It’s time today to catch up on the news and some of your questions. Breaking news isn’t exactly an every day experience in real estate, but that can be a good thing. I’ve got some updates today on foreclosure rates around the country, a pretty good article on why we aren’t seeing many foreclosures, where to expect a bump in foreclosures over the next six months, plus answers to many of your questions all coming up.
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Email your questions to email@example.com. Please always tell us where you are from. We like to know where the show is being heard. And let us know how you found out about us if you don’t mind.
- Lunch with me every Wednesday. Baraonda
- My latest article in Forbes is out. bit.ly/findredeals.
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- https://www.housingwire.com/articles/49529-realogy-suing-compass-for-unfair-business-practices-illegal-schemes Note the click bait headlines at the bottom of the page. Which ones did I click on?
- https://www.housingwire.com/articles/49525-new-bill-slashes-fha-mortgage-insurance-for-first-time-homebuyers It’s a .25% discount. NOT A 25% discount. The idea is sound but the incentive is too small to make a difference?
- https://www.housingwire.com/articles/49528-fed-chairman-powell-tells-congress-he-would-ignore-trump-if-fired He’s appointed to a four-year term. Most fed chairs do things the President doesn’t like. Their job is to rein in inflation. The Pres wants the economy roaring.
- The foreclosure and default rate are at the lowest rate in 20 years. https://www.corelogic.com/blog/2019/07/how-low-can-it-go-overall-delinquency-rate-lowest-in-more-than-20-years.aspx
- Why is the foreclosure rate so low? https://www.corelogic.com/blog/2019/07/expiration-of-the-cfpbs-qualified-mortgage-gse-patch-part-1.aspx
- It’s disaster time – man-made and natural. Wild Fires and hurricanes. https://www.corelogic.com/blog/2019/07/wildfires-and-housing-markets.aspx
Your Questions: Send emails to firstname.lastname@example.org
- Follow up from James in Rochester – he bought two of my houses. If you are interested, email email@example.com.
- MerryLynn, Milwaukee, WI “I am thinking of buying a condo to use for AirBnB. But the building a block away just banned owners from using AirBnB. Can they do that? And what would I do if they banned it in my building?”
- Samuel, Long Beach, CA “My flip is in a real hipster area. Should I do the wild colors I’m seeing up and down the street or be more neutral? I’m not sure how to go in-between.”
- Elizabeth, Denver CO, “Can you flip apartments?”
- Milo, Columbus, OH, “Someone told me the Columbus market is hot. So tell me why my flip property isn’t selling? It’s the only rehabbed house in the neighborhood so it’s price well above the other houses, but it should sell anyway right?”
Motivational Thoughts for the day
- “If you’re not making mistakes, then you’re not doing anything. I’m positive that a doer makes mistakes.” -John Wooden
Expected Air Date: 7/11/19
[0:17] The show that teaches you how to make money in real estate
wherever you are whatever your situation there is an opportunity for you flipping America is sponsored in part by American IRA
founded by investors for investors on the web at American Ira. Com.
And by Braswell Capital Solutions commercial lending made easy on the web at Braswell Capital Solutions. Com,
and now you’re sad flipping America guy Rodger Blankenship.
[0:50] I hope that you’re having a great day today I hope that you’re making some offers and getting some deals done and get something soldered
if you’re not active in the real estate then I hope that your real estate Investments.
Are working out for you and you’re able to go out to your mailbox and just open it up and find money or even better save you a trip to the mailbox just have it
you know sent over to your account be ACH or wire any way you shake it I hope that your real estate is working well for you
hi I’m Roger Blankenship and I teach people how to make money in real estate today we’re going to catch up on some of the news and your questions around the subject of real estate now breaking news isn’t exactly a daily experience in real estate which I think is a good thing
it’s easy really to stay on top of what’s going on in the market okay I see it’s easy we make it look easy and we do a lot of work
behind the scenes to bring you the best information most up to date that we can but it it really isn’t that difficult were able to maintain a full-time career still actively involved in the buying and selling of real estate and doing different things with a lot of people even in while I Was preparing for this show I was interrupted by a phone call and had to sit down and write a contract on a couple of properties that’s an update from
the last show I like I had a question from a gentleman from Rochester who then turn around and bought two properties from me so that’s good.
[2:18] Today we’re going to talk a little bit about foreclosure rates around the country and what’s going on there I’ll give you a hint the Foreclosure rates are low.
[2:26] And they’ve been this low in a long time and I’m going to talk about why I’ve got a pretty good article about why we aren’t seeing very many foreclosures and
another story that suggests that we might see a bump in foreclosures over the next few months and where to watch for them Plus.
Answers to a lot of your questions coming up in just a few minutes let me tell you how to reach us if you have questions about
real estate send them two questions at Roger Blankenship. Com if you have questions about life in general,
or how to be the finest person in the world send them to Diana how do you do it at Roger Blankenship. Com no I’m just kidding my wife just happens to be in the studio with me and so I was picking on her but
anyway she’s wonderful happy birthday sweetheart she’s
she just celebrated her birthday and and we had a wonderful time and now I’m off the subject because my wife distracts me that’s okay anyway questions about real estate,
questions at Rodger Blankenship., I promise you we will answer your question we answer them all some of them we answer on the air if you don’t do email or if you’re just not in a place right now where you can email but you got a question is just burning a hole in your brain
then pick up the phone and call.
