The problem is they aren't saying who the market is horrible for, because it's definitely not horrible for real estate investors.

As an example, back in the early 2000s I bought a small two-bedroom condo for $33,000 as an investment. This condo rents around around $550 a month and I still own it today. It has provided a few hundred dollars of positive cash-flow each month since acquired.

Right now, I'm helping an investor acquire a 1,964 square foot 5 bedroom single-family home for $25,000. This home is a foreclosure and needs about $10,000 in updates. Once updated, it will easily rent for $975 a month.

This investor is going to have a beautiful 5-bedroom home for around $35,000 and will enjoy monthly positive cash-flow of around $700. His annual cash-flow will be around $8,400 and he will have his entire investment back in less than 5 years. He is paying cash for the property and will not have a mortgage payment.

This investor "sees" the real estate market as the best investment opportunity in the last 10 years.

Its easy to see that his investment is far better than my investment. I paid $33,000 for a small two-bedroom condo. He will invest $35,000 for a 5 bedroom single family home. I paid $36.66 a square foot. He will pay $12.72 a square foot.

Where else can you invest $35,000 and receive $700 a month for life?

This investors annual return on investment will be around 24%. Of course, there will be vacancies and repairs throughout his ownership. These costs will probably pull the return on investment down to around 15% a year.

This investor could simply use the monthly net income to offset his living expenses. However, this is not what he is planning to do. Instead, he is going to use the cashflow boost strategy...

The Cashflow Boost Strategy

Believe it or not, the weatlhiest people in the world (including Warren Buffett) use this strategy with their investments. It's nothing new or crazy.

The idea is to simply reinvest the cashflow received into new income producing assets.

It's the same thing as reinevsting dividends back into stocks or mutual funds. Well, this investor is going to do the same thing with his real estate cashflow.

As an example, he might decide to use the $700 monthly cash-flow to buy shares of AT&T stock. This stock pays dividends of around 6% a year.

The dividend income is additional cashflow and actually boosts his annual income and return on investment.

On a high level, he is having someone else buy $700 of AT&T stock for him each month. This little process can continue for life - as long as he doesn't sell the home.

To accomplish the same thing without this real estate investment, he would have to invest $700 a month out of his paycheck each month, year-after-year. His annual income would only be around 6% - the annual dividend yield from the AT&T stock.

However, his annual return will be well over 15% a year when combining the income from the real estate and the dividends earned from the stock.

There you have it - the "cashflow boost!"

The only question that remains is - will you use the "cashflow boost" to your advantage?

However, you might be surprised to know that Richard Branson, Oprah Winfrey, Michael Masterson and Jim Rohn are all known journalers. Jim Rohn's reasoning was as follows:

"Life rewards the serious student."

In fact, Jim Rohn used to spend a lot of money on high-quality leather journals. He was onced asked, "Why do you spend so much on an empty book?" His reply, "I intend to put something very valuable inside." I sure do miss Jim. Here's a picture I had taken with him several years ago:


Most people think of journaling as writing daily in a diary. This could be one use of a journal, but there are several more ways that journaling may transform your life. Here are ways you might use journaling to your advantage:

1. To track your progress towards goals you've set for yourself. In Michael Mastersons recent book, "The Pledge" he shared that he journals daily. One of the things he tracks monthly in his journal is his net worth. The reason why is because he knows that what you measure improves. By consistently tracking his net worth in his journal, he is able to make better decisions that lead him closer to his financial goals.

2. Keep a record of great business or investing ideas. If you're like me, you come across great business and investing ideas on a routine basis. Unfortunately these great ideas slip through our fingers if we don't write them down and review them regularly.

3. Sort out problems or challenges. Facing a big problem in your life? Spend some time writing about it in your journal. List everything you can do to improve the situation and track your progress.  I promise this little process will relieve a ton of stress and keep you focused on progress.

4. Document mistakes made and lessons learned. It's obviously not a good idea to make the same mistake twice. You can use a journal to detail mistakes you've made and what you've learned from these mistakes. More importantly, you can make notes about how you can prevent this mistake from happening again.

