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Higher Chicago Foreclosure Activity Not A Problem

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Image from Pixabay

By Gary Lucido

I’m going to stay out on this limb that I crawled out on but apparently I’m not alone out there. According to ATTOM Data Solutions February Foreclosure Market Report the nation saw a 129% increase in foreclosure activity from a year ago. However, that percentage is kinda meaningless given that foreclosures were basically shut down last year. The graph below puts this dynamic in perspective for Chicago where there was a 328% increase over last year and a 29% increase over January. As you can see activity is probably no higher than it would have been had the pandemic never happened. As Rick Sharga, executive vice president at RealtyTrac which is owned by ATTOM, said:

This isn’t an indication of economic turmoil, or of weakness in the housing market; it’s simply the gradual return to normal levels of foreclosure activity after two years of artificially low numbers due to government and industry efforts to protect financially-impacted homeowners from defaulting.

In this foreclosure report both the Chicago metro area and Illinois got honorable mention for being among the top 5 metro areas and states respectively with high foreclosure rates. Of course, that’s because the rest of the country’s housing markets are so damn strong right now.

After a dramatic plunge following the pandemic foreclosure moratorium Chicago foreclosure activity has just now begun to resurge now that the moratorium has ended.[/caption] One of the reasons for our optimism is that delinquencies have dropped down to pre-pandemic lows as shown in this graph from Black Knight’s January Mortgage Monitor Report. That shouldn’t be much of a surprise given the strength of the job and housing market.

The nation’s mortgage delinquency rate continues to improve and seems to have recovered from the pandemic.

Chicago Shadow Inventory

The number of homes that are in the foreclosure process is holding pretty steady with only a 71 unit increase over last month. This pipeline of homes that might find themselves on the market sometime soon is ever so slowly trending up but it remains extremely low by historical standards.

The number of homes in foreclosure in Chicago declined with the moratorium during the pandemic and doesn’t seem to be rising since.

Gary Lucido is the President of Lucid Realty, the Chicago area’s full service real estate brokerage that offers home buyer rebates and discount commissions. If you want to keep up to date on the Chicago real estate market or get an insider’s view of the seamy underbelly of the real estate industry you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.

Multiple Properties in One Land Trust

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Image from Pixabay

By Randy Hughes, Mr. Land Trust

Many investors think, “I’ll put multiple properties into one Land Trust! That should be easy.” They could assume that managing one trust will be a breeze compared to managing multiple Land Trusts. They may also think that there is no downside.

Investors who think like this have not thought their plan through. The reverse can be the case. Managing multiple properties in one Land Trust is a snap (especially when you use my exclusive Trust Tracker, included with my Basic Course). It’s having all your properties in one Land Trust, or one basket as I like to say, that things can get tough, very tough, fast.

Welcome to the New Year

Image from Pixabay

Before I continue, permit me to point out that I started writing about Trust Trusts twenty-two years ago. My students requested it. They wanted to learn more about the scores of benefits of using a trust to hold title to their properties.

When I speak in front of an audience or teach a Land Trusts Made Simple® class, the question of whether to hold multiple properties in one Land Trust is sure to come up. My basic answer is “you can hold multiple properties in one trust, but I do not suggest you do that.” Why not? Read on my fellow real estate investors.

Here’s Why Not

First, there is a basic principle to asset protection that says, “keep all assets separated.” This applies to all types of investments (cash, stocks, bonds, real estate, precious metals, etc.). The theory behind this is that if liability occurs against one of your assets, it will not directly affect all your other assets. For example, if you titled ten single-family rental houses in one LLC and you had an uninsured loss or legal claim against the property/owner, any lien or judgment against the owner/LLC would tie up ALL the properties inside the LLC. Dumb, huh?

Image from Pixabay

However, if you hold the title to each of those ten rental houses in separate Land Trusts and a contingency-fee attorney and their deadbeat client attack one of them, any potential judgment would be rendered against the property itself and there would be no effect on your nine other properties. Therefore, the smart real estate investor puts each property into its own separate Land Trust. I encourage investors to take asset protection a step further by making the Beneficiary of the trusts one or more LLCs.

