You Can’t Trust Zillow And Its Estimates

When launched its website in 2005, the world was a buzz with the company’s ability to bring appraisals, called Zestimates, to everyone’s fingertips. It was fun to type in your own home address, or that of your colleague’s or boss’s house to see what they paid. Some of the estimates were way off and were course corrected by owner’s ability to log on, claim one’s home, and update the data will all relevant features under oath.

Zillow empowered buyers to become smarter shoppers by understanding comparables and knowing when and at what price the house was last sold. When you know the seller paid $1,000,000 at the top of the market for example, you know it would be ludicrous to pay more by definition.  Zillow brought once exclusive information, available only to real estate agents and people who paid for it to the masses. There was hope for an industry which generally is maligned for it’s two-faced ways, shady appraisal practices, and aggressive lending standards.

My biggest hope was that Zillow would make the markets more efficient for buyers and sellers, thereby cutting out a lot of unnecessary middlemen, and ultimately lower fees from 5-6% down to perhaps just 1-2% of selling price.  Boy was I wrong.


How To Make $50,000 A Year For Free From The Government

Someone once said “there’s no such thing as a free lunch”.  They lied.  With $50,000 a year, you can buy yourself 5,000 free lunches thanks to the generosity of the government!  What are you talking about, I can hear you thinking.  It’s pretty simple really.  In addition to giving struggling homeowners a free $50,000 over a course of 5 years, and 99 weeks of unemployment benefits (which we might as well extend to 5 years in my Shock & Awe Yeah! program), the Obama administration has now announced they will require mortgage companies that collect loans backed by the Federal Housing Administration to offer 12 months of forbearance for qualified unemployed owners!  In other words, if you qualify, you don’t have to pay your mortgage for a whole year!  Is that not sweet sugar or what?!

Think about this scenario.  You unfortunately lose your job in 2010 due to a cut in your entire department.  You own a home but don’t have much savings to hold you over even though you should have been saving and investing for the past 20 years.  The 10% you put down for your home basically wiped out your cash reservers, but you didn’t care because your three kids and spouse deserve the best.

You can literally get 99 weeks of unemployment benefits, a free $50,000 from the government, $3,000 a year in child tax credit and not have to pay your mortgage for a whole year if you qualify!  The maximum unemployment benefit is around $1,400/month.  Let’s say your mortgage is around $1,800 a month.  That’s $38,400 in income you get to receive from the government a year.  Add on the $10,000 a year free gift from the government for 5 years, plus the $3,000 a year child tax credit, and that’s equivalent to earning a fantastic $50,000+ a year!

I don’t know about you, but I sure as heck wouldn’t mind receiving $50,000 a year in free assistance from the government.  With the median US household income of roughly $50,000 a year, the temptation would be incredible not to work and just spend time traveling or hanging out with family. In essence, “making the most of unemployment” might have some different meanings for different people!

To put $50,000 further into context, you can basically change the figure to equal whatever you are making since $50,000 equals the median US household income.  Hence, if you live in Manhattan or San Francisco, where incomes frequently breach $200,000 a year, can you imagine getting a free $200,000+ from the government?  Oh man, no wonder why despite all the doom and gloom from the media about unemployment, the malls and restaurants are packed, traffic is horrendous, and real inflation is much higher than expected due to so much demand and spending!


Twelve Non-Recourse States Lets You Walk Away From Your Mortgage

Paper Money PlaneRefinancing now is generally a wonderful idea as jumbo loans are back to all time lows. That said, what happens if you are so underwater on your mortgage that you feel it doesn’t make sense to continue paying anymore because you don’t think value will ever recover? Banks have become so annoyingly stubborn regarding allowing underwater homeowners to refinance, that you might have a better way.

Have you ever wondered why there have been so many foreclosures in states such as California, Arizon, and Nevada? I’ll tell you. If you live in one of the 12 “non-recourse” states of Alaska, Arizona, California, Connecticut, Idaho, Minnesota, North Carolina, North Dakota, Oregon, Texas, Utah, and Washington you are potentially in luck! If you so happen to own property in one of these states, and have substantial assets elsewhere, you can legally hand over the keys to the bank and exonerate yourself from the mortgage with no penalty against your other assets!


Free $50,000 Bailout Gift From Government To Homeowners!

The Emergency Homeowner Loan Program, or EHLP, aka Government Big Daddy Bailout Fund will provide zero-interest loans of up to $50,000 to pay your mortgage, property tax and insurance bills for up to two years.  That is pretty damn good, considering those who need such help probably make under $100,000 a year and have homes valued right around the median price of $170,000-$200,000.

Supposedly, the program allows you to limit your mortgage payment as a percentage of your income to 31% or $150, whichever is greater.  The EHLP will pay the balance. Homeowners can receive this help for up to 24 months, or until they run through the maximum EHLP loan amount of $50,000.

If you keep up with your payments over a five year term, each year that passes, you don’t have to pay back 20% of the loan!  That’s a free $10,000 a month you get to keep a month up to a total of $50,000!  Let’s say my house is worth $2 million bucks, which is not unreasonable for a 2,800 square foot house in a good area of San Francisco.  Given the loan is probably around 25-30% of the total value of the typical homeowner’s house, that’s like a San Franciscan homeowner getting a nice $500,000-$600,000 loan for free baby!

Why Rental Property Is A Powerful Asset Class

From a financial standpoint, rental property is at the top of the list of assets to own.  It can soon become the biggest headache if you don’t screen properly for the right tenants or buy in a location which consistently attracts poor tenants.  Good thing you scre eRb402HI en like the CIA and only buy in prime locations.

Rental property is the ultimate hedge against inflation as well as the ultimate asset to make money during inflation from a cash flow and real asset appreciation perspective.  With the US Dollar going into the crapper, your goal should be to borrow as much USD as your personal balance sheet allows and buy a real asset in an appreciating foreign currency!  If you can’t do that, you just have to do the next best thing and buy American.  The foreigners are coming!