[3:41] 404-369-1018 404-369-1018,
press extension one you can leave your message or question there please whether you’re right where do you call when you reach out to us on social media,
please tell us where you’re from and how you listen to the show because we want if we find that you know we we find that still the majority of people that listen to show or listening to his over the airwaves
on the AM FM stations are having fun with the podcast and the downloads and all that stuff but most of you tell us that you’re listening over the air
and that’s all right that just tells us you know it helps us make plans for the future
but that way it’s okay so let us know where you’re listening and how you’re listening and we appreciate that and.
We will answer your question will help you in any way that we can if it’s a question about life in general it may take a little longer if it’s about real estate will get right back to you with an answer okay let’s do the news.
[4:47] In the news reality is suing compass
reality is one of the largest brokerage is in America and Compass is on their way to being one of the largest and Compasses being accused of unfair business practices and the illegal schemes read the article it’s I’ve got a,
a link to it it that you can click on and be aware that I’m not coming about the Roses
guilt or innocence of any of the parties involved but I do know that multiple accusers are pointing the finger at compass for unfair and
dishonest and dishonourable business practices and I got to say I’m not really that all that surprised now.
[5:32] I hesitate to do make light of the story because it’s a it’s a big case and it’s it there’s a lot of money involved and we’ll see how it turns out and will keep tracking it but.
I got a little bit of music as I was reading the story in the story is from housingwire and
as I was reading at the bottom of the story like so many stories from reputable news and information sources on the internet today there are a number of.
[6:00] I guess I call him click-bait headlines.
And it did a lot of interesting pictures and so forth in their just designed to get you to click in Salem their site and keep reading a little bit longer and
it’s fine with me I have fallen prey to this ass have you do not deny it you clicked on clickbait you you clicked on something that you knew is
but you had to see.
These pictures that were taken at the incredibly right moment or some other things like that right okay so I’m going to read you the headlines at the bottom of this article and that this is a serious article about a major lawsuit between two
real estate companies and this is on a serious website housingwire the provides a lot of good information and is indeed a source of much of what we talked about her on the show one of the one of my sources and so,
here are 16 headlines at the bottom of the article and I want you to tell me I want you to tell yourself.
Which one did the flipping America guy click on which in which one are actually more I did click on two of these so you tell me which ones I clicked on.
[7:10] Make your gas ready for the headlights Moody’s increased competition for Fannie Freddie would be a credit.
[7:19] Next Freddie Mac announces Fixer-Upper mortgage next.
[7:28] Maria moskva joins cloudvirga as its new Chief legal and compliance officer boy now there’s an example of clickbait if I ever saw it.
The next one arm Co hires new senior director of Business Development.
[7:45] Compelling fed chairman Powell tells Congress he would ignore Trump if fired.
[7:53] Non-qm lending is on the rise but here’s why it’s not the subprime of the past.
[8:02] New bill such as FHA mortgage insurance for first-time home buyers.
[8:07] Taylor Morrison the points industry veteran to lead its Dallas division
compelling TVs shrewdest shark shows that’s easy for me to say because I’m a trained professional that you say it three times TVs shrewdest shark shows one of the best ways to utilize 50 bucks.
[8:30] The next this is the richest person living in your state and next this free upgrade makes Amazon Prime even better.
[8:40] And last of the 16 headlines the one meat you should never feed your cat the winner the one meet you should never feed your cat.
[8:52] That my friends is the essence of a great click-bait headlines the rest of them whatever but the one meet you should never feed your cat.
I don’t have a cat I like cats I don’t have one I don’t have any pets on purpose.
Because when the children were gone it was time for the pets to go the pets outlive children by a few years this right in terms of staying in the household but that once the last pets were gone that was it.
Love cats Love Dogs content just to pet other people’s.
Now I don’t have anything to take care of you know and I can travel whatever it is I’m free all right anyway I did not,
click on the meat you should never feed to your cat like I’m kind of curious now that I’m talking to it I wonder what is the meat you should never feed your cat but I don’t really care I did click on fed chairman Powell tells Congress he would ignore Trump has fired I thought that federal employees that work in
the executive branch serve at the pleasure of the president but the he is appointed to a four-year term and basically.
It’s he was baited into fighting words by Maxine Waters.
And it was just show it’s just Showmanship who knows what’s going to happen who really cares.
[10:12] The other one that I clicked on is the new bill that slashes FHA mortgage insurance for first-time home buyers now I’m actually curious about this because this is going to,
speak to wear a lot of you my friends are working in your properties if you’re flipping properties you may be selling.
If you have a relatively inexpensive home you may be selling to a first-time home buyer and so if there is a bill before Congress that slashes,
FHA mortgage insurance I certainly want to know about it and I have provided the link to this story in the notes for the show.
So you can read this story for yourself but I dovinh to this story with great interest wanting to know what is going on and this and who sponsored it and so this has.
Bipartisan support passed by the House of Representatives got to get through the Senate then it goes to the president for Signature and what it’s doing is it’s offering.
