Thursday, December 20, 2007

Real Estate: Negotiating

You may be saying to yourself that the part on mentoring on my previous blog posting is very self serving, because I happen to specialize in One-on-One Mentoring - let me address that for a moment.

I have always said that creative real estate isn't rocket science, you could figure it out on your own, but how many failures are you willing to accept before success?

There is an old saying that "time is money", and nothing could be a greater truth. There is a learning curve to everything in life, especially in real estate, but after that is accomplished it comes down to knowing how to negotiate, Negotiating is a "million dollar skill" few have grasped it fully. I have seen numerous investors leave far too much money on the table, or negotiate a deal that leaves them 1 vacancy from financial disaster. The moral of the story is this- find a mentor to take all your deals to the next level for maximum leverage and profit.

I would like to end this entry by giving you 3 negotiating tips!

  1. Never need a deal that bad that you are willing to compromise your invest plan! So many investors will do a deal just for the sake of doing one; they pull the trigger with the shot gun blast mentality, hoping to hit the perfect deal.
  2. Be Prepared: Know what you’re talking about. Do your comps, fix up estimates, estimate down side potential, know the players, know what you going to do with the property ( know your exit, before you go in the entrance ) – this is essential before you start negotiating.
  3. Never loose control of the negotiations. If you find yourself loosing control, excuse yourself for a bathroom break, if you’re on a phone negotiation put them on hold with the excuse that you need to find vital documents that will impact the subject matter. Of course, this is just a stall tactic for you to gather your thoughts and get back in control.

Hope this helps and till next time – be well.

James Gage

Saturday, December 15, 2007

Why Real Estate Investors Don't Use Lease Options

I have been using lease options effectively for over 20 years and found there is little competition from my fellow investors. Why you ask? I believe it's a 2 fold reason.
First, with all the cable programs on flipping homes for huge profits ( which I question ), most investors are caught up in the moment. No, I don't doubt there is money to be made in flips, but along with it comes great risk. In fact, in my early days of investing I did a few myself for a nice profit, but at the end of the day the frustration and possible down side exposure was not worth it for me.

Which brings me to reason 2. Most investors do not have the proper information to do a successful lease option and mitigate their exposure, A.K.A. cross your t (s), and dot your I (s). Some believe all you have to do is read a book or listen to an audio presentation and your off to the races. Nothing could be further from the truth. What you need to perform a successful lease option or any other real estate transaction for that matter is : 1. Specialized Contracts ( never use generic contracts), 2. Iron Clad Disclosures (prevent regret and litigation ), 3. Someone who will take you by the hand and walk you through the first couple of deals to insure maximum profit and leverage!

Imagine a strategy that allows all the benefits of ownership without owning the property - what else could one ask for? Please explore lease options as a tool for your real estate investing arsenal. Until next time, may all your deals be profitable.

Wednesday, December 12, 2007

Tip of The Week : Short Sales

Short Sales are the buzz in most real estate arenas today, but do you know how to profit from them?
One of the most important components of any successful short sale is what should you initial offer be or counter offer. Did you know most short sales fail and no counter offer is offered by the bank or mortgage company because the initial offer was much to low!
So what do you do? Do you just pick a number out of the air and pray that things work out, and that your offer is accepted? Why no! If you have been a reader of my tips and newsletter over the years, than you know I have a formula I use to make my initial offer or counter offer, if the bank has prepared a price ahead of your offer based on their BPO (Brokers Price Opinion).

Here is the formula that I have been using over the past 4 months which has served me very well and increased my equity position:

Here it is...

Step 1: I take the estimated or actual BPO amount or the value of the house, based on the comps then multiply that number by 65%.


$175,000 (Estimated BPO value) X 65% = $113,750

Step 2: I then take the number I got and multiply it by 92%


$113,750 X 92% = $104,650 INTIAL or COUNTER OFFER

Hope this helps.

PS: Don't forget our Holiday sale of 35% off of all our products. Just visit our website below, click on "Products" and enter promo code 777 at the check out form - Happy Shopping.

Be well,

James Gage

Friday, December 7, 2007

Gage Consulting Group Holiday Sale

The whole team at Gage Consulting firmly believes one of
the best gifts you can give your loved ones, acquaintances
or even yourself, is the gift of education.
We are delighted at the stories we receive daily by email,
fax, letter and phone, telling us of successes clients
have had with the products we make available.

