Tuesday, March 1, 2016

Do You Think You Can Never get College Aid For Your Kids Due to Your High Income?

Many of you may automatically assume that you will get no college aid when your kids arrive at that age, due to your income, which you assume is too high (especially if you are in Silicon Valley) and crosses all the threshold.

Surprisingly, it is not a matter of just how high your raw income is. It is a much more complex matter of how your overall financing looks, is arranged, even optimized.

For this important knowledge, we have invited Gary Sipos, MBA, AIF, to educate us (no pun intended) on the subject. Gary has helped numerous families get into college in ways that were much more beneficial and frugal than they had imagined.

I always talk about real estate investments, the way we do it at ICG, as a means for a stable financial future with two main items: retirements and your kids’ college. I like to explain how Single Family Home investments done with a long horizon can assist both these goal in a very powerful way.

It is only natural that if we can optimize one of our biggest potential expenses, we would like to know about it.

Gary will be speaking THIS SATURDAY, March 5th, at our ICG 1-Day Expo near SFO. There will also be experts on financial planning, special lenders and loan programs, and market teams from choice U.S. markets for us to meet, learn from, and be exposed to some great properties.

Anyone mentioning this blog can attend for free (with guests who can come for free as well). Just email us at info@icgre.comto register. See you this Saturday.


Wednesday, January 13, 2016

2016 and the Real Estate Investor

The year is off to a decent start--the fears many investors had that mortgage rates will go up very quickly due to the Fed’s raising the short-term rates recently have not only not materialized, but actually mortgage rates have gone down twice. I will address it in a separate blog entry but as you can see there is no immediate correlation. Needless to say mortgage interest rates WILL go up at some point which in part serves to frame the most important aspect of 2016.

During 2016 mortgage interest rates are likely to remain quite low for the entire (or most of the ) year. As single family homes investors, those of you with decent credit and not a huge portfolio can still qualify and get these coveted 30-year fixed rate loans that you can only get on Single Family Homes (technically 1-4 residential units).

This is the year to focus and be effective in buying solid homes financed by these 30-year fixed rate loans at these incredible interest rates and lock them forever. You will feel like a genius later on after rates have climbed and here you are with an under-5% loan fixed forever, and never changing with the cost of inflation. In a continuous manner, inflation erodes your fixed loan, and the tenant is paying it off one little month at a time.

Do this in 2016. Do this several times. You will be setting up your financial future.

As far as markets, there may not be large appreciation swings in most markets during 2016. In a funny way the ever-solid Texas is appreciating decently now, but people have some questions about its overall economy.

Oklahoma City with brand-new homes (under 50% of the property tax bite of Texas; it is poised to provide better cash flow on similar rents and home prices – which it has) is a very serious candidate for solid investments.

Jacksonville, Florida is the market least appreciated in the state so far and carries the best appreciation potential. Also in 2016 the Panama Canal project is slated to be finished, potentially generating major large-ship traffic into the Jacksonville port. Will they finish this gargantuan project on time? Will it drift over to 2017? Regardless, it is a dominant event.

Get those good single family homes and finance them with low 30-year fixed rate loans. Rinse and repeat. You will very likely be quite happy in the future when you look back at what you have done. We will be discussing this in detail, along with market teams and incredible experts, during our next quarterly 1-Day Expo near SFO on Saturday March 5th. Everyone citing this blog can attend for free with guests. Just email us at info@icgre.com or call us at 415-927-7504.

Happy New Year!:

Monday, November 30, 2015

Can We See Real Estate Trends by Media Headlines?

Media headlines have been a pretty good gauge on the overall mood and trends in the real estate industry.  During the big boom of 2005 and 2006, the headlines were screaming, “When is the bubble going to burst?” (A sage point to ponder as it turned out.) During the dark ages of 2008 - 2010, the media headlines took pains to emphasize just how much prices were down in so many markets – a good tip for the savvy buyer.

What does it look like these days?

