What do you do if you are upside down on your property and the bank is running you around and around? You know…asking you to send in the same documents over and over again. Well you can do a Strategic Foreclosure.

What is a Strategic Foreclosure? Another word for tell the bank come get my property and you are tired of their crap. You have to take a step back first and decide where your moral compass sits. What is the right thing to do, make your payments, as promised? Sure financial responsibility is admirable, but it is hard to maintain that kind of thinking when the very financial institutions you owe money have little to NO financial responsibility. What happened to lead by example?

Hire an attorney and it will take one to three years for a foreclosure to happen.
Now think for a moment about your situation. If you do what all the big corporations do, you put business first. If that is the case, you may want to consider a business decision on your biggest investment, your home. I can better explain this with an example, which happens to be a real life example from someone I know.

Okay, you buy a modest home in 2006, 4 bedrooms two baths, two-car garage about 1600 square feet, relatively new. You pay $225,000.00 put in about $30,000.00 in upgrades. All of a sudden the market starts to pull back, and it did. Next thing you know you are paying way more than you can rent the property for, the house across the street just sold for $112,000 and there are ten more on the street for the same price. What do you do?

Well, you first try and call the bank to see if you can get approved for one of the many home mortgage modification plans. But you are not so lucky since you don’t meet any of the requirements, and it wasn’t from a lack of trying. You were told “sorry” so many times you quit counting. Now all of a sudden your job has reduced your hours and pay. You are lucky enough to still have a job but nonetheless, you are now struggling to make your mortgage payment. You decide enough is enough and can’t make your current mortgage payment. One month turns into three and so on. You are still trying hard to get a modification but to no avail.

Finally you are making headway with the bank and you believe you can see a light is at the end of the tunnel you think, the bank says “no problem, we will lower your payment and you can keep making payments on your original note.” WOW, thanks but no thanks, don’t do me any favors! But why say that?
Let’s look at why.

Even if they lowered your principal you are wasting your time as far as a business decision is concerned. The house is only worth what someone is willing to pay, and right now that’s $112,000.

So you walk away from this house, the one you owe $260,000 on. You live in it for say 3 years total before it is foreclosed on. Yes, your credit will be affected, you will have a foreclosure, along with about 50 percent of the other Americans out there that owned a home and experienced a foreclosure. But you are better off saving your money and renting at a price you can afford for the next few years. Get your feet back under you and then buy when the job and the housing market has improved a bit.

If you end up buying a home similar to yours, let’s say the one next door, for say $112,000 in the next five to seven year, it will probably be back to the levels you currently owe – $260,000.

So, a sound business decision encourages you to walk away, make a deal with bank, turn over the house and owe nothing. Save a little money, put down 20% on a new house in two years. Even if your credit is affected you can do a rent to own or a lease purchase. After 12 months of good payments, you can refinance it as your primary residence.

The $112,000 house you will buy for $120,000. You put down $10,000.00 and owe $110,000 over the next six years. Your house goes up in value to say $200,000 and your mortgage goes down to say $95,000.00 and you have $105,000.00 in equity. Meaning if you stayed in the old house that you owed $260,000, it is now worth $200,000.00 and your mortgage is down to $230,000.00 give or take. Which scenario, as a business decision, seems better, upside down or positive?

You have to weigh the pros and cons the decision to be moral and ethical make your payments or make a sound business decision and be ahead financially. Only you can make that decision. I will tell you that the banks and big companies make these decisions every day and they always choose the business decision. That’s not a reason to condone it, but a reason to seriously sit down and consider your choices.

One thing is for sure, the real estate market will come back, until then look for the opportunities they are always present.

Sure, foreclosures seemed to have relaxed a bit but there’s probably a very good reason for that – stalling tactics by homeowners. When the economy crumbed, people started losing their jobs, and the payments stopped on homes around the nation and the population had to think fast. Many decided the best way to temporarily weather the mortgage storm was to stall as long as possible. So, although they were unaccustomed to doing so, many Americans “lawyered up” and put their faith in legal stalling tactics. Up to now it’s worked like a charm. It’s helped people remain in their homes while they desperately search for employment to support their families. It’s also helped the government economic figures. But don’t let the fewer number of foreclosures around the nation fool you. They are not gone; they’ve just been postponed for a few months.