5. Record things you want to teach your children. Our main job as parents is to prepare our children for adulthood. This isn't an easy task. I've found it helpful to document lessons I want my children to learn before they're on their own. I also list various ideas that I might be able to use to help them learn the particular lesson.

6. List things you want to do in your life (aka...your bucket list). What do you want to do? Where do you want to go? What to you want to see? What do you want to learn? Use your journal to document all of these things and make sure you review them regularly. You don't want to get to the end of your life and regret something on one these lists.

7. Capture special life moments. One of the coolest benefits of journaling is what you leave behind for your family. Your children, grand children and great grandchildren will be able to read your journals and "see" who you were as a person. They'll be able to relive your special moments. More importantly, they can learn from what you share in your journal. Maybe, think of your journal as a "Life Book", which may help future generations.

8. Detail quotes that inspire you. Wouldn't it be cool to have one place to record every inspirational quote  you read? Guess what, simply add them to your jounral and you can quickly get your hands on them when needed!

There are numerous ways you can use a journal to enhance and improve your life. The trick is to just get started. You don't need an expensive journal like Jim Rohn used. You can simply use a spiral notebook like this one I used to detail all of the lessons I learned from the real estate market crash and the "great" recession.

Or you can open a new document in Microsoft Word, or a Google Document and use it as your journal. The type of journal you ulimately use  doesn't matter.

What matters is who you become when you journal.

What matters is that you review what you've written periodically and use your journal to your advantage.

By every measure, this home is a fantastic deal. I cannot understand why it's still available. There is absolutely no way someone buying this home could lose money.

It's really that good.

Let's assume an investor paid cash for this home and planned to keep it for long-term monthly income. Here's how this would look for them:

Annual Rental Income ($1,300 * 12)                         $15,600
Less Annual Property Taxes                                        ($2,800)
Less Repairs/Maintenance/Vacancy                         ($3,500)

Annual Income After Taxes                                        $9,300

Annual Return on Investment                                    11.6%  ($9,300/$80,000)

The investor buying this property would receive an annual return on investment of 10 to 12% after taxes, repairs, maintenance and vacancy costs. This would continue for life. If the real estate market continued to stumble for the next few years, it would have zero impact on this investor because their rental income wouldn't be impacted. Actually rental rates have actually increased since the real estate crash as the demand for rentals has increased.

More importantly, the investor would have an asset that was purchased significantly below value. When the real estate market eventually rebounds, they would have the opportunity to sell the home at a significantly higher price point.

So back to the question, why hasn't this fantastic deal sold?

Well, I guess it's because everyone is fearful because they are bombarded by news storied and predictions on the real estate market. The takeaway from this article is for you to shut off the "noise" about real estate and get out there and walk through some homes for sale.

I'll bet you'll be surprised at some of the deals you find available. I found several homes that were fantastic deals like this one. For someone thinking of buying or investing in real estate, it's like being a kid in the candy store.

By the way, if you'd like to walk through some of the homes I identified as a great deal during my tours, send an email to me at robminton@myhomesellingteam.com. We can schedule a little "candy store" tour for you!

A MUST Watch 3-Minute Video

Instead of an update on the market, I suggest watching this powerful 3-minute video from the National Geographic. Think about the future implications of what will happen when these trends turn into reality. What will be in greater demand? Will you be prepared? How can you position yourself to benefit?

To be honest, I've included this video for you because it fits very well with this week's feature article, especially "GEM #1."

A Few Lessons from Warren Buffett

Critical Reads

12 Tips to Make Your Move Simple & Stress Free
Let's face it, moving is NOT fun and can be very stressful for your family. Check out these 12 moving tips that will help you get to your new home with less stress. You can read the article and tips at this link.

