income.

2. You can try to depend upon your retirement. The above chart shows that you should not depend on your retirement income alone to support you, because it won’t. Those on Social Security or most retirement programs end up living below the poverty line and are forced to work until they drop, so that is not a solution. Other investment options are not doing so well, either.

3. Invest in the stock market. We are definitely in a slowdown (I refuse to believe we will have a recession), so the stock market is not going to do well for several more years.

4. Invest in gold and silver. They have already made their run; it is doubtful they will do much better. Gold and silver are used as a hedge against inflation and a weak dollar. It looks like oil prices are headed down and the dollar is strengthening.

5. Invest in real estate. Those who invest in real estate almost always do well. The following graph shows how the top one percent in income have acquired their wealth. As you can see, the vast majority have invested in real estate.

Don’t Think Short-Term
Real estate is not designed to be considered short-term. Right now, real estate is going down in value in many cities, but it is going up in many others. It is a terrible time to sell and pull out any equity. Only about five percent of the properties are for sale. Most homeowners and investors are simply holding on to their real estate and are waiting for the next upward appreciation cycle.

The Four Greatest MISTAKES People Make in Real Estate
Real estate always does well when purchased correctly. It is people’s choices and sometimes greed that mess up an almost perfect investment.

MISTAKE #1. Purchasing Property That is More Than One Can Afford
Often individuals are attracted to and purchase a home they cannot afford. They struggle their entire lives just to make the payments. Then if they have an illness, job loss, or divorce, they are in big trouble.

MISTAKE #2. Buying Properties That Don’t Cash Flow
When rental properties are going up rapidly, everything seems desirable and people purchase rental properties that don’t cash flow. Often that can lead to disaster with large, negative cash flows when the market softens. Properties that cash flow are a no-brainer. They are great no matter what happens. These are
the ones you want to buy and hold. Eventually they will be paid off.

MISTAKE #3. Refying Too Much Out
When prices are going up, one is tempted to take out the maximum amount allowed on an equity line on one,s home or do a cash-out refi on a rental property. That is dangerous if one cannot make the payments or support the negative. It is like abusing one’s credit cards, which often ends in bankruptcy.
It is especially discouraging when values drop below the loan amount, as is happening with many homeowners right now. One should not get discouraged, they will eventually return to their original value and then surpass that, usually within 2½ to 4 years.

MISTAKE #4. Getting the Wrong Loans
We have all seen the problems with sub prime loans. Those with low incomes were not the only parties using these loans. Some bought million-dollar homes in a gamble that they would up in value. Five-year Option ARMS also became popular, but they caused major problems to the investor when they reset. Loans like these should be refinanced as soon as possible. The same is true for adjustable-rate mortgages. Fixed-rate loans are the only suitable loan type for anyone who plans to hold on to his properties.

Second Quarter 2008 Shows Good News

Sales are up in 13 states, especially in the states hit hardest (California up 25.8%, Nevada up 25%, Arizona up 20.5%, and Florida up 10%), a strong sign that the market has bottomed and is returning to normal.

In addition, 35 cities across the U.S. show an increase in prices from the first to the second quarter. Yakima, WA, rose 9.9%; Binghamton, NY, rose 8.7%; and Amarillo, TX, rose 7.2% from a year ago.

It is never fun to be in a down cycle and see the equity in your home and rental property slip away. However, do not be discouraged, this is just part of the cycle of real estate.

These down cycles are always good times to pick up more property at great prices, but be sure you keep a reserve for unforeseen problems (such as illness or job loss) so you can still make your payments. Make sure you purchase good properties in good locations, priced below the median price for the area, in markets that have good job growth.

Properties will return to their 7-plus percent appreciation and then you can watch your wealth build once again.

So, don’t worry. Real Estate is still the best long-term investment.

Marshall Reddick, of Irvine, California, has a Ph.D. in Business and Economics. His mentoring organization conducts seminars and has created investor networks specializing in foreclosures and new homes with reasonable in-house property management. Read more at []

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With the Current Stock Market Malaise, Investment in Phoenix Real Estate Makes Even More Sense

The Phoenix residential real estate market represents a great opportunity to individuals, families, and investors who are weary about the stock market and are realizing that their investment portfolios are too exposed to fluctuations in Wall Street. By now, the reality has sunk in with most people – the stock market’s decline has hit 401K and other retirement investments hard. As a result, this is a critical time to for individuals, families, and investors to rethink diversification of their portfolios again. Portfolios need to be more highly diversified than ever before.

