Commercial Loans Still in Good Shape

The commercial loan business continues to be in a lot better shape than other kinds of lending. The historical average delinquency rate on loans that support commercial real estate securities is 0.61 percent over the past 10 years. Current delinquency rates are generally lower, Moody's Investor’s service points out. The current number of commercial real estate loans that are in arrears rose in June to 0.45 percent, up from 0.01 percent in May. The rate has risen 0.21 percent compared to a year ago, according to Moody’s. Delinquencies in apartment loans are a little higher, standing at 1.37 percent in June from a low of 0.51 percent in August 2007. Despite the overall favorable outlook, prices on commercial properties fell 3.5 percent in May for the third straight month, according to Moody's. Investors may be waiting to see some evidence that the worst is over for commercial real estate," Moody's analysts wrote in the report. "Until that time, most investors appear content to sit on the sidelines."
Source: Reuters News, Richard Leong (08/04/2008)

Bush signs housing rescue law

President enacts controversial measure that aims to help borrowers, bolster the housing market and provide a fail-safe for Fannie and Freddie.

By Jeanne Sahadi, CNNMoney.com senior writer

NEW YORK (CNNMoney.com) -- President Bush on Wednesday signed into law a sweeping housing bill that aims to boost the struggling housing market and bolster mortgage finance giants Fannie Mae and Freddie Mac. The Senate voted 72-13 in favor of the bill on Saturday, after the House passed it three days earlier. "We look forward to put in place new authorities to improve confidence and stability in markets, and to provide better oversight for Fannie Mae and Freddie Mac," said White House spokesman Tony Fratto. "The Fede ral Housing Administration will begin to implement new policies intended to keep more deserving American families in their homes." The new law, one of the most far-reaching on housing in decades, marks the centerpiece of Washington's efforts to address the nation's housing meltdown. The legislation has two principal objectives: to offer affordable government-backed mortgages to homeowners at risk of foreclosure, and to bolster Fannie and Freddie with a temporary rescue plan and a new, more stringent regulator. The White House last week reversed its long-standing threat to veto the bill. In fact, the administration still objects to parts of the legislation, including aid to states to buy foreclosed properties. But the president decided to sign it since "oversight of the housing government sponsored enterprises (GSEs) and the new temporary authorities requested by [Treasury] Secretary [Henry] Paulson are urgently needed now, and they'll contribute to confidence and stability in housing and financial markets," Fratto said last week.

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Fed Expected To Leave Rates Alone This Week

Freddie Mac reports a decline in the 30-year fixed mortgage rate to 6.52 percent during the week ended July 31 from 6.63 percent the prior week, while the 15-year fixed mortgage rate dropped to 6.07 percent from 6.18 percent over the same time span. Additionally, the five-year adjustable mortgage rate slipped to 6.07 percent from 6.16 percent, and the one-year ARM fell to 5.27 percent from 5.49 percent. Analysts attribute the decrease in mortgage rates to the housing bill that recently was signed into law.
Source: Baltimore Sun (08/01/08)

Need More Water? Dig Your Own Well

Wealthy home owners in the Southeast who have been faced with water restrictions because of the lingering drought in the area are drilling their own wells to keep their lawns lush and their pools full. So far this year, for instance, there have been 305 permits to drill new wells issued in Atlanta’s Fulton County and 95 permits in Raleigh, N.C. Drilling companies bore holes usually 300 to 600 feet deep into fractured rock and then extract the water with an electric pump discreetly hidden in the shrubbery. The practice has outraged water conservationists and other less-well-heeled home owners. Legislators in North Carolina tried but failed to pass a law that would have imposed the same watering restrictions on private wells as on municipal water. Jim Kennedy, Georgia’s state geologist says the practice could become a problem is a significant number of homeowners dig wells and pump a lot of water, “But so far we’re not a t that point,” he says.
Source: The Wall Street Journal, Alyssa Abkowitz (07/31/2008)

N.C. ranks among top states for business climate

Charlotte Business Journal

Texas, North Carolina and Georgia have the best business climates among the 50 states, according to a recent survey of executives by Development Counsellors International. North Carolina ranked second among the 281 respondents, with 30 percent saying the state has the best business climate. Texas was No. 1 among 41 percent of survey participants, while Georgia was third (20 percent). They were followed by Tennessee and Florida (15 percent each) and Nevada (14 percent). Executives frequently cited a strong labor market and low operating costs in selecting the top states. The poll placed California, New York and Michigan at the bottom. China, India and Mexico were selected as the top countries outside the U.S. for investment. Development Counsellors’ “Winning Strategies in Economic Development Marketing” survey has tracked development trends since 1996. The New York-based organization specializes in economic development and tourism marketing.

