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30 Second Real Estate Analyzer


Real Estate Leverage

Real Estate Leverage is simply the used of borrowed money used in purchasing real estate. Equity is the amount of money that the real estate is worth above the amount of money owed. For example, let’s say that you have $100,000 available to invest in real estate and the average price of a home in your area is also $100,000 and the average rent for that home is $1,000 per month just to keep the numbers simple.
You could purchase one home for $100,000 cash and then rent it out for $1,000. This would give you a return on investment of 1 percent per month 1,000 / 100,000 = .01) or 12 percent a year. The average real estate appreciation since 1968 has been 6.34 percent per year. Some years it is less and some years it is more, but for this demonstration we will use 6 percent to keep it simple. Add 12 percent and 6 percent and you will have an 18 percent Return On Investment (ROI) for your $100,000. Not a bad return and much better than you would get at a bank or deposited in a CD.

Now let’s add leverage into the equation. If you purchase the same home with only 10 percent down ($10,000) with an interest rate of 6 percent then your Return on Investment would look like this. $1,000 rental income minus $450 interest divided by $10,000 down payment for a return on investment of 4.5 percent per month or 54 percent per year plus 6 percent in appreciation is equal to 60 percent ROI per year. Remember you only used $10,000 of your own money and you leveraged $90,000 and your profit per year would be $6,000.

Since you still have $90,000 in case available you could purchase 9 more homes. Then you would still have a Return On Investment of 60 percent but your profit per year would be $60,000 instead on $6,000 and you would also have leveraged $900,000.

I have not discussed taxes, maintenance, insurance or any other expenses associated with owning real estate. The expenses would be proportional for each home that you owned whether it is one home or ten homes.
The amount of money that you get from your real estate investments is always offset by the amount of debt you have; rent checks from tenants need to go toward mortgage payments and other debt. With real estate leverage it's important to make sure that the income generated from real estate is enough to cover the negative cash flow of the real estate debts during the bad times. Renters can and will damage properties, vacancies will happen from time to time.

If you finance with a variable interest rate mortgage or if the tax appraiser raises the value of several of your homes, you could be in a negative cash flow within just a couple of months with no way out.
Investing in real estate without significant cash reserves is, shall we say, not recommended. An investor without reserves might as well send an engraved invitation for disaster. Investing in real estate is a daunting task. There are hundreds of elements which must come together in harmony for a transaction to close.
Using real estate leverage is a great way to increase your own personal wealth and to build a large and healthy portfolio if it is done wisely. The more real estate leverage you have the more property you can acquire by using this debt or leverage.

It's not difficult to understand the concept of real estate leverage and if used properly can not only make for sound investments but can also make for a healthy financial portfolio.


FICO scores

Surprise! There's not just one credit score. Although the most widely used score is the FICO score, another credit score could show up on your disclosure. The new rules don't require lenders to identify the brand of credit score.

"I think you'll have a slice of lenders who will proactively tell the consumer what brand the score is," says John Ulzheimer, president of consumer education at SmartCredit.com.
For everyone else, there are ways to decipher the score's origin. If the range is between 300 and 850, it's a FICO score. Still, it could be a specific FICO score, such as one designed for credit card issuers, and not the one available on myFICO.com. If the range is 501 to 990, it's a VantageScore, which was developed by the three credit reporting agencies, Equifax, Experian and TransUnion. If the range is anything else, it's an obscure model not used by many lenders, says Ulzheimer.

"Call the lender and find out what score it is," Ulzheimer says. "I think that's a reasonable request."

TouchPad tablets sold out at Best Buy?

America sure does love a bargain: Hewlett-Packard's decision to drop the price to as low as $99 for its TouchPad tablets touched off a weekend buying rush that the company called "overwhelming." Ian Sherr has details on digits.

The price point or $99 fire sale of HP that can compete with Apple's iPad.  It was a great weekend for the retailers but will consumers actually benefit by purchasing a product that can no longer receive updates or any technical support?  It's a bad purchase in my eyes.

Federal NDP Leader Jack Layton dies after second cancer battle

OTTAWA - Federal NDP Leader Jack Layton has died.
The party issued a statement this morning, just weeks after a gaunt Layton held a news conference to announce he was fighting a second bout of cancer.

The party says Layton died peacefully at 4:45 a.m. ET today at his Toronto home, surrounded by family and loved ones.

Funeral details have not yet been announced.

Like some political Moses, Jack Layton led his people out of the wilderness, only to die within sight of his own Promised Land.
In the preface to his 2006 book, "Speaking Out Louder," Layton wrote a passage that turned out to be eerily prescient:

"Oftentimes, life's highs and lows are inextricably linked. That has certainly happened to me and, occasionally, the ups and downs were virtually simultaneous."
In eight years as leader of the NDP he took his party to heady heights, but fell himself to a tragic disease at the age of 61.