Within the past couple of months here are a few headlines: October 20th in the Wall Street Journal, the headline to an article by Jeffrey Sparshott says, “Builder Optimism Hits 10-Year High.” I believe you can guess what the article is about. In any case due to the blessed internet – you can just look it up. Another headline, again from the Wall Street Journal, by Anna Louise Sussman and Laura Kusisto says, “Home Sales Head for Best Year Since 2007.” Again pretty self-explanatory.

The above two articles convey good optimism and strong home sales. For real estate investors this may not always be the best news, as naturally they hunt for bargains. Nevertheless having a strong real estate market in many cities lends itself to strong occupancy, builder (built) homes (always an attractive investor buy due to builder incentives, and new homes bode well for a long hold with minimal potential repairs, and usually the best financing). Having solid real estate markets is a strong backdrop for our tried-and-true-buy-and-hold-with-a-30-year-fixed-mortgage strategy. Add this to low rates still existing today and you have some very good opportunities to expand your portfolio, lock in super low rates forever and change your financial future.

And about those rates – isn’t the Fed just about to raise rates? Let’s look at this headline from the November 24, 2015, San Francisco Chronicle article by Kathleen Pender, “Rate Hike Won’t Hit Too Hard – At First.” I concur—rate hikes will most likely begin by ¼ of a point for short term debt. In addition this anticipation may already be baked in the current mortgage rates. It will most likely be a while before the needle moves on mortgage rates in a significant manner.

With that being said the Fed’s intention highlight yet again that we operate within a “golden window” of super low mortgage rates. For new investors this seems like the norm. For veteran investors, we recognize these rates as the lowest in decades. If anyone has the ability to fix these rates forever in a loan that never keeps up with inflation – now may be the time.

During our quarterly 1-Day Expo THIS SATURDAY – December 5, 2015, we will have a sophisticated asset protection attorney—back by popular demand—Brett Lytle, who will speak on asset protection. Brett always has the most cutting-edge information on protecting our assets and the pros and cons of the type of entities we form.  Ron Stempek, MS-Tax, CPA, will speak on optimizing your taxes for reporting 2015—important must-know information for optimizing tax dollars, and actions to take going into the new year. Christopher Orr, Director of Institutional Products at PENSCO will be speaking on retirement savings goals by using self-directed IRAs, buying properties from a self-directed IRA, and using this vehicle to further your wealth.  As always, we have cutting edge markets teams, lenders, networking and lots of Q&A time. 

Anyone contacting us and mentioning this blog can attend free (email to info@icgre.com or call us at 415-927-7504). If you email us, put in the subject “I read your blog on Blogger” and give us your name and phone number so we can confirm with you.

Looking forward to seeing you, and Happy Holidays!


Friday, September 11, 2015

A Real Life Real Estate Investor Story

As you know we always preach the gospel of buying single family homes, renting them, financing them with 30-year fixed-rate loans and then just holding them long term. We have discussed the benefits of having a 30-year loan which never keeps up with the cost of living (while everything else does!) Thus your loan gets constantly eroded by inflation (and don’t let anyone tell you the United States will have no or negative inflation in the face of the massive fixed debt it is on the hook for), while the tenant makes the payments for you (of course the RENT does change with inflation which makes it all the sweeter).

In the past month I got a call from a financial planner handling the affairs of one of my investors. He had purchased nine single family homes in Phoenix in the mid 90’s. It turns out the he did not even live in the United States anymore, hence the financial planner handling his affairs in the U.S. They decided it was time to sell the homes in light of the 2012-2015 run-up in values that Phoenix has experienced in the aftermath of the recession.

Needless to say his mortgages, while still not completely paid off (they are 30-year loans after all), are essentially as good as paid off after over 20 years. They never kept up with the cost of living and the principal payments whittled them down pretty low – very funny numbers considering the 20+ year inflation which the loan never kept up with.