Counseling on the responsibilities of homeownership for potential homebuyers and if you go through this course you’ll get a reduction in the rate of.
[11:20] Mortgage insurance that you have to pay now FHA.
The FHA right now you can get you can buy a home with 3% down payment but until your equity in the home reaches 20% you have to pay for mortgage insurance what is mortgage insurance well the bottom line is it’s it’s
it’s insurance that you pay that covers the lender if you get foreclosed on.
[11:48] And if you get foreclosed on the lender is going to be reimbursed out of a the from the federal government for that loan and so they’re okay and it’s an insurance policy that you’re taking out
and you’re paying for it it’s the mortgage insurance premium
okay that I can add some dollars into to your month it’s really I mean to your monthly payment it’s not that much typically but it does add a fairly significant amount of money,
and that’s available to everybody who does an FHA loan and just so you know when those properties do go into foreclosure they ultimately become HUD houses and if you think that it doesn’t happen very often just go to HUD home store.
Come and see the quantity of houses that still foreclosed while they foreclose but the lenders get bailed out because you’re paying for an insurance fund all right so
get a significant significant discount what’s the what difference is going to make well they have discovered that people that take this course in they and go through counseling for homeownership they have a far less.
Rate of foreclosure so this is probably a pretty good investment is good for the people that’s good for everybody and it’s good for the Foreclosure fun so they give you a discount
on what you have to pay are you ready for this discount that fits the headline that says new bill slashes FHA mortgage insurance.
[13:14] It’s .25% now let’s let’s listen carefully it is to 5%.
[13:24] It’s not .25 of the amount and it’s not 25% it’s basically 1/4 of 1% discount.
So if you’re paying $30 a month,
for mortgage insurance but you go and take this counseling and you get signed off on is successfully completing it it is going to reduce or slash your mortgage insurance premium
buy $0.08 a month there you go.
[13:55] / what a deal okay we’ll be right back we got a lot more news and your questions coming up on the other side of the brain.
[14:14] Renew what’s around the corner,
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[15:49] All right before the break we got into a little thing about the this has been kind of a story for those who really pay attention to politics and a lot of you don’t that’s okay but there’s a little riff going between President Trump and.
Mr. Powell the chairman of the fed and.
The question put to him is will you leave office if you’re fired by President Trump in
mr. Powell’s response was he can’t fire me I wouldn’t leave I have a 4-year term I ain’t signed in to see it out well I did a little digging and the
it’s not really happen before but the president can remove the Fed chair for cause.
So we’ll see if it happens a lot of what President Trump does seems to be Bluster and.
Noise designed to get some sort of end result that’s usually not exactly what he is blustering and making noise about you know it’s a part of this negotiation.
Strategy so we’ll see in the meantime.
[16:54] Mr. Powell’s way of responding back is when he gets the chance blame President Trump for the
shortage of new housing starts in the US that we’ve spent some time talking about the affordability crisis here on this show and I provided a pretty good set of documents and evidence that supported the idea that.
Local and state government bureaucracy is the biggest hindrance to housing affordability in the United States and accounts for between 25 and 40% of the cost of new home.
Construction which is why.
There are so few new home starts going up around the country and when they do they are not in the affordable sector they’re not in in the
you know the starter home price range because of so much bureaucratic red tape.
Know what they’re doing it this isn’t sorry I picked up from CNBC again with Jerome Powell chairman of the Fed.
Sharing his opinion that the home crunch has to do with the fact that we do not have enough skilled workers.
[18:07] Because we don’t have a lot of illegals flooding the country to work in those construction jobs and.
The tariffs that the president has imposed now I will tell you I I freely admit the tariffs on Canadian Lumber have have created a rise in the price of lumber and,
framing packages are more expensive and those prices have gone up no question about it that is a factor,
the factor that we don’t have a lot of illegal aliens around in the end available to work it points at
our broken immigration system and look I’m not going to get into a whole show about politics if your
flipping America in cider and you read my blog I have done a story on immigration
and how we could fix this and I don’t want to get into it too much here but I am going to say this if people want to come to America I say great
but let’s ask the question why do they want to come here they want to come here because there is a culture and a history of opportunity that opportunity doesn’t stem from the fact that the dirt,
that comprises this country is something unique and special around the world what is unique and special about America and American Opportunity is our respect for the rule of law.
Private property rights due process and a little thing called freedom.
[19:35] That’s why people around the world one to come here so if people around the world want to come here I beg plead and implore with my elected officials to find a way to let the people come legally.
Let’s fix the laws so we can let them in and let them take a part in the workplace.
It was before I really started paying attention to politics because I was just a young child at the time but,
there was a time after World War II and during my childhood years there was a program called The Bracero program that brought
that allowed migrant workers into the country to work as temporary workers now the problem that program had problems as any program does especially a program
say it was conceived by democrats and it was run by democrats and I’m not going to blame the Democrats here but let’s blame government okay it was conceived by government and run by government and.
Migrant workers were brought in to work on American Farms and ultimately the abuse has that were put to these people.
We’re responsible for the creation of the United Farm Workers Union now that in itself is probably something that represents progress for the farmworkers these people are human beings and need to be treated with dignity and respect.