Hunting Expedition

There’s another benefit to NOT putting multiple properties into one Land Trust. If a subpoena is issued to the Trustee in search of information about the trust and its assets, the subpoena would apply to ALL properties inside the trust (not just the property involved in the litigation)! Double dumb, huh?

Furthermore, any assignments of Beneficial Interest or contingent beneficiary provisions in your trust will apply to all properties held in that trust. This removes one of the best reasons to use a Land Trust. For example, if you wanted to sell one property on an installment contract, you could not do it effectively when holding more than one property in one trust.

It does not cost anything to form a trust. Therefore, it makes sense to always put each property into its own, separate trust.

I encourage you to learn more by going to my FREE online training at www.landtrustwebinar.com/411 and text the word “reasons” to 206-203-2005 for my free booklet, Reasons to Use a Land Trust. You can also reach me the old-fashioned way by calling me at 217-355-1281. (I actually answer my own phone, unlike most other businesses in America today!)

Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411.com or our Eventbrite landing page, CLICK HERE.

Did Biden’s Tax Proposal End Up Affecting 1031 Exchanges?

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Image from Pixabay

By Clinton Lu, TFS Properties

Earlier this spring, Biden proposed a number of tax law changes in regards to his Build Back Better program. Aimed at freeing up more money for the little guy, the program divided itself into various parts, one of which was the American Rescue Plan. Within this plan, Biden proposed to do away with the benefits received by performing a 1031 exchange, also known as a “like-kind” exchange, but was this portion of his proposal signed into law?

Section 1031 Like-Kind Exchanges

The IRS Code is divided into sections, one of which details the tax break individuals can take advantage of when it comes to the capital gains taxed on real estate. This particular section, allows investors to roll their profits from a real estate sale into the purchase of another property of the same, or like, type. In doing so, investors defer the capital gains tax that they would typically incur, and are able to reinvest all of the money from their sold property (downleg) into different investment property or properties (upleg.)

Possible Effects of Biden’s Tax Proposal

While it might sound like a good idea on paper, increasing taxes on real estate profits has serious consequences. “The White house emphasizes that its tax increases would affect only the top 1% to 2% of individual taxpayers,” but doing away with 1031 Exchanges would seriously impact both big AND small investors alike.

Image from Pixabay

Both big and small investors can benefit from performing a 1031 Exchange and according to the Congressional Joint Committee on Taxation, investors could save over $40 billion in taxes in the next three to four years if it were to remain in place. That’s money that could—and in many cases, will—be reinvested into other real estate properties and further drive the economy.

This cycle within the real estate industry was so important that the Mortgage Bankers Association and the National Association of Realtors appealed the proposal to halt the exchange. As a result, it seems their efforts, as well as the voices of many others, prevailed.

The Final Verdict

Many feared that ending Section 1031 exchange benefits would have a profound effect on the real estate market. However, this particular part of Biden’s tax proposal was not signed into law. Investors can still defer their taxes on capital gains through a 1031 Exchange and preserve their capital while doing so.

Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411.com or our Eventbrite landing page, CLICK HERE.

What We Can Learn From Zillow’s Downfall?

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Image from Pixabay

By Clinton Lu, TFS Properties

Zillow’s making headlines recently, but not necessarily in a positive way. As you may have heard by now, the well-known online real estate company Zillow had a blunder and their algorithm went a little too far. Now, the company is facing $569 million or more in debt if they can’t offload a few thousand properties.

What began as an algorithm-based way to buy, renovate, and sell a large quantity of homes has become a nightmare scenario for Zillow. But it’s not the computer’s fault. Rather, it’s the unaccounted-for situations that real estate agents see all too often. It is the very act of having a real pair of eyes on a house that lies at the root of the program’s downfall.

The good news is that where Zillow fell short, you can take note and learn a thing or two before entering the real estate market yourself. That’s true for anyone looking to buy and/or sell a home, as well as budding real estate agents.

So what exactly can you learn from Zillow’s downfall?

Real World vs. Ideal Conditions

Image from Pixabay

Real estate agents will be the first to tell you there’s a limit to how much you can ask for your house when selling it. Determining that price range includes identifying the physical aspects of the structure itself including those that can not be identified from a quick glance or through examination of the numbers.