Unemployment continues to rise or remain at constant levels in many states and that just isn’t helping those in need of finding ways to start paying for their homes again. In Nevada, for instance, unemployment hit 14 percent. Those figures have put Nevada 4.3 percentage points above the national unemployment rate of 9.7 percent, and 0.4 point above Michigan’s 13.6 percent rate. By the way, Nevada also leads the country in foreclosures, bankruptcy filings and credit card delinquency. This is just one state’s economic situation; you can find basically the same kind of miserable numbers in Michigan, California and Florida.

There are tons of people out there grabbing up foreclosure deals like mad but the sales are rather slow for a number of reasons. Few people have the money, the credit rating or the desire to be purchasing their next dream home. Banks aren’t lending either and that’s a problem. There is an excess of worry and concern about where families will be in 6 months or a year. Empty homes are fostering vandalism and neighborhoods that were thriving a couple years ago are now quickly falling into ruin and even the homes that are occupied are losing value almost daily.

The government recently reported that new home sales in the United States plunged 33 percent in April to a seasonally adjusted annual rate of 300,000 units. And it was also released that more than half of all homeowners with modified mortgages fell at least two months behind in their payments just a year after the adjustment was made.

In recent months, the possibility of foreclosures continued to fester and that might be a good indication why the media hasn’t reported on it as effectively as they once did. Maybe they’re bored with this persistent problem. Glancing over the headlines on a major news reporting source this morning shows stories about a Sarah Palin public appearance, the problems with the new iPhone, a union that is apparently angry at the governor of Arizona, and the one year anniversary of the deaths of Michael Jackson and Farrah Fawcett. Not one story about the current problems with the banking industry and the housing sector.

So, it’s on to the daily accounts of the Gulf of Mexico BP oil spill (at least for now), but be advised that the housing predicament still exists and is about to grab the American economy by the throat (again). And I’m just referring to the residential side of the Real Estate market; I haven’t even addressed the commercial side yet.

So, where did the mortgage problem go? It didn’t go anywhere, my friend. As a matter of fact just look next door or across the street and I’m sure you’ll find it. Wonder if your representative in Washington sees the same thing in their neighborhood? Maybe it’s time to write them and find out.

When AIG first went to the “well” for money from the federal goverment, the Associated Press reported that the Obama administration’s pay czar, Kenneth Fienberg, said bonus payments totaling $100 million to AIG employees from the same unit that prompted a massive taxpayer bailout are “outrageous” but they were allowed under the law. He said the retention bonuses were contractual obligations agreed upon years ago, before American International Group Inc. received a $180 billion federal rescue at the height of the financial crisis in late 2008. In an interview on ABC, Feinberg said, “These are the old grandfathered payments. I do not for a minute ignore the outrage out there, which I share. But the fact of the matter is we’ve got to abide by the law.” Feinberg said he’s working to get back as much of the bonus money as possible. He said AIG employees have agreed to repay $39 million out of $45 million in previous bonuses to the U.S. Treasury.

Well now it’s too late to ask. If AIG employees got a bonus and the company still can’t get on their feet it’s time to eliminate the problem, just like everyone else and every other business in the world.

How about all the small businesses out there that are also having tough times. For the last year these small businesses have been eliminating overhead and cutting costs across the board, most small business owners tht are struggling have stopped paying their own paychecks in order to keep as many of their most loyal employees still on the books. No government support is in sight for them. Worse yet, it takes months and sometimes years to eliminate some of the most weighing liabilities only to wait even longer before the cash flow catches up.

As far as I am concerned, AIG had their chance. Yes, we will suffer for the downfall of AIG but it will get better and in the end we will be better. But we will have make some difficult decisions first. AIG is not the only insurance company out there. AIG has enough subsidiaries, and they can do what we all do, focus on the ones that are profitable and cut the ones that aren’t and that means if you can’t sell it — close it.

