InvestorGeeks

Living in Boxes: China’s Trade Deficit = Affordable Housing Solutions

by Avi

The rapidly rising U.S. trade deficit with China has caused some US entrepreneurial homebuilders to “think outside the box”. Or rather – think “using the box”.

Homebuilder Industry Analysis

by Peter

Last week the Federal Reserve raised interest rates for the 17th time in a row. This is dire news for the Homebuilder Industry because with every interest rate hike, it gets that much tougher for new home buyers to afford to buy a home. It also introduces an additional negative factor into the equation, in that existing homeowners become worried as to whether they are losing equity in their homes. This may induce them to panic and to put their homes up for sale. These same homeowners, many of whom took out ARMs (Adjustable Rate Mortgages) or “Interest Only” mortgages a few years back, will soon see reality knocking at the door.

Realtors: Ouch

by Jason

Some people are saying that you can track the real estate market by how many new realtors there are signing up. “When everyone thinks they will get rich selling real estate,” they say, “that is when the market will fall.”

Charles Turbiville has some advice for people wanting to get into the real estate game now, but you might want to reconsider. Charles has some scathing words for what he sees as a typical realtor:

Companies like [Redfin and Igglo] will expose the Real Estate Agency Industry as the “we know that you are stupid, and that buying a house is scary so we will drive you around town and hold your hand at closing and give you a dozen business card with my ugly face on them to hand out to you friends because all I care about is marketing myself, not selling your home. Actually if you never sell your home, that is fine, because I will take every potential buyer that I talk out of buying your house to a dozen other houses in the neighborhood and maybe I can list their house too, and do the same thing to them, and pass out a thousand more butt-ugly business cards to all of their potential buyers in the process and maybe we can sell your house before the listing expires, because ‘you’ve got to list to last’” business that it is.

Normally, I wouldn’t pay too much mind to a statement like this. It sounds like the typical rant of a dissatisfied customer. But then, Charles isn’t a disgruntled home seller; he used to be a realtor himself.

If Housing Prices Stopped Rising

by Avi

According to the latest stats, American home prices are still on the rise - in most major markets across the nation.

The National Association of Realtors published a median increase of 4.2% from 1/06 to 4/06. Compare this figure to the published 16.6% last year.

Although prices appear to be leveling off, many economists don’t predict a sour turn for the worst.

How Much Should You Spend on a Home?

by Chris

In my previous article, Misconception: Renting is for Suckers, I wrote that there comes a point when it makes more sense to rent an apartment than buy a home. For myself, I have a rule of thumb that for every $1 dollars I spend in rent a month I can afford to buy up to $125 in property. Right now I pay $1000 in rent, so using my rule I shouldn’t spend more than $125,000 on a home. This created a surprising amount of controversy; some exclaiming me a heretic, and some accusing me of house-hating. For those of you who wanted to know where that number came from, wait no longer — and I’ve put together a calculator for you to figure out how much you should spend on a home.

Misconception: Renting is for Suckers

by Chris

You’ve heard all the reasons that people want to stop renting. “I don’t want to waste my money.” Heck, you may have even said them yourself. Many of my friends are reaching that point in their lives where they’re considering buying a home. However it’s unfortunate that so many choose to buy over rent, especially in this expensive market, because many well-intentioned people are buying homes that are actually damaging their finances.

Despite the fact that many people disagree with me that the real estate market is going to deflate, there is a rule of thumb that I use that should give you an idea about how much you should spend on a home no matter what the market looks like.

Buying a Financial Calculator

by Chris

Tools are designed to help their users do their tasks more efficiently and crunching numbers is no exception. I’ve been humming along with Excel and my trusty scientific calculator just fine, but as I’m getting more involved with calculations such as discounting I’ve decided it may be worth the time to pick up a financial calculator that has many of these formulas built-in.

I ended up buying the HP 10BII, which is among the most popular financial calculators out there. It’s very reasonably priced, has training modules on the HP web site, contains advanced functions such as IRR and NPV, and has a user-friendly keypad. For $30-40, this is a must have for anyone in finance or real estate.

HP 10bII Financial Calculator on Amazon (please support us with your purchase!)
Calculator Comparison from About.com

The Importance of a Mentor

by Chris

Becoming wealthy is a full-time job. Successful entrepreneurs have worked for years to build a deep knowledge base in areas as diverse as sales, marketing, accounting, stock investing, real estate investing, leadership, team building and personal finance. For someone who is still laying his foundation, finding a mentor can help him avoid potholes he otherwise would not have seen, and is an invaluable asset as both a friend and a counselor.

A mentor is someone who has already done what you have set out to do. Whether that means becoming a successful stock investor, or real estate mogul, your mentor is an expert and is willing to share his experiences. Just as professional baseball players have pitching coaches and managers have leadership coaches, so should budding entrepreneurs have a mentor that can help steer them down the right path.

Tuesday Reading

by Jason

I know you came here looking for another insightful article by Chris. You can expect to be wowed again by Chris tomorrow. In the meantime, here are some recent items of interest:

How Warren Buffett Invests

The folks at BusinessWeek have built a stock screener around Buffett’s investing principles. Check out What Would Warren Do? by By David Braverman.

Be a Home Owner

David Bach (of Automatic Millionaire fame) gives you definitive reasons why you should “own”. Read Why Home Owners Get Rich and Renters Stay Poor and then go out and find a place to live using the new home evaluation site Zillow. For an outsider’s look at Zillow, check out What’s Your Home Really Worth? by Walter S. Mossberg and Katherine Boehret.

Investing vs. Starting a Business

by Chris

There’s a very important topic that I’d like to discuss briefly here, and it’s in regards to starting your own business. Fundamentally, a business is an investment. Any company’s goal is to generate profits for its owners, and in the case of a small business, a salary as well. The problem with businesses is that they’re a job. And not only are they a job, they also cause a lot of stress and a generally poor social life during the initial years.

Real estate has always been a passion of mine. Many people have made fortunes off real estate and growing up with a father in the business, I understand how the model works. However, getting started is a big effort, which involves management, construction, marketing, and all the other jobs associated with starting a business. This is not coincidence — buying investment property is a business.

(more…)