The 7 Most Bucket-List Worthy Destinations for 2011
Have you seen the movie, "Bucket List?" If not, add it to your Neflix que. It's a great movie because it helps put things into perspective. Your "Bucket List" is a list of things you want to do before you kick the bucket. Seeing interesting places is typically on everyone's "Bucket List." Well, Paul Eisenberg recently shared what he believes are the 7 most bucket-list worthy destinations for 2011 at this link.

A $60 Million Dollar Dream House - Best or Worst Investment?
Check out this Wall Street Journal article profiling $60 million dollar home built on speculation by a group of real estate investors. Candance Jackson reports:

"Three years into the housing bust, at a time when home values are hitting new lows in many markets, a small group of developers has plunged into the risky business of betting millions on high-end speculative homes. They are erecting amenity-rich mansions for wealthy buyers that they hope will materialize. While the vast majority of the "spec" market remains moribund, some developers, pointing to a handful of big sales and the recent recovery of the stock market, believe the world's wealthiest buyers are out again shopping for trophy mansions, often as second, third or fourth homes."

You can read this article and see the home at "this link.

Amazing Simple Home Remedies!

1. Avoid cutting yourself when slicing vegetables by getting someone else to hold the vegetables while you chop.

2. Avoid arguments with the females about lifting the toilet seat by using the sink.

3. For high blood pressure sufferers ~ simply cut yourself and bleed for a few minutes, thus reducing the pressure on your veins. Remember to use a timer.

4. A mouse trap placed on top of your alarm clock will prevent you from rolling over and going back to sleep after you hit the snooze button.

5. If you have a bad cough, take a large dose of laxatives. Then you'll be afraid to cough.

6. You only need two tools in life - WD-40 and duct tape. If it doesn't move and should, use the WD-40. If it shouldn't move and does, use the duct tape.

7. If you can't fix it with a hammer, you've got an electrical problem.

Market Update:  Congrats - You Got a 2% Raise for 2011!
Feature Article: How to Be a Miserable Investor
Critical Reads:  A little-known strategy to cut your Mortgage Payment
The Funnies: Are Helmets Really Necessary? 

Congrats - You Got a 2% Raise in 2011!

Did you know the recently passed tax law may have given you a raise for 2011? Believe it or not, your payroll tax withholdings will decrease in 2011 to 4.2% from 6.2%. This is a 2% savings and will translate into more take home pay for your family throughout the year.

Most experts suggest using this tax cut to increase your 401k contributions. Why not turn this tax savings into additional retirement income? Talk to your employee benefits administrator and simply raise your 401k contribution amount for 2011 by 2%. You can read more about this idea on Fidelity's website at this link. Scroll down to the section titled "How It Affects Your Take-Home Pay" for steps you might take with this 2% raise!
 

How to Be a Miserable Investor

Tiny Apartment Transforms into 24 Rooms

Do you sometimes feel as if you're home is too small? Well, check out this 4-minute YouTube video highlighting how a tiny apartment transforms into 24 rooms. Is it possible to do more with less?
 
A Little-Known Strategy for Cutting Mortgage Payments

Lynnely Browning recently wrote an article for the New York Times highlighting the strategy of "recasting" or "re-amortizing" to cut your mortgage payments. According to her article...

"It involves paying off a lump sum of the principal amount and asking to have the monthly payments reset according to the original interest rate and loan terms. The lump sum reduces the principal, so your new monthly payments decrease slightly and you save on interest paid over the life of the loan.

Lenders typically charge an administrative fee of $150 or more for this service, though borrowers are not required to pay closing costs or submit to another credit check, because they are not asking for a new loan.

Recasting works well for those unable to qualify for refinancing amid the ever-toughening credit guidelines perhaps because they are self-employed or have less-than-stellar credit as well as for those with extra cash, like a year-end bonus."

Paying down debt is one of the best investments you can make and this strategy might help cut your mortgage payment. You can read the full New York Times article by clicking here.

Former US Treasury Chief Loses ONE Million on His Home

Former Treasury Chief Henry Paulson recently sold his three bedroom home for $3.25 million. Paulson purchased this 2,260 square foot home in 2006 for $4.3 million. The home sat on the market for 8 months before it's sale on December 21, 2010. You can read the full Bloomberg article at this link.