A large part of a home’s market value comes from looking at the values of homes in the same area that have sold recently. These are often referred to as “comps,” or comparable houses. They’re more or less a way to justify the asking price you come up with, because if someone paid a certain price for a comparable house, they should (in theory) pay about the same for your house. However, an investor can not judge the value based purely on comps alone.

In the beginning, Zillow based their home values on these comparisons. The company hired real estate agents to do all the work behind the scenes. Then, it taught the software what to look for, setting parameters to then buy, flip, and sell houses. It sounded all well and good in the ideal world, but when it comes to real estate, hardly any piece of property meets these impossible standards.

Home Values are Not Plug and Play

Image from Pixabay

Whereas a computer might pick out parameters from a data set to determine that house’s value, real estate agents are the ones actually stepping foot in those houses. And what they find isn’t always caught by the algorithms. It takes an in-person inspection to truly determine the state of a home. There are factors such as the mold smell inside a house, or poor plumbing that can only be found through the eyes “and nose” of someone with experience.

In fact, this is where Zillow Offers truly set itself up for failure. It’s no secret the housing market has exploded as of late, but that doesn’t mean the houses going up for sale are perfect specimens. Zillow’s algorithm assumed that the repairs necessary to prepare these houses for market were (a) quick, (b) cheap, or (c) easily identified and addressed.

As time went on, Zillow’s software soon learned how hard it is to flip a large number of houses, especially with the rise in building materials prices and the aftereffects of a global pandemic. The get in, fix up quick, get out approach may work for reality TV stars, but real life isn’t so predictable. It takes expert eyes to gather the information about a home and come up with a well-researched estimate that goes beyond the facts to consider reality.

Real-World Warning Signs to Look For

Image from Pixabay

We’ve been talking a lot about what real estate agents can see that a computer can’t. So what exactly are examples of aspects of a home that don’t show up online?

Here are just a few warning signs to paint a picture for you:

● Water damage: rust, leaks, mold, etc.
● Warped walls
● Vintage fixtures
● Doors that stick
● Misshapen insulation
● Uncodumented work with no building permit(s)
● Water flow issues
● Cracks in walls, ceiling, foundation
● Damage otherwise (poorly) covered up

As you can see, there’s much more to buying and selling a house than just what shows up in the pictures. If you want to make a house your home, choose wisely. It could end up saving you thousands, both in terms of dollars and hours lost to headaches and frustration.

The Value of a Real Estate Agent

Image from Pixabay

Real estate agents know the home better than almost anyone else. They know what to look for when it comes to pushing past the staging to seek out the cracks. When you hire a real estate agent, you’re setting yourself up for success by choosing experience.

As Zillow found out, it’s real-world experience that separates the computer algorithm from reality. A computer might just see the three bedroom, two bath home as a prime buy for the area in which it’s located. The experienced real estate agent, however, knows that this particular house, so close to a school, may appeal more to young families than anyone else.

Hiring a real estate agent might seem unnecessary for some folks. But when you enter into a relationship with a real person, you’re gaining their experience and their connection to a world you may not know a lot about. Think of them more as a guide and you may begin to see the value of a real estate agent, no matter if you’re looking for a property to buy or wanting to sell the one you’re in.

Take it From Zillow

As Zillow prepares to attempt to unload roughly 7,000 homes in order to pay off its debts, rest assured you don’t have to make the same mistakes. Hire an experienced real estate agent to guide you in your home search and you could save tens of thousands of dollars. After all, you should be enjoying your new home, not drowning in buyer’s remorse.

Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411.com or our Eventbrite landing page, CLICK HERE.

Realty411′ South Florida Real Estate Summit

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When:
April 2, 2022 @ 9:00 am – 5:00 pm
Where:
Embassy Suites by Hilton Boca Raton
661 Northwest 53rd Street
Boca Raton, FL
33487
Cost:
Free
Contact:
Realty411.com
805.693.1497

Realty411 Celebrates 15 Years of Publishing Life-Changing Magazines that Have Helped Thousands of Readers Learn about Real Estate Investing

We are going ALL OUT for our South Florida Real Estate Conference and Networking Summit on SATURDAY, April 2nd in Boca Raton, Florida.

This is an educational and fun networking expo, featuring both local and national educators and real estate investing professionals.

