Real Estate Tips For Savy Investors

Editor's Note: You can find everything you need to know about making money with lease options PLUS great practical, "how to" tips like these in James Gage's sixteen -hour audio/video workshop, James Gage's Lease Option , AKA Rent to Own Investing System : http://www.jgage.com/Lease-Option-System.htm Enter promo code 500 and receive a 50% off back to school discount!

Here are some practical tips I have learned from doing lease options over the past 20 years. Lease options are great, except when the seller decides not to live up to their end of the bargain.

Sure, you can always sue the seller to force them to sell you the property, but this can cost you thousands of dollars in legal fees and take years to accomplish in our over saturated legal system. You always need to position yourself in a better position if you want your option to be protected. Here are three good ways to protect your option:

1. Record the option. If your option was signed before a notary, you can record your option in the public real estate records. This will give the world public notice of your interest. If the option was not notarized, you can sign an affidavit called a "memorandum of option" and file it at the Registry of Deeds in your county. Keep in mind that this does not create a lien, it only creates a "cloud" on the title do the owner can not sell it from under you.

2. Escrow the deed. If your seller has died or disappeared, you will have a big problem getting him to sign a deed. An escrow should be created up front in which a title company or attorney holds an executed deed. When you are ready to exercise, you simply tender the money to the escrow agent (which can be your or the owner’s attorney) and collect the deed.

3. Record a mortgage. Typically a mortgage is recorded to secure payments on a promissory note. A mortgage can be recorded to secure performance of any agreement, even a purchase option. You as optionee (buyer) will now be a lien holder, in the same position as a secured lender. If the seller refuses to sell the property, you foreclose. Now the SELLER has to go to court to protect himself, rather than the other way around.

Here are some tips to prevent a tenant from asserting equitable mortgage. On paper you should make everything look like a landlord tenant relationship, but you operate the transaction like a Buyer – Seller relationship.

1. Use separate agreements. Give your tenant a lease and a separate option agreement. Make certain the lease does not refer to the option. More than 75% of the time, the tenant loses his paperwork. You don't show any option agreement to the court until the judge asks for it.

2. Keep your term short. Do not give tenants more than a one-year lease option at a time. If the tenant insists on three years, give him a one year with two rights to renew. Draw up brand new leases and option agreements each time he renews. If you give a cumulative rent credit, raise the purchase price each time.

3. Take a security deposit. Sellers don't take security deposits, landlords do. Make it look like a landlord/tenant relationship, even if the security deposit is small.

4. Make sure you pay the taxes and insurance. Do not let the tenant pay the taxes and insurance. This makes it look like a sale.

5. Don't give large rent credits. The more "equity" the tenant has, the more likely a judge will favor an equitable interest assertion. My rule of thumb is that if you choose to give a “rent credit”, it should never exceed 35%. I know many gurus tell you to give 50% or more in rent credit, but I believe that the more rent credit you give the more equitable interest exposure you create for yourself.

I hope these tips help you on your next lease option transaction.

To claim your 50% off Back to School sale visit : http://www.jgage.com/Lease-Option-System.htmand enter promo Code 500

To your success,

James Gage

Lease Options: A Great Investment Strategy in Today's Market

By James Gage

A twenty years ago while I was working as a real estate agent, a client who was going through a divorce asked me to look for properties she could "rent to own."

At that time, the market was just beginning to shift in our area. Sellers were selling, and Landlords were Landlording. Very rarely did the two types overlap. Some agents would even categorize "rent to own" transactions in the same category as Santa Claus - something some people think exists, but is really just imaginary.

In that market, rent-to-own might have well been imaginary. I could not find the right situation for her, and she ended up moving in with her daughter.

Now, nearly 20 years later, the market has shifted into a buyers market again. Many properties are staying on the market much longer than in the past, and many people that would have been buyers, are finding themselves forced to rent for a while longer, till their credit scores meet today's tougher standards.

This is exactly the market conditions where a Lease Option makes sense - for both the tenant/buyer and the landlord/seller, creating a potential for a real WIN-WIN situation.

Looking For A Career Choice or Change? Why Not Consider Creative Real Estate Investing?

