April 15, 2011 by Chris.

This is a very well-written article about how the US’s new-found sense of fiscal responsibility could be coming at a terrible time. I for one have always been alarmed at our deficits (and the 75% of our spending which is essentially fixed costs), but still find this argument compelling. Helicopter Ben has always said he’s a student of the Great Depression - let’s just hope that he knows what he’s doing if he starts raising rates.

With our cavernous deficit, and the Catch-22 of reducing it, it’s hard to see how the US can have much growth over the coming decade. I hope I’m wrong. What do you think?

deficit-depression-1937-barrons: Personal Finance News from Yahoo Finance

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November 2, 2010 by Chris.

Some politics on Election Day…

Kudos to Michelle Caruso-Cabrera for writing the following passage in her article Here’s the Real Reason Independents Have Turned Against the Democrats - Yahoo! Finance.

 ”Yet, for decades the choice has been either A.) a party that didn’t want to overtax me, but seemed awfully concerned about what happens in people bedrooms, or B.) a party that was far more tolerant on social issues but loved spending taxpayer money to ‘fix’ things.”

She’s describing our two options for government. Neither option aligns with her definition of an “Independent,” which she defines as “fiscally-conservative, yet socially-liberal.” I suppose that’s why these voters are in fact called “Independents.” But why are we Independents (yes I said “we”) forced to choose between options A or B? It’s not like being fiscally-conservative is synonymous with having conservative social values. Likewise, it’s not like being socially-liberal equates to wanting more government.

Anyone have any better options?

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June 23, 2010 by Chris.

The article below from CNA Capital’s real estate agent, Neeti Arndt, paints a different picture than the general media would suggest. Especially interesting is that most of the drop in sales is located in the Northeast. The Midwest saw no drop is sales, which is really good considering that the tax credit did expire. However, I’m glad the general media paints a bad picture from this data as that enables buyers to still pick-up deals despite improving market fundamentals.

May 2010 Existing Home Sales Is Better Than The Headline Data Suggests : Neeti Arndt

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May 19, 2010 by Chris.

Obviously this was going to happen! Anyone stuck with a property to sell right now (including me) is in for a long wait. I guess I’ll need to continue to rent my old condo for at least another year. The next few months should give us very little demand from buyers. This lack of demand should be fairly uniform whether you’re in Chicago or elsewhere.

Of course there’s a flip-side to everything. If you’re a buyer right now, you may be able to snag a better deal now, even without the tax credit, than you could have before April 30th.

Mortgage Applications Plummet To 13-Year Low As Tax Cuts Expire - Yahoo Finance

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May 12, 2010 by Chris.

This isn’t real estate related, but it’s too cool not to share. You can sign up for Square for free, and they send you a free reader that plugs-in to your iPhone headset jack. You can then swipe someone’s credit card on the go anywhere your phone works, and automatically charge their credit card, with the proceeds sent to you! The only fee you pay is the normal payment processing fee that is charged by all credit card processors. The fee is very reasonable and this service allows you to do this all without setting up a merchant account, which can be very time-consuming.

Just thought of the real estate application for this: you could use this app to charge a delinquent tenant for rent while you’re standing with them at their unit! No more, my check is in the mail, or bouncing checks!

Check out their site: About Square

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May 4, 2010 by Chris.

See the below article on Neeti Arndt’s blog (our real estate broker). Now that Fannie and Freddie are no longer backing interest-only loans for 2-4 units, there could be even fewer investors in the market for these properties. This could pose an attractive investment opportunity in the near term for buyers. The only downfall with investing in less than five units is that loan is based upon the borrower’s debt to income (DTI) instead of the property’s cash flow. This is why real estate investors are always seeking people with high FICO scores and low DTI values to partner on real estate deals

Fannie Mae Tightens Guidelines On ARMs And Interest Only Products : Neeti Arndt

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April 16, 2010 by Chris.

This is the first article (see What is Unrelated Business Tax?) I’ve read that actually explains the background behind Unrelated Business Taxable Income (UBTI)! Unfortunately, I think this 70 year old tax now extends much further than it was intended. UBTI is a tax that must be paid, even if you’re a tax-exempt or tax-deferred (i.e. IRA) entity. In the investment world, UBTI is the resulting tax of investment profits made on leveraged assets.

CNA Capital will allow its clients to use their self-directed IRAs to invest in one of our offerings - just know that this requires extra planning. Contact us if you want more information on how to setup a self-directed IRA for yourself.

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January 27, 2010 by Chris.

See the HUD press release: U.S. Department of Housing and Urban Development (HUD) press release

This is great news as flippers no longer need to hold a property for 90 days before they can turn around and sell to a buyer who’s using FHA financing. Honestly, I’m not sure why HUD even had this rule to begin with! Please enlighten me…

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January 19, 2010 by Chris.

 While I applaud the FHA’s attempts at avoiding a taxpayer bailout, their efforts will unfortunately not work and us taxpayers will be left on the hook. Here is the details of the new FHA lending fees that in theory should help the FHA stay solvent - Federal Housing Administration to raise fees - Yahoo Finance

The primary problem with the subprime mess was/is insufficient equity on the borrowers’ part. Sure, many borrowers ended up not being able to pay the monthly mortgage payments when the teaser rate ARMs reset. But, the more interesting (i.e. scary) situation is when borrowers who can pay their monthly mortgage perform a “strategic default” and decide to just walk away instead of paying on a property that is way underwater. This is precisely what is happening right now.

Congress created the FHA in 1934 to help the housing industry recover from the Great Depression. At that time, the US consisted primarily of renters as lenders would only lend up to 50% of the value of the property. The FHA stepped in to insure mortgages that were created with a higher LTV ratio, thus enabling more people to buy property.  Today, you can get an FHA loan insured with only 3.5% down!

Therein lies the problem…what happens when the property value falls 20%? (a modest decline compared to many areas today) The borrower is now paying a mortgage that is worth 17% percent more than the property! Why not just walk away and rent for a year or two. Then go buy a new place at a cheaper price! Sure, you may have a little harder time qualifying the second time around, but with all the current foreclosure, I guarantee lenders won’t ding you as much as they used to for this being on your credit history.

My prediction - the FHA will have to be bailed out by taxpayers in the near future, even with these fee increases. Oh, did I mention that their “fees” can be rolled up into your mortgage?! Brilliant!

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August 26, 2009 by Chris.

Please let me know if you’re interested in helping out! More details to come later. Send me an email at info@cnacapital.com if you’re interested.

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