Are the Helmets Really Necessary?

 

I think I'd go for a parachute instead!

What Will I Be When I Grow Up?

As this is a holiday week, I have something special for you. It's a short story written many years ago by W. Livingston Larned titled, "Father Forgets." I also have an amazing video for you that seems to fit perfectly with this story. You can find a link to the video at the end of the story!
 

Father Forgets by W. Livingston Larned

Market Update:  Property Taxes Keep Rising...
Feature Article: Investing Lessons from a Winning Trader
Critical Reads: 2010's Top U.S. Real Estate Sales
The Funnies: Cute Christmas Story

Property Taxes Keep Rising Even Though Home Values Have Dropped

Want to save some money next year? Consider petitioning to have the value of your home reassessed for your property tax valuation.

Turns out that property tax rates are set based upon the budgets of each local government, not based upon property values. Many local governments have dramatically increased their property tax rates because it's their only option to generate more revenue.

As an example, property tax rates in Northern Jersey have increased 12% while property values have fallen. If you have a few minutes, check out an article by Charles Hugh Smith at  this link. It almost makes you worry about what property tax rates will be in the next year or two...

 

Investing Lessons from a Winning Trader

 Investors Buy 233 Unsold Condos in Michigan

An article recently appeared in Crains Business Detroit highlighting a large real estate investment of 233 condos. Two firms partnered to buy into a large unsold condo project in Ann Harbor that stalled out when the housing market sagged. They paid on average of $60,000 for each condo, which was $71,000 less than the last sale price of $131,000.

The most interesting part of the story is what the investors plan is for the condos. "For now, we plan to continue renting the units and create a community atmosphere," he said. "Then, depending on the market conditions, we'll decide in three-to-five years whether to change it."

Looks like the big time investors are buying properties at the bottom of the market with intentions to rent the properties for 3 to 5 years. Based on our research, 2011 looks like it might be the best year to invest as the real estate market bottoms out. Click here to read the article.

2010's Top US Real Estate Sales

If you've tried selling a home this year and were shocked at prices, take a few minutes to check out these top 10 home sales. Believe it or not, these sales might make you feel a little better. The "Le Belvedere in Bel Air, California was originally listed for $85 million and ultimately sold for $50 million. Ouch. Here's the link to the article which includes pictures.

Want to cook in Jessica Alba's Kitchen or Sleep in Mick Jagger's Bed?

A new article reported, "Many celebrities own two or more homes and a surprising number of these big-name stars will rent you their home -- as long as you can afford it. Yes, it may seem strange that a privacy seeking celebrity is willing to rent out his or her home, but it makes financial sense. The income from renting a house helps defray the high cost of a mortgage, property taxes and maintenance." Click here to see how much it will set you back to rent Mick Jagger's home.

Cute Christmas Story

There was a man who worked for the Post Office whose job was to process all the mail that had illegible addresses.
 
One day, a letter came addressed in a shaky handwriting to God with no actual address. He thought he should open it to see what it was about.
 
The letter read:
 
Dear God,
 
I am an 83 year old widow, living on a very small pension.
 
Yesterday someone stole my purse. It had $100 in it, which was all the money I had until my next pension payment.
 
Next Sunday is Christmas, and I had invited two of my friends over for dinner. Without that money, I have nothing to buy food with, have no family to turn to, and you are my only hope.. Can you please help me?
 
Sincerely,
Edna
 
The postal worker was touched. He showed the letter to all the other workers. Each one dug into his or her wallet and came up with a few dollars.
 
By the time he made the rounds, he had collected $96, which they put into an envelope and sent to the woman.
 
The rest of the day, all the workers felt a warm glow thinking of Edna and the dinner she would be able to share with her friends.
 
Christmas came and went.
 
A few days later, another letter came from the same old lady to God. All the workers gathered around while the letter was opened.
 