In keeping with our Holiday Specials tradition, this year
we are offering incentives on all of our educational
items, including our unique One-on-One Mentoring program.
As our Holiday Specials this year, we are offering 2
great deals. First, take a whopping 35% off any of
our Home Study Courses, CDs, DVDs or Package deals.
Secondly, we are offering a $1,000.00 discount on our
3 month,6 month or 1 year mentoring programs, which
includes all our valuable resources, contracts, manuals
and software!

These specials are available until the end of the year.
Please note that on our on-line order form, the standard
prices will show, but until December 31, 2007,the
discounts will automatically apply by entering:
Coupon Code 777 and you will be charged the lesser
So, you have until the end of the year to make use of
these deep discounts - order today !

On behalf of myself and Gage Consulting Group have a
Happy, Safe and Prosperous Holiday Season.

If you have any questions please do not hesitate to call
me at 508-595-9567.

To your success,

James A. Gage

Is The President Helping The Sub Prime Industry?

Hello All:

Yesterday President Bush unveiled a plan to control the hemorrhaging in the sub prime loan industry, but truth be told it's just another example of smoke and mirrors! There are so many hoops for people to jump through that at the end of the day only 15% of the loans will be rescued, and that will only postpone the inevitable for 5 years down the road.

So the moral of story is that the melt down will continue with a second push of defaults scheduled for 5 years from now. How can we rebound and find a bottom to this market if we have scheduled another down turn 5 years into the future? I have posted the article below for your review.

Be well,

James Gage
PS: Now is a great time to start investing, if you are a leveraged investor - find out how by requesting our FREE newsletter.

No Quick Fix for Subprime Mortgages

Posted: 2007-12-07 12:23:14
WASHINGTON (AP) - Be ready to wait if you want to get information from a toll-free hot line about freezing the interest rate on your subprime mortgage.

Minutes after President Bush outlined a plan to help strapped homeowners, callers were told to have patience until a counselor could answer their questions and "devote as much time to you as necessary."

But, once they do get through, homeowners may not find the answers they sought.

One caller to the hot line (1-888-995-HOPE) was told there would be "lots of hoops to jump through" to obtain the five-year freeze. The rate hold goes to the heart of the relief effort for people with subprime mortgages, which are loans offered to borrowers with tarnished credit or low incomes.

Even President Bush acknowledged the plan is "no perfect solution." Treasury Secretary Henry Paulson said it was not a "silver bullet."

Only a fraction of the homeowners who face huge jumps in their mortgage payments appear likely to be helped by the plan, negotiated by the Bush administration, to freeze the low introductory rates on their subprime loans for five years. After that, they could be in the same position again.

Homeowners dialing up their mortgage company to get their current rate frozen could be disappointed. The White House plan does not force mortgage companies to give eligible homeowners a break. It is voluntary.

The White House on Friday defended the system and its eligibility requirements.

"I wouldn't call them `hoops,"' White House deputy press secretary Tony Fratto said. "I think we are trying to make sure, as we outlined yesterday, that we're getting at the right population that can best be served by this program."

Bush promoted the initiative Friday for the second day in a row, using his weekly radio address to call it "an example of the government bringing together members of the private sector to voluntarily address a national challenge - without taxpayer subsidies or government mandates." The president taped his address for Saturday airing, and the White House released the transcript on Friday.

In first announcing the initiative on Thursday, Bush said 1.2 million people could be eligible for relief. Aid includes the rate freeze and helping people refinance into more affordable mortgages. The Center for Responsible Lending, a group that promotes homeownership and works to curb predatory lending, estimates that just 145,000 families will qualify for the rate freeze. The criteria are too strict, it says.

The White House plan is aimed at stemming foreclosures, which have shot up to record highs as the housing market has gone from boom to bust.

Subprime borrowers have been hardest hit by the meltdown. Initially low interest rates that reset to much higher rates have clobbered those borrowers. Nearly 2 million adjustable-rate subprime mortgages will reset from introductory rates of around 7 percent to 8 percent to much higher rates this year and next. That raises the specter of even more people being forced out of their homes because they cannot keep up with their monthly payments.

Rising home foreclosures are a headache for politicians and a danger for the economy.

Bush tried to shift blame for the crisis to the Democratic-led Congress.

"The Congress has not sent me a single bill to help homeowners," Bush said.

One measure would give the Federal Housing Administration more flexibility; a second would change the tax laws temporarily to help people who have a portion of their mortgage forgiven by banks.