[20:59] However it was a Democratic President Lyndon B Johnson that ended the Bracero Program.
And some say it was due in part to the fact that the United Auto Workers another Union believe that these migrant workers were going to be taking away their jobs so the program was ended and the
hundreds of thousands of workers that came to this country and worked on farms and worked various manual labor jobs
now they could not come here legally and there was a shortage I believe it or not for a little while there was a replacement group.
And let me get the name of it and see here let’s see your scrolling okay athletes in temporary employment as agricultural Manpower get this
athletes in temporary employment is agricultural Manpower
this began in 1964 after the termination of The Bracero program and was meant to simultaneously deal with the resulting shortage of Farm Workers and a shortage of summer jobs for teenagers okay but when you take this
long names and create an acronym out of it what you get is.
The A-Team I kid you not it was called The A-Team before there was a TV show called the 18th there actually was a real life 18.
[22:15] Didn’t have mr. t on it but it still had the A-Team anyway I thought you might find that amusing I did and I’m getting kind of far afield here but what I’m what I’m doing and I digressed into this is,
I’m amused by the fact that the media just tries to manufacture a way to blame the president for everything that’s wrong
but they do that to this present they don’t do it to every president they do it to this President why well maybe it’s because he’s a jerk.
Maybe it’s because he annoys them I don’t know what the reason is but I’ve never seen anything like it and I continue to Marvel at what he’s able to accomplish in the face of so much opposition from everyone
in the popular media.
[23:01] I guess labor shortages probably do have a factor or a factor and I also I know that the terrorists in the cost of lumber is a factor but
I’ve already pointed out to you on more than one occasion that the real factor that causes that that is contributing to the housing shortage crisis is bureaucratic.
Regulation and the need to reduce that or in some cases just eliminated.
Okay let’s see if we can talk about delinquency and foreclosure rate here I’ve got a story from CoreLogic and this is another one of my go-to source is CoreLogic and let me just summarize it for you.
The foreclosure in default rate or at the lowest rate in 20 years.
[23:47] You can read the article then you can get a whole lot of other information but here’s what you need to know the foreclosure in default Raider at the lowest rate in 20 years you know what this means
what this means is we are not about to have another housing crisis like we did 10 years ago in the bust of 2007 and 8.
It’s not about to happen so what’s going on in the market what’s going on is exactly what we here at flipping America what I have been predicting for the last year.
We are in the Slowdown that I predicted would happen and it was fairly easy to see for anyone who is paying attention if you can pay attention to what’s going on in the markets without.
Bias or loathing of particular individuals and the government would just look at what’s actually happening
what you will see is the market is softening in the coastal areas that were predictably hit because first of all they they prices grew too far too fast and got out of the reach of ordinary home buyers in those markets and secondly,
[24:54] The tax plan that was passed by Congress and and put into place as kind of driven down the taxable.
Benefits of owning high-priced real estate which is mostly in coastal areas so it was
understandable and predictable to see 2 to see a Slowdown in the coastal areas we called it it wasn’t hard to do but it’s happening.
What’s happening in the rest of America well you’re seeing a Slowdown in the higher price points all across the country and higher price points are defined Market to Market but.
Whatever your Market is if you’re looking at luxury price points you’re seeing a little bit more time and days on Market that’s just
happening and that softening is creeping downward from the luxury price point into the mid-range
this does not mean that the economy is going bad this is not mean that the Housing Industry is about to collapse and certainly it doesn’t mean that we have a crisis on end what it means is the market is getting back to normal.
[25:58] A three month supply is normal and balanced we’re not even there yet we’re on the way there but we’re not even there.
[26:06] Most markets across the country are not
a three month supply and most places across the country not in coastal America or Chicago most of those places still are seeing something like a 10 to 15 days average Market time before contract
just relax okay we’re not going to see a big crash it’s it’s not about to have a meltdown but why are the Foreclosure rates so low.
I pulled another story from CoreLogic and put it in the notes to share with you and there is a specific reason why the Foreclosure rates are so low.
[26:44] Let me preface this by saying I am not a fan of the Consumer Financial Protection Bureau I believe it is an example of classic government overreach and they they have inner feared with.
The of many good people and businesses across the country during their time and if they are phased out of existence.
Baby fine with me I don’t know if it’s going to happen maybe I don’t know but
I do know that the Consumer Financial Protection Bureau has done a few good things one of the things is the 2013 ability-to-repay and qualified mortgage rule this requires lenders to make reasonable good faith determination of consumer’s ability to repay a mortgage loan
based upon verified borrower financial information you know what this sounds an awful lot to me like common sense it is a shame,
that we have to have a government agency enforce common-sense and lenders and the question then gets to why do the lenders have to have common sense forced upon them by the government.
Don’t they want to stay in business they know anyone who loans money out knows that you got to do things to limit your risk in that money why on Earth
would lenders be making loans that don’t make sense
I’m going to give you the answer to that when we come back and I’m going to tell you how it got solved and maybe some of the problems that we’re looking at because of that.
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[29:24] As you know we do lunch every weekend at the last lunch meeting I was talking to a guy that’s taking my course listen to Josh Bank hear what he has to say,
hi my name is Josh Bank I’ve recently signed up for Roger Blankenship ultimate real estate training course I’ve had a great time with the so far I’ve gotten right to the very you’d understand.