IRAs And Real Estate Investments

BACKGROUND

It’s exciting to know that you can use your IRA money to not only purchase stocks, bonds, and mutual funds, but you can now purchase real estate investments and other investment vehicles. Investments within an IRA are capable of compounding on a tax-deferred or tax-free basis that allows your earnings to accumulate at a much greater rate than similar investments made outside of an IRA. You will need a custodian to perform your investment transactions. Not all self-directed IRA custodians are the same and you need to research who is the best custodian for you considering reputation, fees, experience, results, knowledge, client service, and protection of your assets.

COMMON INVESTMENT VEHICLES

As you plan to research and investigate IRAs and real estate investments, it’s important to know the various common investment vehicles available. These investment vehicles include: real estate, promissory notes, mortgages and deeds of trust, tax liens and sale certificates, private placements, limited partnership (LPs), limited liability companies (LLCs), judgments, factoring receivables, structured settlements, equipment leasing, mobile homes, and auto notes. As always, you need to evaluate your level of risk and the potential return that is not always a guarantee.

FREQUENTLY ASKED QUESTIONS

1. What is a transfer?
A transfer occurs when IRA assets are moved directly from one financial institution to another without the IRA owner taking possession of the assets. Unlike rollovers, there is no limit on how many transfers can be executed in a year.

2. What is a rollover?
A rollover occurs when an individual requests a distribution from an IRA/QRP (Qualified Retirement Plan) and then “rolls” the assets into an IRA. There are two types of rollovers: an IRA rollover and a Qualified Retirement Plan rollover. An individual is limited to one rollover per year. 3. When an investment is sold, can I keep any money that is in excess of my initial investment?
All money generated from a property owned in an IRA must return to the IRA.

4. What can’t I invest in?
Collectibles such as artwork, rugs, antiques, gems, stamps and shares of an S-corp. are not allowed in your IRA. An exception to this rule is investment in certain US gold and silver coins minted by the Treasury Department.

5. What is prohibited?
Prohibited transactions within your IRA include:
a. Personally borrowing money from your IRA.
b. Selling personal property to your IRA.
c. Receiving unreasonable compensation for managing your IRA.
d. Using your IRA as security for a loan.
e. Buying property for personal use with your IRA funds. 6. Can I loan money to family members?
You may not loan money from your IRA to family members of linear descent such as your parents, children, grandchildren or in-laws. You may lend to other relatives of non-linear descent such as siblings, aunts, uncles, nieces or nephews.

7. Can I use my own money in an IRA investment and be reimbursed by my IRA?
Your IRA must remain separate from your own investment and at no time should these two be commingled.

8. Can I get reimbursed by my IRA if I pay for repairs personally?
No, any reimbursement would be self-dealing, which is prohibited by the IRS.

Courtesy Of Bill Gallagher

Real Estate Prices Rising For Four Month Straight - Is Anyone Noticing?

Amidst the gloom on Wall Street about housing someone forgot to check the stats. The National Association of Realtors® has now reported four straight months of rising housing prices, but it seems no one is listening. According to NAR statistics, the median home price has fallen from a high of $230,200 in July 2006 to a low in February 2008 at $195,600, a drop of 15%. Since February, however, it has risen steadily every month. By May the index (which will be revised on July 24) had risen to $208,600, up $13,000 and a full 6.6%. Another indicator, the mean home price (otherwise known as the average home price), has also shown strength and has risen from a low of $242,000 also in February of this year to $253,100, a rise of $11,100 or 4.5%. It, too, has risen every month since February of this year. “I just don’t know where Wall Street’s brains are today,” said David Michonski, CEO of Coldwell Banker Hunt Kennedy in New York City. “Everyone on the Street is wringing their hands over housing when in fact the average American has been out this spring buying homes and pushing the median price higher. This has got to go down as one of Wall Street and Main Street’s biggest disconnects in history.” In addition, on an annualized basis the volume of home sales has also risen somewhat from a low of 4,890,000 homes in January to 4,990,000 in May. “Rising prices on expanding volume should not a crisis make on Wall Street,” says Michonski. So why the crisis? “They say that there are bulls and bears on Wall Street but there are also pigs. Pigs try not just to profit from a crisis but create one to profit from. Today there are just so many people who have positioned themselves t o profit from a crisis that they refuse to admit the reality of what is happening on Main Street. It might hurt their positions.” Is this the bottom? “No one can know for sure, but the hard data is clear. The median price has risen four straight months. The average American is out there taking advantage of bargains in their local real estate market. They are not listening to Wall Street but following their own belief that the best time to buy is when no one else is, and they are out there buying. If this keeps up, February may prove to have been the low in prices.” “It is possible that it will not be Hank Paulson or Ben Bernanke who will pull this country out of a housing recession, but the good common sense of the average American whose affordability to buy a home is at a five year high and is acting on it.”