The end came with a terse announcement.

"We deeply regret to inform you that the honourable Jack Layton, leader of the New Democratic Party of Canada, passed away at 4:45 am today, Monday August 22," said the statement from his wife, Olivia Chow, and children, Sarah and Michael.
"He passed away peacefully at his home surrounded by family and loved ones."
Funeral details have not yet been announced.
Layton rebuilt his party, muted its internal squabbles, united its fractious factions and weaned it from old-style dogma to present a face more palatable to middle-class voters.
He starred in the most successful election in the history of his party and won the title of Opposition Leader, which had eluded his more storied predecessors.
Layton hobbled across the hustings last spring, leaning on a cane against the pain of a surgically repaired broken hip. He shrugged off the effects of treatment for prostate cancer. His dogged campaigning as Le Bon Jack won him a majority of the seats in Quebec, a cherished but illusory goal for New Democrats for decades.

He slew the Bloc Quebecois and saw the long-dominant Liberal party reduced to a battered hulk.
Layton was ready for a new Canadian political alignment that would pit left against right across the moribund Liberal middle.

But the victory cup was dashed from his lips by the onslaught of another, more brutal cancer that wasted him to skin and bones — and killed him just 16 weeks after election day.
Layton went, in one short summer, from triumph to tragedy and left behind less a political legacy than a political question: What if?
He was a man who carried politics in his genes. A great-grandfather was a Father of Confederation. His grandfather, a Quebec provincial cabinet minister in a Union Nationale government. His father, a Tory cabinet minister under Brian Mulroney.
He was a believer. He made that clear in the first sentences of "Speaking Out Louder:"
"Politics matters. Ideas matter. Democracy matters, because all of us need to be able to make a difference."
Layton was born in Montreal on July 18, 1950. He grew up in Hudson, Que., an Anglo community complete with a celebrated yacht club. It was a small town, but hardly typical of small-town Quebec.
He was a child of the placid Fifties in a well-off family in a well-to-do town. He was a teen and university student of the Sixties, with all that went with a decade that has claimed the word "turbulent" as its singular descriptive.

Layton took his BA at Montreal's McGill University in the late 1960s, when radicalism blew through campuses like a stiff gale. The rebellious vigour of the times led him to political activism. He doffed the conservativism of his family and embraced socialism.
"Events in the Sixties and Seventies were formative for me," he wrote in "Speaking Out Louder."
"My path grew out of the tumultuous days of the October Crisis."
He became an activist, canvasser and organizer for a community movement in Montreal as a student.
By the time he earned his master's degree at Toronto's York University in 1972, his political genes had clearly activated. He had studied under Jim Laxer, a key figure in the Waffle movement that rocked the NDP at the time.

Layton taught at Ryerson University in Toronto. But by the time he received his PhD in 1984, he had already largely abandoned academic theory for community activism and then the practicalities of municipal politics.
"I was hooked on local politics and neighbourhood engagement," he wrote.
First elected in 1982, he served on Toronto and Metropolitan Toronto councils for 20 years, honing his instincts and skills at the level of retail politics. He was a politician in the mould of a people's tribune, with rolled-up sleeves, 14-hour days and seven-day weeks. Every hand was there to be shaken, every story was there to be heard, every windmill was there to be charged.
His politics were those of the poor, the homeless, the alienated, the disenfranchised. He served as vice-chair of Toronto Hydro, chair of the Toronto Board of Health and president of the Federation of Canadian Municipalities. He twice ran federally and lost.
Layton's first marriage to high-school sweetheart Sally Halford, which had produced two children, ended in 1983.

He would eventually team up with Olivia Chow, another municipal power-broker. Together they would become the go-to couple of the left in Toronto politics. They rode a tandem bicycle along the waterfront, entertained, led rallies, marched in parades, ran for office and won.
Chow would follow Layton into the House of Commons in 2006. And she would be beside him in the dark summer of 2011.

In his rise, Layton gained a reputation as a brash, aggressive, even abrasive figure.
On a trip to Calgary for a meeting of the federation of municipalities, he raised local hackles with dismissive comments about the city, its appetite for new buildings at the cost of older properties and even its ritzy new city hall. There was an outcry in the local media and Art Eggleton, then mayor of Toronto, dispatched his own apology for Layton's comments.