And it’s time to rethink real estate as one component of your diversification in the future in addition to stocks, bonds, commodities, international investment, and low-risk savings instruments, to name a few.

Wall Street, Main Street, and My Street, and Real Estate

There is no doubt that the goings-on in the real estate industry are intermingled with the market challenges that Wall Street is facing, which in turn impacts Main Street and “My Street.” But the issues with real estate largely emanated from the many corporations that make up Wall Street combined with lack of government oversight and inaction. Lack of personal discretion also contributed to the problem.

Having said that, here is why real estate should be a component in your investment portfolio once again, and why the Phoenix real estate market is an excellent choice for investment to help you diversify that portfolio.

First, due to the wave of foreclosure-related properties, prices have declined to 2004 and even 2003 pricing levels. This is pricing that is pre-run up. Though there is a risk that prices may drop further, the extent of a further decline may be limited in the short term while the long term outlook gradually gets stronger.

Second, real estate can prove to be a more reliable investment in a normal market environment. Prior to the run-up in home valuations in the second half of 2004 through 2005, annual home appreciation in the Phoenix residential real estate market averaged 5%-6% . Playing the long game as investors should, holding a property for 5-20 years could yield a solid return.

Long term is key here. The investor has to be committed to a lower but steady return on their investment when it comes to real estate. The Phoenix housing market will not likely experience a meteoric rise in valuations like it did again. That’s not to say that there won’t be some opportunities to turn properties fast (whether through acquisition at a foreclosure auction or wholesale, or a flip), but this model will have the high risk that most investors will and should shy away from.

One note here. At least in the Phoenix area, investors have to weigh the merits of investments in homes and real estate by several components to get a true picture of the return on a property. These factors are growth in appreciation, rental income and offsets, tax benefits, and equity paydown and buildup.

Third, real estate is real. You can see it. You can touch it. You can check up on it (if you buy locally). And it will always hold some intrinsic value no matter what happens. If you have a home in Chandler, it is easy to get across the Phoenix area, to check up on an investment property in Glendale. Or, perhaps the investment property you choose is right next door to your home in Tempe.

Fourth, under certain circumstances, real estate taxation on capital gains growth can be minimal. The same cannot be said of many other investment vehicles.

Fifth, an investor has much more control in determining the value of the property. Smart improvements and renovations combined with effective property management can increase the value of the property substantially.

Sixth, the Phoenix area continues to grow. The Valley saw a 2.8% increase in the number of residents here last year. This trend will continue as Phoenix and surrounding areas are perceived as a stable, optimum climate to live and to work. With the decline in real estate prices, this perception will also be reinforced by a sense that Phoenix and surrounding areas are once again affordable.

Finally, real estate can serve a dual investment/personal objective. For instance, an investment in real estate can serve as a later gift for children. Or, it can be utilized as a sort of savings plan for children’s college tuition as a complement to 529s and Coverdell plans. The investment could be a retirement property for later in life. Real estate investments can also be used to create income streams to live off of (when rents and equity buildup eventually turn the property cash-flow positive).

There are numerous reasons to invest in real estate even beyond this list.

Real Estate Has A Role to Play in Your Investment Portfolio

The difficult truth about the stock market is that over the past eight years, the U.S. economy has seen two major disruptions or recessions that were severe enough to have rippling effects for all Americans as seen by the decline in 401K and other retirement savings values. As a result, further diversification of investment portfolios is needed across many different asset classes with a regional focus as well.

Real estate should be one of those classes. Given real estate has seen real substantial pricing declines over the last three years to levels seen before the run-up period, one has to consider that there are real deals in the marketplace for real estate. Coupled with the right long-term outlook and commitment to investment fundamentals, real estate can have a more effectual, countervailing purpose in investment portfolios that can help Americans better weather substantial market disruptions in the future. For investors looking for specific markets that may be worthwhile to investigate, real estate in the Phoenix area is a compelling choice.

About David Lorti

David Lorti is a professional Realtor for RE/MAX Elite in the Phoenix area and helps clients buy and sell homes. He holds a Master of International Management and Bachelor of Arts degrees and his insights have been quoted in several news outlets. He also holds a Certified Negotiation Expert (CNE) designation – one of only 1,600 Realtors nationwide. His websites, and, offer additional information on Ahwatukee Real Estate [], Chandler Real Estate [], Gilbert Real Estate and other parts of the Phoenix Real Estate Market.


