Housing once again an investment

In the regular lending business for houses, mortgages just are what they used to be.

According to a WSJ article, March 1 2013 entitled "Cash Course in Housing Fundamentals", overall home sales are back to where they were in 2007 (around 4.5M units sold annually).

However, especially in the hard-hit markets like FL, mortgages now make us a much smaller portion of the home sales.  In 2007, 15% of the sales were cash (implying strong investor interest).  In 2012, DataQuick showed from 55 urban markets, that the cash purchase figure jumped to 36%.  That's more than DOUBLE the cash investment for home buying now verses 5 years ago.

The Government data shows a similar trend-- 4Q 2012 was $123B in mortgages vs. 4Q 2007 at $226B.

Although some of this cash comes from folks who live in their new homes, investors are large share of this new trend (even Blackstone Group, the largest asset manager in the world at over $3.2Trillion under management is buying houses for rentals).

Low rates ironically have once again turned housing into an investment. 

Until Next time,
Tobias J Preston, President.


What is Household formation?

Although new home building has nearly doubled from the bottom of the Recession (i.e. 500K new homes in 2009 to now almost one million) there is still room for improvement.


Because over time, new housing starts are closely correlated to "household formation".

What is Household formation?  It is the natural growth in the USA from a population that adds more new homes each year through birth, immigration and children moving out on their own.

From 1998 to 2002, the numbers annually for both were about 1.5M.

Today, adjusted for the current population, that number would be $1.82M according to a WSJ article 3-18-13 titled "A lot more recovery before housing bubble redux".

As it relates to private loan investors, the greater the demand for small real estate, the more secure are our 1st loans secured by realty.

America needs more properties not only due to household formation, but also because data I have on file shows that 250K+ old housing is or needs to be destroyed due to age or other conditions.

All the above has positive momentum that the current building trend will continue for some time as we grow our households and recover from the Great Recession.

Until next time
Tobias J Preston, President.



Few things in life Really Work!

For private loan investing, a Key Tactic That Works is equity between the balance of your loan and the market value of the real estate.

WHEN EQUITY IS HIGH, you have very low risk.

The 3 best ways to have equity (also called a low loan to value (LTV)) is as follows:
1--fund loans that have equity to begin with.
2--time the market (which you can't BUT is happening again to us in many "lower 48" markets) so realty values are rising
3--fund amortizing notes (that means part of each payment pays down the principal loan balance).

You have control over items 1 and 3.

Item 2 is also happening--the Phoenix AZ market is 18.8% HIGHER THAN ONE  YEAR ago. 

(NOTE NORTHERN CA "bottomed out" in 2011, and so did many other hard hit markets like Phoenix).

Bottom line? Invest now, since you have ALL 3 FACTORS on your side.

This is data and experience that McKinley and AFC can offer to you THAT REALLY WORKS!

Until Next Time
Tobias J Preston, President.


The time is now!

Warren Buffet defines investing as "Putting out money today for more money tomorrow".

With most investments that offer a projected real return, (that's above taxes and inflation so figure a minimum target of about 6.5% yield) it is very difficult to accomplish in this current economic climate.

One of the largest investment "companies", CALPERS with BILLIONS and the best advisors recently returned ONLY 1% for the past 12 months (WSJ article July 2012).

(NOTE CALPERS target is 7.5%)

If the largest and the best only get 1% return, how do you as a small investor expect to enjoy consistent Real Returns?

My suggestion as an expert in First Trust deed investing is to learn about single and pooled loan investments, find a firm or two that is both competent and experienced and start now!

All of us however can earn Real Returns by investing in First Trust Deeds starting at 7% on up.

How can I say this?  My small loans have paid ~$100,000,000.00 to investors with very few losses.

Even Warren Buffet would be impressed and agree that our 1st Private Loan niche follows his rule of investing.

Until next time,

Tobias J Preston


It's over!

"U.S. Housing Bust is Over", Says an article today, July 11, 2012 in the Wall Street Journal.

You can check it out on your computer by entering the exact article title.

After Paying $100MM to investors over 23 years, I can state today more confidently than ever that IT'S TIME TO INVEST IN FIRST TRUST DEEDS AND MORTGAGE NOTES!


1--Simple supply and demand means there are fewer investors buying private loans.  This means you enjoy better yields and lower prices than in the future when more competitors arise.

2--The Silver Bullet to lower risk when investing has now improved.  The more equity (between private loan balance and realty market value), the better.  Housing is now stopping it's dramatic slide and is increasing is markets that also decrease risk of default.

Remember how you feel when you see your favorite "thing" on sale?

That's what is happening now with private loans.  They are "on sale" and it's time.

Bottom line?  Back up the truck and buy quality first loans.  Whether single or pooled, they are the BEST long term investment since instead of predicting anything, they just pay you SEVEN PERCENT OR MORE EVERY MONTH with real estate security.

The U.S. Housing Bust is over.

Until Next  Time,
Tobias J Preston, President.