A few quick CMAs (Comparative Market Analysis) by one of our Phoenix brokers revealed that after selling the nine homes, the investor would NET (after sales expenses and closing), about $1.7M. Considering he bought the homes for an average of $80K each and using 10% down payments (those were the financing terms back in the mid 90’s), his overall return on investment is not only staggering, but the $1.7M is a real, tangible, powerful enhancement for the rest of his life (he is now in his mid 60’s).

As much as this is a satisfying long term result, I know the investor could have easily bought way more than nine homes. Loans were plentiful back then (no up-to-10 limits) and he had the capacity to easily buy three times as many homes. Nevertheless, even with this investment, he has created a powerful effect on his financial future. Alternatively he could have just kept the homes and have the net rent from all nine homes contribute to his retirement income.

During our next 1-Day Expo (tomorrow near SFO – see www.icgre.com for details and if you mention this blog entry, you are invited at no cost – just email us at info@icgre.com with the attendees’ names), we will discuss new loans available to investors who own over 10 homes as well. Loans are now also available to foreigners again, and of course, if you own less than 10 homes there are conventional investor loans available to you from most banks.

Saturday, August 29, 2015

What The Volatile Market Means to Real Estate Single Family Home Investors


The Dow closed down 588 points last Wednesday as worries of a China Slowdown permeate the business community. Even though there was some recovery in the market on Wednesday the market is still volatile. In looking at this from the prism of a single family home investor; there are pros and cons to consider.

On the pro side, it’s already assumed that any interest rate hike by the fed will now be postponed until things feel stable. Since it takes time for a rate hike to translate to mortgage rates, we get more time with our delightfully low mortgages. Of course since most mortgages have yearly caps, it will take even longer (in some cases much longer) for rates to climb in a significant way.

Also on the pro side, people are confused as to where money should operate. The knee-jerk
Great advice.
reaction is to have money sit as cash (with close to zero yield). However when people are scared of stock markets, real estate and (especially) single family homes usually become more interesting as a safe hard asset which produces income, which we tell our clients at ICG as well.

People may also feel this is not a bad time to pull money out of stocks and finally buy a home for themselves, since they might have been planning to do it anyway - this would not be a bad time to deploy that cash, right into locking in a low rate 30-year fixed loan. This of course would boost real estate markets in the single family home sector.

On the con side, obviously what is happening is not engendering a lot of overall economic confidence and more doom-and-gloom messages are circulating. This can create an environment where people "hunker down" which will not help the housing market.

During our upcoming 1-Day Expo, we have invited Dr.Lawrence A. Souzato to discuss this and other important economic waves now manifesting. Don't miss it!

We will also have Ralph Bunje Jr. talking about reverse and regular 1031 exchanges and how to do them right, and Charles Byrd about using Evernote for business, and total life organization and efficiency. We will have market teams from the best United States markets and lots of Q & A, networking and learning. Anyone mentioning this blog can attend for free with two guests. Just email us at info@icgre.com or call at 415-927-7504. Looking forward to seeing you!

Monday, May 25, 2015

Higher Rates Possible by The End of 2015


Janet Yellen, The Federal Reserve Chairwoman, said that if the economy is on track with job market improvement and inflation climbing closer to its target rate, the fed will start raising interest rates by the end of 2015. This is a move most have been expecting.

I presume rates will rise very gradually, and it will be a while before it translates to higher mortgage rates, but the process seems closer than its been in many years. Those of us who have been around real estate for a while know that the super-low rates we see today are not the norm. For most of real estate mortgages’ history, rates have been much higher than they are now.

Thus it seems quite likely that in the coming years we will see rates that could climb back into what we used to see in the past few couple of decades. Mortgages reaching 8%, anyone? It’s possible but will not happen quickly. Of course, some veterans remember mortgage rates being higher than that  - much higher. Assuming mortgage rates will indeed rise in the coming years, it only drives home the tried-and-true message even stronger: buy a good home in a decent area, finance it with a 30-year fixed-rate loan and you have put an excellent “stake in the ground” towards your financial future.