It read:
 
Dear God,
 
How can I ever thank you enough for what you did for me?
 
Because of your gift of love, I was able to fix a glorious dinner for my friends. We had a very nice day and I told my friends of your wonderful gift.
 
By the way, there was $4 missing.  I think it might have been those b@stards at the post office.
 
Sincerely,
Edna
 
I for one, don't think the folks at the post office get enough credit. They work their tails off during the holiday season and are forced to deal with a lot of cranky customers! I couldn't imagine having to deliver the mail 6 days a week throughout the winter months!

Merry Christmas!

Rob Minton

Team Hoyt & CAN!

I don't have a market update for you this week. Instead I have something even better...

Last week I had dinner with a few friends. We had competed in a few sprint triathalons this past summer and were swapping stories about who was better. You know, the typicaly trash talking guys tend to do! Before we changed topics, one of my friends, Dave Berrow, brought up Team Hoyt and suggested I watch the video. I grabbed my iPhone and sent myself a reminder email.

I'm glad I did, because I learned about Dick Hoyt and his son Rick. From TeamHoyt.com:

Rick was born in 1962 to Dick and Judy Hoyt. As a result of oxygen deprivation to Rick's brain at the time of his birth, Rick was diagnosed as a spastic quadriplegic with cerebral palsy. Dick and Judy were advised to institutionalize Rick because there was no chance of him recovering, and little hope for Rick to live a "normal" life. This was just the beginning of Dick and Judy's quest for Rick's inclusion in community, sports, education and one day, the workplace.

The story continues...

In the spring of 1977, Rick told his father that he wanted to participate in a 5-mile benefit run for a Lacrosse player who had been paralyzed in an accident. Far from being a long-distance runner, Dick agreed to push Rick in his wheelchair and they finished all 5 miles, coming in next to last. That night, Rick told his father, "Dad, when I'm running, it feels like I'm not handicapped."

This realization was just the beginning of what would become over 1,000 races completed, including marathons, duathlons and triathlons (6 of them being Ironman competitions). Also adding to their list of achievements, Dick and Rick biked and ran across the U.S. in 1992, completing a full 3,735 miles in 45 days.

Today Dick and his son participate in Ironman Competitions. Dick pulls his son through the water in a raft during the swimming course. He carries him through the transition areas, rides with him on his bike, and pushes him through the marathon using a specialized running wheelchair. 

It's one of the most inspiring stories I've heard in a long time and makes me want to work a little harder. If Dick Hoyt can do this for his son, what can you and I accomplish? Take some time to check out their story and make sure you watch the video. Here's the link to their site: TeamHoyt.com.

A Simply Way to Make More in 2011

I only have two items for you this week and they're definitely not critical. They're actually more on the fun side. Here they are..

Santa's Top 10 Favorite Cities

The folks over at Zillow published a list of Santa's Top 10 Favorite cities. Click here to see if your city made the list. Believe it or not, they factored in many variables to formulate this list including: weather, number of fireplaces, number of children, the number of single-family homes and more. It's fun read as head closer to Christmas!

Celebrity Homes (Including Pictures)

Did you know Miley Cyrus secretly bought a 1.9 million dollar beach home in Florida last year? Well she did! NYDailyNews recently posted pictures of celebrities and their homes which you might find interest. You can see these homes at this link.

The reason why we've included this as a critical read is to hopefully insire you to set big goals for 2011. Our feature article highlighted the power of setting written goals and maybe a new home might be on your list!

The Funeral Procession

A man was leaving a convenience store with his morning coffee when he noticed a most unusual funeral procession approaching the nearby cemetery.

A long black hearse was followed by a second long black hearse about 50 feet behind the first one.

Behind the second hearse was a solitary man walking a dog on a leash.

Behind him, a short distance back, were about 200 men walking single file.

The man couldn't stand the curiosity. He respectfully approached the man walking the dog and said, 'I am so sorry for your loss, and this may be a bad time to disturb you, but I've never seen a funeral like this. Whose funeral is it?'

