by Manny on March 10, 2010
The recession in the U.S. economy has resulted in more foreclosures than experienced by any other generation of Americans. Yet as always, this challenge has given rise to a huge new opportunity for alert real estate investors.
The new opportunity is known as ‘Bulk REO Investing’ or ‘REO Package Investing’ and it’s a huge opportunity.
Consider with me, if you will, the fundamentals of the Bulk REO business.
Understanding the notion of Bulk REO’s requires understanding of the foreclosure process.
As a borrower becomes increasingly behind in his mortgage, the lender regularly calls and writes the borrower with default warnings and threats. The lender directs the subsequent timing of the actual foreclosure proceedings. Between the formal beginning of the foreclosure process and the public auction is the ‘preforeclosure’ period.
When a defaulted property is placed up for auction, the foreclosure process is completed. If there are no buyers at the foreclosure auction, the lender regains title to the property. The designation of ‘REO’ (Real Estate Owned) is then attached to the foreclosed property.
Lenders have no interest in owning property, and thus usually opt to list their REO properties with a local real estate broker in hopes of a retail sale. Yet with increasing frequency, REO properties are being sold for pennies or dimes on the dollar. Lenders are willing to do so in exchange for the buyer’s agreement to purchase a ‘package’ of REO’s rather than a single property.
Qualified real estate investors are increasingly finding once-in-a-lifetime opportunities in these REO packages. Bulk REO Investors are most successful when they have a well-established source of funding for their REO packages. Some sources of funding for these transactions are: personal funds, hard money lenders, commercial lenders and non-conventional sources such as private investors and hedge funds. Additionally, one man is becoming very well known in the field of bulk REO investing, and his name is Sal Bushemi of Dandrew Capital Partners, a New-York based hedge fund.
by Manny on March 10, 2010
Whether or not to make further investments into a traditional IRA and tax-advantaged employer plan accounts versus contributing to Roth tax-advantaged employer plan and IRA retirement accounts is sometimes a confusing decision.
The choice on the trade offs is one of the most complex decisions of do-it-yourself financial planning. A broad array of things can affect whether a regular IRA or tax-advantaged employer plan personal account contribution versus a “Roth” IRA or tax-advantaged employer plan account contribution choice would be best.
For most people’s lifetime circumstances investing into a regular tax-advantaged employer plan or IRA personal accounts is the preferred choice, when those contributions would be deductible against current income taxes.
Over a lifetime the analysis is quite complicated. Simple retirement planning spreadsheets are not sufficient to analyze all the important factors. The choice is not only about tax rate changes. Instead, the decision needs a comprehensive financial projection and analysis of the family’s life cycle savings, taxes, and assets.
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Whether or not a person will save enough and invest efficiently across their lives dominates the Roth retirement account versus the “deductible against current income taxes” traditional retirement account contribution decision.
When a person does not earn a sufficiently high income, does not save aggressively, does not strictly control investment costs, and/or cannot accumulate a sufficiently substantial retirement nest egg, then that person will not have to worry about being in the upper income tax rates when retired — regardless of whether state and federal income tax brackets have moved up or down in the interim. If an investor does not have sufficiently large assets and income in old age, then the current tax advantage an investor will get from deciding on a regular retirement account contribution would work out to be much more economically advantageous over a life cycle.
Note: This discussion ONLY focuses on personal financial circumstances where somebody has the choice of making a “deductible against this years income taxes” regular IRA or 401k additional investment versus a currently “not deductible against current income taxes” Roth IRA or 401k contribution. If you cannot get a deduction this year but can make a Roth deposit, then the Roth deposit is more desirable.
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