Very easy to duplicate and the quizzes at the end make sure you do so it’s really really good
I highly recommend it for anyone that’s interested in getting involved in this I’ve tried talking to some bigwigs that sell pink horses for lots of money.
And the bang for the buck with Rodger is is absolutely worth it I highly recommend it.
Thanks Josh for a limited time you can sign up for this course for 50 bucks a month.
I don’t know everything there is to know about real estate investing but for 50 bucks a month I’ll tell you everything I know no contract to sign just go to Roger Blankenship. Com.
[30:42] Hammer backup Roger Blankenship I’m your host. Teach me how to make money in real estate.
I’m not encouraging you to go out and drop what you’re doing and start flipping houses like you see on TV in fact I’m imploring you please don’t quit your job even if you hate it
don’t quit your job find out how to make money in real estate and keep your job for as long as you can when you have replaced your income * 3.
Then quit your job.
Okay then do this but first and foremost prove that you can prove to yourself and your family and your Skeptics in your doubters that you can make your living in this business before you quit.
[31:19] People ask me all the time how did you get into flipping houses and I tell people sheer desperation and a lack of communicable job skills and that’s that always brings a laugh,
but there’s real seriousness behind it folks I didn’t train for this I didn’t plan on it
it’s something that was just kind of thrust upon me because of Life circumstances and so I made the best of it but I’m telling you it was not an easy path and I don’t encourage everybody to follow the path that I.
[31:45] Because it will it read it was just incredibly difficult
now I will also acknowledge that incredible difficulties sometimes lead to a work ethic that can make you legendary
there is also a reason why I have flipped 900 houses in my career and that’s because of a kind of a legendary work ethic I don’t mind even at my Advanced age
workington 12 hours a day whatever it takes to stay on top of my business and to do the things that need to be done but.
We’re not making this about me I’m making this about you and I’m here to help you so here we go when we were going to break
I was talking about the fact that the Consumer Financial Protection Bureau created a rule called the ability-to-repay and qualified mortgage rule.
That required lenders to make a reasonable good-faith determination of a consumer’s ability to repay a mortgage loan based upon verified borrower financial information now they put some teeth to this.
Lenders who fail to comply can be held liable for damages by both the cfpb and the homeowner and the homeowner.
[32:55] So in other words if you’re a homeowner and you can’t really afford a house and a lender makes a loan on the house anyway and then you default when you get yourself in trouble and you wreck your credit.
[33:05] You can hold the lender accountable because they didn’t they didn’t provide the
good sense that you should had this is government over reached the rule includes definitions of a qualified mortgage composed of built-in consumer protection features generally associated with responsible mortgage lending practices in most cases a.
Qualified mortgage rqm provides mortgage lenders with a conclusive Safe Harbor from the rules legal liabilities however for higher-priced mortgage loans,
a proxy for non prime or subprime mortgage loan the presumption can be rebutted by the homeowner on the basis that the lender did not leave the homeowner with enough residual income,
to cover basic living expenses after considering all current,
obligations non-qm loans do not provide the lender with protection from the rules legal liabilities it is ultimately
a facts and circumstances judgment by a court in the event of litigation however
cfpb is stated that so long as a lender can reasonably demonstrate borrow or ability-to-repay lenders are not fear the rules legal liability.
That’s like saying I’m with the government trust me I’m here to help.
[34:13] Okay the government is involved and the government is probably going to mess things up I do believe that the cfpb is guilty of
massive over-reach but in this case what they did was they Institute a rule that shouldn’t had ever be a rule because lenders ought to be using common sense and homeowners if they don’t have enough sense to know what they can afford they shouldn’t be buying a home
we have created this notion that homeownership is the essence of the American dream.
I don’t agree with that I don’t believe it homeownership isn’t for everyone it shouldn’t be for everyone.
We are a mobile Society no one buys a home and stays in it and gets a job and stays in it until retirement anymore very few very few.
[35:01] We are moving around and listen listen listen to what I say
if you don’t plan to live and in this area and keep this job for more than 5 years
you would be better off not buying a home and instead putting the money that you would be using for a house payment into other Investments.
Vehicles now that’s not the natural advice that’s just sound wisdom
you need to do the math and think about if you can call her right into the show and we’ll talk a little bit more about it if you want to we’ve been through the math and will I’m sure at some point we’ll go over it again but.
Home ownership is a privilege and a responsibility it is not a right it is not a dream.
Sometimes it’s a nightmare because now you have to fix things that break.
You have to go investigate the things that make noise in the night you have to find out what’s going on you need to take responsibility,
for your life and for your house for this structure because you’re putting so much of your money into it you are building Equity every month.
Matt will not much in the first 5 years but it is something that can be a source of.
Cash for you down the road if you stay in that house for several years.
[36:24] But it’s not for everyone we need to stop telling everyone that their dream is to own a house.
[36:31] We need to encourage people to be responsible now where did the problem come from the problem that led to the crash in 2007-8 in you know some people have tried to want to go backwards and blame it on Real Estate Investors,
and speculators I don’t think so at all.