Are you wondering how to choose the right occupation whether you're doing it for the first time or changing careers? Well you came to the right place! Choosing a career can be confusing at best.

There are hundreds of career options out there. How do you make a career choice when you don't really know what you want to do? Does it seem like an insurmountable task? It's not. Yes, you will have to put some time and energy into making your decision, but your effort will be well worth it in the end.

How Do You Choose the Right Career?

Choosing a career is an involved process that is based on a number of things, including your interests, skills, work-related values, and personality.

Whether your goal is a full-time business or a steady, part-time income stream, Gage Consulting Group (GCG) will show you innovative and proven ways to profit and work from your home with a career in the lucrative creative real estate investing industry. Explore the pages of my web site http://www.JGage.com and discover which avenues are right for you!

That being said, browsing the internet there are literally thousands of business opportunity resources and a person often gets overwhelmed by the sheer choice of programs, and services.

When looking for a business opportunity you should look for 7 primary qualities:

1. Integrity : Does the company have a reliable track record/history?

2. Value : Is the company providing a valuable service/product?

3. Training : Do they provide you with quality one-on-one training and materials?

4. Support : Is it easy to contact them and do they reply in a timely fashion?

5. Compensation : Is your effort rewarded in a timely manner (Return On Investment)?

6. Investment : Does the opportunity require tens of thousands of dollars to get started, and years for you to recoup your initial investment?

7. Recession Proof : Can it be profitable in an up, down or side ways economic market?

All these qualities are important when choosing a business opportunity.

Too many people jump in to an opportunity such as MLM ( Multi Level Marketing) that promises them mountains of gold, only to find that they have been ripped off after the opportunity seems to have disappeared into thin air or has gone bust.

Another opportunity being marketed is that of the franchise. A franchise business is a method a company uses to distribute its products or services through retail outlets owned by independent, third party operators. The independent operator does business using the marketing methods, trademarked goods and services and the "goodwill" and name recognition developed by the company. In exchange, the independent operator pays an initial fee and royalties to the owner of the franchise.

The company that grants the independent operator the right to distribute its trademarks, products, or techniques is known as the franchiser. The independent, third party business person distributing the franchiser's products or services through retail or service outlets is called the franchisee. The franchiser charges hundreds of thousands of dollars for a license, and in addition may require annual payments to continue using their name and trade marks.

What ever business you choose to get involved with make sure it meets your budget and expectations! There is nothing worse then starting a business that becomes un-enjoyable, unprofitable, and finally becomes a 80 hour torture chamber.

Understanding & Using Hard Money

James Gage here with Gage Consulting Group hoping that this e-mail finds you and yours in good health.

If you're head is still spinning from the recent news about the trouble with Fannie & Freddie Mac, the collapse of Indy/mac Bank on Friday, and the changes in the lending marketplace, and you're wondering how the heck you can finance your investments with the lending industry running scared from anyone but the best buyers, you won't want to miss out on "Understanding & Using Hard Money".

Banks are even tougher these days with who they're lending to, and they're looking more and more at your credit. What if you have less than perfect credit, don't know how to best present your deal to the bank, want to get commercial financing, would like a line of credit for your business and investments, or are confused by the new real estate investing loan requirements and how you can use them to your advantage?

Before I let you go to read over my exactly what this CD contains, many individuals have called me and ask if I would put together a step-by- step CD on "Hard Money" well your wish is my command. I have put together a CD on that very subject please visit

the following link for more information http://www.jgage.com/hard%20money%20CD.htm

but it doesn't stop there!

Normally priced at less then a few trips to Starbucks at $29.95, it is a great value if I do say so myself.

But for the next 3 days (July 13 - July 16 ) I am extending to you, my faithful newsletter subscribers the astonishing price of only $14.97! That's a whooping

50% off my normal website store price! Enter promo Code 555 on you order/check out page to receive your discount.

After July 16 it will return to the normal price of $29.95.

You maybe asking, why am I doing this? Simple, I am committed to getting this information into as many investors hands as possible, thereby getting our properties financed or under control, not only does that increases our bank accounts $$, but it will also help our economy hopefully stabilize.