David S. Lorti, Realtor – MBA, Certified Negotiation Expert, RE/MAX Elite, 480-227-6911 Direct, 480-285-3600 Office

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The Perfect Storm – Investing & Profiting From the Real Estate Market Collapse in Phoenix, Arizona

What Causes A Perfect Storm?

Well that’s the million dollar question, isn’t it?

What I deem a perfect storm is a set of circumstances that occur once, maybe twice in a lifetime that offers unparalleled opportunity to purchase undervalued real estate at unnaturally depressed prices. There was one similar opportunity in the late 1980s, early 1990s when the RTC (Resolution Trust Corporation – a government-run entity used to liquidate primarily foreclosed commercial assets) had one of the biggest fire-sales of commercial real estate in US history. This was a time that fortunes were made in the acquisition of overly distressed real estate assets. At that time, the market collapse was caused by 3 main factors (1) change in US tax laws affecting real estate investors, (2) Overbuilding, (3) The Savings & Loan banking scandal and fraudulent activity of mortgage lenders and appraisers.

So what’s causing the Perfect Storm Today?

(1) Massive residential property speculation in 2003-2006
(2) Too much credit available to purchase and finance real estate which was overused by lenders and uncreditworthy borrowers
(3) The current overall US market decline/recession that is spreading into a global crisis
(4) Current lack of funds for qualified borrowers
(5) Current oversupply of properties for sale

As you can see, there are 2 stages that follow one after another that lead to the creation of a Perfect Storm and opportunity to purchase real estate at incredible values – The Housing Speculation or Run-Up phase and the Market Collapse. We will examine each of these phases so you are more informed on what has led us to this perfect point in time to invest in real estate.

But first, we need to examine the most important issue a real estate investor must evaluate when choosing where and when to purchase a real estate investment – LOCATION.

Underlying Market Strength

I’m sure you’ve heard the age-old adage, “location, location, location”. I have a different spin on this saying. Mine goes more like, “location, timing, cash-flow”. Nevertheless, location is still number one on the list. If the underlying market is not strong with potential for rental and value increases in the future, then what’s the point of investing in the first place?

First, let’s look at Metropolitan Phoenix as a whole for location. Why the heck would you want to buy property in the middle of the desert?
Even though our market is severely depressed right now, Phoenix has shown remarkable resiliency and long term value appreciation for a number of reasons:

(1) Climate – People want to live here because of the warm, sunny weather. It is why snow-birds come in flocks for the winter and to retire. We all know that the baby boomers are reaching retirement age.
(2) Affordability – Phoenix is one of the most affordable places to live in the US. While this statistic took a temporary hit during the last boom, we have fallen back down to being extremely attractive to business based on real estate values, labor pool and overall cost of living. This will continue to attract business, labor and retirees to the area for the long term.
(3) Standard of Living – very high. Ease of commuting, and a fresh young, vibrant city leads people to want to live here.

These factors have led to the remarkable positive population growth Metro Phoenix has experience for the past 50 years. Even during times of economic hardship, people still continue to move here at a remarkable pace. This puts pressure on the housing market and inevitably leads to appreciation.

After deciding that Phoenix is the right spot to invest in real estate, your next task it to pick a sub-market within the metro region that makes the most investment sense. Some of the most important factors include:

(1) Area of greatest price declines
(2) Proximity to employment
(3) Proximity to amenities
(4) Quality of area
(5) Strength of rental market/values

These will be discussed later in this report and a qualified real estate professional can assist you in selecting sub-markets to invest in that match these criteria.

The Residential Housing Value Run-up

Phoenix real estate has always appreciated at a steady pace with the exception of a few massive run-ups in value followed by sharp declines. The decline of the late 1980s was briefly reviewed above. So what has caused the latest mass-speculation and run-up in values between 2003 and 2006?

Well there were a few culprits that acted together to create this latest debacle.

(1) Underlying Market Strength – As stated above, Metro Phoenix has inherent underlying market strength. That is what got the ball rolling and led to the mass speculation for 3+ years.

(2) Cheap Credit – Interest rates came down to unheard of levels making it easier to buy more assets with less money.

