There's an old cliche that "the squeaky wheel gets the oil," but at what point is the proverbial oil no longer helpful? What if the wheels can oil themselves if given the chance, but grow incapable over time of doing so if they are constantly oiled by someone else?

In coastal Alabama, many rural towns populated by hard-working veterans of the seafood industry are still struggling four years after Hurrcane Katrina devastated their homes. They have received little or no federal or state aid, while watching areas like New Orleans' Ninth Ward scream and hollar for more handouts from the government. And because they've received no aid, reconstruction efforts have moved far slower here than elsewhere on the Gulf Coast.

(for the full NPR story: http://www.npr.org/templates/story/story.php?storyId=112257238)

Yet these residents are subject to new government-imposed restrictions on where they can build, how they have to build, and even where they can live in rental agreement properties. If it sounds like they've been denied benefits while still having to pay the cost, it's a classic case of why government interventions rarely succeed in doing anything but waste money and impose its paternalistic will on its citizens.

Consider this for a moment: These hardy residents of coastal Alabama have never relied on government handouts, and always worked hard to look after their own interests. As a result, they've grown resilient, self-sufficient, and, given the chance, will rebuild their coastal towns with the same assets that have helped them survive all these years: belief in themselves, belief in hard work, and the willingness to do whatever it takes to survive. They will not see the kind of overnight success that comes with government spending to build new homes for them, but in 20 years from now, they will still be self-sufficient and the small local businesses will still control their own destinies.

Now, consider the infamous Ninth Ward in New Orleans. Even before Hurricane Katrina struck, only 41.2% of the population over 16 bothered to work (!!!). Enter Katrina, and then a (pardon the term) deluge of federal and state dollars to rebuild this already decayed slum, because the residents screamed and hollared and "squeaked" louder than anyone else on the Gulf Coast. But after 4 years and hundreds of millions of dollars, employment is even lower, there's little local "industry" to speak of, and in 20 years from now it will still be reliant on handouts from governments, charities, and do-gooders nationwide.

My question to you: is it better to create a population of people dependent on others for their basic needs, by domesticating them and feeding them every day, or promoting independence? I'm not suggesting that the government has no part to play in helping rebuild devastated regions, but I am saying that a keener perspective may be needed in developing strategies for long-term economic growth, rather than simply throwing money at people and making them dependent on Uncle Sam to think and work for them.

Anyone who's made a real estate investment in the last five years, whether in their residence or for as a professional real estate investor, has probably felt the sting of the real estate crash. But there is good cause to believe that the national real estate market is turning around, as more and more individual markets turn upward and start appreciating again. Here are the top ten appreciating real estate markets in the US, along with (more interestingly) the reasons why they're doing so well.

Real Estate Market 1: Boulder, CO

Benefiting from a wealthy population, a collection of stable and large employers (such as the University of Colorado), and a natural defense against overdevelopment (the steep mountain slopes surrounding it), Boulder has felt relatively little pain in the last few years. Whether it helps or hurts matters, Boulder also happens to be one of the Top 5 Drinking Cities in America as well.

Real Estate Market 2: Spartanburg, SC

Once again, college campuses come to the rescue: Spartanburg has the highest student population rate in South Carolina (per capita), and those campuses provide jobs while the students provide money from out of town. It's also the headquarters of Denny's, which doesn't hurt the job market either.

Real Estate Market 3: New Orleans, LA

Between the thriving energy industry, the deluge of federal dollars pouring in and earmarked for home rehabilitation, and the ever-resilient entertainment and tourism industries, N'awlins is doing better than most cities these days.

Real Estate Market 4: Binghamton, NY

Sometimes the easiest way to avoid falling down is to simply not climb too high, as Binghamton's economy and housing markets have stayed remarkably steady and stable over the last ten years. Commitment to its core industries and a lack of frenzied economic behavior have kept Binghamton immune to the rest of the nation's roller coaster ride.

Real Estate Market 5: Fayetteville, NC

Like Binghamton, Fayetteville remains a steady economy, benefiting from stable military jobs from Fort Bragg and Pope Air Force Base, and a thriving arts community made up of museums, galleries, and theatres.

Real Estate Market 6: Pittsburgh, PA

If you're surprised to see Pittsburgh on this list, you're not alone, but the fact is that Pittsburgh has successfully managed to re-invent itself as hub for education and research, health, and biomedical development.

Real Estate Market 7: Little Rock, AR

Yet another example of a city whose real estate values didn't spike sky-high, Little Rock is the beneficiary of Arkansas' tax dollars, as the state government provides a host of stable jobs, and its wind energy sector continues to boom.