So please visit the link provided for more information on this jam packed CD :

http://www.jgage.com/hard%20money%20CD.htm

Also, as a thank you bonus I am including: A HARD MONEY CHECK LIST AS DESCRIBED DURING THE CD PRESENTATION. GET YOUR INFORMATION ORGANIZED FAST; THIS WILL CUT OFF HOURS OFF YOUR DOCUMENT PREPARATION TIME FOR THE LENDER.

Don't forget promo Code 555

To your success,

James A. Gage

www.JGage.com

With this CD which is jam packed full of information you will never have to worry about getting or controlling a property again.

What you will learn on this powerful CD :

On this CD James, along with a veteran hard money lender go over in detail the following topics:

• What is Hard Money?
• The Process.
• Why using Hard Money is cheaper then getting a partner!
• When it is not appropriate to use Hard Money.
• How to use Hard Money with Single Family Rehabs, Multi-family, Acquisition and Rehab, Commercial Acquisition and Rehab/Construction, Land / Subdivisions, Condo Conversions, Flips and Short Sales.
• How to use Hard Money properly.
• Guidelines & Requirements.
• Myths vs Truths about Hard Money.
• Terms
• Documentation needed for a deal review
• Costs
• Where to find ethical Hard Money lenders.
• What questions to ask and what references to ask for.

And of course like all of James's products you will receive much more.

New Resource: Negotiating For A Living

Hello All:

I hope you all had a safe and pleasurable 4th of July. Please forgive me for being away from the blog for the last couple of weeks, but I have been busy finishing up a web site that I have been trying to get up for a year or so! That being said, most of you know I have a background as an Arbitrator, which caused me to bring those negotiating skills into my successful real estate investing, and which I have imparted to my mentoring students.

I have started http://www.NegotiatingForALiving.com to teach individuals to do what I have done for 21 plus years! If you are looking for great way to fund your real estate deals, you owe it to yourself to stop by www.negotiatingforaliving.com and watch my video on negotiating for a living.

Until next time be well.

James Gage

Dave Ramsey Part 2 : Horrible Advice

Hello All:

I was hoping not to re-visit this subject again, however, I received a phone call from a fellow investor (Darlene M.) who received some real bad advice from Dave Ramsey’s radio program.

First, let me state I’m going by what she told me and I am basing my comments on the substance of the phone call to me, but I can tell you that I strongly disagree with what Mr. Ramsey teaches – more about that later.

Darlene explains that she called Dave’s radio program to refute what he has been saying on his radio program about now is a “great time to buy a house”. She did get on the radio to ask the pointed question, but as soon as she asked the question, Mr. Ramsey became angry and coarse, and stated anyone with a half of brain can see what great opportunities are out there for home ownership! What a great posture for a national radio personality to take when the general public calls in with a request for help and clarification, Darlene said she decided to take Dave’s advice and by a house (pre-foreclosure) 3 months ago, and since that time she has lost 5 % in value!

She read my back issues on my blog and noticed I was not a fan of Dave’s, and have clearly stated for the past 15 months that you should not be buying anything in this market, rather you should be using leveraged strategies such as lease options for investments and personal residences.

That being said, and being fair to Dave Ramsey, Darlene did not elaborate on the details of the deal that she did, so we can not bash Dave Ramsey if she got into a bad transaction on what she perceived to be his counsel. However, when it comes to the generic advice of “now is the time to buy real estate” – in the words of Dave Ramsey “have you been living under a rock”?

We have only seen 1/3 of the foreclosures that are going to happen according to financial pundits and Federal Reserve. In addition, these foreclosures have caused increased housing inventory forcing property values to sink 15-20% from all time highs. My question to Dave would be, what do you think is going to happen when the other 66% of people facing foreclosure comes into view? Can you say another 30% downward progression, and if you buy now as Dave suggests, you will be in a upside down property and be forced to stay in said property for the next 10- 15 years, while the market tries to gain value.

The other problem I have with Dave is on his investing advice! After becoming debt free, by the way this is the only thing I agree with him on, he encourages people to invest in mutual funds. Are you crazy Man!!! Have you seen how our dollar has been devalued? In 2002 the Euro was at .88 against the dollar, today the Euro is 1.51 against the dollar – you do the math!