Traditionally, Americans have tried to attain what became known as the American Dream through hard work and cautiousness as it pertained to their personal finances. This approach helped our grandfathers develop a solid financial foundation that insured a comfortable life and a tranquil retirement. But in the past few decades those values have been pushed to the sidelines in favor of a “get it now” financial attitude tied to a “get rich quick” philosophy. Our population seems to be constantly searching for instant riches through state sponsored lotteries, game shows, pro sports, show business or litigation. Many psychologists actually believe that the idea of quick riches has served to deteriorate our traditional American work ethic.

A few decades ago, the vision of the American Dream was essentially universal. You attained it by earning and saving enough money for an education for yourself and your children, a home in the suburbs, a dependable car, through a first-rate job to sustain the dream. But today it’s different for each one of us – today the dream is how you personally define it. For many of you, trading is a method of attaining the dream but remember that trading is not a get rich quick scheme but rather a technique of adding to your personal wealth in a methodic manner.

Trading will allow you to adjust your personal prosperity at your own pace based exclusively on your own parameters – things like risk tolerance and your specific financial goals. But never doubt that you will have to work industriously and deliberately in order to excel in your trading. It takes some planning, some preparation and some education. It also takes a calculated work ethic to attain a positive end result. There is no “get rich quick” plan – it’s going to take some time and you have to be prepared to expend the energy necessary to attain a successful final outcome. A winning trading experience represents how Americans used to reach for the dream – with a determined and unwavering resolve while developing a sense of self-reliance and confidence in their plan.

Ideally, we might all feel more secure and content if we could go back in time and live a less complicated life but that’s not going to happen. It is time to develop a new principled strategy that will insure growth in the short-term and in the long-term.

Today, American society seems to be extremely focused on the intrinsic power of the almighty dollar and, many times, totally discount the joy we can find in our lives for reasons other than material gain. We should remember that while money is an important aspect of life, it certainly isn’t something that genuinely brings joy – you can have lots of money and be totally miserable. I believe it’s time for us all to redirect our attention and values to the things that are truly important in life in an effort to not just attain, but enjoy, our personal American Dreams.

The financial experts always say you should have six months worth of salary set aside as a buffer but putting that kind of nest egg together is sometimes easier said than done. So look at the problem with a different perspective. Create a budget of all your “necessary” monthly expenditures; and by necessary I don’t mean that subscription to HBO or the two dinners a week you eat at your favorite nightspot. I mean really take your personal budget down to the bone and then figure your monthly expenses. My grandfather used to ask me, “Do you want it or do you need it?” That’s the kind of gauge you have to use in this kind of situation. I think you’ll be surprised at just how little you can actually live on each month when you compare it to what you’re spending today just by eliminating all the extras you spend every month.

If you have credit cards with a balance, you should call the bank and see if they will give you a better deal on the interest rate. This has become a very competitive business and if you ask them to lower your rate, they just might do so. One thing is certain – if you don’t ask them they will never lower your rate.

Make sure you have all your documents available and ready should you need them. This should be part of your normal routine but most of us don’t get things in order until someone actually asks us to present a copy of something. Then we madly start looking through what we thought was an organized system only to find the document we are looking for isn’t there. So, get your paperwork together; things like bank statements, past year(s) tax returns, passports, and insurance documents. You might even consider putting these important documents in a fireproof box that can be grabbed and taken with you in case of emergencies. And consider putting a stash of cash in the box too…just in case.

In anticipation of the worst, you might also consider creating a secondary source of income, whether it’s starting your own home-based business or working part time for someone else. If you have extra income coming in prior to an emergency situation, you’ll be better prepared when or if something does actually happen. Maybe you have a talent or a hobby that you can use to create an extra income source. What about a course you can take to learn a new skill? There are a number of things you can do to generate extra cash flow; start investigating them before you need to.

