I was recently published in "Foreclosure News Report". The publication is a great source for information. If you’d like to, please read the full article. There were some additional articles in the publication that were very valuable as well. Remember, now is the time to buy. Don’t let this opportunity pass you by.

I was contacted by the Kane County Chronicle last week regarding the state of the real estate market. The article provided a snapshot of the market and had a couple of great quotes. They interviewed a client/friend/agent Marty Loughlin.

(CQ) H. Rick Bamman-hbamman@kcchronicle.com Real estate investor Marty Loughlin stops by one of his properties on Briar Lane in Geneva. Loughlin bought the foreclosed home, refurbished the interior and exterior and now has a family renting the house. Geneva 12/04/08

Foreclosures ‘a sad fact of the market right now’
By JONATHAN BILYK - jbilyk@kcchronicle.com
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(CQ) H. Rick Bamman-hbamman@kcchronicle.com Real estate investor Marty Loughlin stops by one of his properties on Briar Lane in Geneva. Loughlin bought the foreclosed home, refurbished the interior and exterior and now has a family renting the house. Geneva 12/04/08
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Marty Loughlin most likely will be back in the market to buy another house next year.

But Loughlin doesn’t expect to rush into anything, as he doesn’t expect to run out of viable choices to add to the four investment properties he already owns any time soon.

“It’s an unfortunate situation for a lot of people,” Loughlin said. “But for people like me, I couldn’t ask for a better market.”

Since 2006, the housing market in the Fox Valley and throughout most of the country has suffered.

In much of central and southern Kane County, including the Tri-Cities, Elburn, Wayne, South Elgin, North Aurora and Sugar Grove, the number of foreclosures has risen about 70 percent in the last two years. According to data supplied by RealtyTrac, a company that tracks foreclosures across the country, in the first 10 months of 2008, those communities recorded 907 foreclosures, compared to 535 in the same period in 2006.

In the city of Aurora, RealtyTrac reported a similar increase, as the mortgages of 1,339 homeowners in the ZIP codes of 60505 and 60506 were foreclosed from January through October 2008. In the same period in 2006, 787 foreclosures were recorded.

Cheri Santay, a real estate agent with ReMax Professionals East in St. Charles, said the situation is reflected in her business.

“About 90 percent of my leads right now have to do with foreclosures,” Santay said. “It’s just a sad fact of the market right now.”

For investors like Loughlin, however, the market has created tremendous buying opportunities, allowing him to buy homes that have been taken back by banks for 50 to 60 percent of the appraised value.

Earlier this year, for instance, Loughlin, of Plainfield, was able to secure a four-bedroom house in Geneva – a market previous years would not have allowed an investor like him to even think about – for about $149,000. The house appraised at $220,000.

He also owns properties in Aurora and Joliet.

Market conditions have served to chase away casual investors, said Josh Blank, president of Robert Anthony Real Estate, a St. Charles-based firm that specializes in purchasing, rehabilitating and managing investment properties in the Fox Valley and surrounding areas.

“People who are just looking to flip a house and get rich quick, they’re not doing very well,” Blank said.

Rather, he and investors like Loughlin, who was mentored by Blank through a program run through Blank’s firm, are using the current market to acquire properties and rent them.

“This is a market for someone looking to be in for the long term,” Blank said.

RealtyTrac’s data indicates that the rate of increase for foreclosures appears to be slowing. Foreclosures in central and southern Kane County increased by about 9.5 percent in the first 10 months of 2008 compared to the same period in 2007. In some communities, including Batavia, Geneva and Sugar Grove, the number of foreclosures held steady or declined in 2008 compared to 2007.

But Blank and Santay said they see no sign that underlying conditions will likely change much in 2009, as many homeowners in the Fox Valley and nationwide are now being forced to deal with adjustments to their adjustable rate mortgages and other non-traditional loans. And that could release a fresh stream of foreclosures into the marketplace, Blank said.

That opinion was backed by a report from credit reporting agency Transunion LLC, which this week reported that the number of homeowners that are at least 60 days behind in mortgage payments increased by 45 percent in the period from July to September this year.

“I think we’ve gotten through the majority of the bad stuff,” Blank said. “But this is going to drag on for at least another year or so.”