Our country is being bought up by foreigners, who look at the US stock market as a flea market due to the strength of their currency; they are literally gobbling up everything in site. By the way many would say that a weak US dollar is good for our economy and will bring foreign investors in to buy our products, thus helping to stabilize our devastated economy. My question to those folks is – what products? Last time I checked the US didn’t make anything anymore; we have been referred to as a service based economy which subs everything out oversees.

OK, many would say that I’m jealous of Dave Ramsey because he has a successful radio program and I have a blog. Nothing could be farther from the truth. I just want people to stop drinking the cool aid and start listening to the voices of reason, whether that be me or someone else, who can document and substantiate what we preach!

So what’s my take? The only way you should be in the stock market is with stock options. If you’re stuck in the market due to company related 401 Ks, consider moving into a money market fund or precious metal fund – gold has tripled in the last 5 years and is almost $1,000 dollars an ounce. Look into become a leveraged investor in the Forex trading market – leverage at it’s best if you do not have those restrictions mentioned above. And of course, become a short term investor through lease options, and assignments with short sales and probates.

In the words of Forrest Gump;” that’s all I have to say about that”.

Be well,

James Gage

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

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.

Tomorrow Nights' Webinar

Hello All:

Just a quick reminder to let you know we only have a few lines remaining for our webinar tomorrow night - hope to see you there...

Tuesday, October 23, 2007 - Special Webinar with Foreclosure.com

Time: 9:00 PM EST

Topic: "How to Use Lease Options with Foreclosures!"

Where : CLICK HERE TO REGISTER

* Only 200 lines available- Register NOW !

Real Estate : Russ Whitney & Robert T. Kiyosaki Want You To Be Rich!

We are enjoying the summer days this week at Cape Cod, Massachusetts before returning to NE Florida for some snook fishing at the end of the month. I love Summer mornings. I take my early morning walk, shower, drink freshly ground coffee and watch CNBC.

This morning, there was a special real estate magazine section with tons of glossy ads in my regions newspaper from Donald Trump on condos for sale. I usually go through this stuff pretty fast, but then my brown eyes came upon a major article entitled “Russ Whitney wants you to be Rich”© by Randall Patterson.

The article had the usual stuff you read in the blogs about Russ Whitney and his rags to riches story as well as his friendship with Rich Dad Poor Dad author Robert T. Kiyosaki. The article then begins to describe Russ Whitney’s introductory seminars (4700 per year) which start out free and then move the clientele up the pyramid from $4995.00 to $54,000.00 in program costs. The article also stated that 280,000 people attend per year and 22,000 enroll in the advanced courses. Even though I still use my fingers and toes to count , this is a great deal of money!

.On one hand, the organization boasts having “helped thousands of people become wealthy”, yet it took the reporter several weeks to get the company to provide 1 students to speak with him. When they provided the contact, the reporter discovered they were all employees or doing business with the Russ Whitney organization. With this volume of training which Russ Whitney has accomplished, I wonder why he just didn’t provide a few students who could vouch for his veracity? Easy enough to do.

I find it strange that my real estate competition always has problems in this area, I also advertise the following “Call me, I will be very happy to speak with you”.

No big deal, go to my web site read my e-Books and articles. If you have interest in working with a Mentor, then give me a call at (508) 595-9567 and see if you feel that I can part of your One-On-One Success.

To your success,

James Gage

P.S. I just read an interesting news release on Google stating that the Russ Whitney Organization signed a six-year lease on a 32,646 square foot building in Utah for 200 employees and $700,000.00 in furnishings for student coaching. The news release also stated that Rich Dad Poor Dad author Robert T. Kiyosaki and others attended the ribbon cutting ceremony. What’s the quote from Alice in Wonderland “Curiouser and Curiouser”

Who Can You Trust?

This has been a crusade of mine for several years; the abuse of the information and financial advice giving industry. We have all seen so called experts on television or radio peddling their systems and advice, but what qualifies them to be experts? In the real estate industry most are nothing more than information pushers who have not done a real estate deal in 20 years, but are going to tell you how to do it.

Even in the financial advice world, many so called experts have been placed under the microscope, and found that they are not what they seem, case in point Dave Ramsey ( who is a nationally known talk radio host) ...

