GeorGia real estate reportLess Government, Lower Taxes, More Freedom

Volume 12 No. 1 $2.00 June 2012

Bank Owned Homes Can Be Georgia Cash Cows

Interest Rates Hit Rock Bottom - Again!!

Is Buying Cheaper Than Renting?

“Lease Purchase” Provides Direct Path to Home Ownership Renters Looking to Buy Make Payments On Time

by John Adams

Depending on who you talk to, bank owned homes today represent between a third and half of the residential

market in metro Atlanta. Buying a bank owned home at a

discounted price can get you a great deal. But there can be pitfalls along the way. So here are some points to keep in mind:

* The Banks are literally drowning in real

estate. They have never before faced a flood of

bank owned homes like this. Remember that in years past, most foreclosures never made it to the courthouse steps because values were almost constantly rising.

Lenders have neither the infrastructure nor the personnel to pull off such a massive sales undertaking. Unable to cope, they allow the foreclosed homes to sit empty for months on end. And everybody except them knows that nothing good ever happens in an empty house.

As a direct result of banks mismanagement,* Bank owned homes tend to quickly fall

into disrepair. The first thing to go is the air conditioning

compressor, followed by the appliances and the copper wiring in the walls. Nothing good ever happens in an empty house. Vacant houses attract neighborhood kids, gangs, vagrants and criminals, and things often go from bad to worse.

by John Adams

If you thought home loan rates were already low, hold on to your

security deed, because rates fell through the floor in May, and they are holding there so far this summer. Long term rates are now as low as they have been in nearly forty years, and are being held down by the personal will of Federal Reserve Chairman Ben Bernanke.

I expect this situation to last through the election in November, because the Fed does not want to be seen as helping one candidate over another.

Here are some questions I am frequently asked:

Q: John, what happened recently in Europe and how does that affect us?

A: In a nutshell, Spain edged closer to a full-

blown recession, and that scares institutional investors

who have been putting cash into the EURO as a safe

place to store it. If Spain is unable to fulfill its financial obligations, that could jeopardize

the stability of the EURO, potentially causing those

investors to lose lots of money as the value of the EURO declines.

So in May, big investors sold EUROS and bought US TREASURY bonds, indicating a “flight to safety” we’ve talked about before.

Q: OK, but how does that affect interest rates?A: When Uncle Sam has lots of buyers for

its debt obligations, it can lower what it offers to pay for the money invested. When that

by John Adams

For about the last 50 years, if you couldn’t afford to buy a house, your alternative was to rent. It was always cheaper

- the more affordable choice. Well times have changed, and today we are seeing that, at least in many American cities, it is now significantly cheaper to BUY a house than to RENT one.

Q: What’s this all about?Recently, online real estate site TRULIA

released a survey of the TOP 100 Metro Areas in the US, ranked on whether it was more affordable now to buy or rent. The results were surprising. In today’s upside down real estate world, it’s more affordable to buy in almost every market. That’s especially true here in Atlanta.

by John Adams

In these tough economic times, the path to home ownership may seem steeper than ever before. But there’s a new

twist on an old strategy that is helping put many Americans into a home they may eventually call their own.

I call it “RENT-TO-OWN” but it is really nothing more than a lease with an option to purchase. Whatever you call it, it has proven to be a powerful way to get a great tenant who stays a several years and presents few problems as a renter.

A “lease-option” is nothing more than

a lease agreement that gives the renter the right, but not the duty, to purchase the property under certain terms in the future.

See Buying Cheaper page 14

See Bank Owned page 14

See Rock Bottom page 7

See Lease Purchase page 14

THE

Georgia Landlord Survival Training for 2012Tuesday, June 19, 2012 - 6:00 p.m. til 9:15 p.m.

Northeast Atlanta Metro Association of REALTORS - NAMAR2145 Duluth Hwy - Take I-85 North to Exit 105: GA 120 W - See back page for details

THIS COURSE QUALIFIES FOR THREE HOURS OF REAL ESTATE CONTINUING EDUCATION CREDIT

2 T H E G E O R G I A R E A L E S T A T E R E P O R T June 2012

Real Estate Investing: A Tale Of Two Cities Atlanta Before & After The Real Estate Collapse

Cash Buyers Take Full Advantage of Slow Real Estate Market Cash is Still King, and Sellers Are On The Ropes

by John Adams

1. What was Atlanta like in the 90’s?BUILD BABY BUILD! Let’s remember the

nineties: Between 1990 and 2000, Georgia was a boom state and Atlanta was the epicenter. Everything went right. And it seemed like everyone was all moving to Atlanta.

In September of 1990, the IOC voted to bring the Centennial Olympic Games to Atlanta, and the race was on to transform “the city too busy to hate” into an international icon. Money was no object - construction was everywhere. Jobs were everywhere and people needed a place to live.

During the nineties, Georgia was the 4th fastest growing state in the nation, adding 1.7 million new residents.

Meanwhile, Atlanta found that it had no natural boundaries to stop the growth, and when a builder wanted to find more inexpensive land to build on, he simply went to the next exit on the Interstate.

2. Why the explosion of housing?Two words: EASY MONEY. There was

a strong push by the federal government to make home ownership available to anyone who desired it - and everyone desired it. First, we did away with down payments, then we eliminated credit restrictions, and

finally, toward the end of the decade, lenders introduced so called “sub-prime” loans that locked in super low payments for several years, then reset to higher rates.

Finally, everyone could buy a house.3. What happened?The DOT.Com bubble burst in the year

2000, driving more investment into real estate. Speculation fueled the housing bubble in the period after the turn of the century, and everyone wanted to invest in real estate.

Even after 9/11, real estate boomed. EASY MONEY made mortgage fraud extremely profitable, and a disturbing number of foreclosure homes began popping up, especially in fast growing metro Atlanta.

Loans were happily being made to borrowers who had no reasonable hope of ever paying them back.

In 2005, Federal Reserve chairman Alan Greenspan stated that there was “a little froth” in the housing industry. He was right. As the exotic mortgages of 3 to 5 years earlier approached their change dates, new owners with nothing invested found it was easier to walk away from their homes than make higher payments.

Vacant bank-owned homes began poisoning home neighborhoods all over the metro area. Banks blamed appraisers for over-

valuing homes. In response, appraisers began using foreclosure resales as comparables, and values began dropping like a rock.

Atlanta home builders continued to build, even though demand was drying up.

4: When did the real estate bubble finally burst?

By the time the bubble actually burst in 2007, new home inventory exceeded a one year supply. Meanwhile, as buyers began to see prices decline, demand for new homes dried up. The residential construction industry in Georgia evaporated.

5. And where are we today?Today, we think we are beginning to see

the volume of foreclosures decline. We think there may be renewed interest in housing as a long-term family investment. We think the economy may be approaching a slow period of recovery. BUt no one knows for sure.

There are positive signs that should not be ignored:

* Unemployment appears to have stabilized around 9 percent. The data suggests that things are not getting worse, and that is a positive on its own. I am not suggesting that 9 percent

unemployment is good or even acceptable, but it may be stabilized.

* Manufacturing jobs are on the rise. These are good paying jobs with benefits, and American workers are competing successfully in the world market.

* Retail sales are up, hopefully indicating renewed consumer confidence.

The economic uncertainty created in our current economy has created some great opportunities to build retirement cash flow and boost monthly income now. To learn more about investing in bank-owned homes, please turn to the back page of this newspaper, or visit Money99.com for details.

by John Adams

Many real estate markets across the U.S. are reporting an uptick in home sales activity, even though Atlanta is not.

But it’s not first time home buyers driving the increase. Instead, it’s real estate investors and foreign buyers. Even as housing sales reports are showing some encouraging signs of life, the real action is in the category of “all cash” sales.

Here are some questions I was asked recently on Fox5 GOOD DAY ATLANTA:

Q: John, what are we looking at here?A: I’m afraid it’s not good news. The

bottom line is that banks have finally decided to unload their huge supply of BANK OWNED HOMES in the Atlanta area, and the way they have settled upon is CASH SALES at any price, mostly to investors.

Q: Is that a change from their past strategy?A: Yes. In the beginning of this housing

crisis, banks continued to believe that they could sell post foreclosure homes for the mortgage balance or more, and recoup all their losses from the foreclosure. And why not, that’s the way it’s always been.

Q: So what happened?A: Two things: First, the banks favored

offers from owner-occupants, and owner occupants almost ALWAYS need a loan in order to buy. Because so many of these homes

needed work in order to be occupied, the buyer would tie up the house for 60 days while the appraisal finally came in, and then the loan was denied because the house was deemed NOT READY TO OCCUPY. The banks refused to make any repairs, and the contract fell through.

Second, appraisers saw more and more homes being foreclosed in neighborhoods, and

began lowering property values accordingly. This made it even more difficult for owner occupants to buy these houses.

Q: Then what happened?A: After the banks recognized that sales

to owner-occupants were simply extending the banks ownership period and costing them money, they turned to investors. Today, banks will only entertain offers from CASH BUYERS

who prove they have the cash to close and agree to a settlement in 30 days.

Q: So why is that a problem?A: Investors have a buy at a steep discount

in order to make a profit, so they are used to making low-ball offers. In addition, there are SO MANY bank owned homes and SO FEW people with the CASH and the INCLINATION to buy a run-down damaged house in a questionable neighborhood, that PRICES BEGAN to DROP LIKE a lead balloon.

Q: Are we talking about a significant number of transactions here?

A: Specific numbers are hard to come by as no one keeps reliable statistics on resold homes, but in the ATLANTA market, most experts agree that CASH SALES to INVESTORS are accounting for somewhere between 35 and 40% of all sales activity.

Q: So what happens to the lenders that sell at these super steep discounts?

A: They take a stunning loss on their investment, but they have finally come to the conclusion that they are better off taking their medicine then they are in postponing the agony. The reality is that banks have never grasped the magnitude of the housing crisis - they just don’t believe it.

Q: Does this mean there is an opportunity for today’s real estate investor?

A: YES and NO. If the investor doesn’t

mind making a lot of offers and being rejected repeatedly, and they have cash, and they are willing to buy the property in AS IS condition and pay for the renovation themselves, then YES, there is opportunity.

If, on the other hand, you expect to borrow the money to buy the house, or if you need someone else to handle the renovation, or you have no stomach for high-pressure negotiations, then this type of investing is not for you.

John Adams will be presenting an educational opportunity examining the ability of investors to profit from purchasing bank-owned homes and turning them into desirable rental properties. For more information, turn to the back page of this newspaper or visit Money99.com.

Q: Is this a part of the real estate market that a beginner can participate in?

A: It is critically important that anyone considering this type of investment be educated. This is no time to re-invent the wheel. Instead, anyone who is just getting started needs to fully understand the process of acquiring and renovating these properties. No matter how careful you are, you are taking a risk when you buy one of these houses. Having a full knowledge of the process before you buy anything is the smart way to approach this type of investment.

June 2012 T H E G E O R G I A R E A L E S T A T E R E P O R T 3

Where Do We Go From Here

Lower Your Property Tax - Just By Asking! Comps from 2011 provide lower values for years to come

by John Adams

The Housing Crisis has affected everyone in America who owns real estate in any form, from the homeowner to the renter

to the real estate investor. And since the second quarter of 2007, the impact has been devastating, especially here in Georgia.