(3) Overabundance of Credit – It started in the late 1990s when Bill Clinton passed legislation freeing up credit to allow more people to buy homes – the sub-prime mortgage market was created. People that really shouldn’t have been buying homes in the first place were not only buying homes, but purchasing larger properties than they could afford. As credit loosened and values started to increase, a run on equity lines of credit and refinancing freed up the equity in people’s homes and allowed them to spend ‘invisible’ equity in the consumer markets on durable goods and services. This created the economic boom that we all experienced in the early to mid-2000s. The result: even homeowners that bought early in the boom and saw their property values increase 50-100% over a 5-6 year period had little to no equity left in their homes by the end of this appreciation cycle as they leached it all out through equity lines of credit and other borrowing methods.

(4) Investor Stupidity – As values went up and loans became easier to attain, investors started buying property with no money down and buying as many properties as they could get loans for (see next point below). It became an exercise in buy high and hope to sell higher.

It got to the point that, in 2005, there were actually busloads of investors that were driving around in town stopping in new housing subdivisions and lining up to buy new homes. Why did they concentrate on new homes? Because they could purchase a home to be built in the future, put little money down to secure it and watch the value of their property increase for 6-12 months without even owning it yet! Then they would either flip it right away when it was completed or hold it in hopes of it appreciating even more.

Builders were turning away buyers, holding lotteries and using other methods to hold back the swarm because they couldn’t build homes fast enough, even as they continued to raise prices on a monthly – sometimes even weekly basis! As a result, new homes were overbuilt in 2004, 2005 and 2006 by a wide margin due to ‘fake’ demand since many of the buyers were investors with no intention of ever living in the home!

This flawed philosophy worked for 2+ years at which time the greatest fool theory became a reality. You know how it works…As you build a pyramid of fools, there are less and less greater fools as you work your way to the top. When you finally reach the summit the greatest fool at the top looks around and sees no-one dumber than himself to buy his property for more money and so, the whole structure comes crashing to the ground. It took a while for owners of property who were trying to sell to realize that prices were in decline, not going up in mid 2006 which resulted in a massive number of listings coming on the market with few takers. This is further explained below under ‘The Market Collapse’.

(5) Lender & Investor Fraud – As the run-up in values was occurring, lenders and investors started to get greedy. Lenders began offering programs that made little or no sense for some homebuyers to get them into a home. Many times, putting a buyer into a home larger than they knew their client could afford with programs that their clients did not fully understand.

Credit was so loose and readily available during this time that many investors and homebuyers were fraudulently misreporting their income too high on ‘stated income’, ‘no-doc’ loans and lenders were turning the other cheek and underwriting the loans with no clear proof of the borrower’s ability to repay.

The Market Collapse

So why did the proverbial %#$ hit the fan? Greed and loose credit were the culprits and it culminated when investors and homebuyers ran out of money to purchase and overall economy began to slow down as people started running out of capital and credit. As the real estate market began to slow down, property sellers remained steadfast in their belief that their home was worth more money than the current market value as it had been in months past. But it wasn’t.

From there, the first phase of the market collapse occurred. Overpriced properties for sale with no buyers. Property owners unrealistically priced their homes for sale too high and buyers began to pull off to the sidelines as they were unwilling to pay the exorbitant prices for homes. Listings began to pile up and very few sales were occurring. Some owners started to realize what was happening and dropped the price of their home to help it sell. As the market leveled off and began to slowly correct, phase two began…..

Investors that were counting on property appreciation soon realized that the end had occurred. They began putting property up for sale en mass further straining the supply side of the market. Because all these investors were buying property based solely on appreciation and NOT cash flow, they soon realized that they would be unable to hang onto their property if they didn’t sell them. Some tried to rent, but because they had paid so much for the homes, the properties were unable to cover the expenses. Some investors and homeowners hung on for longer than others, but almost all of them eventually gave in to the realities of declining property values.

This was further compounded by the variety of ‘flexible’ mortgages that were available to homebuyers and investors including shorter term, loans at lower interest rates. Investors planned on short hold times so naturally obtained lower interest loans with shorter terms as they planned to sell within 1-2 years. As the market declined and those property owners could not sell, these loans became due and because property values were declining, they could not get new loans to cover the value of the old loans. Many more property owners walked away for this reason and it continues today.

As the loans go into default due to non-payment, the owner is left with 2 ways out – short sale or walk away. Many went the route of short sale to minimize the affect on their credit rating and those who could not or would not go that route eventually walked away from their property and let the bank take the property back.