It’s been extremely fun becoming an expert of sorts with regard to the market and foreclosures in particular. Last year there was an article written about us that was capped off by Pete Swaufield’s quote, “I’ve never known an agent that was successful dealing exclusively in this type of business,” Swaufield said. “There is just not enough of it.” I believe the market has proven that there is more than enough foreclosures out there. We are solving the problem one home at a time. With 300 transactions this year including both sales and rentals, we have made a significant dent in our local market. Thanks to an incredible team and a loyal investor group, it’s been an awesome year. I’d like to thank you all by inviting you to our annual post holiday party. Stay tuned for more details.

I was contacted by Caroline Kim in response to the media frenzy surrounding foreclosures.  Check out the article here.

The article was great, but there are some miscommunications…I do not fault Carolin one bit however, as I do speak pretty fast and the interview must seem like a million numbers being thrown around.  I have not personally totalled 150 foreclosures, I sold 150 foreclosures in 2007.  I personally have owned up to 31 homes at once, which is quite a lot to manage.  Currently I own 15 homes, 5 of which are under contract for sale.  The final comment is perfectly accurate however…I don’t have a single stock, just cash and houses! 

What does another rate cut mean to investors? It means that the Fed is making a serious attempt to curb the struggling real estate market.  By lowering the fed funds target rate to 3.0%, the Fed has established a sincere effort to remedy their overzealous increases of the recent years.  The theory behind raising rates 17 consecutive times, was to hedge against inflation.  Inflation is extremely difficult to gage, and in all honesty, I have a hard time depending on the government to accurately gage inflation. In my opinion energy costs and gasoline are the major source of inflation in the country.  As we continue to see interest rates cut, this will ultimately help the US economy and will ease some of the “inflation” that the average Joe feels. 

I studied economics at the University of Illinois.  The theory or idea that increasing interest rates curbs inflation may be valid, but I have another perspective.  As rates go up, as they did from 2005 to 2006, this hurts the average American’s pocket book.  Think about it.  Credit card payments go up, home equity loan payments go up, and ultimately this cannibalizes the paychecks and pocket books of the American people.  I understand the theory, I really do. My argument here is that we (and the Federal Reserve Bank) need to examine rates and inflation in a different way. Inflation is defined as the increase in the price of some set of goods and services in a given economy over a period of time. It is measured as the percentage rate of change of a price index.[1] 

In my opinion, the price of milk, cars, food, etc. has not increased or “inflated” beyond a reasonable scope. The price of money however was “inflated” drastically from 2005 - 2006 and was kept artificially high in 2007.  By the 7th time rates were increased, I felt as though the Governmet/Fed was egregiously overreacting.  I predicted that this was a foolish move that would ultimately hurt the US economy.  Many made the same prediction.  Many people, as I do, feel that the Fed typically overreacts.  It’s just my opinion, but the fed funds rate cuts to 1%(post 9-11) was aggressive. With all the uncertainty post 9-11, I did feel that it was deemed as necessary and prudent. The increases in fed funds rate (and ultimately the prime rate) from 2005 - 2006 was excessive, to say the least. Economic growth has slowed, the “R” word is everywhere..and here we are cutting rates again.

So what does all of this mean to us as investors. This means that the softening economy has forced the Fed to lower rates, which will cost the average Joe and the average investor less to own their home.  Rates go down, prices tend to go up.  We’ll see if this happens.  It’s my opinion that 2008 will be a year full of incredible deals and incredible cash flow opportunities.  I’d suggest fixing your rates with Prime for the remainder of the year, for short term real estate transactions.  For your homes and your long term holds, I’d recommend locking in longer term products.  I have a 30 yr. interest only loan on my home.  Great product! The majority of my investment real estate is fixed at 7% until early 2009.  If you are investing in our program today, First Choice Bank, will fund your purchases at 90% with a prime (Currently 6%) floating product.

I have said this over and over again, “NOW IS THE TIME TO BUY”. Our average foreclosures is priced at $100,000. At 6% interest only, your payment will be $500/mo.  Add in your RE taxes and Insurance, and you’ll likely be around $750/mo.  Our average rents are $1,100.