According to Standard & Poor’s Case-Shiller Home Price Index, the average home in metro Atlanta has dropped almost 12 percent below its value in January of 2000, and well over 50 percent below its peak price in summer of 2006.

As I see them, here are the facts:1. PRICES ARE LOWOn average, Home Prices are lower

now than they have been since the turn of the century. In fact, it is possible in parts of the metro area to buy nice homes in nice neighborhoods for LESS THAN IT COST to build them. That can not last, it’s just a supply and demand issue.

2. RATES ARE LOWLong term home loan rates are being

artificially held down by the FEDERAL RESERVE in an effort to stimulate the economy. Fed Chair Ben Bernanke has even announced publicly his intention to hold rates down to these levels through 2014, a date even after his present term as chairman expires.

As a result, we are experiencing the lowest

long-term carrying cost seen in the last 40 years, well below where rates would be if government allowed rates to float. This can not last - it is a temporary phenomenon - but a buyer today can easily lock in the rate for 30 years.

So why aren’t buyers flocking into open houses and new subdivision model homes? What’s the hold-up?

* CONSUMER CONFIDENCE is at an extremely low level.

Most Americans have seen their standard of living erode over the past few years, and wonder if real estate will ever recover. Those that own real estate wonder if they should hold on to it, and those that don’t wonder if they should. Skyrocketing energy and food prices provide a daily reminder that this may be the wrong time to invest in real estate.

* JOBS are on everyone’s mind. Almost every one in the country has been

affected by unemployment, either personally, or as a result of someone they know who has lost their job. Because unemployment has remained stubbornly high, even people WITH jobs are worried that a triple-dip might affect them, and naturally, they are worried. And worried people don’t buy BIG TICKET ITEMS.

* FORECLOSURES continue to poison the Atlanta market with damaged houses selling at a fraction of their true value by witless

lenders who pass on their losses to our all-too-willing government.

Meanwhile, government mandated loan modification programs are fractured and ineffective, and lenders are unwilling or unable to process them. Almost all of these loans are from federally chartered lending institution, yet a painful lack of leadership in housing has rewarded lenders who foreclose.

WHERE DO WE GO FROM HERE?Here are three

ideas that might have a

dramatic impact on the problem and could be

implemented quickly across the country:

1. STOP FORECLOSURES. In any case where the owner

wants to stay and can afford even modest payments, encourage them to stay, not leave. Foreclosures should only be allowed in cases where the home is abandoned or the lender has made a good faith effort to allow the owner to stay. We have failed to recognize the tremendous damage even one foreclosure has on a neighborhood.

2. REFINANCE EVERYBODY. Any existing federal loan could be modified to lower the rate to current levels and extend the

term to lower payments. No appraisals and no lengthy processing - streamline the process and watch home prices start to rise.

3. LOWER TAXES on those who BUY ABANDONED HOUSES, fix them up, then sell them quickly to qualified owner-occupants. Government is ill-equipped to undertake this task, yet it is vital to any serious housing recovery.

I recently had a conversation with a HUD employee in metro Atlanta who advocated that local county governments should be given direct federal grants to acquire and rehabilitate bank-owned houses. When I countered that governments were the worst possible agents for improvement of real estate, he was stunned. And when I further suggested that “housing rehab” was not an appropriate activity for our federal government, I thought he was going to have a cardiac arrest.

This type of investing is currently punished heavily by our tax laws. If you buy a house, fix it up, and then sell it for a profit, you pay a whopping 49.3% in state and federal taxes on that profit. Instead, this activity should be rewarded and encouraged with a ZERO TAX RATE. This is the most powerful way to restore neighborhood integrity and solidify values.

Do these ideas make sense to you? Please share your thoughts with me at money99.com, and I will share the best with you in a future column.

by John Adams

Georgia Law was changed a couple of years ago to make it easier for real property owners to protest and appeal

their property tax assessment, yet as many as half of all parcels are over-valued for tax purposes. Here are three easy steps to put the odds in your favor:

1. Learn Area Sales Prices from 2011Call a real estate agent and ask if they will

help you obtain a list of all homes in your neighborhood that sold during 2011, along with their prices and basic data, such as age, bed & bath count, and square footage. Ignore sales from this year, as they are not admissible as evidence of value for your 2012 tax assessment.

Choose the three “sold” homes most similar to yours, and arrive at a realistic estimate of your home’s value based on this data.

2. Fill out Form GA 311-PT-A and get it delivered before the deadline in your county.

In Georgia, the county tax assessor is required to mail a NOTICE OF ASSESSMENT to the owner of each individual parcel advising you of the county’s estimated value on your property. You have only 45 days from the date that NOTICE is mailed to file your PROTEST, and that is done with Form

GA 311-PT-A. You can find this form and instructions on my website at Money99.com.

Most Georgia counties mail their NOTICE OF ASSESSMENT during May & June, so you should have yours by the time you read this column. But don’t wait to get

your NOTICE. Go ahead and call your tax assessor NOW to find out when assessments will be (or were) mailed. The same office will tell you the deadline for your protest to be filed.

3. Try to Talk with the Tax Appraiser

Ask to see your PROPERTY RECORD CARD, and check it carefully for accuracy. And ask what sales they intend to use to generate this year’s valuation. Invite them to come look at your home if they want to do so. They are so busy, they may agree with your estimate of value on the spot.

ADDITIONAL TIPSa. DO THIS NOW, while you still have

time. Deadline is likely in June or July.b. BE FRIENDLY, not hostile. These

folks are just doing their job.c. If they turn you down, APPEAL to the

BOARD OF EQUALIZATION. d. Look for foreclosure resales to justify a

lower value on your homeThis is a great time to get your taxes

lowered, because assessors typically only look at your property only once in a three year period. That’s not the law, it’s just the way things usually work. So if you get your valuation lowered THIS year, you are likely catching the bottom for the next THREE YEAR PERIOD.

If you need more information of the process, you can purchase the John Adams seminar entitled the PROPERTY TAX REDUCTION WORKSHOP for GEORGIA. Visit Money99.com or call 404-373-6000 for details.

4 T H E G E O R G I A R E A L E S T A T E R E P O R T June 2012

Home Inspection Important For Any Buyer Careful Evaluation Can Save You Thousands In Unexpected Repairs

Seven Deadly Sins of Credit Scoring How To Ruin Your Credit For Up To Seven Years Without Really Trying

by John Adams

Whether you are an investor or a first-time home buyer, the home Inspection has become a common part of the home-buying process in Georgia. But what exactly should you expect from your inspection, and what happens when a home flunks the inspection process. Here are the questions I am most frequently asked:

What exactly is a Home Inspection?A home inspection is an impartial

visual examination of the physical structure and major internal systems of a residential building, much like a physical exam that your doctor might perform on you. It is not an appraisal, a warranty, a code inspection, or an insurance policy.

What does a standard Home Inspection Include?

During an inspection, the inspector will review the accessible exposed portions of the structure of the home, including the roof, attic, walls, ceilings, floors, windows, doors, basement and foundation, as well as the heating/air conditioning systems, interior plumbing and electrical systems for potential problems.

Remember, if the inspector can’t see it or get at it, he can’t include it in the inspection.

Why is a Home Inspection so important?The purchase of a home is probably the largest

single investment you will ever make. You can and should learn as much as you can about the condition of the property and the possible need for any major repairs before buying that house.

A thorough home inspection helps minimize the possibility of unpleasant surprises, which can be very expensive.

After the inspection, you will have a clearer understanding of the property you are about to buy, giving you confidence and peace of mind.

How much does a Home Inspection typically cost?

Three to five hundred dollars is typical in the metro Atlanta area. A thorough inspection usually takes two to three hours, and results in a written report of areas needing attention.

It’s always a good idea to shop and compare prices from several different inspection services in your area, asking exactly what is included with the price. The inspector’s experience, training, and professional affiliations should be the most important considerations when

making your decision.How do I find a reputable home inspector?The State of Georgia currently has no

licensure or educational requirements for home inspectors, so an inspector’s reputation is

particularly important.Real estate agents and closing attorneys

are typically familiar with reputable home inspectors. Whatever your referral source,

you will want to make sure that the home inspector is either a member of the American Society of Home Inspectors (ASHI.org) or the Georgia Association

of Home Inspectors (GAHI.com). Each requires training and experience, and all members subscribe to a code of ethics.

When should you order an inspection?Most sales contracts include a 7 to 10 day

inspection contingency, so that if there are substantial problems, you can either renegotiate or withdraw altogether and get a refund of your earnest money. Defects of a cosmetic nature are typically not included in the inspection contingency.

Smart sellers order an inspection BEFORE they put their home on the market and use that inspection report as a MARKETING TOOL. However, buyers should not rely on an inspection furnished by the seller for reasons of prudence.

Do I have to be present for the home inspection?

Technically, no, but I strongly recommend that you attend, for two reasons:

1) You can watch the inspector do his job and ask questions directly, and

2) You will learn, first-hand, about the

condition of the home and become familiar with all its features and components.

What if my inspector finds problems with the home?

No home is perfect. If problems are discovered, it doesn’t mean you shouldn’t buy the house, only that you will know in advance what to expect.

Depending on your contract agreement, you may be able to negotiate the purchase price of the home with the seller, possibly offsetting repair costs.

What if the inspector misses something, or I discover a problem later on?

Inspectors will ask you to sign an acknowledgement that they are not responsible for defects that are hidden from sight or in areas that are inaccessible. In addition, inspectors are only human and are being asked to make a lot of judgement calls.

For example, if a furnace appears to be working properly, but it is ten years old, is it good or not? The correct answer is that the furnace is “near the end of its service life,” but that it may have another three to five years service ahead of it.

Yes, the inspector can examine the burner and the heat exchanger, and look for signs of rust or decay, but no, the inspector can not know when the furnace will stop working.

And even though you had an inspection yesterday, there is no guarantee that the furnace will continue to work tomorrow.

BOTTOM LINE: The more you know about the house you are buying, the better prepared you are to make the final decision and avoid future surprises. Knowledge is power.

1. Never pay your bills on time! And definitely don’t use online bill pay! It’s way too easy, and not paying your bills on time, every time, is sure to send your credit score plummeting. Being late with your bills can damage your credit rating pretty quickly, as well as increasing the interest you pay on all of your accounts.

2. DEFAULT on your MORTGAGE! Forget the fact that your payment history makes up more than one-third of your credit score. Just cross your fingers and hope that the bills go away all by themselves. That is, unless the creditors send the collection agencies after you...

3. Ignore any collection agency requests that you get. If you’re setting out to ruin your credit rating, this is a key step! Everything from an overdue library fine to a parking ticket to a late credit card payment can be submitted to a collection agency, so even little fines can affect your credit score!

4. Always use revolving credit, preferably

with high interest rates! If you want to ruin your credit, don’t go for “responsible” home equity loans or anything like that. Use your credit cards! It’s easier, the companies will usually up your limit so that you can spend more, and all you have to do is pay an outrageous interest rate and, of course, send your credit score down.

5. Never, ever review your credit report. Sure, it’s free - each of the three credit reporting agencies in the US (Experian, EquiFax, and TransUnion) are required to provide one free credit report upon request per year. And it’s easy - you can do it from your computer at work or from home. However, if you’re trying to ruin your credit, the last thing you want to do is check your credit report for possible problems!

