KUNO Real Estate

Since my last blog a while ago nothing much has changed in the real estate market. It still is a fantastic opportunity to buy any real estate. What is making the housing market a little different is the 10 year note yields are starting to come down finally. As I said to my Congressman and I will say it here, get rates down and this will help to stabilize the real estate market/economy. The 700 billion dollar bail out is not filtering down to main street at all. What we need is 1% interest rate on 30 year fixed mortgages and you will see how the bleeding will stop. This will have a trickle effect which will help the economy and local governments that rely on property taxes for their budgets. This is not rocket science to figure out but the politicians are not doing anything about it.

10 year note yields have been stagnate for months until the last week or so. This morning Friday-10 year note yields are below 3.0%. When 10 year yields go down so do mortgage rates. Rates were getting down to 5.6%. this week. Today will be a limited trading day on Wall Street/Chicago Board of Trade but Monday morning the markets will get back to normal. I am telling everyone to watch 30 year interest rates next week. This will be a good time to start buying. You may have a week to take advantage of this so act quickly and lock in to your rate. Rates change daily like oil prices in the market we are in. Make sure you get a mortgage that has no pre-payment penalty and you can buy your rate down after you have locked it in. If rates get lower than your lock before you close than pay the small fee around $250 to $500 dollars. Every lender is different so ask. It’s all about playing with numbers.

Historically interest rates are still great even at 6% especially if you are a new home buyer/investor but if you can get a 30 year fixed rate below that it would be worth it. For people with mortgages, the rule of thumb that I use and tell everyone is when your rate is 1% point higher or more than the new interest rate re-finance. The key is how long do you plan on holding on your real estate. It normally costs a couple to a few grand to re-finance. Example; If it costs you $3000.00 to re-finance and you save $200.00 a month on your payments just add up how many months do you need to get to $3000.00. In this example it would take 15 months. So if you were to sell your property in the next year it would not be worth re-financing. If you were to sell 5 years from now than it would be worth re-financing. Just play with the numbers to meet your goals.

Everyone have a Blessed Thanksgiving Weekend!  

Dave Kuno

Kuno Real Estate

www.kunorealestate.com

www.foreclosures-indiana-illinois.com

As I said in my previous blog the safest place to place your money is real estate. When all the scandals started earlier this decade such as the Enron debacle, I took all my money out of Wall Street and placed it all in my properties, paid my principals down. I am so glad that I did. There was 2 trillion dollars lost in the stock market with-in 2 weeks. Even 401K programs are not safe. Do not let someone else control your money. If you want to invest in real estate do what I did and buy multi-unit buildings. It will be some time before people will be able to qualify for a mortgage because of tighter lending restrictions ( higher credit scores and more down payment money). People have to live some where that is why the rental industry is a hot market. If you manage your real estate investments wisely it is a very gratifying business. I personally make 28% return on my buildings and that is awesome. My favorite to buy is 4 unit buildings. With a 4-unit you can still get residential interest rates not commercial. 1 to 4 family units fall under residential interest rate guidelines. Anything over 5 or 6 units or more under one building falls under commercial mortgage guidelines. A commercial mortgage you need minimum 20% down payment and it’s with a higher interest rate. Each commercial lender is different but usually it’s 1 to 1.5 points higher than residential rates.

With a residential loan you can put 5% down (FHA) owner-occupied as one example. I purchased my first 4-unit this way. So 4-units make it easy to buy and sell because of less down payment and lower interest rates than a building that has more units under one building. I am not saying do not buy 10-unit buildings. Like any building you buy, if the numbers are their go for it. If you make 20% return on your money with a 10-unit building at a 9% commercial interest rate go for it. It’s playing with the numbers. The point I am trying to make is it’s easier to qualify for 4 unit buildings and easier to sell because the average person can afford a 4-unit. I specialize in this market because that is what I do.

