Building Wealth - Cutting Costs

As I have said many times on this blog one of the best ways to build wealth is with the proper use of real estate as part of your investing portfolio. The problem for most people is simply where do you start? I mean there are countless techniques like buying foreclosures, land lording, flipping properties, buying foreclosures and foreclosures or buying and managing multi tenant properties.

I have always also believed that in the day and age of the internet it is collective intelligence that helps people skip making countless mistakes in favor of learning from the mistakes and experience of others. Today by sharing information people are able to do more and learn more faster then ever before So, when I was asked to have a look at a new real estate website, Investors Lounge Online, and their brand new real estate investment forum I was happy to do so and let my readers know about it.

I found the site to be beautifully designed with excellent resources including a great articles section, advice on financing, great FAQs, advice on auctions and a ton more.  The site even offers some great real estate tools.   I think however, it is the forum with the most long term potential.  Right now it is brand new and it could really use some folks to join and get it started off with a bang.  The forum is feature rich and again the design is just excellent.  They even have translation functions into 10 languages, talk about bringing collective intelligence across the globe.  With outstanding information and resources and a forum that is sure to become an outstanding resource of its own Investors Lounge makes my list of recommended sites.

I talk a lot about mortgages, the US real estate market and investing in property in the US because it is something I know quite a bit about. I have really not said much about foreign real estate markets for the exact opposite reason, I just don’t have any real estate experience outside of the United States. So when I was asked to have a look at a UK based site that provides free financing advice and quotes on UK Mortgages I was happy to do it.

The site is called Money Magic and I found that it provides excellent advice for both investors and consumers alike. They even have information for international mortgages that was something that I haven’t seen on may mortgage sites.

Well if you did not start a refinancing process when I suggested it before you may want to hold a few more days for a bit lower of a rate. Everyone is expecting yet another slashing of the prime rate after the Fed’s meeting at the end of this month. I don’t predict another big cut and while the media is using the term “slash” I think we will see perhaps another 1/8th - 1/4th. That won’t mean a ton more then the last cut already meant but it will make a difference to some who are on the “edge” of making mortgage refinancing a good decision.

To me the real opportunity here is for real estate investing. Loans are lower then any time in history and houses are sitting by the butt load. Right now is a great time to find an incredible deal on investment property. It is however not a time to be stupid and go into highly leveraged deals. What you are looking for right now is a property at 10-20% under even the current depressed value, a property that you can afford to have for a year to 18 months with out a tenant and still have no financial grief.

This is a big part of why the rich always get richer. If you are in good shape money wise right now and can afford 1-3 small properties in this fashion you stand to make very big investing returns in the next 5 years. If however, you are dead broke or swimming in debt you just have to sit back and watch all these great deals sit. This is a very bad time to be in the property flipping business. With the massive inventory out there, suppressed market and probably a 2 year recession ahead it is a great time to be buying the best deals you can find and afford, holding on to them and renting them as you can.

This is exactly why I always say the reason to build wealth in many ways is to live good in bad times.

Just yesterday I suggest looking into refinancing your home while rates are down and I also stated another rate cut was on the way, to wait for it and jump on it when it came.  24 hours later here we are, the market took a 400 point dump when it opened, the Fed panicked and cut rates before the end of the month meeting just as I said they would.    This is not an I told you so post though just another nudge to get going with a refinance if you are paying to much in interest, if you can make a smart move to pay off consumer debt (credit card debt) or if you were stupid and got into an ARM that will soon expire.

Right now I am finding rates are low a 5.125% on a 30 year fixed and todays cut is not even factored in yet.  Odds are you can get something in the 4.75-5.2% range with any type of decent credit assuming you have some equity in your home.  I don’t think you will see a better time in the next few years or perhaps the next decade.  Is this the absolute bottom for rates?  Who knows but it won’t get much better, my advice is to act now.

Also don’t fall for all the advertisements.  The best source to refinance a loan is most often your existing lender.  No one wants to loose a good mortgage client right now.  Last time I did a refinance I got all fees waived by my existing lender.  Remember if you don’t ask they generally won’t tell,  learn and use the phrase “is that the best you can do?” often.

I am not big on “suing people for profit” and in fact I think that business is a big part of what is wrong with America today. Yet lawsuits have a place and they are a way for individuals and companies to attempt to right a wrong.  Business owners in particular may on occasion have no recourse other to file suit in certain circumstances.

In fact put yourself in this place for a second.  You own a small company that makes software and you come up with a great new product.  Along comes a much bigger company and steals your code, “improves” the product and basically says there is nothing you can do about it.  Such things can and do happen.  Now again you are a small company, facing a much bigger fish and you know they can drag it out and bankrupt you before you ever get a decision.

What recourse do you have?

You might want to consider Commercial Lawsuit Financing to fund your case from LawMax Legal Finance.   There are many times when you can’t get a good attorney on a “contingency basis” which is where the attorney will handle the case and all expenses and only get paid after they win the case for you.   In fact getting an attorney to work that way may be pretty easy in a personal injury case but in a business to business suit it can be very difficult indeed.

Services such as LawMax actually evaluate your case, determine if you have a good case and then if approved they actually loan you the money on that same contingency basis where you only repay the advance if you win your case or reach an out-of-court settlement!.  Again while I don’t think people should be suing for profit it is good to see that a service like this exists to help smaller companies take on their adversaries when necessary.

Now this may sound a bit odd for a blog that is about saving money and building wealth but I mean what I say, spend cash. The key is spend cash rather then spending your money by writing checks or using debit/check cards.Each week plan your spending on everything, meals, groceries, etc. Then with draw the cash you need for the week and pay in cash at all times. Now this does not mean you can’t use your debit card if you need to or write a check when it is called for. It simply means to do the bulk of your spending with cold hard cash.

Why?

Simple you will spend less money!

How?

Easy you will do it yourself. It gets so easy to spend money with checks and cards. The money just doesn’t “feel” real to you. Due to this you spend more and I mean everyone (including me) does it. When you put cash in your pocket it becomes material to you and hence each expenditure becomes more personal, more real and you judge it a bit harder. You start to realize there is an “end” in a very real sense to your spending power.

Long term you will benefit as well, it will be much harder for that sales guy to sell you on how easy financing the car, vacation, etc is going to be. You mind will tune in on “real money” and such antics will cease to be effective. You will insist on control simply because money will always be a real and finite thing in your mind.

Always remember how you view, understand and think about money is more important then any other aspect of your financial success.