The Flip Board® – Real Estate Blog

Hypo Real Estate, a German commercial property lender has been rescued for a second time by the German government two months ago. The company will also slash more than 40 percent of its workforce and pull back from some business areas to keep from completely going under.

Staff numbers would fall from 1,800 to 1,000 in the next three years, HRE announced this last weekend. Strangely enough, some two-thirds of the jobs being lost are outside of Germany. At the same time, the Munich-based corporation warned that business conditions had declined in the current quarter and “significant extra burdens” were expected in its fourth-quarter results. It was also terminating the contracts of Markus Fell, Finance Chief, and Frank Lamby, responsible for all commercial real estate operations.

HRE attracted global attention in October, at the height of the financial market crisis, when it received a €50bn ($70bn) funding package, orchestrated by Berlin, after a €35bn lifeline proved inadequate. This is the same predicament large US banks find themselves in.

HRE had run into difficulties after failing to obtain sufficient short-term, unsecured financing to support its public sector lending arm. The company has been among the German financial institutions hardest hit by the financial turmoil because of its reliance on wholesale funding markets.

For the uninitiated, a real estate broker is one (or a firm) who acts as mediator between sellers and buyers of real estate.  They also market and put together deals.  Hmm… If you are a good RE Broker, then chances are you are very affleunt and handle very exclusive accounts.

Or, you are a newbie who is trying to break into the real estate market by not actually purchasing any real estate.

It sounds to me that brokers do nothing outside of what an experienced RE investor can do on their own. So, why do we have brokers? When real estate companies wish to capitalize on fees and “add-ons”, they come up with things like brokerage, handling services and negotiation representation. All things that you will be charged for.  And all things you can do yourself for nothing.

In this particular real estate market, we have a large supply and a lower demand, which is causing prices to drop. This also means brokers are out of work.  Some brokers are trying to move devalued real estate. And some are trying to convince buyers to buy.  Bottom line is without buyers and sellers and enough cash to support both, you have no real estate brokerage business.

Save some money and handle real estate yourself. Keep as many transactions in-house as possible. This includes locating properties, negotiating deals and representing yourself and/or company.

Let the brokers move their businesses to insurance.

-Richard – www.TheFlipBoard.com

Merry Christmas!

First, the bad news -

The nation’s labor market continued to worsen in recent weeks, with the unemployment lines stretching to the longest in 26 years, the Labor Department reported this morning.  First-time applications for state unemployment benefits jumped by 30,000 to a seasonally adjusted 586,000 in the week ended Dec. 20, the government said, based on reports of actual filings at state offices around the nation. That’s the highest since November 1982!

Next, better news -

I was reminded today of a post from a while ago that talked about increasing your credit rating. You can read it here. The reason for that quick run down memory lane was to remind me that if investors did not start cleaning up their credit, then they will find it almost impossible to get a bank to loan them money. It takes several months of on-time payments to build that reputation you, as an investor, will desperately need. And now that we are in a financial crisis, created and owned by the banks, institutions are looking for every possible reason NOT to lend investors money for Real Estate.

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I had an idea this morning. How do I communicate to those who just don’t “get it”?  Then it dawned on me. Tell a story or equate the concept to something they can relate to. I chose the latter of the two methods.

Most newbie investors have trouble truly visualizing what the Real Estate business is as well as how to make it successful.  Based on the successes we have experienced, the best way to approach Real Estate is to think of yourself as printing money.

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The weekend before Christmas 2008 is upon us! Beware! Streets will become crowded, retail prices lowered and people more obnoxious than ever. It’s time to jump into the fracas that is last minute Christmas shopping. Or better yet, go look at houses and build your business. It’s safer and a lot less stressful. Here’s a rhetorical one for ya… If we have been in a recession for a year now, then why are people literally breaking down doors at Wal-Mart to purchase things like TVs?

Instead of bowing to the gods of consumerism, we should be getting back to basics this holiday season. And those basics are family, God and country.  Spend some quality time with your kids. Instead of cramming them in car and driving all over the place, sit down and read them a story. And if you do have to get out, go look at houses. You never know when you will find a good investment deal.

-Richard

As an investor, especially in this market, people are always asking to be shown the ropes or for some advice. That is the fundamental purpose of TheFlipBoard.com. As most of you know, most amatuer advice is useless and wastes everybody’s time. Below is some real advice from individuals who have done it and are doing it.  Ok, it’s from me and a good friend of mine who believes in Carlton Sheets’ system. But everything else is solely just my opinion.

I stick mostly with single-family homes but most of the techniques below will apply to multi-units as well.

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Reading the news has become an exercise in how much bad news I can take before I feel the need to jump off a building or drink 100-proof alcohol until my tears become flammable.

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WASHINGTON – The Internal Revenue Service said Tuesday it will try to make it easier for homeowners in financial straits to refinance or sell their homes.

The plan announced by IRS Commissioner Doug Shulman would speed up a process where financially distressed homeowners may request that a federal tax lien be made secondary to liens by the lending institution that is refinancing or restructuring a loan.

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