Courtesy Of Rismedia

Redevelopment of Central Avenue is piece by piece

Charlotte Business Journal - by Katy Finger Staff writer

Parcel by parcel, developers are remaking the face of Central Avenue near Plaza Midwood. But they're hoping the changes won't compromise the character that attracted them to the neighborhood in the first place. People need a place to get away from the franchise, cookie-cutter places you find all over the city,says Andy Kastanas, a part owner of Cosmos and The Forum uptown. He is transforming a nearly 80-year-old building on Central Avenue into a restaurant and lounge. This is one of t he last outposts in the city for cultural developments. At least a handful of projects are planned or under way for about a half-mile stretch of Central Avenue between Louise Avenue and The Plaza. The only thing connecting the development: a desire by owners and tenants to be a part of one of Charlottes last unique neighborhoods. And most expect the proposed streetcar line that would run along Central Avenue through uptown and several new housing developments to boost the neighborhoods popularity. Kastanas is investing about $400,000 to rehabilitate the top floor of 1500 Central Ave. for what he calls a gastro-lounge. The building, constructed in 1932, needed extensive structural work, he says. The 1,900-square-foot restaurant, called Soul, will have about 60 seats and serve dishes such as sushi and tapas. Downstairs, neighborhood tattoo artist Rodney Raines is opening a wine store and art gallery, which will also occupy 1,900 square feet. Raines, owner of Ace Custom Tattoo on nearby Thomas Avenue, plans to have monthly art exhibits and possibly outdoor seating at the shop, which will be called Twenty Two. Bernadette Delgado, who owns the building, says she was picky about who she offered leases to. The thing that I was so cautious about was that I wanted something that would add to the neighborhood,Delgado says. I think the two will really complement each other and the neighborhood. Around the corner, the owners of the Jackalope Jack's restaurant and bar will renovate a triangular building at 1212 Pecan Ave. previously occupied by The Steeple Club. Owners Rob Nixon and Andy Wilson plan to add two floors to bring it to about 8,300 square feet. Of all of the places in Charlotte, this area has got uniqueness,Nixon says. It's got an old downtown feel that no other place in Charlotte has. Other developments include: A restaurant and retail complex proposed by Conformity Corp. for the corner of Pecan and Commonwealth avenues. Construction of the building, which could be as large as 14,000 square feet, should begin in about six months and be complete by the end of 2009. People are looking for spaces that are real as opposed to contrived,says Monte Ritchey, Conformity president. A 10,000-square-foot warehouse at 1117 Pecan Ave. occupied by a paint store. Sherwin Williams should be moving out by fall. The space would be ideal for an art gallery or yoga studio because of its large open space, says Jo hn Nichols, president of The Nichols Co. A 20,000-square-foot building renovated by Rudolph Moore Properties at 1401 Central Ave. The firm is investing about $3 million in the 1950s building, which will be home to offices and shops and should be complete within a few months. A 10,000-square-foot building being renovated for two restaurants at 1101 Central Ave. A 3,700-square-foot space in the Family Dollar-anchored strip center on Central Avenue proposed for a restaurant. John Hatcher, who owns the 10-acre tract the strip sits on, plans to add large windows along the Central Avenue side of the building and a patio. Hatcher has taken his time developing the site, which has been in his family since 1907. People have great visions for what they'd like to see, but when you put the economics with it, it doesn't always work out. Most of the developers involved in Central Avenue projects think the proposed streetcar line will bring more development. "We've got to have the density to keep the area alive," Nichols says. "The streetcar will only strengthen this areas connection to the core of the city."