Spicer Matthews

Overview

The point I am going to make in this post is you can use the different markets outside of Real Estate to help with timing your Real Estate transactions. Great timing can do wonders for your bottom line. I have to setup my point so read all the way through. I will put it all together at the end.

To continue my argument that I believe that at the very least if you are a Real Estate investor you should have an eye on different markets outside of the Real Estate world I am going to highlight Mortgage Back Securities and what it means for the common Real Estate investor.

First lets define what a Mortgage Back Security is, or MBS. More or less a MBS is a bond sold on wall street from the big government backed firms Fannie Mae and Freddie Mac. These loans are originated by banks we all know and love. Then the banks sell these loans off to Fannie Mae, and Freddie Mac in big pools (collections of mortgages). For example (and to keep things simple), lets say Bank of America lent out 100 thousand dollars to 10 people (total of 1 million dollars). Bank of America collected a bunch of fees for putting the loan together (from the borrower), also mostly likely will get to continue to service the loan (charge more fees for the service of collecting loan payments). Now, BofA will sell this pool of loans to Fannie Mae or Freddie Mac. So the amount of loans BofA is willing to make each week/month/year is almost a factor of how willing Freddie and Fannie are willing to buy the loans.
Once the pool of loans are sold and out of the bank’s hands, Fannie and Freddie then bundle the loans up into bigger pools and sells them off on Wall Street as bonds. So when you make your home mortgage payment you send the money to your bank, then the bank send your payment to Fannie and Freddie, and then Fannie an Freddie sends your payment to the owner of the bond. You can learn way more about this process at Wikipedia.

Why should you understand all this?

It is one big chain of influencers; The seller, the buyer (borrower), the bank, Fannie/Freddie, and the bond holder. Each phase of this chain relays on entity below it. So lets look at each phase.

Continue Reading

From my first post (Real Estate Vs. Da Stock Market – Part #1) many people contacted me and told me that they disagreed with me. The stock market and the Real Estate market were not the same. Many people expressed that they liked Real Estate, (and made it their “thing”), because they had far more control over the investment. You can pick your tenants, you can pick your lender, you can remodel, and so on. While in the stock market you have no control unless you have the capital to be a major share holder. All you have is the ability to cast your vote in a share holder meeting. While this is true, in fact you do not have much control over the direction of the company you own stock in, you have control over if you own the asset or not. In terms of personal wealth, this is way more powerful than than the direct control you have with Real Estate. Having the ability to liquidate your ownership in an asset within seconds is very powerful. When managing your assets their is two parts; growing your assets, and protecting your assets.

Wise investors can spot a downturn coming, such as the one in late 2007. No one really knows how bad a downturn is really going to be, but a wise investor should know when to shift from capital appreciation mode to capital protection mode. Below are the things you can do to protect your stock and real estate assets in a downturn.

Continue Reading

One of the things that drives me nuts, is when I hear people say “Real Estate is my thing”, or “Real Estate is what I am into”. It is not a drug it is an investment! You buy Real Estate, (as an investment), for it to go up in value and maybe collect rent. Hmmm, that sounds just like buying a stock, and the rent would be the dividend (or even a stock buy back). Real Estate, (from an investment standpoint), is not a way of life. It is not something you are into. It is not “your thing”. It is 100% an investment. So many people, particularly young people, don’t get that. With this post I am kicking off a series of blog postings talking about the importance of understanding all markets not just the one “you are into”.

First of all lets clear somethings up. When I say Real Estate investment I am not talking about your home, or a vacation home. Those have personal emotional aspects; you need a home to live in and you love staying at your ski condo on the weekends. I label these assets as personal property, there is a luxury element you may or may not be paying up for. I am talking about the rental property you purchase, to collect rent, or even flip.

Second thing I want to clear up, I am giving general statements and rough numbers in this blog series. With any investment there is always another side, another stat, another point of view. I get that. This is what makes markets if we all thought the same way no one would buy or sell anything. This is just one man’s view. I hope you can share you view points in the comments below. READ MORE….

Continue Reading

Everyone thinks being a landlord is all fun and games. You sit back each month and just let the money roll in. I have even talked to some landlords that complain about what a pain it is taking all their rent money to the bank each month. Don’t get me wrong, being a land lord can be a very rewarding job, part time or full time, but this week has been particularly hard for me as a landlord. Which reminds me there are times that this job is not very rewarding both emotionally and financially.

Continue Reading

Something that has been frustrating me more than anything in the last year. With the slower economy I have been able to spend more time just talking to people; strangers, family, friends, and just about anyone else that has something to say. Being a business person the conversation often heads down the path of success and how to achieve it, but so many people I talk to don’t want it bad enough. They would rather talk about it then do it. I am not just talking about building a business. I am talking about getting a job if they are unemployed, upgrading your current job, or starting a business.

When the economy tanked in 2008 I more or less lost my job. Every project I was working on dried up and went away. I like 10% of America right now I did not have the ability to collect unemployment, so I had to make a big shift in how I as going to support my self almost over night. Luckily, I was ready and the shift was something I was able to make quickly. I will get to what helped me in my shift in a second, but first a little rant. I have talked to so many people that are on unemployment and they are doing nothing with their lives. They talk about how they want to use this time to better themselves. They talk about the businesses they are going to build during this time. They talk about the personal brand building they are going to do to help them upgrade their employment when they go back to work, but they spend a great deal of time sitting on their ass playing video games or something.

Continue Reading