Because the loans that defaulted were at there were two types of loans that were primarily the ones that defaulted they were liar loans to begin with
the stated income in the no doc loans and I’ll come back to that in a minute the other loans that defaulted were second home loans that those are a lot of times mistakenly assumed to be investor loans
these people were not buying these as Investments they were there it was their second home and when the economic situation takes a downturn when the economy goes sour.
One of the first things if you got to quit paying for something you’re you’re going to keep paying for your primary residence but you’ll let that second home go and because of the market crash people couldn’t sell their second home so they just let him go these people were not investors.
Okay investors were held to a different standard for qualifying for their loans.
[37:40] And they actually had to qualify and that’s still true today but
a bulk of the problem the vast majority of the problem came from homeowners who had no business owning a home had no money to buy the home and we’re allowed to just make up a number to qualify income-wise for the loans,
these loans were encouraged by the Clinton Administration and.
[38:07] They were put into place and Banks were pressured to make these non-qualifying liar loans I called him liar loans with their stated income no doc loans.
Some of you that are at Ben adults for less than 10 years may find this hard to believe but in the early aughts in 2002 to 2006 or 7
you could actually go to A lender and if you had decent credit you could just make up a number for your salary.
Stated income you didn’t have to provide documentation you didn’t have to provide tax returns you didn’t have to provide W-2s a stated income loan and some of your say what,
that’s nuts there’s no sense involved in that and you would be right.
[38:54] The reason the government had to come and make rules that require lenders to have common sense is because the government put out a bunch of loan products and required or pressured lenders to make these loans knowing full well.
That a number of these people are just going to lose the house because well.
[39:15] When you let people get greed in the way it’s just going to happen people are going to game the system people are going to play
I had a half million dollar house I was selling in the Country Club Community and the borrower that ultimately bought that house for me was a pharmacy assistant that made $36,000 a year,
there’s no way on God’s green earth she should have qualified to to get the loan on the house
I was not a person who is going to change the system out of house and I needed and wanted to sell it and so I I sold the house but I’m not the one who did anything wrong here that buyer lied about what she made the mortgage broker
was complicit in the lie and they went down together.
[39:58] Okay so now the government’s get involved because the government screwed up the lending industry in the first place and now they’ve got these rules.
And they’re requiring lenders to have come and said they’ll this is a long diatribe on one subject when the government gets involved things get screwed up
but in this case I am going to give the government credit for correcting something they shouldn’t have had to correct in the first place I guess I just wanted to make sure that the blame fully rested with the government and head to begin with but the rule is.
Now lenders have to make sure that borrowers can actually repay the loan.
[40:37] Duh if they do that we’re going to have a very low rate of foreclosure.
[40:44] And I can tell you from the stats you can look at the article that we’ve posted from CoreLogic where it states clearly that the default rate and foreclosure rate is at a 20-year low.
All because of a common-sense rule.
[41:01] I can also tell you from my experience as a person who gets list and buys foreclosures at the steps.
There there has never been in my 20 years in this business there has never been more people at the steps trying to buy houses and there have never been fewer houses to buy.
[41:19] I used to say all the time doesn’t matter how many people come out to the steps I will always be more deals and buyers that’s not true right now.
[41:27] That could change it’s not going to change overnight they could change I don’t hope for it to change because that would mean a lot more people are getting foreclosed on.
[41:37] But will be there and prepared and watching what’s going on and adapting and changing with the market.
And that my friends is the way to be a serious and career real estate investor.
Find a deals where they protect themselves and when the cheese gets moved you move with it.
[41:57] Okay I picked up one of the story about where we’re expecting to see a bump in the rates of default in foreclosure and.
There’s no great secret here it’s going to come from wildfires and hurricanes it’s time.
It’s that time of year folks it’s Wildfire Timbre out west and it’s hurricane season in the Atlantic and so we brace ourselves for the destruction of property that is almost certain to appear out west,
we’ve had a rash of wildfires over the last 5 to 10 years like nothing we have ever seen the results have been tragic and devastating and.
It is clear for anyone who wants to dig in a little bit that back in the day when.
They did controlled Burns in the uninhabited areas of California they didn’t have the wildfires like this but
the tree lovers in the tree huggers got involved in they start they stop doing the controlled Burns and now when the burn happens it’s out of control okay that I don’t want to get it. I’ve spent enough time on Paul
political things today at I don’t want to spend any more time on it let’s just hope for the best okay kind of like when I hit a golf shot hidden hole.
[43:09] Let’s also do the same thing when it comes to Hurricane Season let’s let’s just
pray that this season will be like we’ll have a little bit of relief and people will be able to go ahead and enjoy their Coastal property but has the seasons approach this is where we can expect to see a bump because when homes are destroyed,
naturally a lot of people choose not to continue on paying the mortgage on a house that’s no longer there.
That there are remedies but sometimes the remedies take too long to get there for people to
fully deal with the situation yeah they got money, but in the meantime they’ve got a mortgage to pay plus they have to pay for wherever it is they’re living now and lot of people just aren’t able to do both and as I said in the previous Eggman,
if somebody has to choose between paying for where they’re living now and paying for some other place where they’re not living.