In 2004 Dave Ramsey's column was dropped from The Tennessean and four other newspapers owned by Gannett, Co. after it was discovered that the identities of those seeking help were falsified in several of his columns. Ramsey accepted responsibility for the error and offered refunds to the newspapers affected by the error.

Believe me, I don't like to throw stones, but these so called experts are the same individuals throwing stones at everyone else, claiming they are the only ones with true in site.

That being said, what should you look for when taking advice about real estate or financial matters?

1. Make sure the individual is active in the industry that he or she is giving advice.
2. Make sure you can personally speak with them; if you can't don't do business with them or take their advice.

Hope this helps in your quest for top quality information and advice.

To your success.

Real Estate:The House has passed the Section 8 Voucher Reform

Hello All:

James Gage here to inform you on the Washington real estate news.

JULY 18, 2007 -- Washington, D.C. -- The House has passed the Section
8 Voucher Reform Act of 2007 (SEVRA) that will change aspects of the
apartment unit inspection process to result in faster move-in of new
residents.

The National Association of Home Builders (NAHB) said it is "very
pleased" that the bill passed, by an overwhelming bipartisan vote of
383-83. "NAHB has been supportive of efforts to reform the Section 8
voucher program, particularly in areas such as unit inspections," NAHB
stated. The organization said Section 8 reform is one of its highest
priorities for its multifamily members.

The Section 8 Housing Choice Voucher program provides rental subsidies
to approximately two million very-low income households for obtaining
housing in the private market. The program is meant to broaden the
range of housing choices for families seeking affordable housing.

Claudia Kedda, director of multifamily finance at NAHB, said of top
concern to the organization's members is the provision to streamline
the unit inspection process.

The inspection process under existing laws currently requires the
Public Housing Authority (PHA) to inspect a unit when it is vacated
before a new resident using a Section 8 voucher can move in. Problem
is, units can sit empty for weeks while the unit is waiting to be
inspected.

Under the new bill, the unit still has to be inspected before it is
reoccupied, but if there is an issue and it is not life-threatening, a
new tenant can move in. And the PHA pays the owner the rent
retroactive to the date of the lease. Consequently, both the owner can
cut down on the rent lost and the resident can find a home quicker.

The new bill also allows PHAs to inspect units ever other year rather
than every year, Kedda explained. And if the unit has already been
inspected in the past year under another federal program--for example,
under the Low Income Housing Tax Credit or HOME programs--and meets
quality housing standards, then under the legislation an additional
inspection for the Section 8 program is not required, she said.

Other provisions under SEVRA require HUD to translate official HUD
documents commonly used by property managers that are considered
"vital," and to set up an 800 hotline number for oral interpretations.


And the legislation provides for changes to the project-based voucher
program to, according to NAHB, ensure its flexibility as a tool for
preserving or expanding the supply of affordable apartments especially
those with a tight housing market.

NAHB is currently working with the Senate to introduce a companion
bill. The group said it appreciates the leadership of Chairman Frank,
Chairwoman Waters and Ranking Member Biggert, "who worked so hard to
bring the bill to the House floor."

Seems like it's geared towards inspections!

Real Estate Investing: More Evidence...

New Home Sales Fall in May for 4th Month

AP -

Sales of new homes fell in May for the fourth time in the past five months, providing further evidence of a continued slump in housing.

Just FYI.....

Get started investing today!

Lease Options: Will Real Estate Agents Do Lease Options?

Lease Option Tip of The Week

The simple answer- absolutely! Contrary to popular belief, real estate agents will do lease options as long as they get paid!
In most states a listing or co-broke piece of property can not generate a commission for real estate professional unless a closing happens; as always there is an exception to every rule. In this case the listing agent would have to go to their broker and get permission to do some kind of fee agreement in place of their commission structure.

As you can plainly see it would be much easier to have this understanding prior to finding a potential deal.

Hope this helps; my all your deals be profitable.

James Gage

Lease Options: Are Lease Options Illegal?

Hello All:

I received a very interesting phone call today from a real estate investor who was exploring lease option investing. He had talked to a few local investors who told him that lease options are illegal and risky! He called me because he found me on the net ( www.jgage.com) and wanted to find out the straight scoop.