'My wife's."

''What happened to her?"

The man replied, 'My dog attacked and killed her'

He inquired further, 'But who is in the second hearse?'

The man answered, 'My mother-in-law. She was trying to help my wife when the dog turned on her.'

A poignant and thoughtful moment of silence passed between the two men.

'Can I borrow the dog?'

The man replied, 'Get in line.'
 
Have a geat week!

Rob Minton

Market Update: Home Prices in Northeastern Ohio Post Slight Increase
Feature Article: What You Measure Improves   
Critical Reads: Qualifying for a Mortgage May Get Harder in December
The Funnies: Night Vision Goggles & Other Hard-To-Find Toys     

Home prices in Northeastern Ohio Increased Slightly This Summer

Home prices in Northeastern Ohio have increased slightly (around 1.8%) during the summer months of 2010, as compared to the same period in 2009. This is not the case for home prices at the National level, which fell 2.4% for the same period. However, recent statistics suggest home prices might track downward again.

One trend those interested in real estate should pay attention to is the average price concession. A price concession is the amount the home sells for compared to the asking price. In 2010, the average price concession has increased indicating that sellers must be more flexible in their pricing and during negotiations to get their homes sold.

Interest rates remain at historic low levels allowing buyers to save a significant tens of thousands in interest. However, it's going to be impossible for the Federal Reserve to keep rates at these levels indefinitely. At some point, they will have to increase to fight off inflation. An increase in interest rates will be good for homeowners because home prices typically rise with inflation. When this does happen (and it will happen) buyers who locked in fixed interest rates of 4.55% will be sitting pretty as their home gains value and their monthly mortgage payments remain unchanged!

What You Measure Improves

Believe it or not, one of the easiest ways to improve any area of your life is to measure where you stand on a consistent basis. For example, if one of your goals is to increase your net worth, you have to measure and track your net worth on a monthly basis. Otherwise, you're not paying attention and you're definitely not making any progress.

You've probably heard all of this before, but it's true.

What you measure improves.

Want to lose weight? Weigh yourself every single day. A recent study from Brown Medical School and Drexel University ran an experiment to determine whether consistent "weighing in" would affect weight maintenance. At the end of the year, the subjects who weighed themselves every day lost more weight and kept more weight off than those who weighed themselves less frequently. The key to their success was to consistently measure their weight.

Other things you might consider measuring on a routine basis might be:

- Your monthly passive income
- Them amount of debt you have
- How much you save each month for retirement
- Your monthly living expenses (are they increasing or decreasing)
- The number of books you read on a monthly basis

If you stop and think about it, tracking and measuring is super easy to do, but chances are your not doing it. To make progress in any area of your life, you have to monitor and measure where you stand consistently. The good news is won't cost you a penny and the potential return is enormous. You don't need any fancy software. All you need to do is make the time and follow through.

Qualifying for a New Mortgage Will Get Harder for Some Buyers

The New York Times recently ran an article highlighting new lending guidelines by Fannie Mae, which become effective on December 13, 2010. These new guidelines will make it easier for some buyers to qualify and almost impossible for others. If you're thinking of buying a home, these new guidelines will have an impact on you and this article is a must read. Depending on your circumstances you may not qualify after December 13, 2010. You can read the article by clicking here.

30 Days and Counting to Grab The $1,500 Energy Tax Credit

The tax credits for installing energy efficient windows, doors, furnaces and more is set to expire on December 31, 2010. If you need to upgrade something in your home, now may be the time. You can read more about this tax credit, what's eligible and how much you can receive at this link.

End of Year Tax Moves for Investors

Another important deadline you might want to pay attention to is the deadline to convert to a Roth IRA. Roth IRAs allow you to withdraw funds in retirement tax-free. For 2010 only, you can convert a traditional retirement account, or IRA and spread the resulting tax liability over the next two years. Now may be the time to convert and you can read more by clicking here.

Hard to Find Toys

Since it's officially time to shop for Christmas, see if you can find these hard-to-find toys...