You know what they’re going to do and so that’s going to create a little bit of a hit and the rate of default and the rate of foreclosure so that’s the news will be back in a minute and we’re going to deal with some of your questions.
[44:18] If you’re a real estate investor.
[44:21] You owe it to yourself to get a profile on the fan the flipping America Network it’s a flipping America network.com.
The profile is free if you’re a buyer a landlord a rehabber you enter what you’re looking for.
Particularly the ZIP codes of interest you don’t have to sit on the app,
all you have to do is tell us what you’re looking for your profile includes your cell phone number which will verify and when a property is posted in the zip code you’re interested in your going to get a text message that says,
look what just hit the fan.
[44:55] Everyone should register all 43,000 ZIP codes in the United States are included and you could be finding your next property just by listening for your text we call it snap,
click sold because if you are a seller you can download the Apple anyone can download the app and in the App Store
it’s called flipping America Network all one word no spaces you download the app flipping America Network,
and does a seller you could be at the property negotiating a deal with someone that you want to wholesale you can take a few pictures of the property and that’s the snap.
Then you can click to upload this property to the fan put a little information about the property there and.
[45:43] Immediately that property will get texted,
to however many investors have expressed an interest in that zip code you no longer need to manage a mailing list you don’t have to go out and put together your flyers in your brochures or create
ads for Craigslist or other sites just posted in the fan it may be sold by the time you get back to the office that’s why we’re calling it snap.
Click sold www.dot flipping America Network. Com register now
vacant land is one of the most overlooked in misunderstood real estate investments in the world. Most people think
incredibly powerful investment if you know where to find property owners who will sell it for virtually nothing in the good news is these people are actually all over the.
You just need to know where to look how men check out the re tipster club or I will spill the beans on everything I know about the land is.
Again that sorry tipster. Club.
[47:02] Amber back Marilyn Mary Lynn from
it’s Merry Lynn kind of unusual Mary Lynn for Milwaukee Wisconsin I am thinking of buying a condo to use for Airbnb but a building just a block away just banned owners from using Airbnb.
Can they do that and what would I do if they banned it in my building.
That’s an interesting question and I actually have a couple of Airbnb specialist coming on the show within the next couple of weeks I know
it’s been scheduled sitting right in front of me at the moment I couldn’t tell you when it’s going to be probably within the next two weeks we’re going to
we’re going to do a show on this I’m going to save your question and and get back to it then with them but.
[47:49] The answer is inside a Condo building yes they can.
Because the building is as common space that’s owned by everyone so if the condo association the homeowners association agrees to ban Air B&B they probably can do that
and so you know you probably have a homeowners association a condo association in this building,
and so yeah they they can the question is whether or not they will now I am not encouraging this but I know people who
they do Airbnb you know it’s banned in their building I don’t know and eventually they get caught they have to quit
I don’t think there’s any jail time involved for but there probably are some Financial penalties or fees that you have to pay I don’t know I’m not encouraging you to do that what I am saying is if they I guess
to answer your question what would you do if they banded in your building that probably not bandoneon are Banning rentals.
[48:45] Although some buildings with condos have a limit to the number of units that can be rentals and you have to get permission from the homeowners association to turn it into a rental.
They might not be banning rentals all together but a lot of units that.
Cashflow great as an Airbnb don’t really cash flow well as a rental so at that point you may just have to dump the property.
Those are things to consider when you buy something now.
The question was not about a single family home and I think we are heading to an interesting.
[49:23] Illegal scenario at some point some city is going to over-reach certain certain cities in the US have already banned Airbnb and I believe that when they get that to the Core.
You are not going to be able to restrain private property ownership then that way you can you can you know if the police come out
and a few neighbors complain that you’re having a party in the noises to out if there’s a noise complaint and it’s after hours then certainly you can get cited for that
but they cannot stop you from having a party and that’s the big concern of Airbnb that these people are just going to use these houses for one big massive party and I’m telling you that the owners of the house don’t wanna see that they don’t want
people partying and getting drunk and tearing up their house that’s not what they’re in this for and that’s not what they’re looking for and I think that concerned about that is.
Definitely overwrought however.
Have there been instances when there were there were parties going on and they were loud and obnoxious yeah of course but that happens with regular homeowners to you know.
[50:34] So anyway.
We’re going to keep tracking this end and we’ll be talking with more Airbnb practitioners in the near future so merry then please stay tuned Samuel from Long Beach California by flip
is in a real hipster area should I do the Wild colors I’m seeing up and down the street or be more neutral I’m not sure how to go in between
well I’m glad you put that last part in there about going in between because that’s bets
kind of what I would recommend I have recommended it in the past I know we had a question somewhere over this a few weeks ago but and it’s becoming a trend to.
In these areas where there are you know a little bit older than Millennials I guess the hipsters I don’t know how you clearly delineate between these Generations but what’s in style right now is to have brightly colored houses.
My own daughter is in this hipster age group and she painted her house or shade of blue that I can’t imagine.
I would want on my house but you know what it fits right in her neighborhood so it’s fine and
her house is growing an equity in value every single day and so I’m proud for her that she has that asset.
So that’s terrific and that’s okay but I think that’s a decision that the homeowner would make because they should make because.
[51:53] If you paint some wild color that you love.