I have another article posted on this site detailing the Pros and Cons to purchasing Short Sales and Bank-owned Properties in Phoenix.

The market was soon flooded with distressed properties of all kinds. This forced home values down further and faster as distressed properties are typically aggressively priced at least 5-10% less than current market value. This cycle has continued to force values down for months to the point where most submarkets in Metro Phoenix have fallen 25-50% in the past 2 years. Some properties have fallen over 60% from their highs 2 years ago.

This has led to further problems in our region. Due to the extent of the downturn and the sheer number of vacant, distressed properties, Many properties are being vandalized by outgoing owners and theft is become much more widespread of vacant properties. This is further compounding the downturn as properties in poor condition are even harder to sell and must be discounted that much more in order to find a willing purchaser.

When Will The Housing Market Hit Bottom?

Good question. Here’s the answer…..

I have no clue. In fact, no-one does. But that’s’ not the most important thing. There is no way to know for certain when the absolute bottom is reached. All you can do is invest wisely NEAR the bottom. Purchase properties that produce positive cash flow (will be explained later), and wait to ride the wave back up.

Why Now?

There are several critical elements in evaluating the state of the residential real estate market and its proximity to turning the corner. Many of these criteria are now pointing to real estate values bottoming out. Here are some of the statistics I have been watching carefully which lead me to believe we are finding resistance that is creating a market bottom.

(1) Housing affordability has shot through the roof
(2) Residential Resales are on the rise
(3) Homebuilding is at a 25 year low
(4) Applications for new mortgages are on the rise

The biggest concerns that still remain are:

(1) The overall economy is weak and likely to get worse before it gets better
(2) Credit is harder to obtain and larger down payments are now the norm when buying real estate making it less available for more people
(3) Still too many foreclosures and short sales coming on the market from the frenzy of a few years ago.

Affordable Housing Is Back!

One of the best indicators on how attractive a specific real estate market is for homeownership is the affordability index. This is a measure of how affordable homes in a particular area are relative to wages and incomes. A number of 65-70 shows considerable value and favorable affordability for a large percentage of the population. As you can see, one of the driving forces of Metro Phoenix growth has always been housing affordability. In the speculation frenzy in the mid-2000s, that affordability plummeted to numbers never seen before. As prices have fallen, you can see the affordability coming back to the point where now, we are above our historical average.

*graph not available on this site*

Residential Resales are Picking up Steam!

As you can see from the following chart (unavailable on this site), sales activity is on the rise, although over 40% of the sales are currently lender-owned properties. This shows that we are starting to hit a resistance at the bottom as people are starting to grab the deals at the bottom of the market. If this trend continues, it could signal the slow-down in price declines and near-term stabilization of our home values.

For these reasons, while I believe we are near the bottom, I think it will be a few years before we see a marked improvement in our area where values begin to rise again. Will it happen? Absolutely! As I have attempted to explain above, the overall Metro Phoenix Market is very strong for numerous reasons and is poised to be a major growth region again – and not too long into the future, either.

So why not wait until things start turning around? Well, you certainly can, but there are 2 reasons why now is the ideal time to get involved.

(1) Abundance of properties (supply) – with so many distressed properties out there of all kinds, you now have your pick of what to purchase and can be more aggressive on price. As the market shifts more towards demand with more buyers chasing good deals, the number of opportunities will certainly diminish, it will be more difficult to find really good deals and there will be more competition to buy them.
(2) Positive Cash flow – prices are so low right now, that it is relatively easy to find residential properties that will produce a positive cash flow. Basically this means that the rental income should cover all the expenses and mortgage costs leaving you with money at the end of the day. This will be explained in greater detail below.

Why Residential Property?

Normally, I don’t recommend purchasing individual single family homes because they are harder to manage effectively and usually don’t cash flow. The major benefits that they have over other forms of real estate you could invest in are:

(1) Liquidity – Simply stated, there are more buyers for this form of real estate than any other. It is therefore easier to sell when needed for the greatest value.
(2) Appreciation Potential – for the smaller investor, it gives you the greatest potential for appreciation if purchased at the right time because there is such a broad market of buyers for housing
(3) Lower mortgage rates than commercial property investments, typically
(4) Values may have fallen 30-60%, but rents have not really fallen much at all.

