TARP and HAMP failed to halt foreclosures! (Really, did anyone really expect a government program to come through)
In his latest quarterly report to Congress, special inspector general Neil Barofsky said that the Troubled Asset Relief Program, or TARP, has failed to boost bank lending as well as halt the spread of foreclosures -- two key aims of the sprawling program. "Whether these goals can effectively be met through existing TARP programs is very much an open question at this time," Barofsky said in the report. Since Congress enacted TARP, lending to both consumers and businesses has continued to decline. Earlier this month, the Treasury Department reported that the 22 banks that got the most aid from the government's various bailout programs have actually cut their small business loan balances by $12.5 billion since April. "For those of you new to reading between the lines, this is the money that would typically be given to private entrepreneurs and business to reinvest and employee people"
The Obama administration did propose a joint program between the Treasury Department and the Small Business Administration in October to make capital cheaper for community banks that commit to increasing their small business lending, but three months later the government is still drafting guidelines for that initiative. Barofsky, whose office has been closely tracking the evolution of TARP, also criticized the Obama administration's Home Affordable Modification Program. Even as Treasury allocated $35.5 billion towards that foreclosure-prevention program as of the end of last year, only 66,500 homeowners have received permanent modifications, with another 787,200 homeowners in trial modifications. There is no sign that the rate of foreclosures is slowing down anytime soon.
OK Kids lets do the math to make sure everyone understands the numbers:
$35.5 Billion (9zeros) / 853,700 modifications (ya we believe these numbers) = $40,998.00 per mod.
PLEASE NOTE LESS THAN 10% OF ALL INITIAL MODIFICATIONS MAKE IT TO PERMANENT DUE TO FAILURE TO MEET OBLIGATIONS. LOOK AT THE NUMBERS AND SEE THE TRUTH 787,200 IN TRIAL ONLY 66,500 MADE IT LAST YEAR INTO PERMANENT
SO WHERE DID ALL THE MONEY GO? CAN YOU SAY GOVERMENT, BANKS AND THE EMPLOYEES
Earlier this month, RealtyTrac, the online marketer of foreclosed homes, reported that foreclosure filings surged to a record 3 million in 2009, up 21% from 2008.
There was at least one bit of good news from Barofsky's latest report however. He acknowledged that while the ultimate cost will still be "substantial" for American taxpayers, it will be less than originally estimated. (HEE HEE HEE, IF HE CALLS THIS GOOD NEWS I WOULD HATE TO SEE WHAT IS BAD NEWS)
Showing posts with label home. Show all posts
Showing posts with label home. Show all posts
Monday, February 1, 2010
Sunday, July 19, 2009
THE BEST QUESTION I HAVE BEEN ASKED IN A VERY LONG TIME!!!!
I had a great conversation today with an old business partner of mine, and he asked me the best question I have been presented with in a long time. That question inspired me to write this blog and hopefully will inspire some of you to partner up / invest and help grow the company. The question you ask: Why I left the Import / Export business to wholesale REO properties to investors and home buyers?
The answer was simple, yet led into a two hour conversation with him and by the end of the phone call he was talking about moving to MN and looking into who he knew or how he could help me get the financing needed to partner with me on my deals.
For those of you reading I will go into short but further detail explaining the science, math and exit strategy behind why I left the import world for the world of REO investing. The answer was simple ‘I explained’ Why buy 1,000 Ipods just to make $20,000, when I can buy one (1) home for less cost and make $50-60,000.
BUYING WHOLESALE ELECTRONICS:
When buying wholesale electronics I would purchase hundreds to thousands of units directly from the factories, just to wait for them to clear customs and be delivered by cargo freight to the United States. Once they arrived I would have to warehouse them and then hustle to get them to distributors for sale online or in smaller retail shops. This process takes all cash up front to purchase and ship, and the average time for purchase, shipping and sale is 120-150 days. Imagine all that work, stress and time to make what an average of $10.00 per unit after all cost. So do the math:
Simple Math:
1,000 IPOD’s = 1,000 x $100 (Wholesale cost from factory)= $100,000.00
Wholesale price to distributor from me (includes all fees and shipping) = $123.00
Profit per unit after costs= $20.00
This is a Standard deal for a medium sized online retail group. So as you can see the total profit is only $20,000 for something that might take four to five months.
The huge downside to this business is you are buying directly in cash from overseas, there are no guarantees that you even get the product let alone that it is even officially licensed product. Lastly once you have the product state side you need to sell it cheaply enough to compete with the big box stores.
INVESTING IN WHOLESALE REO PROPERTIES:
When investing in Reo properties I have taken everything I have learned from over 14 years of my Import and Global Executive career in wholesaling and applied that in a approach formula that is a win for the banks in removing there toxic assets, a win for my partners and investors and a win for the buyers and communities we invest in.
This will explain the formula in brief detail for your review of the REO Investment program. I am buying houses at .20 (twenty) - .30 (thirty) cents on the dollar. These homes are 3 bed+ 2 bath 2 car garage in prime locations throughout MN (program can be applied in any state or country). When it comes to the Rehab of the property we handle all construction management. This ensures the margins are kept for all renovations at under .50 (fifty) cents on the dollar. The Rehab quality we perform on our properties is to “NEW” construction condition.
Meaning our homes look, smell and appear to be new construction to the investor and buyer.
OK, we have a home fully renovated to new condition in a prime location that is purchased and rehabbed at less than .50 (fifty) cents or 50% of its current true market value.
