Inside this Issue My Take - Excuses, Excuses, Excuses Want a Raise in 2010? Give Yourself One Right Now
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2. "Someone hit me across both knees with a baseball bat at work and I've been in the hospital."
Benjamin Franklin once said: “He that is good at making excuses is seldom good for anything else.”
1. "I fell over a wheelchair at work and hit my head. I was in a coma the last few days."
Have you found that to be true? You probably have. Part of one definition for “excuse,” as found at Dictionary.com is:
Real Estate Roundup: Around North America Strong Reign
Obamas Get Nod as Most Desirable Neighbors for 2010
“A plea offered in extenuation of a fault or for release from an obligation, promise, etc.”
Talk about “pleas for a release from responsibility!” How many of these doosies would work if you used them on your landlord or bank, explaining why the mortgage or rent payment was late?
From the perspective of failing to perform your responsibility, you You could look at it as a plea to be have two choices when it comes to released from responsibility. A real excuses: estate investor recently shared his “Top 10 List of Excuses” from ten- 1. Make excuses ants for 2009. You might get a kick 2. Don‟t make excuses out of it. It‟s pretty obvious, isn‟t it? Don‟t you have a little more respect for 10. "My work cut my hours." those who don‟t make excuses 9. "My pay week is off this when they don‟t perform. Like the month." field-goal kicker who owns up to a miss, doesn‟t blame the wind or 8. "I've been really sick this past the holder, and just says “I missed week." it. My fault?” 7. "The bank mailed the check to While your choices regarding makthe wrong address." ing excuses are obvious, you also 6. "My daughter got married and I have choices about taking exhad to pay for the wedding." cuses. The decision here is maybe a little less obvious, but it‟s just as 5. "My brother passed away." important. You can choose to ac4. "My car was stolen." cept excuses or not accept them. Your choice. 3. "My nephew was shot in the head, and we had to pull the plug on him this past weekend."
Real Estate - News You Can Use
Want a raise in 2010? Give Yourself One Right Now By Walter Whitehurst If you‟re like millions of others in this economy, you might not have gotten the pay raise in 2009 that you were expecting. Maybe not the kind you‟ve been used to getting. And if you‟re like millions of others, you‟re probably getting ready to file your tax return, eagerly awaiting your refund from the government. Those two scenarios, no matter how many of others are in them with you, should not go together. You‟ve heard it before, right? You are giving your government an interest-free loan, and you shouldn‟t be doing it, and blah, blah, blah. It‟s true, you shouldn‟t be doing it. Yet about 75 percent of Americans over-withhold on their paychecks so as to have that wad of cash come from Uncle Sam once a year.
these days, you say. Mutual funds, individual stocks — those things aren‟t for you. But do you have a 401k plan at work? If so, you‟re invested in those things already. And all you‟d have to do is make the change from paying the tax man your extra hard-earned money each pay check to paying it to yourself. Give yourself a raise — your retired self — by moving the money you‟d never miss anyway into your 401K.
It‟s a forced savings plan, and it works, except that you‟re loaning money free, which is not a good business plan. You might argue that the interest you‟d earn on the money is so miniscule that you‟d rather have the lump sum. True, if you could somehow earn a now-pie-in-the-sky rate of 2 percent on some money market account, overpaying to the tune of a $2,000 refund would only get you $24. For most, that is a small price to pay to get a $2,000 check once a year.
If retirement is too far off for you and still not worth that $2,000 check each year, ask yourself this: “Could $200 more per month in my paychecks be even more valuable than the 8 or 10 percent returns I might get in a mutual fund”
However, doing that is costing you more than just that $24. What if you changed your W-4 form so that you weren't‟ OVER-paying — where else do you so willingly do so? — and instead invested it into something with a rate better than 2 percent?
Well, if you have credit card debt, or a car loan — even housing-related debt, the answer just might be yes.
Well, that might be risky, right? Only investing with some risks pays more than 2 percent
So many people carry credit card balances, paying upwards of 18 percent sometimes, yet (Continued on Page 7)
Real Estate - Around North America
Las Vegas, Nev. Home loan modification efforts have been listed as a reason foreclosure filings have dropped, but in Vegas, something else is apparently cutting into foreclosure listings. According to ForeclosureListingsNationwide.com, short sales are reducing the number of foreclosed homes. The site pointed out that according to the Greater Las Vegas Association of Realtors, short sales made up 70 percent of all sales in December 2009. For the year, foreclosures dropped from 67 percent of sales in January 2009 to 60 percent by December.