In our current market, one of the major faults of residential property has been eliminated. It is now easier than it has been in decades to buy residential property in Metro Phoenix at a positive cash flow.

How Do I Buy Property?

I will begin this section by stating that these are my thoughts and suggestions when evaluating property for purchase based on my experience and common sense. These are guidelines that you may choose to follow at your own discretion. I cannot guarantee results or success for any investment. It is up to you to properly evaluate investment opportunities and make decisions in line with your goals and risk tolerance.

Picking the location

Here are important elements in selecting the area to purchase an investment property

(1) Safe area
(2) Close to highway access
(3) Within 30 minutes drive time of major employment centers
(4) Proximity to shopping and other amenities
(5) Proximity to schools
(6) Strong rental market – I mean with a track record of other properties being rented for rates which you can use to evaluate the viability of the property as an investment

Picking the type of property

These criteria are designed to reduce your liability and investment risk and maximize your upside potential. Size criteria is meant to keep the property in the range of properties that are easiest to lease, rent for the highest value per square foot and are also easiest to sell down the road since they conform to the largest market segment of potential buyers.

For Single Family Homes

(1) 3-4 bedrooms, 2+ baths
(2) 1,200 – 2,000 square feet with 2 car garage
(3) Newer homes are better. Try and stay with 1995 and newer
(4) NO pool/spa in backyard (too much liability and maintenance
(5) Low or No maintenance landscaping is preferable

For Condos

(1) Minimum 2 bedrooms 1.5 baths
(2) Decent amenities in complex (pool, spa, clubhouse)
(3) Stick with larger communities with 100+ units. If you’re looking at a smaller complex, make sure to verify the viability of the HOA and fees

The benefit to condos is less overall maintenance required – particularly on the exterior and to the community grounds. The downside is that they may appreciate at a slower pace than single family residential.

Evaluating the numbers

Even in the best worst market that we have to accumulate wealth through real estate, you need to be careful. There are as many, if not more bad deals out there as good deals. Properly evaluating a property will make all the difference between a success investment and an underperforming one.

Before getting to number analysis, let’s not forget evaluating the CONDITON of the property. We always recommend that you obtain a HOME INSPECTION on every home you plan to purchase to help insure that you are buying what you think you are buying.

Initial Analysis

Before placing an offer on a property, you want to perform an initial analysis to see if the property will generate a positive cash flow. In order to do this, you should have already been prequalified by a lender so that you know what down payment requirements you will have and what your finance costs will be. Once you know what those cost are, you are ready to evaluate the income and expenses.

Evaluating the INCOME is fairly straightforward. You will want to compare the going rental rates in the area for similar sized homes in fair to good condition and use a figure in the bottom ½ of the going rental rates to be conservative.

Analyzing EXPENSES is a bit trickier. There are a few items that you will need in order to verify costs and come up with a total expense amount. These may be broken down into the following:

Recurring Expenses

Property management – Figure 8-10% of the gross rent will be paid as management fees on single family homes. The more properties you have under management, the better the fee you may be able to negotiate with a management company.

Insurance – You will need to have enough insurance to cover the home and liability to cover accidents, having tenants in the premises. Make sure you have adequate coverage


HOA Fees – Many single Family Homes in Phoenix belong to a homeowner association where fees are collected periodically for community maintenance. Please make sure to

Utilities – usually paid for by the tenant on single family residences, so you don’t have to worry about this. Check with you property manager for what is typical in their area
Legal/Accounting – many investors forget this one. Remember that you own and investment and need to make appropriate plans to minimize your liability and tax exposure. Please talk to legal and tax specialists for more information. The more property you own, the less this items costs per property since you can spread the cost over all your investments.

Maintenance Costs – you may have to pay someone to maintain the exterior of the home One of the main reasons to buy a home with no pool/spa and low-maintenance desert-style landscaping. Once a tenant is in, they are typically responsible for maintaining these areas.

VACANCY FACTOR – You will not always have a tenant in the property. You need to make allowance for time between tenants. If you price your rent aggressively for the market, 1 month per year as vacancy should be more than adequate.