6. Open as many low limit credit cards as possible. Low limit credit cards show creditors that you can’t get a higher limit - a red flag for any creditor. Anyone who was not looking to ruin their credit would set out to build their

credit limit using just one or two cards with higher limits. Also, the low limit cards are easier to max out, leading to the next way to

ruin your credit...7. Make sure you max out

your credit cards - and pay only the minimum payment each month! Pushing your spending to the limit of your credit cards is a great way to successfully ruin your credit. The higher your debt is, compared to your credit limit, the more proof that you can’t control your spending and that you’re a high risk for creditors.

Any of the above actions will have a negative impact on your credit score, but performed in concert, these seven sins are sure to really destroy your chances of getting any new credit for a long time!

For more information about your credit score, visit MyFico.com and also get a free copy of your own credit report by visiting AnnualCreditReport.com.

June 2012 T H E G E O R G I A R E A L E S T A T E R E P O R T 5

Four Ways To Buy A House With Bad Credit

HARP Phase Two Rollout May Help Millions Refis Not Limited To Owner Occupants - Investor Loans May Qualify Also

by John Adams

A huge number of Americans have taken a big hit to their credit score, and may not be able to qualify for a new loan under traditional underwriting guidelines. This comes as lenders are tightening their standards and making it more difficult to obtain financing.

But that doesn’t mean you can’t buy a home. Even if you have really bad credit, you can still become a homeowner by employing unconventional methods:

1. Owner Financing can benefit both buyer and seller. Remember that 40% of homes in America are owned free and clear of any mortgage, and many sellers would rather accept a stream of payments at a good interest rate rather than a lump sum that will pay them almost nothing in a savings account. They still have the house as collateral, and the down payment, if any, is negotiable. Credit is typically not an issue.

2. Buy A Home “Subject To” the existing mortgage. Most conventional loans are not assumable, but depending on the language in the security deed, there may be a path to ownership by taking over payments with the permission of the lender. Some lenders are willing to be more flexible in order to avoid a foreclosure, so don’t be afraid to ask if you can take over the loan from a seller.

Remember that many mortgages in existence today carry a “due on sale” clause that may allow the lender to call the loan due in the event of any transfer of ownership. While this action can not affect the credit of

the purchaser, it may allow the lender to begin foreclosure proceedings against the house itself, so don’t buy anything “subject to” unless you understand the exact consequences of such a purchase.

3. Lease-To-Own is likely the easiest way to approach ownership if your credit is ruined. Once you have declared bankruptcy or suffered a foreclosure, it usually takes about three years to rebuild your credit. Many investors will sign a three year “lease-purchase” agreement agreeing to credit a portion of your rent toward an eventual purchase. In exchange, they hope you will handle minor repairs and take good care of the house. It can be a true win-win situation.

4. Buy With a Partner. That partner might be a roommate or it might be an investor who has good credit. Either way, you can structure the loan in the name of the buyer with good credit, but take ownership as partners under a partnership agreement. Typically, the partnership includes a time frame in which either party can buy out the other under pre-determined terms, so you are not locked in for life. In today’s low yield savings environment, this can create a true win-win opportunity.

The bottom line is that you have to live somewhere. By exploring alternatives to the conventional home loan, you can likely find a way to benefit from all those dollars you will be spending anyway on your living space. Because these are unconventional methods and “off the beaten path” of real estate, make sure you Hire a Real Estate Attorney to protect your interests.

by John Adams

The Obama Administration’s most ambitious attempt yet at mortgage relief is finally becoming a reality. It’s called HARP PHASE TWO, and it promises to help literally millions of borrowers (including investors) get a lower interest rate on their home loan. But who will qualify and who won’t?

Here are the questions I have been most frequently asked:

We know its called HARP PHASE TWO, but who is it for and who will qualify?

The all new HARP PHASE TWO program is designed to target so-called “responsible” borrowers, who are current on their mortgage, but may be underwater on their loan. In other words, they owe more on the loan their their home is worth.

Why is that important?In many parts of the country, including

Atlanta, home values have fallen sharply as foreclosures and the recession have taken their toll. Many who bought before 2007 now are stuck with high interest rates, but unable to refinance due to their upside-down loan to value ratio.

So what’s in the fine printAmong the key rules:1. Only loans owned or guaranteed by

Fannie Mae and Freddie Mac are eligible.

Underwater borrowers who have FHA, VA or other types of mortgages are not. The website www.MortgageLenderAtlanta.com allows you to “look up” features that tell you whether they own your loan.

2. Your mortgage must have been purchased or securitized by either company no later than May 31, 2009, and must have an LTV ratio in excess of 80%.

3. You must be current on your loan, with no 30-day late payments during the past six months, no more than one late payment during the last 12 months.

4. You still must qualify for the program using normal credit guidelines, so if your credit has taken a hit or your income is way down, you may not qualify.

Is there anything else we need to know about this program?

Yes. The HARP PHASE TWO program is not restricted to your current residence, so if you have rental property or a vacation home, this may be your ticket to a lower interest rate. This is important because most loan refinance programs are restricted to owner-occupants and have excluded investors or those with vacation homes.

OK, so how do we find out more, if we think we might benefit from this program?

It’s important to remember that, under this program, you are NOT required to work with your existing lender, so you’ll want to shop around for the best rates available.

My advice is to start with your current lender, find out if you qualify, then talk to s e v e r a l o t h e r

sources before making a decision. If you need a referral to a local lender, send an e-mail to John Adams at www.Money99.com .

The treasury thinks this program may help as many as two million borrowers, and the only way to find out is to call your current

lender and get the facts. For additional information, call Jim

Duffy at 800-MY-LOANS.

6 T H E G E O R G I A R E A L E S T A T E R E P O R T June 2012

Mortgage Mistakes You Should Avoid

Why Hire A Real Estate Agent When You Buy A House? How An Agent Can Save You Time, Money, and Help You Avoid A Lawsuit

by John Adams

For most Americans, the greatest expense associated with home ownership is the interest expense of the mortgage loan. Yet many borrowers make common mistakes that end up costing them money month after month, for years to come. These mistakes apply to both purchase loans and refinance alike.

Here’s my “top eight” list of mortgage mistakes to avoid:

1. Making a Major Purchase before Loan Application.

Major credit purchases can have a negative impact not only on your credit score, but also on your debt-to-income ratio. This means that if you buy a new car the month before you apply for a mortgage loan, you will likely get worse terms and a higher rate. The hit to your credit may even result in your application being turned down, at least for now. Instead, postpone major purchases until after loan closing

2. Not Knowing Your Home’s VALUE Ahead of Time.

Never let the appraiser tell you what your home is worth. Instead, you tell them before they arrive and make them prove you wrong!

Have an agent friend do a competitive market analysis (typically at no charge) to provide you with a ballpark idea of values. In addition, keep the list of comparable sales as ammunition when you meet the appraiser. Failing to suggest a reasonable value ahead of time to your appraiser often results in a conservative valuation. In today’s market, that can spell disaster.

3. Selecting a Lender without SHOPPING AROUND.

Your current lender will not necessarily have the best rates and programs. Many borrowers think it will be easier to work with your current mortgage company. But in most cases, your current lender will require the same documentation as other companies.

Know that most loans are sold on the secondary market and have to be approved independently. So even if you have been a good borrower on your existing loan, they will still have to underwrite your new loan all over again.

On occasion, it is possible that your existing lender can offer you a “streamlined” refinance option and avoid certain costs. Even so, you should still shop and compare. Some streamline lenders raise interest rates to offset the reduced fees structure of their loans.

4. Not Performing an INTEREST BREAK EVEN Analysis.

The only true long term savings associated with refinancing is seen in a lowering of your

overall interest expense. Everything else is simply principal payback, and that is money you are paying to yourself in increased equity.

For example, if you have fifteen years remaining on your loan at six percent, and refinance for thirty years at seven percent, your monthly payment would decline. But your overall interest expense would be much higher because your interest rate increased.

Instead, my advice is to determine the total dollar cost of the refinance is, then figure out how much in interest dollars you will save every month by refinancing.

Divide the total cost by the monthly savings to get the number of months you will have to stay in the property to recover all your refinancing expenses.

For example, if your refinance costs $2000 and you save $100/month, your recovery period is 20 months. You won’t begin to see any savings under this new loan until you have made an additional 20 months of payments.

This break-even analysis only works if you are paying cash for settlement charges. Many lenders will allow you to pay a slightly higher interest rate and get a zero closing cost loan.

5. Not getting a Good-Faith Estimate IN WRITING.

Your lender is required by federal law to provide you with a written estimate of all anticipated closing costs within 3 working days of receiving the application. Keep your copy and compare it to your closing statement.

6. Not getting an Interest Rate Lock IN

WRITING.When a lender tells you they have locked

your interest rate, get a written statement which details the rate, the term of the lock, and details about the program.

7. Not providing documents in a timely manner.

When you make loan application, your lender will ask you for mounds of paperwork. Don’t complain. They are working to get your loan approved, and all these documents are needed for underwriting. Cooperate as quickly as possible. Failure to provide required documentation promptly can end up delaying your approval. If rates move higher and your rate lock expires, you’ll regret your tardiness.

8. Signing your Closing Papers without reviewing them.

Whenever possible, try to get documents that you will be signing ahead of time so you can review them. It’s a good idea to ask for a sample copy of all loan papers you will be signing at least 7 days before settlement, and a completed set no less than 24 hours before your scheduled closing.

This way, you can provide paperwork to your own attorney for review. In addition, your attorney can answer any questions you may have. You’ll have about one hour allotted for your closing, and you won’t be allowed to read all your papers while everyone else waits.

Avoiding these eight common mortgage mistakes can go a long way toward making sure your new loan is the best possible, meets your needs, and saves you money in the long run.

by John Adams

Here are eight specific areas where a real estate professional can and should earn their keep. Make sure you consult this list when thinking about hiring your next real estate agent, whether buying or selling.

1. Education & ExperienceThe average home owner buys a house

approximately once every six or seven years. And real estate markets and conditions can change dramatically in a matter of just months. As a result, unless you are in the real estate business, you are not experienced enough to represent yourself on what may be the largest purchase you ever make.

You can’t know everything about buying and selling real estate, but if you hire an experienced real estate professional, you have just put a strong advocate on your side.

2. Agents Save You TimeYour agents will take the time to find out

what you are looking for, and only show you

homes that meet your needs. It is not possible to see them all - with an agent you only see what you want.

3. Neighborhood KnowledgeAgents pride themselves on having “inside

information” about a neighborhood and a community. That’s why it’s best to hire an agent who is experienced with the area you want to live in.

4. Value ComparisonsAgents bring to the table detailed

information about factors that make up the valuation of homes in a particular neighborhood. Age, size, condition and market conditions are just the beginning. School district, style of construction, area crime statistics, and revitalization activities also contribute to a home’s value. Without this knowledge, it’s almost impossible to shop and compare, then get a fair price on a house.

5. Professional NetworkingReal estate agents network with other

professionals, many of whom provide services

that you will need to buy or sell. Agents know which inspectors, attorneys and lenders have a good reputation for efficiency, competency and competitive pricing. This can make the whole transaction much smoother, and less likely to end up in a lawsuit.