I can teach anyone that is willing to learn and watch how it will make a difference in your financial portfolio. You have to sacrife material things such as new cars, boats these items are called de-constructive debt. This is the hardest thing for most people to not have. Constructive debt is real estate, this is one example. Once you are in a position than you can buy your toys. Most Americans need a second job to match what our parents were making 40 years ago because the dollar could buy so much back than. With real estate you do not have to be there from 9 to 5. Think about that! You are at your primary job and your secondary job is making money and you are not even there! In 18 years re-finance the building to pay for your childs colleage education. The best part you get to write off the interest, depreciation and maintenance on taxes. My vision is (because of our economics) you need to have more than one building to keep your family's financial needs going and owning appartments is the way to do just that. It helps combat the decline in the dollar and hourly wage losses. One building for each child for education needs, another building for your medical needs and so on. I pay for my own health care and it's $320.00 a month (no dependants) and by the time I am 65 my montly paymet will most likely be $1200.00. I will take my positive cash flow from one building to cover my medical expenses. Vision for the future. You can not depend on social security or 401k programs. You need to manage your money yourself!!!!!!!!!!!!! 

I here all the stories of why people do not want to buy appartments because of having tenants. Number 1 these are people that have fear in them selves and right off the bat have a negitive attitude. Stay away from negitive people period!!! The key is knowing what to by, what to look for, return on your investment and of coarse what most of the mistakes people make that turns them off is preventative maintenance. What I do is every 2 years is have all the furnaces cleaned and thermo-couplers replaced. This is one example. If you maintain the property now it will save you time and money in the long run. Just by doing little things will make you sleep at night instead of getting a call at 2am that the tenants furnace is not working. This is how you make money in real estate! Having the vision to foresee future problems. This is why big time property managers get paid the big bucks because of preventitive maintenance.

If you want the best to help you be an investor call KUNO!!!!!!!

Remeber it's not how big the company is, it's how good your Realtor is!!

HOME BUYERS!!!!!

To all home buyers it's still a great market to buy especially foreclosures. We can help you fix up that foreclosure if you are not willing to do it yourself. But not all foreclosures need major repair just some old fashion elbow grease. Its one stop shopping from your purchase to the final product.

Please do not listen to the media about no money to lend. There is money out there you need higher credit scores and a little more down payment money than in past years. Interest rates are still great. Remeber I know what to look for in a home. I could tell you everything that may need to repaired now or in the future and then compare other homes in the area to come up with what price to offer. We have saved thousands for our clients. Knowing the construction business in how homes were built and the differnt styles used is how you know you have the best Realtor out there. That is another of many benifits that helps me achive all my goals for my clients.

You can not beat all this experience!!!!!!!   

Please call Kuno Real Estate for all your real estate needs!  