I began to explain that lease options are illegal if they are done wrong, which by the way 95% are implemented wrong. You see I continued, most people believe they can read a book or listen to a tape and then it's off to the races. Truth be told, very few people in our society (me included) can take a book and implemented without any help or direction. - that's why I developed my One-on-One Mentoring Program.

As our conversation concluded he asked me what the first thing he should due before getting involved in any real estate strategy? I told him to check with his states guidelines for investors, the Dos and Don'ts can be obtained at that states Attorney Generals Office (which can be fund online). The second part of the answer I don't think he was ready for! You need to get a mentor, whether it's me or someone else - don't go it alone!

Hopefully, this brief post will guide those of you who are trying to go it alone to re-examine your game plan/business model.

To your success,
James Gage

Mark Twain said: "Keep away from people who try to belittle your ambitions. Small people always do that, but the really great make you feel that you too can become great."

Short Sales: Wannabe Buyers Welcome Housing Market Slump, but Lenders Tighten Mortgage Standards

Hello All. Here is just another example of what tough times lie ahead for the housing market; can you see the great opportunity for investors' who implement short sale and lease option strategies? Please read the below article and let me know what you think!

Be well.
James Gage

AP
Wannabe Buyers Welcome Housing Slump
Sunday June 10, 2:16 pm ET
By Alex Veiga, AP Business Writer

Wannabe Buyers Welcome Housing Market Slump, but Lenders Tighten Mortgage Standards

LOS ANGELES (AP) -- Kurt Montufar isn't stressing over the housing slump. He's actually hoping things get worse. Like many wannabe homebuyers who were priced out of the market during the last boom, Montufar spends time these days scanning real estate ads and news reports to determine if it's time to take the plunge and buy.

Foreclosures rising? Great. Cash-strapped sellers pressured into lowering prices because they can't find buyers? Even better.

"Somebody else's misfortune could be my happy ending," said Montufar, 27, a resident of suburban Los Angeles.

Indeed, the advantage is shifting to buyers in many previously high-flying housing markets, as homes take longer to sell and prices level off or begin to fall.

Modest annual declines have been seen in cities such as San Diego, Boston, Las Vegas, Phoenix and Honolulu, according to first-quarter data on existing single-family homes compiled by the National Association of Realtors.

Meanwhile, price gains of just 1.4 percent or less were reported in New York, Chicago and Washington, D.C.

Those numbers have left many people trying to "time" the market to take advantage of the slump. But experts said that can be risky because there is little consensus on how long the current doldrums might last.

In addition, the market forces that helped drive the housing boom -- affordable financing and the alluring prospect of escalating home values -- are no longer a given. Potential price breaks could be wiped out if interest rates rise any higher.

"In general, it is very difficult to time the market," said Raphael Bostic, associate director of the University of Southern California's Lusk Center for Real Estate.

"The real problem with that is you don't know when the floor is until after it's passed. If the floor is right now, you missed it," he said.

Montufar, an asset manager and part-time real estate agent, has little choice about waiting for prices to fall further.

He would like to pay about $500,000 for a home in the San Fernando Valley. However, the properties he has been eying are still priced at about $650,000.

"At this point, I've got no choice but to wait and see ... how low they get so that it gets to a point where I can afford it," he said.

Others have already seized opportunities to buy.

Melanie Scalice, 36, a seventh-grade teacher living in the Boston suburb of Arlington, Mass., saved for years for a home. She decided to jump into the market when local housing prices began to dip after years of double-digit percentage increases.

"The timing has been great," Scalice said. "With prices going down, there's so much for sale that I had a lot to choose from."

Still, she had to go to Fitchburg, some 40 miles from Arlington, to find a home that suited her budget and need for space. She settled on a $199,000 condominium.

Areas outside big markets may still represent the best option for finding an affordable home.

"There are areas where prices will, at worst, stay flat, but probably continue to go up," said Patrick Lashinsky, CEO and president of Emeryville, Calif.-based ZipRealty Inc.

Home prices haven't lost much steam in the Northwest. Seattle's metro area, for example, saw its median price soar 12.3 percent during the first quarter.

In California, where home values more than tripled since 1995, sales have been lagging and price appreciation has slowed or fallen in major metro areas.