6. Negotiation Skills & ConfidentialityTop producing agents negotiate well

because, unlike most buyers and sellers, they can remove themselves from the emotional aspects of the transaction and because they are

trained to bring the parties to a meeting of the minds. Your agent will present your offer in the best light and agree to hold your information confidential from competing interests.

7. Handling All The PaperworkIn 1978 when I started as an agent, our

contract document was one page front & back. Today’s Georgia Purchase & Sale Agreement runs between 12 and 16 pages, more with all the disclosures and federal forms attached. One tiny mistake or omission could land you in court or cost you thousands. While agents are NOT lawyers, they are trained in real estate contracts.

8. Answer Questions After ClosingThere is always sometime that comes up

after closing, and your agent will assist you in whatever needs to happen. Maybe the tax bill gets sent to the wrong place, or maybe the seller took the antique chandelier in violation of the contract. Whatever it is, a good agent will deliver service after the sale, and that gives you peace of mind.

June 2012 T H E G E O R G I A R E A L E S T A T E R E P O R T 7

Principles of Liberty: The 28 Great Ideas That Are Changing the World

“I Believe”: Words from the Great Capitalist John D. Rockefeller Jr.

1. The only reliable basis for sound government and just human relations is Natural Law.

2. A free people cannot survive under a republican constitution unless they remain virtuous and morally strong.

3. The most promising method of securing a virtuous and morally stable people is to elect virtuous leaders.

4. Without religion the government of a free people cannot be maintained.

5. All things were created by God, therefore upon Him all mankind are equally dependent, and to Him they are equally responsible.

6. All men are created equal.7. The proper role of government is to

protect equal rights, not provide equal things.8. Men are endowed by their Creator with

certain unalienable rights.9. To protect man’s rights, God has revealed

certain principles of divine law.10. The God-given right to govern is vested

in the sovereign authority of the whole people.11. The majority of the people may alter

or abolish a government which has become tyrannical.

12. The United States of America shall be a republic.

13. A constitution should be structured to permanently protect the people from the human frailties of their rulers.

14. Life and liberty are secure only so long as the right of property is secure.

15. The highest level of prosperity occurs when there is a free-market economy and a minimum of government regulations.

16. The government should be separated into three branches - legislative, executive, and judicial.

17. A system of checks and balances should be adopted to prevent the abuse of power.

18. The unalienable rights of the people are most likely to be preserved if the principles of government are set forth in a written constitution.

19. Only limited and carefully defined powers should be delegated to government, all others being retained in the people.

20. Efficiency and dispatch require government to operate according to the will of the majority, but constitutional provisions must be made to protect the rights of the minority.

21. Strong local self-government is the keystone to preserving human freedom.

22. A free people should be governed by

law and not by the whims of men.23. A free society cannot survive as a

republic without a broad program of general education.

24. A free people will not survive unless they stay strong.

25. “Peace, commerce, and honest friendship with all nations - entangling alliances with none.”

26. The core unit which determines the strength of any society is the family; therefore, the government should foster and protect its integrity.

27. The burden of debt is as destructive to freedom as subjugation by conquest.

28. The United States has a manifest destiny to be an example and a blessing to the entire human race.

Source: Over 150 volumes of the Founding Fathers original writings, minutes, letters, biographies, etc. distilled in The Five Thousand Year Leap, by W. Cleon Skousen, Published by The National Center for Constitutional Studies, 1981.

In 1941, before Pearl Harbor, John D. Rockefeller, Jr. helped to establish the United Service Organizations (USO) and was an active leader of it. Two years later he joined in the formation of the National War Fund, including the USO, and served on its board. This Fund raised more than $321,000,000 to help the men and women of the armed forces, the merchant marine, and others.

During this period, JDR Jr. expressed in one concise statement his philosophy of life. On July 8, 1941, in a radio broadcast appeal on behalf of the USO and the National War Fund, he gave this statement of principles that was widely reprinted under the title, “I Believe”:

I believe in the supreme worth of the individual and in his right to life, liberty and the pursuit of happiness;

I believe that every right implies a

responsibility; every opportunity, an obligation; every possession, a duty;

I believe that the law was made for man and not man for the law; that government is

the servant of the people and not their master;

I believe in the dignity of labour, whether with head or hand; that the world owes no man a living but that it owes every man an opportunity to make a living;

I believe that thrift is essential to well ordered living and that economy is a prime requisite of a sound financial structure, whether in government, business or personal affairs;

I believe that truth and justice are fundamental to an enduring social order;

I believe in the sacredness of a promise, that a man’s word should be as good as his bond; that character – not wealth or power or position – is of supreme worth;

I believe that the rendering of useful service is the common duty of mankind and that only

in the purifying fire of sacrifice is the dross of selfishness consumed and the greatness of the human soul set free;

I believe in an all-wise and all-loving God, named by whatever name, and that the individual’s highest fulfilment, greatest happiness and widest usefulness are to be found in living in harmony with His will;

I believe that love is the greatest thing in the world; that it alone can overcome hate; that right can and will triumph over might.

John Davison Rockefeller, Jr. (January 29, 1874 – May 11, 1960) was a major philanthropist and a pivotal member of the prominent Rockefeller family. He was the sole son among the five children of businessman and Standard Oil industrialist John D. Rockefeller and the father of the five famous Rockefeller brothers.

Rock Bottom continued from front pagehappens, our borrowing costs go down, and so do the interest rates everyone has to pay to buy a house.

Q: Wait a minute, didn’t we go through this with Greece earlier this year?

A: Exactly the same scenario, except that GREECE is a tiny player with a tiny economy. In contrast, SPAIN is a major world player with a very large economy. If Spain were to undergo the riots we saw in Greece, it would be an economic disaster for the E.U. and a major boost to the strength of the dollar.

Q: So, tell us - how low are rates today?A: If you can qualify for a FULL

DOCUMENTATION conforming loan and have excellent credit, current 30 year fixed mortgage rates are below 4% and 15 year

mortgage interest rates are close to 3%. 5/1 ARM loan rates are under 2.5%. At these rates, rentals make more sense than ever before.

Remember that it was just at the end of the Carter administration that 30 year fixed rates topped 18%! We will never again see rates this low in our lifetimes.

Q: So, what should we do right now to take advantage of these rates?

A: If you have an existing loan at any rate above 4%, call several lenders today to see what they can offer you. You will save the most if you can move from a 30 year loan to a 15 year loan. But remember that a shorter term loan will cause the monthly payment to be higher, and that will impact your cash flow.

Also, if you have any personal debt, such as student loans, car loans, credit card debts, or even second mortgages, these tend to have higher rates and may not be tax deductible. Consider refinancing and paying off all these debts. By moving them into a mortgage, the interest you pay will probably become tax deductible, and the rate you will pay is so low that even I can’t believe it.

Q: Anything else we might forget?A: These rates are also apply to secondary

residences, so if you have a loan on that beach house or the cabin on lake lanier, now is the time to refinance and buy more real estate.

Q: What about rental properties? What are the rates for non-owner occupied properties?

A: Slightly higher than the above, but

STILL excellent rates. Plan on adding about three quarters of a point the current rates for investor money. Also, it is likely limited to about 75% of appraised value. Talk to your lender for details.

Q: What about JUMBO MONEY? A: Loan amounts above $417,000 are

considered “jumbo” loans. The rates are slightly higher than owner-occupant rates, but still remarkably low right now.

After your refinancing, go to a bullfight and thank a spaniard!

For a personal recommendation to a reputable lender with great rates, call John Adams at 404-373-6000 and leave a detailed message.

8 T H E G E O R G I A R E A L E S T A T E R E P O R T June 2012

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Tired of Losing Money In The Stock Market?

Refinancing When You Owe More Than the Home is Worthby Jim Duffy

The HARP 2 Refinance Program – allowing homeowners who owe more on their home than it would currently appraise for - is set to help thousands of homeowners to refinance to today’s low rates, and save hundreds every month, build equity more quickly, and for many, actually save their homes.

Here in the Southern US, Georgia and Florida have fared worse than our neighbors in percentage of homes where the borrowers own more than their house is worth.

In fact, if you combine negative equity and ‘near negative’ equity, defined as owing 95% or more of the home’s value, Georgia comes in with 32.3% of our homeowners being underwater. Wow, 1/3 of all homeowners.

HARP 2 Refinance ProgramThe numbers are important because

the new HARP 2.0 refinance program is just now opening up. And that is designed for those homeowners – even the ones who have very little equity, since this refinance program does not require Mortgage Insurance, which is normally required with less than 20% equity.

Rates are just a touch higher on the HARP program than for a conventional refinance with equity. But that is often offset by the lack of need for an appraisal. So far in my experience about 70% of HARP refinance applicants are granted a ‘Property Inspection Waiver’, meaning that Fannie Mae or Freddie Mac ‘assign’ a value to the property based on comparable sales, and therefore no appraisal is necessary.

To qualify, your loan needs to have been purchased by Fannie Mae or by Freddie Mac prior to June 1, 2009. Irrespective of your servicer, you will know that by looking up to see who actually owns your loan. Here are the websites: fanniemae.com/loanlookup or at freddiemac.com/mymortgage .

Don’t forget the two biggest changes with the HARP 2.0 refinance guidelines:

Now we can re-issue Mortgage insurance in most cases if you have it, and there is no Loan to Value cap. It’s unlimited; although it is capped at 105% Loan to Value for Investment properties.

FHA Streamline RefinanceProbably the easiest refinance you

will ever do.Similar to the HARP 2 refinance,

homeowners who have FHA loans on their homes can qualify for an interest

rate reduction loan into a new FHA loan with minimal documentation – and no appraisal.

The unique thing about an FHA Streamline refinance is that no Loan to Value ratio is calculated on the property, and therefore no appraisal is needed.

Rates change daily, but right now we are able to do an FHA streamline refinance with No closing costs to the homeowner at 3.75% (4.10% APR). That means that the 3.75% rate is paying me, the lender, enough ‘yield’ to have enough to pay the homeowner’s closing costs in full.

True, rates change every day, but they happen to be at extreme lows right now. If you have a current FHA loan, you should take advantage and lower that payment and save every month.

Similar to the HARP loan qualifications, the cost of the FHA mortgage insurance just went way down as well for Streamline refinances, so long as your current FHA loan was made and endorsed by HUD prior to June 1, 2009.

The Mortgage Insurance drops by more than half, from currently 1.25% of the loan amount per year, to just 0.55%.

Whatever type of loan you have on your property, it’s well be worth your time to explore refinancing via the HARP 2 program or the FHA Streamline program. You may be amazed by just how much you will save, both every month, and the cumulative savings over time.

Jim Duffy can be reached at 1.800.MY.LOANS or on the web at MortgageLenderAtlanta.com.

Be sure to catch Jim’s regular updates on the opportunities in the ever-changes world of real estate finance on his blog at http://www.MortgageLenderAtlanta.com.

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June 2012 T H E G E O R G I A R E A L E S T A T E R E P O R T 9

Home Value Insurance: A Bad Product for a Bad Marketby John Adams

Metro Atlantans have learned over the past few years that housing values don’t always grow. Many homeowners today wish they had some way to turn the clock back and capture the maximum value their home ever had.

