The unemployment report was just released for October, and the news isn’t good.  Approximately 240,000 jobs were lost in the month and the unemployment rate has hit 6.5%.

Traditionally, an unemployment rate of 5% is considered “full employment”, so the news might not be as bad as we’re being led to believe.  Regardless, this is an issue that real estate investors - and particularly landlords - want to be aware of, since it could be your tenants who lose their jobs.

When your tenants lose the ability to pay you, the key is quick and decisive action.  But you must know when such a change happens before you can act on it.

I was thinking about this issue this morning and came to the conclusion that it would be ideal if there was a way to know as quickly as possible when a tenant has lost his/her job.  That way, you can be prepared to act quickly in the way that’s most appropriate.

Please note: What I’m about to describe to you are ideas in the embryonic stage.  I’ve not tested them, and I’ve not confirmed them with legal counsel.  I’m posting them here because I think it’s well worth considering, and it’s also possible that someone among the thousands of readers of this blog may have already implemented a similar idea and could tell us about it.  So here goes:

Here are a few ideas to be able to know quickly if your tenants have lost their job:

• Send a notice to all of your tenants that you have some sort of “Assistance Program” in the event of the Tenant’s being laid off, but that they must notify you within 3 (or whatever #) of days of their termination.  (It’s up to you what your “Assistance Program” entails - maybe you reduce rent slightly, or maybe you connect the tenant with an employment agency… that part is your choice.)
• Require your Tenants to disclose their employer to you at the time they sign their lease with you, and require them to notify you within a short period of time any time their employment situation changes.
• If your lease enables you to change its terms, consider doing so for active leases, and require the tenant to notify you of employment changes

These are the 3 ideas that I’ve come up with so far.  I’m very interested to hear your ideas on how to deal with the issue of a suddenly unemployed tenant.  If you would be so kind as to share your experience, we’ll all be grateful.  Also, feel free to share with us exactly how you use the information that your tenant has lost their job.

Thank you for reading RealEstate.BryanEllis.com!

I’ve seen reports recently about the stark contrast in availability of financing when comparing traditional lenders to credit unions.  Apparently, credit unions as a group are not suffering from the “credit crisis” like the big mortgage lenders and banks are.

In the interest of full disclosure, note that what I’m sharing with you here is based on my research, but not my experience.  I have never done business with any credit union.

According To Realty Times, “credit unions avoided writing subprime home loans and other easy-money mortgages. They also shunned selling packages of mortgages to Wall Street moguls who packaged them into now low- to no-return securities.”

If this is true, it suggests that credit unions may be on the verge of a boom, as they can offer capital that isn’t available elsewhere.  So for your own home, and for homes you are attempting to sell to buyers, your local credit union may be a good funding alternative.

However, credit unions generally use a more traditional and detailed application/approval process than other lenders.  With credit unions, your credit history does matter, your down payment does matter and your ability to pay does matter - so nobody should expect “subprime” treatment.

Nevertheless, the unique structure of credit unions (as non-profit financial institutions that generally hold their own notes long-term) can mean a greater availability of capital.

What I am not certain of is whether credit unions offer financing for investment properties.  If you know the answer to this, let us know in the comment area below.  Or if you have other experience with credit unions - positive or otherwise - please share it with us so we can all make an informed decision.

Thanks for reading RealEstate.BryanEllis.com!

With yesterday’s victory of Barrack Obama, one thing is certain:  Taxes will rise.  Whether you like him or not, Obama has no history whatsoever of cutting taxes (despite his promises).  Expect more of the same.

That’s the reason for this post.  I want to begin a discussion about best ways to minimize your own tax burden.

(Note - President-Elect Barrack Obama has flatly stated that you are selfish if you want to minimize your taxes.  So if you’re a supporter of Mr. Obama, please disregard this content, as Obama does not support it.  But reasonable people certainly do.)

This post is not going to be highly detailed.  All I’m going to do right now is give you a few topics to research and begin to consider.  Further, I will do further research on these topics and provide more information to you as I discover it.

A few general ideas for you to think about for minimizing (or at least, delay) your tax burden are as follows:

• Sell any appreciated assets right now, before tax increases are instituted
• Use proper corporate structuring enabling shifting of profit from one tax year to the next
• Use of self-directed IRA’s and Solo 401k’s for tax-advantaged transactions
• Use 1031 exchanges when selling qualified real estate and defer taxation until more favorable taxation environments exist
• Convert as much of your income into lease-based (and other passive) income rather than active income

Clearly this list is far from complete, and there are no details included yet.  I’ll work with you to provide more details in the near future.  In the mean time:

Please share your thoughts below about general tax reduction strategies with which you are familiar.  Please don’t bother sharing the details yet - just give us an idea of how your strategy works.  I’ll use your comments as source material for finding further details and provide the information to my entire readership.