REGULATION MIS-MANAGEMENT FROM WASHINGTON TO WALL STREET

All this mess with the financials began with regulation. It goes back to the politicians that relaxed/un-restricted what investment banks can do. Before you start blaming Wall Street blame the politicians first which de-regulated the system period!  Then Wall Street management took advantage for their own pockets. GREED! Wall Street created financial instruments that made no sense. That is the main reseason I got away from building/flipping homes in 2005 after doing it for 10 years. There was no way this system/lending practices could keep going on. I gave everyone 2 months notice in October 2005. It took a little over a year for the system to fail. February/March of 2007 when the melt down started (Ameriquest and New Century filing bankruptcy) The politicians could of acted anytime they wanted to but they did not. They knew what was going on or did they! On top of that globalization with more jobs going over seas so now we go from $36.00 an hour jobs to $8.00 an hour jobs. All the credit cards the consumer can acquire, goods and services going up, hourly wages going down-hey why not do 100% financing on a home. Wall Street knew that they needed to create teaser rates and so on so people can qualify for a home mortgage because no one had down payment money. I still blame free trade that opened the flood gates to jobs being out sourced over seas, again Washington and big business. It’s pretty bad what I am seeing out there. I have lost 16 clients in 2008 because of out sourcing. There is no way people can buy homes working retail and restaurants. This is our middle class. The way things are going no one will be able to purchase a home, at least not anything over 1000 square feet (new construction) on a crawl space. $100,000 homes are what the average person can afford with our current economics in Northwest Indiana. That is why I can not stress how owning apartment buildings is the way to go. Your money is out of the banks and Wall Street. You manage what happens not someone else. You have seen what happens when someone else controlled your money!!!! I took all my money out of Wall Street back when the ENRON scandal broke. When I seen that ENRON switched fund managers and froze out the stock holders and employees from accessing their money for 30 days but upper management, board members could still have access that was it. Board members sold there stock and took everyone’s money. What the board members did was build the biggest home that they could in either Texas or Florida. Why you ask because you can not take away someone’s primary resident in those 2 States it’s a liability shelter. One home was 40 million. All the employees lost there 401K program and stocks. I took money out of Wall Street and re-invested it in real estate, wher it will stay. How is this fare to us the consumer and you want us to bail Wall Street out and give you money. You need to make it fare for everyone no one side can benefit over the other.

Builders if you want to make money in new home sales, build cluster homes (4 to 12 families under one structure) in the price range of 80K to 130K if the towns will allow. Some towns will only allow owner-occupieds (covenants & restrictions), you can not rent/lease, you must live in the dwelling. This way your costs are down and you can still make a profit and keep the economy growing with job creation. You need to build for what the average person is earning. If we do not get 50K to 100K average paying jobs in Northwest Indiana than we will be a low income area.

The South Shore expansion project you all been hearing about. Number 1 who is going to pay for it and who is going to bail it out if it fails? Will it be sold to foreign investors like the Indiana Toll Way? I do not support this project because what I am hearing is this will be a good source of transportation to tap into the Chicago job market. So let me get this straight, we are going to spend millions of dollars to work in another State, that makes a lot of sense. I would rather take that money to create and educated our children for high tech jobs here in Northwest Indiana. Let me have this money and you watch how I could make us grow and return of the days when people had 20% or more to put down on a home. No credit cards, money in the bank and in their pockets.Why are our children moving out of the area after they get their degrees? No future growth. That is what I mean no one wants to roll up their sleeves and talk about job creation in Northwest Indiana. I mean high tech jobs. The ones that pay 50K to 100K. We have Purdue Calumet and I.U. Northwest what a great way to train and educate our community to create high tech jobs instead of sending them over seas. The infrastructure to train is in are back yard and instead of building the infrastructure we are instead seeing are talent go to other States. Like I said retail and restaurants is the middle class.

Tell your politicians to create a special fund to create 1% interest 30 year fixed mortgages. Then you will see the housing market take off. Plus it will stabilize the market.

Sorry I have to go but please let KUNO REAL ESTATE help you in all your real estate needs. I know where to buy what market is hot and what market to invest in.

We may get the news this weekend that may jump start the housing market.

Buyers and Sellers pay attention!!

Fannie Mae & Freddie Mac may have government intervention this weekend or in the next few days. This will definitely help the financial markets and interest rates. With the un-employment rate going up to 6% this may be the last piece of the puzzle that is needed to jump the housing market. With good news in oil continuing its decline and the dollar going up in value this in turn creates U.S Treasury purchases, like the 10 year note (which is used for mortgages). With the 10 year note yields continuing their decline as investors come back in this market interest rates keep coming down. The 10 year note has been stagnating for a couple months with yields staying around 4%. In the last week or so the 10 year yields continue their slide downward which is great for lower interest rates (6.08% for a 30 yr fixed). Buyers start looking for your purchase because if rates get down to 5% or lower, guess what will happen to home prices, yes they will go up or neutralize (depending on the market you are buying). With this possible move the government is doing with Freddie Mac & Fannie Mae this could be the bottom of the housing market.