There’s no setting back the clock, but a new insurance product promises consumers some peace of mind by protecting against a loss in home value due to a declining local housing market. Home Value Protection was rolled out in Ohio last fall, and the company behind it has moved into the Georgia market.

Here are the questions I am most frequently asked:

Q: John, what’s this insurance policy all about?

A: OK, let’s be honest. The appeal of home-value insurance is obvious, the devil is in the policy’s details, and those factors make Home Value Protection the worst investment I have seen lately..

I know that insurance is not really an investment, but some people think of it that way, and this is simply ,my opinion of a complete waste of your money.

Q: Every home owner wants to lock in past gains or prevent future loss. What’s so bad about a chance to protect our single largest investment?

A: As with any insurance policy, the devil

is in the details.Here’s how the policy works:Homeowners pay a monthly premium

to lock in today’s value of their home for the next 10 years, protecting the current value against future declines in their local market. If the home was purchased within the past 12 months, the “protected value” is the purchase price; if it was purchased more than a year ago, the insurer does an appraisal based on current local market conditions. If not, a current appraisal

reflects the bottom of the market we

are experiencing right now.

If the home is sold at a

loss during the protected

period, the consumer

gets the lesser of

the actual loss suffered on the home or the percentage decline in the Case-Shiller Home Price Index for their zip

code.Q :

What is the P R O T E C T E D

PERIOD?A: If you sell your

house during the first couple years from now, you are limited in the amount you

can collect. This is designed to allow a full economic recovery to boost the value of your house, a recovery that has already begun.

Q: So what happens if you sell your house at a loss after two years?

A: You can’t just dump it and expect the insurance to cover an oversized loss, and can’t let a home deteriorate to where it’s worth much less than surrounding homes, but have insurance make up for their negligence.

The maximum protected loss is 25% of the home’s original value, no matter what you end up selling for.

Q: Who will be selling this home value insurance?

A: The companies involved hope that real estate agents will push it as a smart option to add to their regular home owners insurance.

Q: Are there other limitations on the policy?

A: Yes. Even if you sell at a less and even if the loss is less than 25 % of the value at the time the policy was originated, you are also limited by the drop, if any, in the CASE SHILLER Home Price Index for the local market, whatever that may be.

Q: Is that a problem?A: In my mind, yes. The CASE SHILLER

INDEX in Atlanta only measures a small cross section of the market, and is notoriously wrong in Georgia much of the time.

Q: So, what’s the bottom line?A: I understand that the idea of HOME

VALUE INSURANCE is appealing, especially when it looks like we are in a declining real estate market with no light at the end of the tunnel, but I want everyone to know, and this is simply my opinion, that we are AT OR NEAR the bottom of this recession, and that home values will likely start to rise next year.

HOME VALUE INSURANCE is a waste of money, and your dollars are better spent making your home more livable or more enjoyable right now.

404-COOLING404-266-5464

Ask for Bill Preston

• Ask John Adams who he uses • Rehab & Custom Home Specilaists • Retail Installations at Wholesale Costs • We Know the Rehab/ Investor Market

10 T H E G E O R G I A R E A L E S T A T E R E P O R T June 2012

JIM DUFFY

has the RIGHT Home Loan FOR YOU!

“I have worked hard over the years to assemble a top class team to provide for you mortgage concierge level services, and look forward to working with you

on structuring the right home loan for your needs and goals, and to closing that loan smoothly for you.”

We are a direct mortgage lender serving the entire metro Atlanta and Georgia markets. A direct Fannie Mae, FHA and VA lender,

as well as offering very competitive jumbo rates.

o Home Loanso Refinance Loanso Vacation Homeso Jumbo Loans

o FHA Streamlineo FHA and VA Loanso HARP II Loanso Investor Loans

Jim Duffy, Mortgage Banker

Call 1-800-MY-LOANS jim@mortgagelenderatlanta.com

4485 Tench Road, Suite 740, Suwanee, GA 30024 NMLS#35122

10 Time Management Tips That WorkAre you working on clock time or ‘real’ time? Learn how to manage your day by understanding the difference with these 10 time management tips.

from Entrepreneur.com

Chances are good that, at some time in your life, you’ve taken a time management class, read about it in books, and tried to use an electronic or paper-based day planner to organize, prioritize and schedule your day. “Why, with this knowledge and these gadgets,” you may ask, “do I still feel like I can’t get everything done I need to?”

The answer is simple. Everything you ever learned about managing time is a complete waste of time because it doesn’t work.

Before you can even begin to manage time, you must learn what time is.

A dictionary defines time as “the point or period at which things occur.” Put simply, time is when stuff happens.

There are two types of time: clock time and real time. In clock time, there are 60 seconds in a minute, 60 minutes in an hour, 24 hours in a day and 365 days in a year. All time passes equally. When someone turns 50, they are exactly 50 years old, no more or no less.

In real time, all time is relative. Time flies or drags depending on what you’re doing. Two hours at the department of motor vehicles can feel like 12 years. And yet our 12-year-old children seem to have grown up in only two hours.

Which time describes the world in which you really live, real time or clock time?

The reason time management gadgets and systems don’t work is that these systems are designed to manage clock time. Clock time is irrelevant. You don’t live in or even have access to clock time. You live in real time, a world in which all time flies when you are having fun or drags when you are doing your taxes.

The good news is that real time is mental. It exists between your ears. You create it.

Anything you create, you can manage. It’s time to remove any self-sabotage or self-limitation you have around “not having enough time,” or today not being “the right time” to start a business or manage your current business properly.

There are only three ways to spend time: thoughts, conversations and actions. Regardless of the type of business you own, your work will be composed of those three items.

As an entrepreneur, you may be frequently interrupted or pulled in different directions.

While you cannot eliminate interruptions, you do get a say on how much time you will spend on them and how much time you will spend on the thoughts, conversations and actions that will lead you to success.

Practice the following techniques to become the master of your own time:

1. Carry a schedule and record all your thoughts, conversations and activities for a week. This will help you understand how much you can get done during the course of a day and where your precious moments are

going. You’ll see how much time is actually spent producing results and how much time is wasted on unproductive thoughts, conversations and actions.

2. Any activity or conversation that’s important to your success should have a time assigned to it. To-do lists get longer and longer to the point where they’re unworkable. Appointment books work. Schedule appointments with yourself and create time blocks for high-priority thoughts, conversations, and actions. Schedule when they will begin and end. Have the discipline to keep these appointments.

3. Plan to spend at least 50 percent of your time engaged in the thoughts, activities and conversations that produce most of your results.

4. Schedule time for interruptions. Plan time to be pulled away from what you’re doing. Take, for instance, the concept of having “office hours.” Isn’t “office hours” another way of saying “planned interruptions?”

5. Take the first 30 minutes of every day to

plan your day. Don’t start your day until you complete your time plan. The most important time of your day is the time you schedule to schedule time.

6. Take five minutes before every call and task to decide what result you want to attain. This will help you know what success looks like before you start. And it will also slow time down. Take five minutes after each call and activity to determine whether your desired result was achieved. If not, what was missing? How do you put what’s missing in your next call or activity?

7. Put up a “Do not disturb” sign when you absolutely have to get work done.

8. Practice not answering the phone just because it’s ringing and e-mails just because they show up. Disconnect instant messaging. Don’t instantly give people your attention unless it’s absolutely crucial in your business to offer an immediate human response. Instead, schedule a time to answer email and return phone calls.

9. Block out other distractions like Facebook and other forms of social media unless you use these tools to generate business.

10. Remember that it’s impossible to get everything done. Also remember that odds are good that 20 percent of your thoughts, conversations and activities produce 80 percent of your results.

June 2012 T H E G E O R G I A R E A L E S T A T E R E P O R T 1 1

Listen to JIM DUFFY

Jim has the RIGHT Loan Product FOR YOU!

“I have worked hard over the years to assemble a top class team to provide for you mortgage concierge level services, and look forward to working with you on structuring the right home loan for your needs and goals, and to closing that

loan smoothly for you.”

We are a direct mortgage lender serving the entire metro Atlanta and Georgia markets. A direct Fannie Mae, FHA and VA lender, as well as offering very competitive jumbo rates.

o Home Loanso Refinance Loanso Vacation Homeso Jumbo Loans

o FHA Streamlineo FHA and VA Loanso HARP II Loanso Investor Loans

Jim Duffy, Mortgage Banker

Call 1-800-MY-LOANS jim@mortgagelenderatlanta.com

4485 Tench Road, Suite 740, Suwanee, GA 30024 NMLS#35122

Keep the Neighbors Happyby Kim Cook, Contributing Editor of the GRER

When we’re selling or renting a house, the neighbors can help make it a pleasant experience or a real nightmare. Bill and I always try to talk with the neighbors and listen to their needs and concerns. We want the neighbors to like our house and appreciate the improvements we make. We also want the neighborhood’s values to benefit from our sales price.

We recently bought a house in a very nice neighborhood where the values had taken a terrible turn downward. We did a beautiful rehab to the house and property, spending about $24,000 on improvements. The neighbors were patient with the noise and tolerant of our trucks constantly blocking the road.

During the rehab, we encouraged the neighbors to drop by and check out our progress. We asked them to help keep an eye on the house, which made them feel a part of the process and helped us keep the house safe.

Also, as a great testament to the amazing talents of our contractors – Joey English and Keith Casey – several of the neighbors asked for their phone numbers. It does my heart good when our team benefits from future work in a neighborhood.

When the rehab was finished and the house cleaned, we tucked a ‘Choose Your Neighbor’ flier behind the flag of each mailbox in the subdivision. We offered the neighbors a referral fee of $250 if they would help us find a good buyer for the home. We also thanked them for their extreme patience and understanding while we worked to make the house something they would be proud to have in the neighborhood.

On the back side of the flier, we included information about our upcoming Open House and invited them to stop by and see the finished product. And here’s the key to dissolving any anger about our low price: we listed all of the recent sales in the neighborhood, stating that those sales

dictated our list price. It’s hard to argue with the facts.

Listing the recent sales helped the neighbors understand how we determined our list price. It also helped them recognize that the house was a killer deal. Several of the neighbors brought their family members to the Open House in hopes that they could benefit from such a good deal.

As a matter of fact, before this article is printed, we can almost guarantee that our buyer will be the brother of the guy who lives up the street.

When we rehab a house and list it for sale, we want to make a profit, of course, but we also want the neighborhood to benefit from our time spent there. Being considerate of the neighbors, working diligently to find a good buyer, and helping to improve the values makes the experience a pleasant one for all.

Bill and Kim Cook’s North Georgia Real Estate Investors Association meets on the 2nd Thursday of each month, from 7 to 9 p.m., at the beautiful Hilton Garden Inn off Main Street in Cartersville, Georgia. Highly recommended by John Adams. For more info, go to REIoutpost.com.

12 T H E G E O R G I A R E A L E S T A T E R E P O R T June 2012

Atlanta’s Real Estate Recovery Held Hostage To An Epidemic of Unreasonably Low Appraisals

Special for the Georgia Real Estate Reportby D. Scott Murphy, SRA

Are values recovering in Atlanta? Well, it depends who you ask and exactly which part of Atlanta you are talking about. It actually goes even further than that. It depends on which price range in which given area. So the answer is not a simple one.

In general, the worst of this recession appears to be behind us. Many areas and price points are seeing price stabilization and (dare I say) appreciation in some small pockets.