Finally, one of the greatest things you can do for yourself is to keep moving forward, with a smile on your face and your head held high. Get comfortable in developing your networking skills because in today’s world, this is a requirement. Don’t fall into the “out of sight, out of mind” syndrome but rather maintain a solid image and a well-defined approach when engaging people within your area of expertise. Whenever possible make connections with others who may be able to help you. Go out and keep shaking hands, make phone calls, send emails…never allow yourself to fall by the wayside. Just go where the people are and use all types of media to meet them. This can go a long way in helping you to maintain a solid footing during the rough times and just might assist you in locating that next big career move.

The bottom line – in order to make sure you move through this unpredictable economy successfully you must be well prepared. Arrange your life so that when (or if) something unexpected should happen, you’ll be ready for it while you smoothly “sail through” to your next big opportunity.

I usually find that if I’m not certain of where I’m going or how I’m getting there, I will tend to have more concerns than if I actively sit down and plan for the future.  We hear on the financial news programs every day that investors are “worried” about a variety of things that will move the markets lower.  What’s the point?!  Let’s start planning our personal situations and stop creating the anxiety.  The summer months are over and we are now preparing for autumn and the changing colors of the trees, feeling a nip in the air, and the smells of the season from cinnamon to evergreen.  I don’t know about you but I think this is a great time of year.  

Sure, there are some challenges ahead which could complicate our national and personal finances.  The negative scenarios that the U.S. economy is pushing through today along with the ever-increasing cost of energy could certainly cause a drain on our personal finances and put tension on the retail sector as well as pressuring the trade gap.  But there’s not a lot we can do personally to generate solutions for these hot topics.  The one thing we can do to sustain our personal “corner of the world” is to develop a positive and constructive attitude.  It really does help.  When you decide to carve out your personal path using even a small amount of confidence, you can’t help but develop the belief that you can succeed at anything you set out to do, no matter what the odds.  Believe me, I’ve done it. 

Positive thoughts and actions create positive results. If you have the wrong attitude then your trading could also be affected.  Doing anything with the wrong attitude will lead you in a direction that will be a burden rather than a blessing.  Individually, things can be tough to deal with but collectively – as an encouraging population – we can do anything.  As we approach the final quarter of the year, I’m hopeful for the months ahead and I hope you are too.  We’ve proven this factor in the past and I have no doubt that we will bear it out again in the future. Become proactive and cheerful by developing your attainable goals while staying focused on the situation(s) at hand.

The improvement of anything you do in life requires you to get the education you need, whether formal or informal.  If you feel like you need to improve your personal investing skills why not find a trading group in your local area and work with others to perfect your skills or take a formal class.  You’ve heard me say it before – it’s all about education.  If you are learning to play golf, I’m sure you have to practice.  If you are trying to master algebra, you have to study.  The same is true for an effective and profitable financial life.  Never give up! Determine your direction, get educated and you will get results! 

Happy trading!

For instance, while a certain amount of your portfolio will, no doubt, be invested in the equity market, you should also be involved in other areas of opportunity like commodities, options, bonds, real estate, and you should also consider the Forex (foreign exchange) market.  The Forex offers you another method of diversifying your investment strategy to protect your financial future.  I advise you to consider the potential benefits of the Forex and invite you to learn all you can about this unique method of investing.  One way to learn is to get a copy of my best selling book, Forex Made Easy…6 Ways to Trade the Dollar.  I wrote the book to be very investor-friendly and it will help you understand the Forex market and how to trade it.  It’s actually very simple and that’s why I like it so much.  The way I trade the currency markets only involves the U.S. dollar against six other major world currencies. That’s it!  Not 40,000 or more stocks or mutual funds…just six currencies!  I like that kind of simplicity.

Plus, if you are considering investing in the stock markets, you might want to consider issues that offer dividends with yields that exceed the 2.5% mark.  That’s probably much better than yield you can get at your local bank.  Check out companies that are showing brisk growth in such industries like the financial, energy or consumer sectors. Just do your homework and you’ll find something that will fit the mold and desired direction of your portfolio.