One-Time Costs

These are costs you will incur in purchasing the property. You may bundle this into the total investment cost along with the down payment you intend to use. They will include:

Escrow fees and other closings costs
Home Inspection
Termite Inspection
Other Inspection Fees (if applicable
Finance Charges (for the loan)

You will be able to prepare an estimate for all these costs prior to putting in an offer on a property. Typically, you will have 10+ days after offer acceptance to run all inspections and tighten up all your figures to make sure your estimates were accurate. If you find something wrong with the home during this time, you will usually have the ability to cancel the contract and get back your earnest money. Speak with your Real Estate Professional for more information about the procedure of placing an offer on a property

Emergency Fund

It’s important to always have some extra money put on the side to cover emergency expenses, a tenant that skips out or is delinquent on payments, repairs costs, etc. Always be prepared for the unexpected.

Sample Analysis

Let’s work through an example so you may see how a typical investment might look on a single family home:

Our sample property is a single family home with 3 bedrooms, 2 baths and 1,400 square feet for $100,000. We will assume that you will need to put 30% down to purchase this home. A home like this is fairly typical in today’s market and might have sold for $180,000 – $200,000+ 3 years ago.

Total Purchase Price $100,000
Down payment (@30%) $30,000
Loan Amount $70,000

Closing Costs
Down payment $30,000
Escrow Fees $1,000
Finance Charges $1,500
Home Inspection $400
Termite Inspection $100
Total Closing Costs $33,000

Monthly Rent $950
Less Vacancy Factor (1 month) $950
Annual Income $10,450

Annual Expenses (est.)
Taxes $800
Insurance $400
Property Management (@9%) $940
HOA fees ($50/month) $600
Maintenance/Repairs/Cleaning $450
Legal/Accounting $250
Total Annual Expenses $3,440


Annual Mortgage Payments (@ 7.5%) $5,874

Positive Cash Flow $1,136
Return On Initial Investment (ROI) 3.4%
return excludes appreciation

Condition Of Property

There are 3 different types of properties you can look at purchasing as an investment as it relates to condition.

Option A – Property In Good Condition & Ready To Rent

Option B – Property in fair condition but requiring cosmetic repair to make rentable. This is a property that might be bank-owned or otherwise vacant for a while. May have been heavily used or poorly maintained by the previous owner. Work required is more cosmetic in nature and easy to estimate. Things like carpet cleaning or replacement, new appliances, repainting, cleaning, landscape repair, drywall touch-up

Option C – Property in poor condition, requiring major repair and/or replacement. I only recommend this option for seasoned, experienced investors that have a background in home construction, repair and cost analysis. While you may be able to purchase property well below current market values and create instant equity by fixing them up, you can also lose your shirt if you don’t know what you are doing.

If you are a beginner real estate investor, I suggest you stick with option A until you get your feet wet and a little more experience with repair and replacement costs.

Be Pragmatic

Remember, it’s an investment. Be a Vulcan. Don’t exhibit emotions when dealing with buying a property or renting it to a tenant. The numbers have to make sense and the upside must be there. NEVER FALL IN LOVE WITH A HOME YOU’RE BUYING AS AN INVESTMENT. You will not be living in it. Think of it strictly as an income producing asset like a stock or bond. Make sure tenants are properly screened and qualified.

Property Management

It is important to have quality local management to oversee your investment. Yes, it cost more money to pay them, but they help maintain the value of your asset and save you from those calls at 3 am about a plumbing leak. Factor them into the numbers when evaluating an investment and don’t buy anything that doesn’t positive cash flow without management.

Why Not Commercial?

Commercial real estate like apartments, office, retail and industrial make excellent investments – if purchased at the right time. The consensus among leading real estate investment professionals is that this segment of the market has not bottomed out and likely will not for a while. The time to pick up distressed real estate investments in these asset categories may yet be 3-4 quarters away (from 4th quarter 2008).

Why? Because as the economy fails and the recession heads into full swing, many business eventually fail. This drives up vacancy rates and reduces asset performance while at the same time, reducing rental values as more space competes for limited tenants. Investors start demanding higher rates of return and factor in higher vacancy rates into their calculations of asset value driving the prices of property down. It usually takes some time for property owners to catch on to this market trend and reduce their asking prices to falling market values which further puts strain on values. This is the same scenario that has happened in the residential property arena in mid-to-late 2006 and into 2007. I suspect that there will be many commercial properties that enter default and revert back to the lenders creating opportunities for seasoned investors to purchase commercial real estate assets for very attractive values – but the time has not yet arrived. Patience is warranted in this area.

Copyright Notice

All rights reserved. No part of this publication may be reproduced or transmitted in whole or in part, in any form or by any means electronic or mechanical. Any unauthorized use, reproduction or distribution is strictly prohibited.