Again:  please share your tax-reduction tips below…

Thanks for reading RealEstate.BryanEllis.com.

You’re reading this because you’re interested in real estate and business.  So let’s focus there.

If you’re an undecided voter, you’re a lot like me:  Not particularly in love with either candidate.  On the one hand, there’s the dashing and incredibly eloquent Barrack Obama versus the seasoned, courageous and wise John McCain.

Who do you choose?

Let’s ignore the politics for a moment, and think about reality for us as real estate investors, business people, lovers of our families and seekers of liberty.

There are all kinds of specific policy issues that make the choice fairly simple if your focus is on economic opportunity.  I’ll tell you about those in a minute, but let’s think about what’s really most important:  Our families.

I spent the afternoon with my daughters yesterday.  My daughters and my wife are the love of my life, and I would do anything to help and protect them.  I am sure you feel the same about your family.

My oldest daughter is named Kayla, and she and I have the special type of daddy-daughter relationship that every father craves.  As I was hanging out with her, I began to think of her future.  I thought about what she would become professionally.  I thought about whether and when she would get married.  I thought about what I would do to make sure she has every advantage.

This is important for a lot of reasons, some of which are obvious.  But one isn’t so obvious:  How will the choice between Obama and McCain effect my daughters - and your family?

The answer there is quite clear.

My daughters - and your family - will have to have a free society and business climate to experience real professional success.  And let’s be clear:  My hope is that my daughters are overwhelming financial successes beginning early and all the way through life.  Here’s why:

• The fundamental yearning of the human soul is freedom.  Behind only physical and political freedom in importance is financial freedom.
• My parents demonstrated and taught me that it’s very, very important to help those who need it, and I have taught my daughters the same.  The more financial success they have, the more good they can do.
• Financial success gives rise to opportunity.  I want my daughters to be able to take advantage of situations like we have right now, with a depressed stock market and low real estate prices.  That takes money.

Here’s where I have to take the inevitable leap into choosing sides.  While Mr. Obama is a rhetorical dynamo, he does not represent the best interest of my family - our yours.

You agreed that you want your children to have the best of everything, didn’t you?  Mr. Obama does not agree.  Imagine for a moment that one or more of your children are reasonably successful, and are able to realize a 6-digit income in their 20’s (I did it, even though nobody in my family had ever done so, so it’s definitely possible)…

Mr. Obama wants to take a staggering percentage of your child’s income in the future - but he wants to take it only from your child.  He doesn’t want to take it from your child’s friends who didn’t work quite as hard as your child.  He doesn’t want to take it from the people who are unable to compete with your child in the professional marketplace and work force.  He wants to take it from your child specifically, because your child is successful.

You may be tempted to think that Obama’s tax policies won’t be a factor by the time your child is an adult.  But please:  Do not fool yourself.  We still have most of the destructive “New Deal” tax policies after 6 decades.  Obama’s changes will be no different.

Furthermore, Obama will condemn your child’s preference to be keeper of his own money by referring to your child as “selfish”.  That’s right:  Obama has publicly stated that anyone who prefers not to pay exorbitant taxes is selfish.  To Obama, if you work hard and are successful, you are “selfish” if you prefer to be able to use your own money.

That’s hypocrisy, through and through.  Obama wants to take money from virtually everyone (he started his campaign by saying he’d raise taxes on those making over $300,000 - then went progressively down to $250,000 then $200,000 then $150,000).  The reason he claims to want that money is to “spread the wealth around” - or so he told “Joe the Plumber”.

What does that sound like to you?  If you remember your high school history and civics classes, you’ll know that’s a fundamental tenent of socialism and communism (which are the same things, just in varying extremes).  Both of those forms of government are oppressive and limiting and are not related to freedom.

What Obama proposes to do is to take away your child’s freedom to be a high income earner by stifling the motivation to achieve it.  (After all, if you’re going to lose most of your income above a certain point, why should you ever earn more than that?)