Determine what types of investments make you most comfortable and which investments make you uneasy.  If you have trouble sleeping at night because you’re worried about your investments then you shouldn’t be there.  Educate yourself daily through various media sources available to you; books, magazines, the Internet, television and radio.  Go to workshops and perhaps consider taking a class at the local college.  Always practice trading on paper before you invest any of your hard earned dollars in anything you are not familiar with. 

Listen, these are some extremely volatile days.  It seems like the financial markets have tried to maintain some kind of balance but recently this hasn’t been all that successful on a global basis.  Political rhetoric, deep concerns about the world’s economy, the growing federal budget deficit, and the daily fears of terrorism around the world has taken its toll on all of us over the past couple of years but now is the time to rebuild.  You should always keep in mind that no matter what the Dow is doing, no matter how the NASDAQ is trading, there are always investment opportunities that are increasing in value.  Just remember to always practice the one method of cutting the odds of losing your valuable investment dollars.  Assure that your portfolio is as diversified as possible. 

I know, most of us just think we’re much too busy these days and if we had more time in the day we could handle all of our tasks more easily and on time.  But you know, we all have the same amount of time; and some are very good at managing our daily 24 hours while others are just pitiful.

It’s a common error of many new managers to believe they can accomplish the job more efficiently on their own.  I learned a long time ago that it is much more important to train others in the organization in a specific task and then delegate.  It will do wonders for your peace of mind and for the successful completion of the task. Plus, training and delegation is important to develop a solid team spirit within the organization. 

So, where do you start? I guess the first step is accepting the fact that you could do much better when handling your time.  Don’t waste a moment during the day.  Start by;

-         Getting back to basics and write up your daily, weekly and monthly “to do” lists.  Knowing what you have to do and prioritizing the tasks is half the battle.

-         Set a deadline for each task

-         Determine which projects will you delegate and which you will do yourself

-         Make a list of the individuals who can help you complete each task…who is the right person for the job?

-         Schedule the work to be done, assign it to the person(s) involved and then move on to the next project. 

Remember, corporate management is always looking for the professional employees who can handle the job in the eight hours allotted each day.  If your deadlines are constantly being pushed forward to a later date, then how effective are you perceived to be by the corporate elite…also known as your boss.  It’s understandable that in these volatile times, as we approach 10 percent unemployment, people would want to “look” busy for obvious reasons.  But better than being busy is being productive…being creative….being efficient.  The proper management of your time (and the time of your subordinates) will help you and your company locate a path to success. 

In today’s challenging business environment, we are all being asked to accomplish more with less – fewer dollars, and, at times, fewer people.  That’s why the proper management of your time has never been more important. And remember, just because YOU think you are too busy doesn’t necessarily mean you actually are too busy.

You have a choice of how you accomplish your daily schedule but before you even start, prioritize, delegate, schedule and make it happen.  There will be some things that just didn’t seem to be important yesterday that will move to the top of the list today.  And others will disappear completely or get pushed to the back of the priority list.  Today’s daily calendar must be fluid and changeable.  We all must be prepared to turn 180 degrees at a moment’s notice, if the situation calls for it; just keep your eyes and your mind opened to the changing situation and adjust, when necessary.

Take control of your time, starting today.  Your personal level of “busy-ness” will affect your professional life and the professional lives of those around you who you are tasked to support. Remember, what you do (or don’t do) affects others. Begin taking on a creative approach to getting your job done.  Your proper approach to time management has never been more important.

One of the most profitable times in my life was during my dedicated real estate career; I say that because, at the time, that is all I did.  That period also taught me about diversification and the importance of good money management, but that is another story.  Anyway, during this time (the late 90’s) I began to invest in real estate.  The market was a good buyers market so there were lots of opportunities, however interest rates were a little higher and I had pretty bad credit.  As I was growing up through high school and after my graduation, I didn’t maintain my credit as I should have.  Contrary to what people believe, think or say, you can fix your credit. I did but it took many years.  I was able to eliminate all the bad and replace it with all good. Yet again, that’s another story but you can do that to.