Sen. Charles Schumer, D-N.Y., complained the criteria for Bush's mortgage freeze are too narrow to help most distressed homeowners and worried that legal challenges by investors might stall the effort.

"While we certainly all hope this will be a shot in the arm for the housing slump, it is hardly a panacea," Schumer said. "There are too many families who may be left out, too much left up to the voluntary willingness of the private sector and too little disclosure and transparency to ensure families who do qualify are being helped."

Under the plan outlined Thursday, the rate freeze offer would be available only to people who have not missed any mortgage payments at their introductory interest rate. It also only would apply to loans taken out between 2005 and this past July 31 and scheduled to rise to higher rates in Jan. 1, 2008, and July 31, 2010. To make sure speculators don't get the break, the rate freeze offer applies only to people living in their homes.

The idea behind the administration-negotiated plan is that the five-year freeze will buy time for the housing sales and prices to start rising again. Such a rebound would enable homeowners to refinance their current adjustable rate mortgages into fixed-rate loans with more affordable monthly payments. But some people who want to buy homes and have been priced out of the market are upset that there's no help in sight for them.

Of the nearly 3 million subprime adjustable-rate loans surveyed by the Mortgage Bankers Association in the third quarter, a record, 18.81 percent of them were past due. A record, 4.72 percent of the loans entered into the foreclosure process during that period.

Meanwhile, there still is the possibility that investors, who were counting on bigger returns from the higher rate resets, will balk at extending the duration of the lower rate.

George Miller, executive director of the American Securitization Forum, whose members include investors, ratings agencies and other financial players, backed the White House's effort and developed streamlined procedures for lenders to follow when sorting through borrowers' requests for relief. He was hopeful lawsuits could be avoided, but he struck a note of caution.

"Certainly, there is no complete insulation from legal exposure," Miller said.

Wednesday, December 5, 2007

Another Bright Idea !

Hello All :

I was going through a list of articles today and I couldn't believe my eyes! Yes, it's true our national financial gurus/advice givers have come up with another brain storm - "use your credit cards to pay your rent" ! As sited in the article below the premise is to charge your rent to your card and pay it off each month if you are in good financial shape, and capture the rewards points.

There is a number of flaws in this thinking: 1. Most people who are in good financial shape do not rent, but rather own property, 2. When you run up your credit, even if you pay it off at the end of the month affects your FICO score, 3. Most people do not have the discipline to pay off their card each month, so aren't we creating another financial tsunami, or it least adding to the coming credit one?

As most of you know, who have been a reader of this blog, I called this sub-prime tsunami 12 months before it happened. I am now forecasting 2 more I see on the not to distant horizon:
1. Credit & Credit Card Collapse: When people have to pay the mortgage to keep their homes, they live off their credit cards for food, clothing, utilities etc. Eventually the money runs out and not only due they default on credit obligations, but the home loan is not far behind, so be on the look out for another down turning in housing.

2. The US Dollar: We are in deep trouble folks! Not only are super models asking to be paid in Euros, but for the first time in history the Canadian Dollar is at parody with the US Dollar. I read recently that Canadians are traveling to the Northeast US for vacations because they get more for their dollar! Unfortunately we are part of a global economy losing our sovereignty bit by bit each day. The Chinese have threatened to blow up our economy by pulling out of the US Dollar, the Arabs are talking about switching from the US Dollar to the Euro has their stand for oil trading, and the icing on the cake- the Federal Reserve is posturing to cut interest rates again. You my be saying, Jim, that's great cutting interest rates will help the economy right? Wrong! It will further weaken the dollar, and cause our resources to become a "K-Mart blue light special" for foreign investors.
Finally, to illustrate how the dollar has lost much of its value ponder this. In 2002 the Euro was worth .88 to the US Dollar, 5 years later the Euro hit a high of $1.50 against our dollar.

So as you can see in order for you and your family to survive this unwanted restructuring of our
countries finances, you must become a leveraged investor through short term investing. Please visit my web site and learn about these exciting avenues of financial security.

Be well & to your success,

James Gage

Financial tip of the day: Charge the rent to your credit card?

Charging the rent to your credit card sounds insane -- it seems like it would be the eighth deadly sin, tied with going to a payday lender to get gambling money.

But as the New York Times points out, the strategy can be great if you're in good financial shape: If you pay off the balance each month you pay no interest, and you can rack up rewards on your credit card -- possibly round-trip airfare anywhere in the country each year if you have high rent!