Furthermore, he’s going to stifle your child’s ability to do good for the benefit of those around him, because Obama wants to take away so much of your child’s income that your child will have little left to assist those in need.  Sure, Obama says that he wants to “spread the wealth around” so that those making less money will have more available to them - but has that ever worked?  It’s so rare that a person goes off of welfare and into the working world that such stories make big news.

Those stories wouldn’t be big news if government were good at managing charity.  but they are not.

And let’s not forget about your child’s safety.

We clearly have a big problem with terrorism, and are the primary target of terrorists throughout the world.  Why?  We’re free.  We have the right to run our lives as we want, and nothing is more of a threat to tyranny and destruction than freedom.  Our souls yearn for freedom, and enemies of freedom want to stamp it out wherever it exists.

That’s why Mr. Obama’s extremely tight associations with known terrorists like William Ayers (who bombed his targets here in America in the 60’s and who publicly has regretted that he didn’t do more) is so disturbing.  Obama has relied on William Ayers as a friend, professional acquaintance, political fundraiser and more for decades…

…and his only defense - which frankly is not believable - is that he did not know of Mr. Ayers’ past.  Yet still, Obama continues the association.

And Mr. Obama’s lifelong pastor, spiritual mentor and friend, Reverend Jeremiah Wright, is a well-documented hater of America.  Just look him up on YouTube and you’ll find so much blatant anti-America speech that it will make your stomach turn.

This is who Obama has relied on for advice and mentorship for two decades.  I guess if my mentor hated America like Rev. Wright does, I’d be willing to consider policies that are not in the best interest of America, too.

Which brings us back around to our children.  This is a historic election - but frankly, it’s being made into a racial and gender issue.  Many seem focused on Obama’s blackness or Palin’s femininity, but focusing on those things makes one bigoted, doesn’t it?

I propose that you look past those things.  I’ve already voted for John McCain.  Not because he’s my first choice - I was a strong supporter of another candidate during the primaries - but because I can’t conscience what a Barrack Obama presidency will do to this country, and to the hope I have for my daughter’s future.

Kayla was so much fun yesterday as we discussed the things she likes to do (she’s really into building things and would make a great engineer).  I voted for John McCain, because I want these things for Kayla:

• For her to be able to do as she pleases professionally and personally
• For her to be appropriately rewarded for her efforts, and for her to be able to use her blessings to benefit others in the way she chooses
• For her to be safe from terrorists and other enemies of America

I want freedom, opportunity and hope for my children.  In the light of those ideals, Mr. Obama’s calls for “change” ring quite hollow.

If you’re not sure how to vote today, think about your kids.  They are only children, and they don’t yet know what’s best for them.  But in your gut, you know exactly what’s best for them:  freedom and opportunity.

Please consider these things, and on behalf of the thousands of readers of FreeRealEstateTraining.com, I encourage you to vote for John McCain if you’ve not yet made up your mind.  And please:  Go vote right now.  Don’t miss this God-given opportunity.

Thank you.

I’ve heard an increasing number of reports about lenders who positively refuse to speak with their borrowers about loan modifications and/or impending foreclosures.

I suspect a primary reason for this is that many lenders are waiting to see how the Bailout Bill will play out, and whether they’ll be able to sell their toxic assets to the government without adjusting the borrower’s loan.

Regardless of the reason, this is a horrendous practice.  Lenders should at the very least have a discussion with their challenged borrowers, even if the lender ultimately exercises its right to continue with a foreclosure.

If you face a situation in which your lender will not communicate with you, here are three alternatives to consider:

• Mortgage Insurer: If you made a down payment of under 20% when you acquired your property, your loan almost certainly has a mortgage insurance policy.  The insurer who wrote your policy will be on the hook for a part of the loss in the event that the lender forecloses your property, so it may be helpful to communicate with your mortgage insurer and have them apply pressure directly to your lender.
• Forensic Loan Audit: A very high percentage of loans contain inaccuracies or outright violations of law which may seriously pressure the lender to modify the loan in the borrower’s favor, and a great way to discover those issues is through a Forensic Loan Audit.
• Your Attorney: Frequently your attorney can prompt a response even when you can not.  If you have a relationship with an attorney, ask them to contact the lender on your behalf.  If not, here is a link to Prepaid Legal Services, a very low-cost legal program

Whatever you do, don’t just stand by and agree to be ignored by your lender.  Ultimately, it’s their choice to determine whether to modify your loan.  But it is within your power to force the issue if necessary using one of the above tools/resources.

If you have other ideas or thoughts about this issue, I welcome your comments below.

Thanks for reading RealEstate.BryanEllis.com!