Prices have declined sharply in regions that saw major home or condo construction in recent years, such as Riverside, San Bernardino and San Diego counties.

Even if prices fall further, it could be tough for buyers to find affordable financing if interest rates increase much more.

The Federal Reserve raised the federal funds rate from 1 percent to 5.25 percent between June 2004 and June 2006. The rate, which can affect mortgages, has held steady since then.

Meanwhile, the monthly average interest rate for a 30-year fixed mortgage crept from a low of 5.23 percent in June 2003 to 6.26 percent last month, according to mortgage giant Freddie Mac.

In addition, lenders have tightened standards in response to a surge in defaults by subprime borrowers, and a number of subprime lenders have gone out of business altogether.

A number of wannabe buyers are pinning their hopes on foreclosures, which some studies predict will explode during the next two years as adjustable mortgages reset to higher interest rates.

Foreclosure activity jumped 62 percent nationwide in April from the year-ago period, according to Irvine-based RealtyTrac Inc. Among the states with the highest foreclosure rates were Nevada, Colorado, Connecticut, Florida and California.

Gino Barragan of La Puente, Calif., a lifelong renter, was among the hundreds of people who attended a recent auction looking for a good deal on a foreclosed home.

Barragan, 34, was hoping to find a condo costing less than $300,000. He found only one that he liked within his price range.

"I am willing to wait, but I'm keeping my eyes open," said Barragan, a teacher.

Bruce Norris, president of The Norris Group, a real estate investment company, said now might be the best time to purchase a home, if the buyer plans to live there for 10 years.

"I'm not sure that I wouldn't rather pay today's price with today's interest rate than count on a big discount and the wild card that interest rates might be very different," Norris said.

"It would not shock me to have a 10 percent interest rate by the end of this negative cycle," he said.

Urgent : FLASH: PIMCO's bond guru Bill Gross predicts US housing market to be "decimated"

Hello all, James Gage here; when I read this I had to immediately post for your review and consideration. If this is true, it opens up a tremendous opportunity for us as investors; there will be 2 options (forgive the pun) for most people: 1. Become a renter or 2. Lease Option a property. That being said please read the rest of the comments by Bill Gross, and if you have any questions please do not hesitate to contact me.

“These increases in rates over the past few days have placed the 30-year mortgage market at close to 7% in conventional terms,” said Gross, chief investment officer for Pacific Investment Management Co. and manager of the world's largest bond fund.

“This will decimate the housing market if it wasn’t already decimated before, and certainly put the Fed on hold, and maybe allow the Fed to reduce rates…six to nine months from now.”

Lease Option: Is there a big difference between a lease option and a contract for deed?

By James A. Gage

The lease option and the contract for deed are both popular methods of creative financing. However, that's where the similarities stop.

First, let's start with the lease option. A lease option is not a sale it is a standard rental agreement with an added perk (the opportunity to purchase). A lease option actually consists of two separate and very different agreements - the lease and the purchase option. The lease is the written agreement under which the property owner allows a tenant to use the property for a specified period of time in exchange for the payment of rent. In the option contract, the seller gives the buyer the exclusive right (or option) to purchase this leased property. Typically the price is set at the time the lease is written, and usually the "option" period is the same as the length of the lease - but this can change especially if you are an investor.

Keep in mind, a lease, just like a sales contract is a "two-sided" agreement. Both the landlord and the-tenant are legally bound to the contract. An option contract, on the other hand, is "one sided". The seller gives the "option", but the buyer is not legally bound to take it. , .

For tax purposes, a lease option is treated the same as any other lease until the option is exercised, then it would be considered a sale.

A contract for deed is a sale. The seller holds legal title to the property as security for payment, while the buyer has "equitable" title. This equitable title gives the buyer the right to live in the property, improve it, rent it and otherwise enjoy all of the benefits of ownership. However, since the buyer does not have legal title, he typically cannot use it as collateral for a home equity loan. When the buyer pays the full amount due under the contract, the seller delivers legal title to the buyer. For tax purposes, the IRS generally treats a contract for deed as a sale, which means the buyer has the tax benefits of ownership. The payments of interest that are made by the buyer in possession are deductible as "mortgage interest," even though the buyer does not have legal title to the property. A contract for deed seller must report the transaction as an installment sale on IRS Form 6252. Once sold, the seller cannot claim depreciation or any other tax benefits of the property. If the buyer defaults on the contract and the seller exercises his legal option to reclaim the property, the tax code treats the transaction as a foreclosure- not where you want to be as an investor.