During the process of purchase and renovations my team of real estate agents and marketers has been advertising the home for direct sale to investors and end home buyers. Selectively making sure that by the end of construction we have a buyer lined up to close in under 20 days after inspection. Total time is 30-45 days from purchase to sale of property to end user.
Simple Math:
1 of “MY” REO Homes = 1 x $20,000 (average cost to purchase) = $20,000.00
Renovations of the home = $40,000 (average cost everything upgraded to new) = $40,000
Total cost to purchase, renovate, and close = A + B = C($60,000.00)
True Market Value in Today’s Market after repairs = $175,000.00 (average)
Exit Strategy:
We are here to move the houses as fast as we can and sometimes we will sell the home even before we purchase or start construction. The difference is not just finding superb properties but adding and giving value to the buyer whether they are end buyers or investors. The way we do that is the quick sale model of selling the property at an average of 75% LTV* for the sample property that means we would sell this home to the investor for $131,000.00 leaving over $44,000.00 in equity with a completely like “new home” as incentive to buy from us.
Profit for the company and partner after selling the house and paying interest and fees = $61,000.00
Fees include closing cost, agent fees, misc. =10,000 on average.
If you are my new partner or client I just split $61,000.00 with you 50/50. I currently have more properties than I can handle and need the influx of new partners or investors to make our company the hottest investment firm to hit the Midwest.
After reading this I hope you are as excited about the opportunity as I am, please contact me directly with any questions you might have. And I look forward to seeing how many properties we can buy and sell together.
The answer was simple, yet led into a two hour conversation with him and by the end of the phone call he was talking about moving to MN and looking into who he knew or how he could help me get the financing needed to partner with me on my deals.
For those of you reading I will go into short but further detail explaining the science, math and exit strategy behind why I left the import world for the world of REO investing. The answer was simple ‘I explained’ Why buy 1,000 Ipods just to make $20,000, when I can buy one (1) home for less cost and make $50-60,000.
BUYING WHOLESALE ELECTRONICS:
When buying wholesale electronics I would purchase hundreds to thousands of units directly from the factories, just to wait for them to clear customs and be delivered by cargo freight to the United States. Once they arrived I would have to warehouse them and then hustle to get them to distributors for sale online or in smaller retail shops. This process takes all cash up front to purchase and ship, and the average time for purchase, shipping and sale is 120-150 days. Imagine all that work, stress and time to make what an average of $10.00 per unit after all cost. So do the math:
Simple Math:
1,000 IPOD’s = 1,000 x $100 (Wholesale cost from factory)= $100,000.00
Wholesale price to distributor from me (includes all fees and shipping) = $123.00
Profit per unit after costs= $20.00
This is a Standard deal for a medium sized online retail group. So as you can see the total profit is only $20,000 for something that might take four to five months.
The huge downside to this business is you are buying directly in cash from overseas, there are no guarantees that you even get the product let alone that it is even officially licensed product. Lastly once you have the product state side you need to sell it cheaply enough to compete with the big box stores.
INVESTING IN WHOLESALE REO PROPERTIES:
When investing in Reo properties I have taken everything I have learned from over 14 years of my Import and Global Executive career in wholesaling and applied that in a approach formula that is a win for the banks in removing there toxic assets, a win for my partners and investors and a win for the buyers and communities we invest in.
This will explain the formula in brief detail for your review of the REO Investment program. I am buying houses at .20 (twenty) - .30 (thirty) cents on the dollar. These homes are 3 bed+ 2 bath 2 car garage in prime locations throughout MN (program can be applied in any state or country). When it comes to the Rehab of the property we handle all construction management. This ensures the margins are kept for all renovations at under .50 (fifty) cents on the dollar. The Rehab quality we perform on our properties is to “NEW” construction condition.
Meaning our homes look, smell and appear to be new construction to the investor and buyer.
OK, we have a home fully renovated to new condition in a prime location that is purchased and rehabbed at less than .50 (fifty) cents or 50% of its current true market value.
During the process of purchase and renovations my team of real estate agents and marketers has been advertising the home for direct sale to investors and end home buyers. Selectively making sure that by the end of construction we have a buyer lined up to close in under 20 days after inspection. Total time is 30-45 days from purchase to sale of property to end user.
Simple Math:
1 of “MY” REO Homes = 1 x $20,000 (average cost to purchase) = $20,000.00
Renovations of the home = $40,000 (average cost everything upgraded to new) = $40,000
Total cost to purchase, renovate, and close = A + B = C($60,000.00)
True Market Value in Today’s Market after repairs = $175,000.00 (average)
Exit Strategy:
We are here to move the houses as fast as we can and sometimes we will sell the home even before we purchase or start construction. The difference is not just finding superb properties but adding and giving value to the buyer whether they are end buyers or investors. The way we do that is the quick sale model of selling the property at an average of 75% LTV* for the sample property that means we would sell this home to the investor for $131,000.00 leaving over $44,000.00 in equity with a completely like “new home” as incentive to buy from us.
Profit for the company and partner after selling the house and paying interest and fees = $61,000.00
Fees include closing cost, agent fees, misc. =10,000 on average.
If you are my new partner or client I just split $61,000.00 with you 50/50. I currently have more properties than I can handle and need the influx of new partners or investors to make our company the hottest investment firm to hit the Midwest.
After reading this I hope you are as excited about the opportunity as I am, please contact me directly with any questions you might have. And I look forward to seeing how many properties we can buy and sell together.
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