Let’s say you pick a particular shade of coral or watermelon pink or something like that for your house you run a good chance that.
Half the people that look at it or going to hate it and they may not be able to get Beyond it and painting and entire
home exterior is an expense that well that’s just too much to stomach when people buy a house these days on the retail Market,
they don’t want to buy a project they don’t want to buy a house with things that they still have to do unless you’re going to be buying it at a fixer-upper price and that’s not why you’re doing is right.
Now if you have a neutral color they may not love it but they also probably don’t hate it.
[52:48] And that’s what’s important.
They can say to themselves well a few years down the road after we get settled in we can repaint the house but if it’s a color they hate their thinking old when we move in we would have to paint mediately I can’t take it this color.
[53:06] You see the difference.
[53:08] That could be the difference between making the sale and not making the sale if you want to put a splash of color I have another daughter who is a graphic designer and artist and she says.
What color and so we get a pop of color by doing weird colors on the doors in the shutters and that sort of thing,
I had never imagined that I would paint doors orange or turquoise or some of these weird colors you know the first several years that we did this we had one color scheme for all of our houses
it back in the early aughts we’ve been paying all the house has a pale yellow with green shutters and
are white shutters in a green front door and then we’d started changing with the times a little bit then
do you know got a little bit more hip and cool and but always it was something that was just kind of neutral to the exterior color of the house was not designed to make it stand out on the Block just
to look like it was in great shape and in fact be in great shape but you know.
To fit the the condition of the house we wanted a great paint job we just didn’t want any colors that screamed you got to do something about me.
[54:19] K a front door is easy to change if if we had some weird color you know lemon yellow front door and they hated it they can change that.
All right so that’s what I would suggest that you do Samuel and thank you for writing in Elizabeth from Denver Colorado right in and says can you flip Apartments.
The answer is yes any asset can be flipped you can flip a car.
[54:46] You can you can tip a cow know I don’t know what he really can or not.
You can flip any asset the flip model as a business model is you buy with the intent
to somehow add value and resell it with apartments that buying process takes longer and the selling process takes longer
typically with Apartments if you’re going to buy with the intent to flip you’re going to buy something that’s undervalued.
Maybe it has a high rate of vacancy maybe their units are entire
buildings in the apartment complex that need to be rehabbed but you’re going to do something to add value and when it comes to apartments or commercial assets you add value by in
proving and increasing the income,
because much of the value back all of the value in a commercial asset is not all but most of the value of the first class that comes from the income.
And it’s the income is connected to the the area cap rate for that type of asset and it’s not just
the cap rate on Berry Apartments do you got a B and C apartments and so you have to compare apples and apples there but if you know what you’re doing
yes you can flip Apartments Milo from Columbus Ohio says someone told me the Columbus Market is hot.
So tell me why my flip property isn’t selling it’s the only rehab house in the neighborhood so it’s prices well above the other houses but it should sell anyway right.
[56:15] Okay Milo no.
I’m sorry I’m not here to hurt your feelings but no it’s it’s not going to automatically sell just because it’s rehabbed
okay it may be the only rehab Dallas in the neighborhood but this is an example of one of my little sayings the early bird may get the word the Worm but it’s the second mouse that gets the cheese I never want to be the first.
Person into a neighborhood trying to establish a new comp and.
You know without that last sentence in your statement if it if you say so tell me why my flip property isn’t selling and folks this is a question we get almost everyday why isn’t my property selling well.
[56:58] The number one answer is your price is wrong on yeah but if I reduce the price I won’t make any money I’m sorry.
The marketplace is not determined based on whether or not you’re going to make money the marketplace is determined based on what people are willing to pay for a house in your area in York in the condition that it’s in.
[57:22] That’s it the market doesn’t care what do you make money or not.
That’s up to you it’s up to you when you buy it’s up to you during your rehab process and it’s up to you with your pricing strategy please my friends.
Do not buy a property assuming that you can fix it and sell it for a lot more than the other houses in the area that are the same size are selling for unless you can point to other examples of properties in that area that.
Have been rehabbed and up to a certain standard the standard that you’re going to rehab to and already sold at that price that’s the only way that you’re going to get your price.
Don’t be the first.
Be the third or fourth in an area. The first one is only going to push the price up a little bit sick in the first second and third can push it up a little bit more.
It takes a little bit of time in a right-minded market to push these prices up and so you don’t want to be the first one there.
Okay I’m sorry my love but the answer is price you’re going to have to reduce the price to get your house sold.
I hope that you come out all right and that you least break even and if you break even.
[58:29] Or even if you lose a little money that’s part of the tuition in the business of real estate and sometimes we have to pay tuition to learn some.
[58:50] I love this quote from John Wooden so I’m going to use it again if you’re not making mistakes and you’re not doing anything.
I’m positive they do work makes mistakes and this quote is brought to you today by the foundation for Renewal working together with communities across the country to provide lasting life change and impact.
Find them on the web at renewal fund. Net and is always your gift in any amount is very much appreciated and tax deductible.
That’s it for today my friends please keep the questions coming to questions or Rodger.
[59:31] You’ve been listening to flipping America real estate investing for everyone if you have any questions about real estate send them two questions at flipping America network.com,
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