Toronto According to the Toronto Star, the housing market in Toronto got off to a robust start in 2010. Citing figures released by the Toronto Real Estate Board, the report indicated that sales in the first two weeks of 2010 were nearly double what they were the year before. The new year started with 1,749 homes sold in the first couple of weeks, compared to 888 in the same period a year ago, when the market was at its bottom, according to some analysts. Prices were also up, the Board reported in its statistics. The average price in January 2010 was $395,307, compared to an average of $332,495 in January of last year. Sales in 2009 was the second-best year for the Toronto market, with sales up 17 percent from 2008. Washington D.C. The U.S. Treasury Department in January reported that a December 2009 push in mortgage modifications doubled the number of U.S. borrowers with permanent modifications. According to a Treasury and Department of Housing and Development report, about 110,000 permanent modifications were approved in December. The report also indicated that under the Home Affordable Modification Program, about 850,000 borrowers have had a median payment reduction of $500 per month. HAMP was implemented to offer 3 million to 4 million struggling homeowners assistance with their mortgages through 2012.
Irvine, Calif. Residential property owners aren‟t the only ones affected by difficult real estate times in California. Irvine-based Atlas Hospitality Group said that hotel foreclosures in the state quadrupled in 2009, according to a Bloomberg report. According to Atlas, 15 hotels had foreclosure filings in 2008. That number jumped up to 62 foreclosures on hotels statewide in 2009, evidence that the economy‟s effect on tourism took its toll on the travel industry. Atlas estimates that properties in default were up to 307 in „09 a six-fold increase from the year before.
Weston, Fla. Former NFL quarterback Bernie Kosar‟s financial troubles continue. According to a South Florida Business Journal report, the ex-Miami Hurricane faces foreclosure on his 9,900-square-foot estate in Weston. Kosar, who played professionally for the Cleveland Browns, Dallas Cowboys and Miami Dolphins, filed for bankruptcy last summer. His case was converted from a Chapter 11 to a Chapter 7 case, an asset liquidation, according to the article. Ocean Bank, who holds the loan on Kosar‟s property for $2 million, was granted a stay from the bankruptcy in order to take possession of the home, an attorney for the bank said in the article. Before the bankruptcy filing last year, Kosar had faced foreclosure filings on several investment properties, the article states. In his bankruptcy case, Kosar listed debts totaling $18.9 million and assets of $9.2 million.
Chicago. Billionaire Sam Zell told CNBC that the worst is over for the U.S. residential housing market. Zell, chairman of private equity group Equity Group Investment, said: “"I think we've seen the bottom in housing and we have passed through the worst issues. There are still some rough spots for sure, like foreclosures, but I think we will see a housing recovery through 2010," according to CNBC. Zell, whose firm invests in commercial real estate, said the big problems in the residential market were keyed by fraud. "I think it's going to come out that fraud played a major role in housing," said Zell in the CNBC interview. "It was free money and people were creating mortgages and you had brokers twisting people's arms, you had 'liar's loans'. I don't think there's any surprise here." Zell also pointed out that his firm‟s recent emphasis was extensive real estate investment in Brazil. 3
Columns and Commentary
Big Bonuses Have Everybody up in Arms All over Again Remember what an uproar bonuses paid to Wall Street execs caused last year? Well, the New Year has brought attention to them again, and not without plenty of rejuvenated uproar. The Wall St. Journal‟s James B. Stewart wrote: “With Wall Street set to pay the biggest bonuses in its history, some recipients are still complaining that not enough will be in cash, leaving them to face a "liquidity" squeeze. I've been wondering just what kind of squeeze that might be. Let's consider the burdensome bills a typical banker might be facing. Housing? Say there's a 10-room apartment overlooking Central Park ($10.5 million, plus $5,000 a month maintenance) and that shingle-style mansion in East Hampton (not even on the beach) for $6.5 million. Transportation? Count on a private-jet fractional share ($400,000 or so plus monthly charges and hourly operating fees) and two Mercedes SUVs for the Hamptons ($120,000). Education? Private school for three kids could hit $150,000 per year. And these are just the basics.” huge bonuses, much as they did in the go-go years of crazy lending.
The sarcasm doesn‟t end there. “Or, there is always the extravagance of buying a condo on the new Utopia ocean liner,” writes CNNMoney.com contributor Blake Ellis. “It's the high life on the high seas for just $24 million.”
All that unpleasantness about a financial meltdown? All the contrition, and resolve to create a stable financial system? Apparently, it was all a dream.”
At issue with most is the fact that banks, despite being at the heart of the U.S. financial crisis — accepting bailouts, even — seem to have forgotten all about their recent troubled past and are back to business as usual.
