Real Estate Investing Links for February 3, 2010

“Foreclosure Plague: 2009’s Worst Hit Cities”

financial“Sand states” Nevada, Florida, California, and Arizona, were rated the hot spots for 2009’s foreclosure explosion. At five times the national average, 12% of Las Vegas homes filed for foreclosure at least once last year. Despite a 21% increase in yearly foreclosures, “20 cities recorded declines in foreclosure filings in the last three months,” reports Yahoo Finance. In addition to this drop, experts are beginning to see a stabilization in the causes of foreclosures- now primarily due to job losses as opposed to “bubble related” filings. The article also mentions that areas with more stable home prices have had fewer foreclosures over all– a possible indication of further declines to come.

“Home Loan Demand Down as Refinancing Loses Steam”

Due to decreased demand for refinancing and a dwindling pool of qualified buyers, “mortgage applications fell for the first time in four weeks.” In spite of low interest rates, the number of loan applicants for home purchases has also fallen. Reuters addresses the auxiliary effects of homeowners not refinancing their homes– a drop in consumer spending due to unlowered mortgage payments. Demand is expected to stabilize as interest rates continue to decline.

“FHA Property Flipping Waiver”

depreciationFollowing the FHA’s recent suspension of the “90 day anti-flipping rule,” REI Tips provides important analysis of the document from a real estate investor’s perspective. While it used to be that investors couldn’t even sign a contract to resell property to a “buyer using an FHA loan” until the seasoning period was up- now, to boost sales, the waiver may even be facing extension. While this development significantly shortens the flipping process of buying and selling, investors will still be unable to conduct “same day closes to an FHA end buyer.” Further, if your rehab bumps up the resale price higher than 20% you must be able to prove to an “independent appraiser” that the increased price is justified. Refer to the article for more detailed analysis of these rules.

“Investing for Cash Flow”

This article form Wisdom of Rich Dad compares “investing for cash flow” to “investing for capital gains,” touching on a common Lifestyles principle– the formation of passive streams of income. Stating that investing purely for capital gain is “risky due to the uncertainty of the future,” the article uses Robert Kiyosaki’s analogy of a game of monopoly where players acquire property for the rent or “cash flow.”

“S&P: Worst Yet To Come For Commercial Real Estate Loans “

middleThe Square Feet Blog evaluates an S&P report that “the worst may still be yet to come for U.S. commercial real estate.” The study states that vacancy rates for multifamily have jumped to 7.4% (0.4% higher than 1991’s peak.) At the same time, rents have decreased in many commercial sectors. While percentages of non performing loans and construction losses are staggering– they have yet to measure up to expert’s predictions, suggesting that these factors still have substantial room to climb. The S&P predicts delinquencies in multifamily to continue to rise as in the commercial construction sector.

“Landlord Association Recommends High Credit Standards for Tenants”

The National Association of Independent Landlords is now advising more thourough background checks on tenants as a result of recent waves of people whose credit has been ruined through the process of foreclosure. The Real Estate Bloggers predict that this has lead to people attempting to rent before their homes are actually foreclosed on. Because of this the association recommends a salary three times the monthly rent and confirmation of rental history from an actual landlord, not just a friend or relative.

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