Real Estate Market Update

Yesterday, the Feds cut interest rates by half a point! This has definitely rallied the stock market but will it help the housing market? One of the purposes of this rate cut is to help stablize the housing market. We are currently experiencing record high foreclosure rates and a lot of this is due people's inability to pay their adjustable rate mortgage. The prime rate is directly related to the adjustable mortgages and half a point reduction in their interest rate may help people with their monthly payments. For some, this might be a few hundred dollars in savings. On the down side, the rate cut will affect your high yield savings accounts such is ING. You will probably see about a quarter point reduction in your interest earnings.

As a Realtor, I'm in the marketplace everyday experiencing and dealing with foreclosures, pre-foreclosures, and bank owned properties. I've been working with several people looking to take advantage of these properties because you are getting a very big discount off market value, in some cases as much as 30%. If you are interested in real estate investing, this is the time to start considering buying a pre-foreclosure or bank owned property. If you have any questions about these type of properties, let me know and I'll be happy to answer them for you!

To help support this site, I would encourage you to spend a few seconds to visit our sponsors to the right. Thanks!

Oh, and my stock picks of the month are RIMM and MOS.

What do you do for work?

This entry is in response to my friend DY’s blog on jobs. His challenge to his readers was to answer, in depth, what they do for a job. We are commonly asked this difficult question and we respond with a simple and generic answer such as: I’m an engineer/consultant/doctor/scientist/lawyer. But what is it that we really do? What are your day to day tasks and responsibilities? Here is MY response to his question.
People often ask me what I do for work. My answer to them is “I’m in real estate, more specifically, residential sales.” Another words, I’m a Realtor, or Real Estate Consultant. But what does a Realtor really do? What do I do in my day to day life to make money and to build my business? The answer to that is actually very in depth and somewhat complicated.

There is a very common misconception that real estate agents make a lot of money and that their job is very easy. This is a stereotype that is completely wrong. 90% of real estate agents fail in the first 3 years of business and of the ones that do get by; maybe 10% of those actually make a lot of money. The Realtors who you see and interact with are usually the successful ones because they are the ones who do all the business. This is why many people think real estate agents make a lot of money.

So what is it that we actually do as Real Estate consultants? One way of looking at it is like this: Real Estate agents are in the lead generation and customer service business. I am in the business of marketing myself, my services, and my properties. The by-product of my efforts is the sale of a home. During the entire process, I am providing excellent service to my clients and guiding/advising them through the entire process.

My typical day can be broken up into three parts. In the morning, I work on lead generation. I spend around 2-3 hours on this activity. The purpose of lead generation is to find new business, another words, find new buyers and sellers to work with. This activity is the core of my business and it is how I find my clients. It involves emailing, making phone calls, and sending letters/postcards, and reminding people(past clients, friends, acquaintances, etc) to send me business.

The second part of my day is following up with existing clients and making appointments. This takes up another 2-5 hours depending on how many active clients I’m working with and how many deals I have in process. This is where I make sure my current buyers and sellers are up to date on what’s going on. For sellers, I let them know what the status is on their property that I’m marketing. And for buyers I point out properties that might fit their needs and see if want to view them. When there is a property they want to see, I schedule the appointment. This is also the part of the day where I take care of the detailed procedures for existing deals that are in the process of closing.

The final part of my day is to go on appointments. This can take 1-3 hours. For buyer clients, I take them to view homes. This is the small part of the day where the general public sees us working. This is also the easiest and most relaxing part of the day. On the other hand, seller clients are a little different. This is where I go to their home, give them a market analysis of their home, explain to them how I will market their property, convince them that I am the perfect person for the job, and if all goes well, we sign a contract and I list their property for sale. You can think of this as a job interview and it’s also the most stressful and exciting part of the day. If you remember how you felt during the times you’ve been at a job interview - that is what I have to experience that several times a week.

I hope this sheds a little light on my profession. The tasks may sound simple, but the marketing that I do and the words that I say require a lot of thought, creativity, practice, discipline and skills to implement. What do you do for work?

Financial Freedom

Financial freedom, loosely defined, is a state of financial well-being where your passive income can support your style of living. “Passive income” is defined as the income you receive that’s not from your day to day job. The majority of us has not heard of, or understands the meaning of financial freedom. Some of us know what it is but do not care about it. A few of us thoroughly understand this concept and are trying to achieve it. And only a handful of individuals have achieved this state of financial freedom. Which one are you?

There are many advantages of financial freedom. You don’t have to work, you don’t have to worry about retirement, you can have the freedom to do the things you want to do, you can support your family… just to name a few. The 3 basic stages of financial freedom are:

--Stage 1: your passive income equals your living expenses(housing, food, clothing, car, basic expenses, etc).

--Stage 2: your passive income exceeds your living expenses and you can live very comfortably.

--Stage 3: your passive income greatly exceeds your living expenses beyond stage 2 and you have money left over to do the things that you want(charity, buy toys, etc).

There are many ways to achieve financial freedom but the most realistic way is through real estate. Basically, becoming a landlord. Each investment property that you buy, not only gives you tax benefits, but also generates income or positive cash flow. If a property is bought correctly, you can generate $500-$1000 a month income and sometimes even more. Let’s say for example your cost of living is $4000/month. All you need is 4 properties generating $1000/month to achieve financial freedom.

Of course, this is easier said than done and it can take a lot of time. Let’s say for example a family makes $100k per year. By living a very conservative lifestyle in the beginning, this couple can save $40k per year. Keeping all things constant, they can buy their first investment property in 2 years and start making an extra $1000/month. If they continue living the same conservative lifestyle, they can buy their second investment property 1.5 years later. So on and so forth… and in 6 years time, they can own 4 investment properties generating $4000/month thus achieving the first stage of financial freedom.

I’m trying to reach stage 1 and I’m in the process of looking for and purchasing my first investment property. If you are thinking of buying real estate as well, or know anyone who is, let’s work together and I can help you achieve your goals.
Who do you know that is financially free or on their path to financial freedom? What are they doing to achieve this? Do you want to be financially free? If so, how do you plan on doing that?