A 30-year fixed-rate loan has always been amazing. To foreigners they seem like an impossible miracle: how can the loan payments and remaining balance NOT be pegged to the cost of living? That seems like a fairy tale. How could everything else rise with inflation, on average, except for one and only one item: the mortgage rate on a fixed-rate loan?

Once people realize how absurd this is, it becomes crystal-clear:  it’s amazing for the BORROWER.

As a borrower – go ahead and get these incredible loans. You don’t have to wait 30 years for the loan to pay off. After some time – perhaps 10 years, perhaps 12, 15 or so – the loan, while still having time remaining on it, will likely look like a joke – VERY low payments and very low balance – as good as paid off in essence. (Down to almost a rounding error as the years advance.)

 Inflation AND your tenant pay the loan off. Inflation makes it lower in real dollar value and the tenant makes the payments for you (and leaves extra for you in the form of cash flow which increases as the years go by since the loan payments are fixed, but rents are not).  This message is always true – regardless of what interest rates might be.

 However when interest rates are so incredibly low as they are now – it behooves real estate investors to go out and buy homes, finance them with 30-year fixed-rate loans, rinse and repeat. This is a window in time which may not repeat itself for many decades. Take advantage of it.

In our ICG 1-Day Expo coming up NEXT SATURDAY 5/30/2015 near SFO, we will discuss this point and many others. There will be lender guests who will teach us about loans for people with over 10 loans in place, loans for foreigners, and other special loan types. There will be market teams for the best real estate markets in the nation. There will be special real estate deals and special houses that can start the process we discuss above for you.

As always, we will also have experts on insurance, credit, financial planning and other topics, plus a lot of networking. Anyone mentioning this blog can attend free with two guests – please email us at info@icgre.com to register.

Tuesday, May 19, 2015

Home Prices Rising and How You Benefit

In a Wall Street Journal article (front-page) by Laura Kusisto, May 12, 2015 titled "Home Prices Start to Heat Up" we learn that home prices rose year-over-year in 148 out of 174 metro areas in the United States, as measured in the first quarter of 2015. Fifty-one of these metro areas increased by double digits.


There is no doubt that most U.S. markets, including essentially all the markets real estate investors are investing in, are on an upwards trajectory. (If you are not a real estate investor... you may want to take advantage of as many opportunities as you can to learn about this market and determine what might work for you as an investment in your future.) The reasons are many, including low interest rates and loans becoming even easier to obtain over the past year (and this trend continues). Buyers (no doubt) know that the low rates will not be there forever, and feel compelled to jump in. And they are doing just that. A better employment picture also helps.


Needless to say, the phenomenon of price appreciation by itself can create upwards price pressure, as buyers prefer jumping in sooner rather than later, to get a better price. As I have always discussed and predicted, retiring baby boomers are starting to be a major force in some of the sunbelt states as they seek homes for retirement in warmer climates and friendly tax situations.


For the investor, new and seasoned, what is happening now is not strong enough not to invest. Learning how to take advantage of all of this is optimal at this time. It is a reminder that buying with a fixed-rate 30-year loan that never changes with inflation - and I cannot emphasize that enough - is one of the best financial moves one can make for their financial future! The tenant and inflation will bring the loan balance down as the years go by. Home prices AND rent are NOT fixed, only the mortgage payments are (the loan balance is also fixed and in fact is paid a bit off each month, even nominally due to the amortization).


I will discuss this in greater detail as well as many other factors critical to our real estate investing strategies, during our ICG quarterly 1-Day Expo near SFO airport on Saturday May 30, 2015. We will have market teams from the best markets in the U.S. at the Expo with vendors present for one-on-one discussions. Lenders will tell us about the new loans we can get, including new loans for foreign investors and U.S. investors with over 10 homes. We will also have experts on insurance, credit optimization and repair, and overall financial planning. For more detail on these experts, visit us at ICG Real Estate Investments and click on the button about our upcoming event. To register you may email us at info@icgre.com, and mention where you saw this blog, to attend for free with two guests. If you would rather register through Eventbrite, feel free (although ticket price applies).


See you soon; I look forward to learning from our experts right along with you.