And it‟s not likely to change without strict government regulation, writes Robert Reich of the blog, Huffington Post: “The big banks have access to money almost as cheaply as in 2007, courtesy of the Fed, so bank profits are up and bonuses as generous as at the height of the boom.
From USA Today‟s editorial board: “Remember the old television series „Dallas,‟ when the character Bobby Ewing's death was undone by having it rewritten as his wife's dream?
The only difference is that now the Street's biggest banks know they are "too big to fail" and will be bailed out by taxpayers if they get into trouble -- which means they have every incentive to make even riskier bets.”
Something similar is happening on Wall Street, as thousands of financial wizards awake to 4
Real Estate - Movers and Shakers
They Said It: (President‟s Day edition)
“Discipline is the soul of an army. It makes small numbers formidable, procures success to the weak, and esteem to all.” George Washington “Wealth can only be accumulated by the earnings of industry and the savings of frugality.” John Tyler “Do I not destroy my enemies when I make them my friends?” Abraham Lincoln “In the time of darkest defeat, victory may be nearest." William McKinley “Next to the right of liberty, the right of property is the most important individual right guaranteed by the Constitution." William Howard Taft "Happiness lies in the joy of achievement and the thrill of creative effort." Franklin D. Roosevelt “The American, by nature, is optimistic. He is experimental, an inventor and a builder who builds best when called upon to build greatly." John F. Kennedy
Obamas get nod as best celebrity neighbor for 2010 Apparently, the first family would make great neighbors. At least that‟s what results of the third annual “Celebrity Neighbor Survey” at Zillow.com reveal. The Obamas were selected as the most desirable celebrity neighbor — or neighbors — for 2010, according to Zillow. That 4-percent total of the The Obamas narrowly re- vote wasn‟t near the “winner” ceived a leading 14 percent of in the least-desirable neighbor the survey‟s votes, edging out department. Ellen DeGeneres and Portia T h a t honor went to DeRossi (12 percent) and — “Octomom” — Nadya Suleperhaps showing that it wasn‟t man — whose 17-percent of just Democrats voting — the vote nudged out another Sarah Palin (also 12 percent). TV mom, Kate Gosselin, who Rounding out the list of desir- received 16 percent of votes. able celeb neighbors were: Yes, despite Tiger‟s exploits, Taylor Swift (9 percent); four times as many people Oprah Winfrey (7 percent); would rather live next to him Tom Brady and Gisele than Kate Gosselin, apparBundchen (3 percent); Tiger ently. Woods (3 percent); and Robert Pattinson (1 percent). Like Tiger, Palin showed up on both lists, finishing third Interestingly enough, Tiger also landed on the survey‟s with 11 percent of the vote on list of LEAST Desirable celeb- the least-desirable list. rity neighbors. Survey respondents seem unsure whether they‟d enjoy living next to the humbled golf golden boy — listing him eighth among celebrities that would be least desirable to having living next door. He garnered 4 percent of the vote in that category. 5
The rest of the least-desirable neighbors on the Zillow survey were: Richard and Mayumi Heene — the balloon boy parents — (11 percent); Kanye West (8 percent); Heidi Montag and Spencer Pratt (8 percent); Britney Spears (7 percent; and Woods.
Books, Blogs & More It‟s remarkable how well the players from different eras — the 50s through today — know and respect each other. The book talked about a recent pregame celebration during which the kids who won the 2005 national championship e a g e r l y walked over and exchanged hugs and handshakes with guys who had won the 1957 national championship. The culture of unity and connectivity in the organization is definitely a part in the program‟s long-lasting success.
A Strong Reign “Light Blue Reign,” by Art Chansky, is about the long-lasting dynasty in college basketball built by the University of North Carolina. What‟s a basketball book doing in a newsletter about wealth-building? Well, remember that “success leaves clues.” And generally, successful people have commonalities that are important to study. That‟s why we read books by or about successful businessmen and wealth-builders, or the “Good to Great” books by Jim Collins about companies that endure over time. But reading books by or about John Wooden, Vince Lombardi or Bill Belichick, coaches who built lasting, ultra-successful sports teams, gives us good insight, too. “Light Blue Reign” is about the Carolina program itself over the years, not really about the sport of basketball. Since the early 1950s, the school has only had five basketball coaches, and two of those were coaches only for a couple of years each.