Legal Notice

While attempts have been made to verify information provided in this publication, neither the author nor the publisher assumes any responsibilities for errors, omissions, or contradictory information contained in this document.

This document is not intended as legal, investment or tax advice. The reader of this document assumes all responsibility for the use of these materials and information and is urged to do their own investigation prior to purchasing and/or investing in real estate of any kind. Celestial Homes Ltd, Prudential Arizona Properties and the author assumes no responsibility or liability whatsoever on behalf of any reader of these materials.

© 2008 Celestial Homes Ltd.

Ron Cuttler Prudential Arizona Properties 602-418-8800

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Massage in Bucharest

Recognize it! You’re busy! And so must be! That’s what life is like! But you want more than that, you want to do more for yourself and massage can help. Because massage makes more than a simple relaxation of the mind and body. It keeps your body in shape and gives you enough energy to make you enjoy a longer life better than you do it today.

Massage releases stress. At the moment, stress is a universal evil. Every time you are late, every time you avoid a car in traffic, every time you have trouble working, stress is doing his job. Each time adrenaline increases heart rate and cortisone levels and organs respond to the measure. You will be in a state of nerves and constant agitation.
When there is no release of stress, serious problems such as an upset stomach, hypertension, sleep disturbances, chest pain, or existing illness may worsen.

Some of the changes that may occur are: Anxiety, lack of concentration, depression, permanent fatigue, muscle or bone pain, sexual dysfunction, excessive sleep or insomnia

All these stress-related problems can be diminished and some can be totally eliminated by massage. The researchers concluded that a massage session can lower heart rate and blood pressure, relax your muscles and increase endorphin production. The massage also releases serotonin and dopamine and the result is a general relaxation, both physical and mental.
Our body care must be at the top of the priorities.
By adding the massage to your routine you will look much better and you will be much healthier and relaxed. Massage can improve your vitality and mood. Massage can prepare for a long and beautiful life.

Our masseuses personalize each massage session according to the needs of the individual.
Our massage parlors offer a variety of relaxation styles and techniques to help you. Apart from relaxing, massage can be a powerful ally in reducing pain, increasing energy levels, improving mental and physical performance

We recommend : HotAngels , VipZone , JadePalace , ThaiPassion

After a massage session, you will see how the mental prospects are enriched, the body allows easier handling, better pressure resistance, relaxation and mental alertness, calm and creative thinking.
When you have the impression or force yourself to stay straight, your body is not actually aligned properly. Not only does the posture look bad, but it forces some of the muscles to go muddy all day, while others become weaker. After a long time, the incorrect position may cause other drops. For example, internal organs press on what affects digestion, breathing ability is also diminished, which means that much less blood and oxygen reaches the brain and hence all sorts of other complications.

Massage allows you to return your body to the track. Allowing the body to make healthy and accurate movements is one of the greatest benefits of massage. Massage can relax and restore muscles injured by bad posture, allowing the body to position itself in a natural, painless position.
Apart from posture, there is also anxiety. One of the signs of anxiety and stress can also be heavy breathing. When the body begins to breathe too little and deeply instead of breathing at a natural rithm, it is impossible for one to relax. One reason may also be that the chest muscles and the abdomen get tightened and the air gets harder.

Massage plays an important role in learning the body how to relax and how to improve breathing. Respiratory problems such as allergies, sinuses, asthma or bronchitis are a group of conditions that can benefit from massage. In fact, massage can have a positive impact on respiratory function.

Many of the muscles in the front and back of the upper part of the body are breathing accessory. When these muscles are tight and shorten they can block normal breathing and interrupt effective breathing natural rithm. Massage techniques for stretching and relaxing these muscles improves breathing function and breathability. Massage leads to an opening of the chest as well as structural alignment and nerve dilatation that are required for optimal pulmonary function. A good way to treat respiratory problems with massage is the taping made in Swedish massage. When done on the back, along with vibrations, it can detach the mucus from the lungs and can clean the airways for better later function.

Massage not only relaxes muscles, but helps people become aware of daily stress levels. Once the body recognizes what really means relaxation, the mind can rest easily relax before the stress becomes cornice and harmful. This will help you enjoy a balanced life. Massage controls breathing, allows the mind to re-create relaxation before the occurrence of chronic and harmful stress and increases the level of energy.