We are seeing days on market decrease, sales price to list price ratios increase and multiple offers on properties. This is due in part to the fact that Atlanta is seeing some of the lowest levels of inventory of homes for sale in many years.

A SELLER’S MARKETMany economists state that when inventory reaches

a point of less than 6 months it becomes a seller’s market. This is occurring in areas all around Atlanta, generally in areas where foreclosure and short sale rates have stabilized or declined.

The flip side to this are the areas which were (and still are) hard hit by foreclosures and short sales.

The latest numbers reported by the S&P/Case-Schiller Home Price Index for Atlanta (March 2012) show a continued decline (-0.91% from Feb 2012) and (down -17.74% from a year ago) with the last 7 months down -23.2%.

Over my 30 years of appraising, I have seen at least three recoveries. I am aware of the various stages of these cycles and monitor the market closely so I can accurately estimate the value of a given property.

I am concerned that this recovery may be extended or impeded by the appraiser and or the lender, although

neither should have any influence on the value of a home. They both should act in the background and the market should be moved by the forces of supply and demand, negotiations of a willing and well educated buyer and seller, mortgage interest rates and the state of the economy in general. That’s the way it should be.

THE WAY IT ISIn reality, I am seeing time and time again good

arm’s length transactions “not appraising” and sellers having to make large price concessions or the deal dies. This unnatural force on market value is caused by some new problems in the appraisal and lending worlds.

What is causing this? Why are so many properties “not appraising”?

First let me state for the record that I do not believe that every arm’s length sale should appraise at full contract price. There are going to be times when the property is just not worth the agreed upon purchase price, but these instances should be few and far between.

Next let’s look at the appraiser’s role in the mortgage process. We are to act as an unbiased party, putting ourselves in the shoes of a typical buyer, thoroughly analyze the market and determine if the sales price is reasonable. I often refer to us as the “mortgage police”. We are to determine if the sale price is reasonable or not, ferreting out fraudulent or unreasonable deals in an effort to protect the lender and the buyer.

Appraisers do not determine market value, we interpret market value. So a valid arm’s length deal should appraise because the buyer has closely analyzed the market and negotiated a deal which is in line with other recent sales and active listings.

The problem for an appraiser in a recovering market is twofold. We must use recent confirmed sales and are only allowed to consider active listings and pending sales as a secondary means of supporting our appraised

value. TRAPPED IN THE PASTWhere buyers are in the present, appraisers are

mostly trapped in the past. This is compounded by the onerous rules and

guidelines imposed by the lender (ultimately the secondary market funder such as Fannie Mae, Freddie Mac or FHA). I often say there are two values for a property: a) market value and b) Fannie Mae value. That’s because the requirements of these secondary market funders often lead to a value which is significantly below real world pricing.

This leads me to the second part of the problem: the lender. In their defense, the lender is literally compelled to adopt the underwriting guidelines of the secondary market. Never in my 30 years of appraising have I seen such microscopic scrutiny of our appraisal reports. There is literally not a report submitted which is not kicked back for some type of correction or revision.

Lenders are running scared and for good reason. GOVERNMENT SPONSORED ENTERPRISESThe secondary mortgage market buys closed

loans from lenders provided those loans meet the underwriting guidelines of FANNIE MAE, FREDDIE MAC, or the FEDERAL HOME LOAN BANK. Collectively, these institutions are called “government-sponsored enterprises” or GSEs for short. If a loan fails to meet GSE underwriting guidelines, it can not be sold in the secondary market, and must be held by the lender “in portfolio.”

Today, the GSEs are analyzing all loan application files with a fine tooth comb. If even the smallest discrepancy is found, the GSE will send the loan package back for repurchase by the originating lender.

Until just 3-4 years ago, appraisers had been pressured by the loan originators to “make deals work” and to get the highest value possible on refinances. This was an industry standard and I am sure many loan officers were taught that it was the way things were done.

Then federal regulations changed all that through the HVCC – The Home Valuation Code of Conduct.

Today, no one associated with the loan origination can communicate with an appraiser, let alone discuss value. This was a necessary change and one which should have been done a long time ago.

The problem is that it came at a really bad time. Values were already declining and it had one unintended consequence. Many appraisers now flip flopped. Instead of “pushing” value, these appraisers became ultra-conservative.

Because of all the mortgage fraud over the past 10 years, loan officers now had no contact and no control over the appraiser in any way. As a matter of fact, now the underwriter has the power. In order to “stay in good” with the lender, many appraisers feel they must be ultra-conservative. BY doing so, they hope to please the underwriter and avoid scrutiny of their reports.

Loan underwriters are under tremendous pressure to scrub each file and make sure it is not going to be kicked back by the GSE.

In past recoveries, we had the latitude to prepare our reports with the best data possible, prove that the sales price was reasonable and within our adjusted range (often the higher end of our range) and place appropriate weight on the pending sales and active listings. This is what a savvy buyer has available to them RIGHT NOW – there are so few meaningful sales out there that pending and active sales are wisely considered.

If appraisers had that same latitude, I believe we would affirm the sales prices of the vast majority of the contracted sales. Unfortunately, such is not the case.

Now we are faced with mine field when searching

for comparables: REO’s, foreclosures, short sales, bankruptcies and other non-arms length transactions litter the comparable sales database.

On top of the seemingly impossible struggle to find comparables we face this immense scrutiny from the lender. Can you blame the appraiser for saying “forget it, I am just going to be conservative, fly below the radar and get my job done”.

He is no longer in fear of the loan officer not sending him any work. The less he “rocks the boat” with the lender, the better his chances are of getting additional work. The more difficult path is to stick to his ethics, take the blinders off, realize his true purpose is not the determine market value but interpret it and work extra hard to find the best, most similar comparables possible.

If the sale price falls within his adjust range he should gravitate to that number. Appraisers are not superhuman - we do not control the real estate market. And the real estate market is far from perfect – there is no ONE number that any house is worth.

There are many instances when an appraiser must use a foreclosure re-sale as a comparable. The problem is that the sale of a property from a bank to in investor is not a true arm’s length sale. The buyer (typically an investor) is taking a very large risk with his cash and his credit. He is buying this property in “as-is” condition, with no guarantees of value now or later. There are no warranties and no disclosures. He has no recourse if later a major defect is discovered.

He is also taking a title risk as the seller does not offer a traditional warranty deed (taking full responsibility for the title) but a limited warranty deed or bargain and sale deed. Wouldn’t you expect a discount for this risk? – definitely! Therefore, the appraiser must adjust for this under terms of sale.

Once a neighborhood is saturated with foreclosures this adjustment may not be as supportable but in a neighborhood of mostly regular, arm’s length sales it is.

If appraisers and lenders do not realize this and become more realistic, the real estate market will only continue to spiral down. Good competent appraisers and lenders must do their job and do it correctly.

Market value is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion.

It is not that all sales must be within one mile and have sold within so many days; and all adjustments must be within these given ranges. I know of appraisers who are throwing out perfectly good sales and replacing them with inferior sales just because they will satisfy these sometime ridiculous lender requirements.

My pleas to the Lenders? Remember, the guidelines are just GUIDELINES.

The appraiser must be given the latitude to choose the most appropriate comparables in an effort to truly interpret market value as of the date of his report.

If this epidemic problem of unreasonably low appraisals continues through our strongest part of the year (the summer selling season), we then move into election time and then the slow months of winter, I am not sure we will see any recovery and may lapse into another free fall in value.

D. Scott Murphy is the principal owner of D. S. Murphy & Associates, Inc – a residential and commercial appraisal firm based in Atlanta Georgia with offices through the southeast. He is an appointed member of the Georgia Real Estate Appraisers Board and a frequently speaker and nationally known authority on real estate valuation. He can be contacted at 678-584-5900; dsmurphy@dsmurphy.com; www.dsmurphy.com

The All NewReal Estate Academy

ANNOUNCING A BRAND NEW JOHN ADAMS REAL ESTATE SEMINAR

If you are a veteran real estate investor, or just getting started, or even if you want to add property management to your professional skill set, you need to know these Investor Strategies & Secrets, guaranteed to boost your cash flow month after month and build net worth in the years ahead.

Dear Investor,

Last time I checked, there were 310 million people living in this country, and most of them prefer to live indoors. That means they have to have a place to live. And that means you and I can take advantage of this recession to make money.

But today, the times have changed. Property values have changed.Opportunities have changed. This is a challenging time for many Ameri-

cans financially. And if you plan to make money in this market, you need to know which strategies to use and which to avoid.

That’s why I have put together my all new Real Estate Academy, and I want to invite you to attend. This is not a slimmed down Institute, but in-stead is a new program designed to bring you up to speed on how we make money in this market in this economy.

My faculty of six professional instructors is the finest gathering of real estate investors anywhere. Each is an expert in his or her own field, and each continues to achieve successful investment results today.

Look at the course outline to get a specific list of the topics to be covered.I know that ten hours in one day is a lot, but that’s the time we need to

cover the material you want.And here’s the best part: The entire Real Estate Academy is completed

in one day and it’s only $695 for one person or $995 for any couple. And of course, your satisfaction is guaranteed. If, by noon on Saturday, you decide the course is not right for you, simply turn in your materials and get a complete refund. No questions asked.

Here is my problem: The Atlanta Realtor Center in Sandy Springs can seat only 20 students, and I am unable to expand the seating. I want this to be a small group so all your questions can be answered. But this program will sell out fast.

You will meet my attorney, my lender, my investing partners, my ac-countant, and my computer guru. And each of them will be available to you for questions and further conversations.

If you have been to my Investors Institute, you will find the ACADEMY a very different experience. We focus on multiple core modules and case studies, and you will come away with a specific plan of action for making money in this market. Whether you are a veteran investor or just getting started, whether you want to be hands-on or hands-off, this one day pro-gram is for you!

Each module is taught by me with an acknowledged industry expert, one who will bring us up to date on everything that is happening in their line if work. You simply can not find this type of current real-world educa-tion anywhere else.

WHO SHOULD ATTEND:Investors, Landlords, Renovators, Realtors, Brokers, and anyone who

is tired of getting mediocre results in their self-directed IRA or Roth. This program will show you how to dramatically boost your cash on cash returns in a short period of time. Hey, if we are going to have a recession, you might as well profit from it.

I AM AN INSTITUTE GRAD.DO I NEED TO ATTEND THIS SEMINAR?Absolutely. While some of the concepts will remind you of your Insti-

tute experience, this is an all new and updated program designed to take advantage of the current economic recession. Our leaders in Washington have created this wreck, and there is a silver lining. My suspicion is that this opportunity will last for maybe the next 12 months, but eventually this thing will be over. But for right now, this is what works for me.

WHAT DO I GET WHEN I ATTEND?A complete manual covering all the modules presented, and access

to all faculty members during and after the program. And the most upto- date real estate investment program available anywhere. It’s ten hours of non-stop education you don’t want to miss. There is free cof-fee, cokes and snacks, a simple lunch is included (because we will teach right thru lunch). Agents get 7 hours of continuing education. And the entire course is guaranteed to be right for you. If, by lunchtime, you feel that this isn’t what you expected, just turn in your materials and get a complete refund.