As far as this story goes, I identified a great place to make money in the real estate market place, most specifically rentals, and investor rehabs.  The problem was I didn’t have any extra cash and poor credit. So, I set out to accomplish my goal. I had to use private money; in fact I was paying interest as high as 18%, one year notes and five points.  Yikes, you say.  Me too!

The difference was this; if you aren’t putting any money down or little money down then your return is infinite regardless of what you are paying for the use of the money.  I always get the terms of the money first then I look for a deal that fits within those parameters.  That way I can still make money paying whatever the terms are.  That’s what I did.

I bought literally hundreds of properties and then started buying multi-family properties.  As I have written before, you need to move the ball along.  I was able to eventually find better pricing that was still high but not as high.  The point of all this is to show you that credit and using private money is a possibility that you can consider and today’s financial landscape offers a great opportunity to go out and find deals.

Let’s talk about no money down deals and better yet getting money back. First, there are lots of them out there. Maybe not as many no money down deals as in the past but certainly little to no money down deals are still available.  When I first started out I was able to do a lot of deals that actually paid me when I closed.  The key is to find someone that will deal with you.  Do your homework and keep moving the ball forward. 

It seems that the real estate market runs in cycles, about five to ten years.  We just got through a big one where everything was going up.  Homeownership in the U.S. has risen to nearly 70 percent.  Now we are on the down side and we are already near homeownership levels of 1985.  The time for rentals is back.

But what you will see is that most of the apartment buildings that sprung up during the last great rental period have converted to condos, and thus have started to experience foreclosure.  Today we are facing a huge inventory of foreclosed properties, and all of the people that lived in those properties will be looking for places to live.  Why not in your condo or home?

The next great real estate cycle is now at your feet.  When is the best time to get into the real estate rental market?  How about when interest rates are low and prices are even lower?  Ah…..would that be now?  I think so.  Now what we have to do is get creative and we have to find out how to get into the market using leverage or better yet – cash.  I personally have begun a life of living debt free, I simply believe that cash is king and credit will enslave you.  However, with that said, leverage and finance have their place and you may not be able to run out and pay cash for your next rental property.

There is no question that buying bank-owned properties for cash will get you the best deals, but banks are now more motivated than ever before to get real estate they own off their books.  They are motivated by their own business model and oversight by the federal government.  So, these banks are more willing to loan you money now than ever before.  Laugh out loud if you will but it is in their best interest to do so.  You can get creative and work some pretty good deals out with them and they will be the bank.  It is better for them to loan you the money on the house than to have the bank sit on it.

The way this cycle will work is that you can go out buy a house or a condo for dirt cheap prices – I mean 30 cents on the dollar.  Remember that the real estate market will run in cycles (trends, if you will).  On average a typical home in the U.S. will double in value every eight to ten years.  And we saw that prior to the last pull back.  If you bought or buy at the end of the cycle you can get hurt, so we buy our home now when prices are at an all time lows; we rent the home and start using the strategy in which we pay extra principal payments.  With interest rates so low you should be able to have enough extra principal payments that will allow you to pay this home off in eight to ten years. 

You are then sitting on a piece of property that is 100 percent cash flowing, even if the market pulls back again you will still have cash coming in with little overhead which will allow you to make the next cycle.  But this is the best part, let’s say you buy a home for 50 cents on the dollar.  Say a $200 thousand home that in today’s value is $100 thousand. Believe me, you can get them for far less today.  Over the next 10 years you pay it off and the value of the home increases to nearly $400 thousand.  But you own it free and clear; so let’s say you have another correction.  It would have to go a long way down before it really starts to affect you because you own it free and clear.  Even if it went back to 10 year lows you still have equity to pull out. 

On a side note you can always get a mortgage or refinance later and pull cash out to invest tax free later.  Although this is not a debt free type of mentality, there are circumstances when leveraging money will be to your advantage.

With all that said, keep looking for more articles from me on this subject as I am personally doing this.  I love real estate as a way of diversification and now is the time to make your next fortune in real estate.

Happy investing,

James Dicks