Dean Graziosi | Dean Graziosi Real Estate | Dean Graziosi Investment

Every now and then an investor comes up with a novel idea.  The Mack Companies are a real estate investment company located in Chicago and specializing in the city’s south and west sides.  The company has come up with a nice package, which they call home-redevelopment.

The home-redevelopment concept is designed for the small to medium investor who has a small appetite for risk.  The company has put together an interesting formula with controlled exposure and a steady yield with long-term potential.

The new product is called RECAP, which stands for Real Estate Cash-flow and Appreciation Program.  The Mack Companies promote the product as the simplest way to be in the real estate investment business with minimal risk.

Rather than purchase short sales or go through the foreclosure process, investors purchase one or more of Mack’s tenanted, professionally managed completely redeveloped homes at discounted prices.  All properties in this offering are located in secure, stable areas of the city.

The homes are in “pristine” condition, are guaranteed to be structurally sound, including all the structural systems, and have all appliances that appeal to tenants.  All tenants in the RECAP homes have been qualified by the company.

As the real estate market improves, investors can anticipate long-term growth.  Meanwhile, investors have a steady stream of income.  The Mack Company says investors receive one check for each property each month.  From the proceeds the investor must pay property taxes, the mortgage, management fees and insurance fees.  Typically the investor nets between $200 and $300 per month.

Mack says most tenants stay in the properties for five years. Obviously there are questions to be asked, but it is refreshing to see developers start to untangle the effects of the recession.  

With the pressure that buyers and sellers are under in today’s real estate market, the Department of Housing and Urban Development (HUD) has opened offices with home counseling services.  Many real estate companies and agents also provide comprehensive home counseling services.

Home counseling services cover a wide berth of topics ranging from home purchasing to preventing foreclosure.  Most brokerage houses provide these services free of charge and all HUD services are provided at no cost.

When you are purchasing, the counselor can help evaluate your credit, assist in correcting any errors on the credit report and explain the purchasing procedure from beginning to end. One of the most important parts of purchasing is understanding the amount of money the purchaser will need to cover the down payment and all closing costs. 

The counselor can provide everything the buyer needs to know about the mortgage industry.  Mortgage products change constantly and as the mortgage is such an integral part of homeownership, it only makes sense to get advice from a professional.

The best time to learn about the “offer for purchase and sale of real estate” is before you are ready to make your first offer.  That way when you find the property you want, you will be ready to act.  The counselor can explain all the parts of the purchase offer as well as explain the home purchasing process.  Purchasers will need to select an agent, find a property, make an offer, negotiate the contract, arrange for a mortgage and close the title.

Generally, the counselor can introduce the prospective purchaser to several lenders.  Purchasers should always obtain a pre-approval letter from the lender before submitting an offer.  The presence of the pre-approval will make the offer look more appealing and increase the purchaser’s chance to get the offer approved.

Private or public housing counselors can also help troubled homeowners.  Today, troubled owners have many options and opportunities to prevent foreclosure.  The housing counselor will be aware of all the federal and private workout programs.  Whatever course of action is on your horizon, consult with a housing counselor before you begin. 

Consumer confidence is one of the key indicators that investors always track.  For the past two years, consumer confidence has risen to surprising highs and fallen to desperate lows.  Every time there is a shift there is a reason why.

That’s the scary part.  Consumers are human.  They react to headlines, media and world events that really have very little affect on the overall marketplace.  Savvy investors not only watch consumer confidence but they analyze it.  In fact, the consumer confidence index published by the Department of Commerce affects every market from equities to currencies to commodities to real estate.  If you fancy yourself a real estate investor stay on top of this important index.  You will make many smart moves by staying on top of consumer confidence.

In July, the Certified Financial Planning Board of Standards released a survey through June 30^th, 2010.  The study revealed that consumers are worried about equity markets and currency markets.  The survey, which included more than 1,000 residences from all areas of the country and from all economic levels, indicated that 83 percent of those polled believed their finances would improve over the next six months.

These consumers believe that many sectors of the economy, including residential and commercial real estate, will also improve in the next twelve months.  Progress will be slow and delayed, but progress will be made.

Certain aspects of the June real estate market activity are surprising.  In Southern California’s six biggest counties, real estate sales increased by 7.2 percent in June compared to May.  In fact, activity in these counties was the highest since June 2006.

California trails Arizona and Florida in short sales and foreclosure activity.  Facts are facts.  More money was invested in Southern California last month than in the pat two years.  Additionally, more mortgages were written than in the last two years.

While this is not a complete endorsement, it certainly marks a trend worth watching.  Pick your investment area and follow the consumer confidence trail to short sale success.