He also gained a reputation as a master of the political stunt and the over-the-top comment. Some joked that the most dangerous place to be around city hall was between Layton and a microphone, where one might get trampled.
Rightly or wrongly, the image of a loud lout shouting into the mike from the left side of any issue clung to him after he won the NDP leadership in 2003.
It was a leadership contest that pitted Layton and the trendy new left against Bill Blaikie and the traditional, Prairie populist wing. Blaikie was a United Church minister in the best traditions of NDP and CCF champions of old. Layton was an academic and a firebrand. Blaikie was a Manitoban, Layton was from Toronto, font of all evil for many Canadians, especially westerners.
Layton won on the first ballot and went into renovation mode. He began to rebuild and re-brand his party. He was a people person whose BlackBerry kept him linked to hundreds of organizers, fund-raisers, recruiters and policy wonks. He worked through meals and vacations, pushing himself and his goals.
He toned down the wild rhetoric, although he raised an uproar in the 2004 election campaign by accusing then-prime minister Paul Martin of responsibility for the deaths of homeless people because he failed to produce affordable housing.

Despite that, Layton won his Toronto-Danforth seat in Parliament in 2004, an election that left Martin's Liberals with a minority government. The NDP raised its seat total to 19 from 13.
It was a start. Layton criss-crossed the country to raise the party profile and in doing so, became the public face of the NDP. The trademark grin, the brush moustache, the earnest optimism, the trademark head tilt were the tools of his trade. The hellfire rhetoric cooled. This was reasonable Jack, optimistic Jack, the Jack of the kitchen table, not the street corner.
The approach seemed to strike a chord with regular folk.
In 2006, Layton's campaign produced 29 seats, but boosted its vote to 2.59 million. Momentum was building.

In 2008, Layton campaigned not as a third-party leader, but as a prime minister-in-waiting. The vote total slipped slightly, but his campaign won 37 seats, just six short of its then all-time high under Ed Broadbent.
By 2011, Layton was ready for a breakthrough. Despite the prostate cancer diagnosed in early 2010, despite the mysterious hip fracture, he was everywhere. In Quebec, his working-class French and his call to action on behalf of the ordinary family struck a note with voters grown weary of the Bloc and leery of the Liberals.
On May 2, about 4.5 million people cast ballots for the NDP, giving the party 103 seats — 59 from Quebec — and making Layton leader of the Official Opposition.
Just over two months later, looking pale and gaunt, he called a news conference to say he was suffering from another, unspecified cancer and he would temporarily step down as party leader. Nycole Turmel, rookie MP and veteran labour leader, took over in the interim.

Deuteronomy 34 says God took Moses up to a high place and showed him the Promised Land in the distance.

"I have caused thee to see it with thine eyes, but thou shalt not go over thither. So Moses the servant of the Lord died there in the land of Moab, according to the word of the Lord."


Closing costs

I want to review some of the costs you can expect to pay associated with any new home loan. With any luck, the builder or seller will agree to pay at least some of these expenses for you. But regardless of who pays them, these costs are part of the price of buying your next home, so let's take a look. They are closing costs, loan discount points and prepaid items.
Closing costs are the actual expenses that the lender incurs in the origination of a new home loan. Some of the costs are related to your loan application, such as the expense of newly updated credit reports on all applicants. Other fees are related to the house itself, such as the appraisal of the property. Others are payment to the lender for processing your application, such as the loan origination fee. All these costs are lumped into a broad category called "closing costs." Unless the seller offers to pay them for you, this area of expenses is charged to the buyer, and often runs between 2 and 3 percent of the amount being borrowed. Because different states have different fees and taxes that are a part of these costs, it's impossible to generalize nationwide. So it's important that you talk with a reputable lender ahead of time about what costs you can expect to pay in your part of the country.
Loan discount points are, in essence, a form of prepaid interest. One discount point is exactly equal to one percent of the amount being borrowed. It is paid in cash at closing to the lender as a form of interest. Discount points have the effect of lowering the stated interest rate you will pay on the loan you obtain. For example, a lender might offer you a 30 year fixed rate loan at 8% with zero points or the same loan at 7.5% with 2 discount points. Because the points are considered interest, the yield to the lender is approximately the same. So why, you are asking, would I want to pay points? You probably won't, but sometimes new home builders or employers will offer to pay up to a certain number of points as an incentive, and I want to make sure you get everything that's coming to you.
Last, there is the issue of prepaid items. Most home lenders want you to set up what is called an "escrow" account. This is nothing more than a savings account that the lender holds. Every month you will, in addition to your regular loan payment, deposit a sum for property taxes and for homeowner's insurance into this account. And when the next bill comes due for taxes or insurance, your lender will make the payment for you. The reason that all this matters today is that, on the day of your purchase, you will be required to set up an escrow account with about 9 months worth of taxes and about 2 months worth of insurance payments. In addition, you will have to pay for the first year's insurance policy in full. These costs are called prepaid items, and you must pay for them yourself.
Because regulations and customs vary from state to state, the amount you need at settlement may be more or less than the amounts I have discussed here. Talk to a reputable lender to get an accurate estimate of how much you will need to buy your next home.