Join us early at 9 am for a complimentary network breakfast with fellow investors from throughout Florida and around the nation.

Realty411 will virtually unite the most successful, knowledgeable and savvy investors in the REI (Real Estate Investing) industry to help our readers make educated and informed decisions.

Joining us on this special conference to help guide our readers will be top industry experts ready to spill their secrets of success. Get educated, motivated and prepare for an amazing 2022 and beyond.

Normally, in-person networking events of this caliber are hundreds of dollars to attend, but Realty411 is making this special weekend conference COMPLIMENTARY for investors of all levels who have a sincere desire to begin and/or expand their real estate holdings.

Since 2007, Realty411 has produced real estate-investing events and expos throughout the nation — now in 12 states across the United States. Now, it’s time to connect with our readers in person.

Realty411.com is the longest-running real-estate investor media company publishing online and print magazines, e-newsletters, webinars and podcasts. Our mission to educate and empower everyone to invest in real estate.

Please register and further details of this event will be sent, click here:

https://www.eventbrite.com/e/realty411-south-florida-real-estate-summit-tickets-230614573397

Do you have questions about participating in one of our virtual or in-person events? Please contact us directly for additional information or for information about exhibiting at this event: 805.693.1497 | email: [email protected]

Fund That Flip Raises $20M Series B to Expand Offering for Local Real Estate Entrepreneurs

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Images from Pixabay

Special News Submission 

Rapidly-growing fintech company’s award-winning end-to-end investment platform empowers real estate entrepreneurs to create wealth and value in their communities

Fund That Flip, the New York City- and Cleveland, OH-based real estate-focused fintech platform, recently announced the first close of its $20 million Series B funding round. The financing was led by GPO Fund of New York, with participation from MassMutual Ventures and Tribeca Early Stage Partners. More than 50 Fund That Flip clients also participated in the capital raise via an AngelList syndicate led by proptech investor, Jonathan Wasserstrum.

Earlier investors included Edison Partners and SoundBoard Venture Fund. The investment will help further the expansion of the firm’s proprietary technology platform that provides investors access to scalable capital and passive investment opportunities. The raise will also accelerate the company’s national expansion, development of technological innovations for an underserved industry, and exploration of global opportunities.

“Real estate investors play an integral part of the economy in building homes, creating jobs, and growing businesses and communities,” said Matt Rodak, founder and CEO of Fund That Flip.

Matt Rodak, Fund That Flip

“Since our inception, we have been dedicated to solving the problem so many entrepreneurs face: access to capital and technology to grow their businesses. This round of funding accelerates our mission to deliver technology-first solutions that create even more value for the local entrepreneurs who are themselves creating value in their own communities.”

With an aging housing stock and 72 million millennials seeking to transition from apartment living to single-family homes, Fund That Flip is uniquely positioned to expand its technology and track record of enabling local real estate entrepreneurs to scale their businesses with reliable access to financial services and technology. The company plans to continue to broaden its platform into an end-to-end real estate investment operating system designed to support the information and capital needs of the local real estate entrepreneur.

Image from Pixabay

“With this raise, we plan to create even more innovative solutions for real estate entrepreneurs, bring them additional value through optimizing the real estate investing ecosystem with data and technology, and continue to provide unparalleled customer service to help real estate professionals drive their businesses forward. We’re thrilled to partner with GPO Fund because they have a proven model of helping companies disrupt analog markets through the creation of data-driven solutions and platforms,” Rodak said.

As part of the round, Jeff Stewart, partner and managing director at GPO Fund, will join the Fund That Flip board of directors. “I’m really excited by the way Fund That Flip is leveraging data and technology to empower a huge and underserved market. While they have grown tremendously fast over the past twelve months, we believe the opportunity in front of them is enormous,” said Stewart. “Fintech companies are transforming entire industries through vertically integrated technology solutions, and the team at Fund That Flip has an impressive track record of leading that innovation within the real estate space.”

Image from Pixabay

Fund That Flip is one of the fastest-growing private companies in the U.S., on pace to grow its revenue by 300% year-over-year and doubling its customer base since 2020. Their technology platform has facilitated over $1 billion in real estate investments, with 99.1% return of principal, and has achieved profitability since the close of their Series A in August 2019.