Another commonality among the coaches was that they are, or were, extremely organized and prepared for everything. Smith and Williams, in fact, had every day‟s practice plan printed on a sheet of paper, down to the minute. There are parts of the book that talk about their teams‟ tendency to make big comebacks and win games, and you get the feeling it‟s because of how wellprepared the teams were to face any challenges. This is very instructional.
The book takes a look at the histories of the three Basketball Hall-of-Fame coaches — Frank McGuire, Dean Smith and Roy Williams — who have led Carolina to a combined five national championships and tremendous success over six different decades. What really stands out in the book is the fact that despite the three coaches‟ drastic differences in many areas, their leadership of their organization was rooted in what they had in common.
All three coaches were also very gracious with the media and learned how to get publicity for their program, which helped them earn more TV revenue and land more high-profile recruits. It‟s all about marketing, right?!! North Carolina basketball was just recently named the most profitable college sports program in America.
They were all fiercely loyal, both to their own ideals and to the people with whom they surrounded themselves. When things got tough, they stuck to their guns, stood up for the people they worked with, and the program always became stronger for it. Their families were extremely important to each of them, and their basketball teams and staffs became kind of extended families and were treated that way.
It‟s easy to get the feeling from “Light Blue Reign” that these leaders of a basketball program could have had just as much success as CEOs of businesses or even leaders in government. 6
Real Estate Foreclosure Watch
(Continued from Page 2)
they continue to keep the money out of their paychecks and loan it to the government at 0 percent.
U.S. News and World Report in January reported that U.S. foreclosure filings were up 21 percent in 2009 from the year before — some 2.8 million filings — and nearly 120 percent up from 2007.
A $200-per-month pay-down of an 18-percent credit card balance is an investment with an 18percent return. Even a 5 or 6 percent car loan that you can pay off quicker is a worthy recipient of the money you‟re overpaying to someone else.
The report said almost 1 in 10 mortgages were delinquent as 2009 came to a close. The U.S. News and World Report articles quotes RealtyTrac CEO James J. Saccacio as saying:
Pay yourself. Give yourself a raise. It‟s easy for most of us to do. Most of those who pay too much in withholding tax do so by marking “zero” as the number of exemptions on their W-4 tax withholding form.
"A massive supply of delinquent loans continues to loom over the housing market."
If you start claiming your own exemption and/or indicate that you have dependents, you will start getting paychecks more in line with what you actually owe in taxes.
Experts predict that even more filings will come down the pike in 2010, as temporary foreclosure prevention measures by the government that have stalled some foreclosure processes will run out.
A word of caution, you don‟t want to start UNDERpaying your taxes, either, because if you‟re used to getting a refund each year, you will not enjoy getting a tax bill.
What that means for both U.S. investors and typical home buyers is there will be continued opportunities to acquire distressed properties. It also means that in areas expected to be hit hard by the next wave of foreclosures, prices will likely drop. Also, it would be logical to think credit will tighten further, making financing challenging. It‟s good to anticipate these events before they come.
You can get assistance with figuring your withholding amounts at the IRS website — IRS.gov. There are also other sites with online withholding calculators, such as PayCheckCity.com that can also assist you. You‟ll generally need to know how much money you made last year and how much you paid in taxes, plus what you plan to make this year and what you‟re currently paying in taxes, to make accurate calculations regarding your withholding.
Home sellers, on the other hand, will be challenged by falling home values if a tidal wave of foreclosures hits markets, as it did in 2008. It is hard to compete with foreclosure prices. And when the home buyer tax credits expire for contracts written after April 30, there is are likely to be fewer buyers in the market.
You will also need a blank W-4 form from your employer, as you will need to file it with them. You can also download a W-4 form at www.IRS.gov.
For investors and home buyers alike in Canada, hopefully what has happened in the U.S. can serve as a lesson. It helps to study your market during good times, so that you can be prepared for any not-so-good times in the market that could be up ahead.
Remember that when you do this, you will not be receiving the typical refund you have come to expect each and every year. Instead, you‟ll receive it each pay check. So a word of caution: Spend it wisely. If you blow the money on “toys” each month, you are no better off than when you were loaning money interest-free from the government. To make the raise you give yourself pay off, you have make sound decisions about using it!
Hopefully, as the Canadian market continues to flourish now, residents and the government can learn from the missteps of the boom in the U.S. 7
Walter Whitehurst Keller Williams Realty 3840 Henderson Drive Jacksonville, NC 28546
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February 2010 Inside This Issue:
My Take: Excuses, Excuses
Real Estate Roundup: Around North America
Obamas Get Nod as Most Desirable Neighbors
Everybody’s Up in Arms again Over Bank Bonuses
Foreclosure Watch 8
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