Also we will have to see what the FED will do with the Fed Fund Rate (it’s currently at 2%) and the Discount Rate (which is at 2.5%). This will also play a key roll in interest rates!

Call our office for more valuable information on the real estate market.

KUNO Real Estate has expanded our business to custom home building and remodeling, consulting services for large and small projects.   

Financial Market Up-Date

BOE (Bank of England) & ECB (European Central Bank) kept interest rates the same along with the FED. The 3 monetary entities are more worried about economic growth instead of inflation. Last report that the inflation rate in the U.S. rose over 5% which is the highest jump in 18 years. When does the FED start raising rates to cool off inflation? Oil is the number one cause of inflation. With oil prices continuning to go down from it's high of $147.00 this will be a good sign to slow down inflation. Oil is currently around $115.00 a barrel. If oil keeps going down and the dollar strengthing the FED may keep rates the same to keep economic growth on it's radar. The financial slow down is also being effected globally. A global recession is a possible concern to everyone because of the financial markets. As global investors had there share of investing in sub-prime mortgages. We will have to see each quarter how things play out. Based on data that I am seeing with more continued write downs from Investment & Commercial Banks the financial slow down will continue to the end of the year for sure. I will keep an eye on the markets and quarterly gains or losses and report accordingly. Lending institutions will continue to hold on to their money which means tighter lending restrictions for consumers. Do not listen to the media there is money out there for mortgages. It’s just harder to get. If you have good credit, down payment money and your debt to income ratios (28% to 36% guideline) are with-in the lending institutions guidelines than you can get an affordable loan.

Fannie Mae & Freddie Mac is also a big concern. The U.S. Government will bail them out if need be, so far that has not happened. Between the 2 they insure 5 Trillion Dollars worth of mortgages. President Bush signed off on the housing bill (July 30^th, 2008) which part of the bill is to help Fannie Mae & Freddie Mac if needed. The new bill will immediately help 243,000 mortgage holders from foreclosure and will eventually reach up to 400,000 mortgage holders. 

Also part of the housing bill first time home buyers will receive a $7500.00 tax credit. If you are a first time home buyer the credit is good even if you purchased your home before the bill was signed. The tax credit will be from April 9^th 2008 to before July 1^st 2009. Check out www.kunorealestate.com and go to mortgage/Housing bill page for more info.

The way we will come out of this housing slump/credit crisis is commodities (oil, gold, copper). The more oil drops the stronger the dollar, the stronger the dollar than investors will buy bank stocks and treasuries. The more bank stocks being purchased the more money the banks will have to lend. The more money the banks have then their lending restrictions become more relaxed. A strong housing market is the key to a strong economy! Investor confidence in our financials is a must! 

Interest rates have stayed steady moving up or down with-in 1/8% to 1% for the last couple months. 10 Year Note Yields have stayed around 4%. When the yield goes down so do interest rates.  

Home prices are staying steady in Northwest Indiana except for foreclosures. You are still in a great environment to buy in. Remember we are not California, Las Vegas, Phoenix and Florida were speculators inflated home prices. We are at the bottom of home prices (except foreclosures) or pretty close in are area. I do not see us going past 12% to 15% total loss since the housing slide began. We have come down 6% to 10% depending on the location of your property.

Remember that property taxes for 2009 payable in 2010 will be 1.5%. In 2010 payable 2011 taxes will be 1% and will continue to be (assessed value). This is for owner occupied homes.

Lake County may vary this by 2 tenths of a percent. Real Estate Investors and Commercial Business owners will also have taxes reduced. This should also help real estate sales. Pending home sales rose 5.3% for June which market annalists estimated a 1% loss. This is a good sign buyers are starting to come out.

The 3 combinations-lower home prices, lower taxes and historically low interest rates mean buy, buy, buy!!!!!!!!! Do not wait. Contact KUNO Real Estate the best buyer agent on your next purchase!!!!!