Which one works best?

To determine which way to go you will need to consider many factors, such as the buyer's situation, the market, and what you need at that time.

Contract for deed has a major downside, you may have to foreclose, which could take a lot more time (and money) than a simple eviction. Also, the entire balance paid on the contract will be due as a capital gain, which could mean a big tax hit if you have a low basis in the property

With a lease option, you, (as the landlord/seller), maintain legal control of the property with the ability to claim depreciation and to defer gains by 1031 exchange. But, along with all these benefits of ownership, you still have all the burdens of upkeep and landlord duties. You want to structure your agreement to ensure that if the tenant fails to purchase the property, you get to keep the non-refundable option money payment and any additional rent that was paid for the option.

Most renters would like to buy, but lack of cash or credit is holding them back. The typical tenant wants to plant flowers and wallpaper, but only to their own home.
Investors like upfront cash and steady monthly income with minimal hassle, but don't want to take a chance on just any credit problem off the street. Therefore, I believe that Lease Purchase AKA Rent To Own is by far a superior way to control real estate, whether a investor or someone looking for a residence.

The aim of this article was to give the reader a basic understanding of the contract for deed Vs lease option approach to real estate hopefully I have accomplished that in the context of this article.

Short Sales: How to Contact People in Pre-Foreclosure

by James Gage

Many times a week I get phone calls from investors’ asking me what method should they use to make initial contact with people in pre-foreclosure; should they use letters or pick up the phone?

My take is this, neither! Why copy what your competition do is doing, why not go directly to the horse’s mouth – knock on their door ! There is nothing better then eye ball to eye ball and belly to belly, but Jim , I couldn’t possible due that; I don’t like confrontation. Well, if you know what you’re doing it won’t be confrontational- if you need help don’t hesitate to contact me together we can overcome your problem; I have over 20 plus years of just doing that!

So in summary my first method of contacting individuals in pre-foreclosure is:

1. Door knocking, followed by 2. Phone calls and finally 3. Letters (which 99.9% of the time when received will make its' way to the circle file, aka the trash).

Lease Option: Finding and Qualifying the Tenant/Buyer

by James Gage

Once you and the seller have signed your contract your job becomes to move that property to a tenant/buyer (this is also known as a sandwich lease). Remember, to save time, to have your flyers and signs done before going to meet with the seller. This allows you to drive the neighborhood before meeting with the seller to see where you can place your signs and flyers.

So be sure to place your signs once your meeting with the seller is concluded. Next is to place your ad in the newspaper and any specialty papers in your area. Go through your manuals and make a checklist of all the other areas we mention to place your flyers and signs. Next check your database of tenant/buyers to see if any are looking for this type of home in this particular area.

Make the telephone calls to the appropriate agencies we discuss in our manual.

Once you start receiving telephone calls be sure to qualify your tenant/buyer. Can they pay rent on or before the first of the month? Can they make repairs? Is the assignment fee in their budget? Go through your checklist for this in your manual.

Again, you don't want to make wasted trips, you are not a Real Estate Agent. Be sure they are serious. If they are, either have them complete your application by phone and/or set up several appointments and bring your application forms. Always be sure to tell the tenant/buyer about your procedures and fees. This avoids confusion and prevents wasting your time.

Remember if a tenant/buyer wants you to hold the property, they have to leave a deposit. Be sure to give them a receipt for the deposit. This form is in our contract package; explain your procedures on this. Deposits are not refundable unless the tenant/buyer does not qualify. Changing their mind is not an option, since you have removed the property from the market to any other tenant/buyers.

After the credit check and application process is fulfilled, you call your seller to tell them you found a tenant/buyer for their property, and then set up a meeting time with your tenant/buyer to process the paperwork. Assign the property and cash your check.

Isn’t lease purchasing a wonderful business?

www.jgage.com/renttoown.htm