WHAT IF I HAVE A CONFLICT THAT DATE?I can’t imagine what you could possibly have scheduled that is this

important. Even if this is your wedding day, I recommend that you postpone it - your future spouse will thank you later. If you have any questions about this program, call me personally at 404-373-6000. I will answer your questions and sign you up on the spot. But seating is limited by the small size of the Atlanta Realtor Center in Sandy Springs, so don’t put this off. Take action now!

8:00 - 8:25 Introduction - Your Plan for Financial Freedom in Real Estate8:25 - 8:55 Conventional & Creative Financing for Investors9:00 - 9:45 How To Make Money In This Market a. The Long Term Hold Strategy b. Find, Fix-up & Sell Quickly10:00 - 10:45 Identifying Bargain Properties in this Market a. HUD Auctions b. Bank Resales & Other sources11:00 - 11:45 Short Sales & Owner Financing12:00 - 12:30 LUNCH (Hard Money Presentation)12:30 - 1:00 Real Estate Contract Overview1:00 - 1:45 Land Trusts, Corporations, Asset Protection2:00 - 2:45 The Real Estate IRA and Aggressive Tax Avoidance3:00 - 3:45 Performing A CMA & Estimating Repairs4:00 - 4:45 How COMPUTERS Bring All Your Data Together5:00 - 5:45 Your Call To Action - Now You Know!

THE REAL ESTATEACADEMY

June 23, 2012

ADVANCE TICKETS$695 per person or

$995 per coupleMAXIMUM of 20 Students for this event.

• Above Discounts when paid in Advance Only -• Satisfaction Guaranteed

Visit money99.com or call todayThis course has been approved by the Georgia Real Estate Commission

for Seven Hours of Real Estate Continuing Education Credit

Bonus for AttendeesFull Day of Repo Tour of Homes

We’ll visit atleast 10 repo housesJune 30, 2012 9:30 A.M. - 5:00 P.M.

Created specifically as an additional learning experience for graduates of my Real Estate Academy, my students will be able to attend the full day tour of homes for FREE. It is a perfect follow-up for the class on Saturday, and includes transportation and lunch, as well as a viewing of at least 10 distressed pre-selected homes that are currently on the market at distressed prices. Experts will guide you thru each house and discuss the pros and the cons, giving you an inside look at how the pros do it every day. This tour alone is worth your academy investment.

SATURDAYJune 23, 2012

8:00 A.M. - 6:00 P.M.

ATLANTA REALTOR CENTER

5784 Lake Forrest Dr. NWAtlanta, GA 30328

near 285 at ROSWELL ROAD

JohnAdams

14 T H E G E O R G I A R E A L E S T A T E R E P O R T June 2012

It should be a win-win document.HOW DOES IT WORK?Usually, a portion of the rent is applied

toward the purchase price IF the renter decides to buy at a later date. In exchange, the owner gets a good renter because the tenant might end up buying the house. Since he plans on buying the house, the resident takes good care of it, and tends to pay his rent on time.

WHO WINS with a LEASE PURCHASE?The buyer wins because his credit can

improve over the option period allowing him to qualify for a conventional loan and buy his own home. In addition, the rebated rent can serve as the down payment and may cover some of the closing costs as well.

The seller wins because he gets an

excellent tenant who keeps up the property. He can sell and get a fair price for his home, and usually there is no real estate commission due, which can save money too.

HOW CAN A LEASE PURCHASE BACKFIRE?

Typically, when a renter enters a lease-purchase agreement, there is a non-refundable option fee which is paid to the seller. This fee is negotiable, but is lost if the tenant decides later to NOT buy the house.

Also, the rebated portion of the rent is ONLY available for use by the tenant to purchase that particular house under the terms of the option agreement. If the tenant later decides to continue renting or to buy another house, all that available rebate is

lost to the owner as rent.That’s not really back-firing, but it

always hurts to lose money you thought you had coming.

Here are the questions to ask:1. Is there an UP-FRONT FEE of any

kind, and is it REFUNDABLE?2. What is the TERM of the OPTION?3. Is the rent competitive?4. Does a Portion of the Rent Apply

toward the Purchase?5. What will the selling price be?6. Who Pays for Repairs During the

Option Period?All these items are negotiated between

renter and owner at the time the option is written, so be prepared to make some serious financial decisions.

FINALLY, HAVE THE OPTION DOCUMENT REVIEWED BY A REAL ESTATE ATTORNEY

In a Lease Purchase agreement, there are many decisions that need to be made in advance, and your real estate attorney is the best person to review these decisions with you. Make sure you do this before you sign anything. After you sign on the dotted line, it’s too late to make a change in the lease.

If the idea of using a “lease-purchase” makes sense to you as a way of generating great rental income, you need to attend our workshop detailed on the back page of this newspaper. In addition, go to Money99.com and sign up for our weekly newsletter. And GOOD LUCK!

Q: Everyone knows it’s cheaper to rent than to own. What has happened to change that?

* HOME PRICES ARE CONTINUING TO FALL: According to statistics, home values in Atlanta fell almost 15 percent just in the past year, and we still don’t know when the economy is going to turn around. As a result, prices have been devastated. And that’s not just here, it’s pretty much nationwide.

When buyers are afraid to buy, sellers can’t sell, so they drop their asking price, and that makes it more affordable.

* INTEREST RATES ARE SUPER LOW: The vast majority of buyers use a home loan to finalize their purchase, and the largest expense

of home ownership over a thirty year loan is interest. When that interest rate is artificially held at 4 percent in order to stimulate the economy, it rewards anyone who locks in a mortgage. As a result, the AFFORDABILITY of home ownership is as high as we have ever seen it. And frankly, I expect it to stay this way through the election this fall.

Q: What other factors have entered into the BUY vs RENT issue?

* RISING RENTAL COSTS have forced renters to take another look at their finances. Because there are so many entering the ranks of renting (due to job loss, foreclosure, credit issues), there is a shortage of quality rental properties. As a result, rents are UP. That

makes owning more attractive by comparison.Q: What has caused rental rates to rise??A: Supply & Demand:* Thousands of former rentals have

been foreclosed and sent back to the bank, where they sit for sale while they drag down property values, and

* Thousands of former owners who have lost jobs or had other financial problems have lost their homes to foreclosure, and are unable to qualify for a loan, even if they had the money. So they are forced into the rental market, just as the supply is dwindling.

* Loan Qualifications are now set so high that it’s much harder to get a loan than it was just a few years ago.

Q: Are there any cities in the top 100 where renting makes more economic sense?

Yes, if you want to rent, move to Honolulu or San Francisco. Both markets are still strong and expensive to buy in. In addition, they are both pretty much landlocked, with no place to expand.

But here in Georgia, we still have an excellent market that rewards the buyer for making a decision now.

If, after reading this article, you would like to learn more about investing in quality rental property in Georgia, please turn to the back page of this publication for information about our next educational event.

Buying Cheaper continued from front page

Bank Owned continued from front page

Lease Purchase continued from front page

* Banks are often so disorganized, that even they don’t know they have a house for sale.

It can be months between foreclosure and any organized attempt at sale, and even then, the lender often has a completely unrealistic idea of what the house is worth in its present condition.

To Make Matters even worse:* The banks will NOT finance their own

homes if they need even cosmetic repairs (and most all of these homes do). Few of these homes will qualify for conventional financing.

So why even consider a bank owned home?

1. The Banks Must Sell. They are under pressure from the federal bank regulators to sell quickly for whatever they can get.

And almost nobody wants to buy “the worst house in a slipping neighborhood.” So, you can possibly get a great deal.

2. The fact that the bank has neglected the house over a period of months has contributed to its rapid decline in value. During your negotiations, document damages and needed repairs (especially mold or lead based paint) and submit photos of problems with your offers.

3. The FHA 203k rehab loan is ideal for this situation.

The FHA 203k loan program is HUD’s primary program for the rehabilitation and repair of single family properties. You can think of it as an acquisition loan plus a home improvement loan. It is currently limited to owner-occupants, but you could move or sell after a year of occupancy.

The property is appraised “AS IS” and also appraised based on its AFTER REPAIR VALUE.

If the numbers work, FHA loans you the money to buy the house, fix it up, and wraps the whole thing into a 30 year fixed rate loan at a great interest rate. The maximum loan amount in the Atlanta area is currently set at $346,250 for a single-family dwelling.

4. The best part is that you can make some improvements based on your own wishes.

For example, you can choose your own colors, floor coverings, kitchen design, and even add things like a deck or a fence.

As with many government programs, there is a fair amount of paperwork to file and rules that must be followed. For example, some improvements are specifically prohibited (tennis courts and pools) while others are

specifically approved ( k i t c h e n and bath remodeling).

5. You’ll need an experienced and licensed contractor, and you’ve got to have decent credit, but the FHA 203k loan can be the solution to buying a bank owned home. Your down payment can be as little as 3.5 percent of the purchase price.

In some cases, you may be able to perform some of the work yourself, or you may be able to serve as your own general contractor. However, work can not be limited to nights and weekends only.

At closing, the lender lends you the money to buy the house, and as repairs are made, allows draws to

be made against the escrow for repairs. Work is monitored each step of the way, so that the buyer knows exactly what level of completion has been achieved.

At the end of the day, the FHA 203k is a unique way to approach today’s housing market.

If you are not planning on moving into the house after it is repaired, you

can use a short-term lender to acquire the property, fund the repairs, then convert your short-term loan into so-called “permanent” financing, meaning a 30 year fixed rate loan. Yes, you have to have decent credit and yes, you have to qualify for these loans, but the cash flow can be remarkable due to the combination of low acquisition price plus low interest rates.

For more information about buying bank-owned homes and making money investing in real estate, please turn to the back page of this publication, or visit MONEY99.com for a schedule of upcoming events.

June 2012 T H E G E O R G I A R E A L E S T A T E R E P O R T 15

re a l es tat e Bu s i n e s s Di r e c t o ryDunwoody Tax &

Accounting GroupTax & Accounting http://www.kddcpa.com/

404-375-1566

Advanta IRA Administration, LLC

Consultinghttp://www.advantairagroup.com/

800-416-8736

Barnard Agency Inc - Allstate

Insurancehttp://www.allstateagencies.com/DeanBarnard/Welcome

678-455-8606

Angel Oak

Lending Services http://www.angeloakcapital.com

404-844-5521

Your Intown Home

Property Managementhttp://www.yourintownhome.com/

404-855-1430Atlanta Carpet Services, Inc.