With just 10 purchases, you could be cash flowing $3,500/mo.  This will likely take care of your personal mortgage and maybe even your car payments.   But Josh, What if Prime jumps back up?  Well that’s a great question.  We don’t know when rates will go up, but if you were to fix rates now you may pay a slight premium.  That being said, your cash flow situation will likely remain tremendous, as the mortgage crunch has forced first time home buyers to remain renters.  Take advantage now, the opportunities are abundant.

According to foxbusiness.com, foreclosures were up 79% in 2007.  That may sound like an extremely high rate of foreclosure, however a further analysis may provide a different perspective.  Obviously, foreclosures are up, but if you were to listen to the media, you may think that 50% of the U.S. housing market was in foreclosure.  According to the article from foxbusiness.com, more than 1% of all U.S. households were in some phase of the foreclosure process in 2007.

While 1% is quite an increase from 2006, I’m amazed that the number is that low!  It’s shocking. My amazement may be due to the fact that I deal with foreclosures daily.  Maybe I’m so entrenched in this business, that my perspective is skewed.  Or…maybe the media has covered this topic ad nauseam.  I’m guessing it’s the latter.

I’d like to thank all of my investors for the great turn out we had for our Seminar/Party.  Despite the weather, there was a fantastic showing from current and new investors.  If you were not able to make it, please call to set up a one on one meeting.  It was a great night that was full of new networking connections and real life stories.  Some of the highlights of the night were our testimonials to the strugles and successes that go along with this business.  The footage below is a brief clip of the night. 

Our raffle was a blast this year, with 11 winners.

9 Winners - $250 Gift Certificates

2nd Place - $1,000 Gift Certificate, went to Dan Pigatto

GRAND PRIZE - 42″ Panasonic Plasma HDTV Flat Panel, went to Trigon Properties

Thank You for joining us!

This recent write up in the Kane County Chronicle offers a good history of our business and what we are trying to do for our investors. We obviously disagree with the last quote!

STC agent takes a new direction

By JONATHAN BILYK - jbilyk@kcchronicle.com

ST. CHARLES – As foreclosures continue to shake the real estate market, a local real estate investor has decided to up his stake.

Earlier this year, Joshua Blank, a self-described foreclosure specialist, acquired Robert Anthony Real Estate, a small real estate agency formerly located at 330 W. State St. in downtown Geneva.

Blank said the Anthony agency had been “having problems” and he and his associates “bailed out the owner.”

“Robert Anthony was a company name built on service,” Blank said. “But with the market downturn and some other internal problems, it just presented a good opportunity for us to step in.”

Blank had been with a Re/Max agency before, but decided to reduce overhead costs and fees associated with carrying the Re/Max name.

Although Blank will continue the work of a traditional real-estate agency, listing and showing homes, he also has shifted the company to a business model he enjoys: Acquiring and selling investment properties, and helping others do the same.

Blank began buying and rehabilitating homes – a process known as “flipping” – about eight years ago.

“I did my first home, saw the profit and I was hooked,” he said.

And while he will continue to do that in his new role as head of Robert Anthony Real Estate, Blank said his focus had shifted to offering a way for others to get into investment real estate.

As part of that process, Blank said he would continue to specialize in foreclosed properties.

Last year, Blank said he closed on more than 130 foreclosed properties, and this year, through Robert Anthony, he said he is on pace to do even more.

“We’re going to do just about anything our clients might want,” Blank said.

He said his agency can connect investors with contractors, financiers and leasing agents for those who wish to operate rental properties.

“My focus now is on helping others become armchair investors,” he said.

Pete Swaufield, executive director of the Realtors Association of the Fox Valley, said Blank’s ambitions were not surprising.

“Agents have dealt with foreclosures and ‘investors’ since the beginning of time,” Swaufield said.

However, he questioned how successful Blank might be if he focuses on foreclosed properties.

“I’ve never known an agent that was successful dealing exclusively in this type of business,” Swaufield said. “There is just not enough of it.”

On the 28th, I was the special guest on the SpringBoard Real Estate Investing Hour with Doug Crowe, on News Talk 560 AM the Wind. We spoke a bit about my background, how I got into real estate investing, about the current market, using cash offers, and more.

Click play on the audio player below to listen to the broadcast.

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