Providing carpet, wood, vinyl, and tile http://www.acscarpet.com/

770-322-7373Halperin

Lyman, LLCReal Estate Legal & Consulting Services

http://www.halperinlyman.com/

678-999-9220Atlanta Capital

Fundingprivately funded hard money lender

http://atlantacapitalfunding.com/

404-794-5322

Soteria Services, Inc.Tax & Accounting

http://www.soteriatax.com/

678-799-7861

Universal Refinish, LLC

Contractors http://www.universalrefinish.com/

770-630-5132

Southern Fidelity Associates, LLC

Insurance sfallct@gmail.com

770-500-2319TriPoint

Funding, LLCLending Services

http://tripointfunding.com//

678-382-1224

Goldmine Properties

Real Estate http://www.bestbuyhomesllc.com/

770-338-2994

John Maurer Law

Real Estate Law at a Reasonable Pricehttp://www.facebook.com/Speaksga

678-443-9622

Paces Funding

A direct hard money lenderhttp://pacesfunding.com/

404-814-1644

SafeGuard Communities

Turn key real estate deals http://www.safeguardcommunities.com/

404-969-1223

Jeff Thompson Appraisals

Appraisalshttp://www.jtappraiser.com/

678-403-1963

R.S. Mechanical Services

HVAC http://www.rsmechanicalatlanta.com/index.html

678-305–0255

Harlan & Associates, LLC

Legal Services http://www.harlan-law.com/

770-817-1012ABC Painting & Home

ImprovementPainting Services

(No Info for website)

404-964-3266

Platinum Resource Group, LLC

Real Estatehttp://www.prgnexus.com/

404-453-9066Home Buyers

of GeorgiaCreative problem solving experience

http://www.ibuyga.com/

404-377-1718Real Estate Works 4 U

Property Tax Appeal Serviceshttp://www.lowerpropertytax.org/

678-971-3118Networth Realty of

Atlanta, LLCA residential wholesale brokerage

http://www.networthrealtyusa.com/

678-321-6061

Carpet Cheap Flooring Steals & DealsCarpet & Flooring

http://www.carpetcheapusa.com/

404-684-2700American Family

InsuranceHome, Auto, Life, More

Full Service Insurance Services

770-250-1910

Watkins Legal LLCLegal Services

http://www.watkinslegalga.com/

678-951-0700

Allgood Pest Solutions

Pest Control allgoodpestsolutions.com

770-339-4500

Georgia Roof Inspections

Roofinghttp://www.georgiaroofinspections.com/

404-246-0104

Law Office of Fred P. Kross

Real Estate Transactionshttp://www.fredkrosslaw.com/

770-932-8269

DNA Home Solution

residential or commercial renovationhttp://www.dnahomesolution.com/

404-557-8885Garmon Home

Inspection Services, Incprofessional home inspectionshttp://www.garmonhomeinspection.com/

770-368-8151

The Real Estate vendors on this page have been recommended by readers of the Georgia Real Estate Report, but are not endorsed by this publication or by John Adams. If you contact any of these vendors, please mention you saw them in the Georgia Real Estate Report.

16 T H E G E O R G I A R E A L E S T A T E R E P O R T June 2012

John Adams TeachesGEORGIA LANDLORD SURVIVAL SEMINAR

Rental Properties Can Make You More Money Than Any Other Investment, And My2012 REVISED LANDLORD SURVIVAL SEMINAR Shows You How, Step By Step.

LET’S MAKE MONEYThe real money in real estate is in OWNING it,

not in selling it. But most people fall flat on their faces when it comes to actually Making Money with Rental Properties.

Remember this: for most Americans, the best investment they ever make is in their own home. Not their 401k, not the stock market, and not in a savings account. It’s the real estate that makes the money. Most of us agree, and have found that to be true in our own lives.

But so few are willing to consider using Real Es-tate as a Wealth Building tool. Owning and renting houses and apartments is not only highly profitable, it also helps out your community. You are providing a service by offering clean, decent, and affordable housing to those in your area who need it. But in order to make money, you’ve got to follow the rules:

RULE #1: SELECT THE RIGHT HOUSEThe right neighborhood will reward you in mul-

tiple financial ways. First, it will draw good tenants because it is near to amenities that people want. Shopping, schools, churches and jobs are conve-nient, and the area feels safe.

In addition, the area is experiencing above aver-age appreciation because the people who live there are investing in themselves and the community, and the neighbors are fixing their homes up and making them nicer, resulting in a more attractive commu-nity.

I can teach you how to use demographics and insiders to learn about up and coming neighbor-hoods.

In order for you to make money in Rental Prop-erties, it is critical that you not over-spend on the house itself. You want this house to serve you for a number of years, but not forever. Therefore, it’s vital to select a house with upward potential, one that can ride up the valuation ladder and generate a positive cash flow all the way to the date of sale.

This seminar will present a plan for staying in the right size and price range for your financial goals.

RULE #2: SELECT THE RIGHT BUSINESS STRUCTURE

Most landlords think they have a pretty good sense of business, and try to manage their rental properties in their own name and run everything through their personal checking account. That causes two big problems.

First, your tenant finds out you own the prop-erty and figures you are doing this as a hobby so he doesn’t have to pay the rent on time. And second,

since everything is in your name, whenever anyone has a slip and fall on the steps, they get to sue you person-ally, and they get to sue you for everything you’ve got!

Instead, in this semi-nar I will show you the correct business entity and business structure for you to 1) get your name off the public record and 2) prevent legal difficulties forever.

You can use an at-torney if you choose, or

you can do it all yourself. Either way, you are fully protected.

RULE #3: SELECT THE RIGHT TENANTSThis is where most landlords, even the experi-

enced ones, run into problems. In my experience, it is vitally important to screen your tenants from the very beginning. You do not want any tenants who need their hands held every day. You do not need tenants who expect you to do everything for them. You do not need tenants who can not afford the rent.

You do not need tenants who simply do not pay their bills on time.

In contrast, your goal should be to find a tenant who wants to take the property for a full year, pay the rent on time, take reasonably good care of the property, and pay you the rent.

Other than that, we don’t want to hear from them. Believe it or not, I can teach you how to screen for the good tenants, and leave the rest for another landlord.

RULE #4: USE A STRONG RENTAL AGREEMENTI am amazed when I see someone own a house

worth a couple hundred thousand dollars and they are using a lease form they bought at Office Depot. They may have saved a couple of bucks on a lease, but it’s probably unenforceable in Georgia, and fails to address topics required by Georgia landlord ten-ant law.

We will talk about the GAR LEASE and other commonly used lease agreements, and we’ll cover the important points most leases leave out!

RULE #5: HANDLE THE MONEY PROPERLYGeorgia Landlord-Tenant Law has a lot to say

about how you handle the security deposit and how

you deposit the monthly rent.Unfortunately, most landlords in Georgia are do-

ing it all wrong, and it could cost you plenty if you are found out.

Attend this seminar and learn the RIGHT way to protect yourself, and learn whether or not you are required to use an escrow trust account for rental payments. HINT: You probably are.

Learn the safest forms use and learn the best banks to work with in Georgia. Also, get the scoop on credit card payments and electronic rent depos-its.

Also, we will look at how to MAXIMIZE the TAX benefits of real estate management. We want all the best strategies on our side of the equation!

RULE #6: HANDLE REPAIRS, TURN-OVER & EVICTIONS

The biggest mistake most landlords make is fail-ing to treat their rentals as a business. In this semi-nar, I will teach you to work with contractors and turn-key operators, what you can do yourself and what you can’t, and what the new Georgia General Contractors Licensing Law means to you.

One of our biggest expenses is turn-over, and we’ll examine my program for tenant retention.

What’s more, I will show you how to handle move-outs smoothly and in a business-like manner, and if they won’t move out, I will provide a quick strategy for eviction.

RULE #7: STAY AWAY FROM APARTMENTSYou will learn why single family residences are

a better way to make money in the long run than apartment buildings, and I will prove it to you! But if you are determined to manage multi-family, I will give you a complete list of do’s and dont’s from my own experience.

RULE #8: BUILD YOUR REAL ESTATE EMPIRE!Finally, in this three hour brand new program, I

will share with you a proven strategy for building your real estate empire, house by house, building by building, growing your equity on a yearly basis, adapting to changes in your communities, and im-proving your portfolio every year. I will show you not only the way to build it up, but we will also ex-amine exit strategies to minimize taxes on the way out.

In three solid hours, we will cover enough gems to make the difference between a losing property and a Positive Cash Flow goldmine. Don’t miss this event!

The seminar manual alone will be worth far more than the registration price, and will serve as a reference manual for years to come.

The Revised 2012 LANDLORD SURVIVAL GUIDE for GEORGIA

In 1994, John Adams wrote his best-seller for Georgia Landlords, and it became a clas-sic. It includes tons of practical, down-to-earth advice on how to screen for good tenants and how to get rid of deadbeats before they cost you money. His fabulous KILLER LEASE system has saved more rent than any lease ever written, and now in 2012 his revised edition includes the new lease, new ideas, new Georgia laws, and new strategies to save you money. Normally $129 alone, this book & three hours of audio CDs will be offered at a special low price during this seminar!

TOP 5 REASONS TO ATTEND MYLANDLORD SURVIVAL SEMINAR

1. INCOME is produced in the form of rent, which can be used to pay for the property as you buy it. With current low interest rates, it is possible to have the rent cover not only your monthly payments, but also gener-ate a positive cash flow which increases as time goes by.

2. DEPRECIATION and other TAX BENEFITS are so good for real estate, that it’s hard to believe they are true. If you structure your purchases and sales correctly, you can make huge profits and never pay one penny in state or federal income tax.

3. EQUITY BUILD-UP begins with the first loan pay-ment you make and continues until you own the prop-erty free and clear. This slow, steady growth pattern ac-celerates because each payment contains more principal and less interest, building more profit for you.

4. APPRECIATION is the gradual increase in value over time due to inflation and the law of supply and demand. Unlike the stock market, home prices tend to grow slowly and steadily. Today’s low home prices are unsustainable, and will rise over time with inflation and construction costs. Think LONG TERM!

5. LEVERAGE is the ability of a small amount of money to control a much larger investment. Real Estate can be leveraged safely and easily because lenders believe that homes will be worth more in the future, so their loans are secure. In fact, lenders are so confident in real estate that they loan for long periods at extremely low interest rates. That means more profit for you, as rents rise year after year.

John Adams is uniquely qualified to teach real estate in the State of Georgia. He has owned and managed rental property in this state continuously since 1974, and continues to act as a full-time investor and landlord today.

An Atlanta native, John attended Decatur High School and Emory College. He was first licensed as a real estate agent with Barton & Ludwig Realtors, then later owned his own active residential brokerage firm.

His weekly real estate column in The Sunday Atlanta Journal & Constitution is the product of years of helping investors, home buyers and sellers, and listening to their concerns.

For over thirty years, John has built a quality portfolio of single family rental homes, multi-family properties, and resort vacation homes, all located in Georgia. He continues to add to his holdings yearly.

John believes in a WIN-WIN philosophy when it comes to real estate, and has developed a “hands-off ” landlording technique which has allowed thousands to maximize their rental properties in Georgia.

John Adams is well known to audiences as a dynamic public speaker who motivates and entertains as he educates. There are few speakers who bring more personal energy or sound advice to the platform.

Why You Should Listen ToWhat John Adams Teaches

ADVANCE TICKETS$69 or

$99 for any two$100 per person registration on day of seminar - Couples share materials

Above discounts when paid in advance only • Satisfaction GuaranteedTO REGISTER VISIT

money99.com or call 404-373-6000This course approved for 3 hours continuing education by Georgia Real Estate

Commission. If you are unable to attend this seminar in person, you can purchase the live seminar on CDs along with the revised 2012 Landlord Survival Guide For Georgia

for $129 + Tax & $10 for shipping and handling.

“The time has never been better for investing in houses. Low interest rates allow you to buy and have immediate cash flow and inflation will eventually drive prices upward.”John Adams, Real Estate Investor

TuesdayJune 19, 2012

6:00 p.m til 9:15 p.m.NAMAR BUILDING2145 Duluth Highway, at I-85

Duluth, GA 30097

Atlanta Metro