Real Estate Market 8: Gainesville, GA

Education once again helps provide stability, in the form of universities and medical research. Retail and tourism help balance the economy as well, with the gorgeous Lake Lanier just around the river bend.

Real Estate Market 9: Burlington, NC

Like Pittsburgh, Burlington has successfully discarded the baggage associated with its old manufacturing economic base (textiles, not steel, in this case), and pursued a more diverse economy in the form of medical companies like LabCorp and Honda's upcoming light commercial jet manufacturing plant.

Real Estate Market 10: Oklahoma City, OK

Aside from its strong energy sector (unfortunately the dated energy models of oil and natural gas), Oklahoma City also benefits (like Little Rock) from being a state capital and having the rest of the state pay for its employees.

While the country's economy and real estate markets awaken from their slump, it's an excellent time to make a real estate investment or two, while we rest at the bottom of the curve. As dreary as the economic news was last winter, it's proving to be an optimistic summer and fall of 2009, as we see increasing numbers of markets start to appreciate in value again. 

On Wednesday July 15, Fitch Ratings issued a 189 page report about the U.S. real estate market, and their belief that we are at or near the bottom of the real estate market collapse.

This is great news, particularly for real estate professionals such as realtors or investors forced to sign a rental agreement instead of a sales contract. That being said, the report's optimism was cautious, and warned that there is still a long way to go.

One of the reasons for hope, in evaluating the movement of the market, is the increase in builder confidence and decline in builder cancellations from Fourth Quarter 2008 to First Quarter 2009. New home inventories are decreasing (helping to limit supply), while builder cancellations are approaching "normal" levels.

One of the problem areas remains consumer confidence, and the lingering reluctance to buy out of fear that the market will slip further. Existing homeowners, who might otherwise trade up or buy a second home, are particularly fearful of further market decline, which leaves first time homebuyers and real estate investors as the main source of demand. These buyers alone, no matter how much they may want to get into the real estate game and sign their first rental agreement as a landlord, simply can't create the momentum needed for a full turnaround.

The report also noted that the Obama Administration's efforts have had little (if any) effect on the nationwide real estate market. While it is laudable to try and minimize the number of homes lost to foreclosure, the current attempt to push refinance and mortgage modifications has not delivered on its full potential. The Making Home Affordable initiative needs some revisions and additional approaches if it is to succeed, the report noted.

There is good cause for optimism, but unfortunately for each hopeful indicator, there's a negative indicator to counterbalance it. Still, while consumer confidence has not returned to the national real estate market, general public opinion about the economy continues to gradually improve, which will bleed into consumer confidence in real estate soon enough. In the meantime, first time homebuyers and landlords looking to add a rental agreement or two to their monthly income will have to continue to offer fresh demand and keep the real estate market afloat.

Man, who would have thought there were actually funny real estate videos in the world? YouTube really is one of the greatest ideas of the internet.

Without further ado, here are the funniest real estate videos you'll ever see:

1. Funny Ad for MyRealty





2. Funny User-Made Video for EZ Landlord Forms (hehe - iPod)





3. Hitler the Real Estate Investor



See? Real estate videos can actually be funny!!!! Amazing. Just amazing.

It's Thursday, and that means... well it actually means nothing, but I'm in the mood for something a little lighter (not atypical for my personality). So we're going to have some fun with real estate investing today.

 

Fun Fact 1: Cameron's House from Ferris Buehler's Day Off is For Sale!!!!

I'm convinced that there isn't a single English-speaking person in the world between the ages of 13-55 who hasn't seen Ferris Buehler's Day Off. And one of the more memorable scenes from that oh-so-memorable movie is when, that's right, Cameron sends his dad's 1962 restored vintage Ferrari out the back of the glass garage and into the revine.

This prime Chicago real estate could be yours for the everyday low price of $2.3 million! What are you waiting for? Go out and get an 800 year amortized mortgage, and start partying like it's YOUR day off!

 

Fun Fact 2: There Are at Least Two Spaceship Homes in the World (that We Know Of)

Ok, here's the bad news: they don't fly. But there is spaceship-shaped real estate in the world, one in Johannesburg, South Africa (right), and one in Chattanooga, TN (below). 

In fact, the one in Tennessee was built as a model home, for an entire spaceship-home subdivision, that was (fortunately? unfortunately?) abandoned by the developer.

The Tennessee spaceship real estate model sold at auction for a measly $119,000 in December 2008, which surprised me at first. Where are the Trekkies, I wondered? What about the Star Wars nerds? Sci-Fi Channel regulars?

Then I remembered the property's in Tennessee, where they don't have electricity for things like televisions, and it all made sense.

I guess that's all the fun we're going to have today, class, but keep on keepin' on with your real estate investing, it's us investors who are going to keep this national real estate ship from sinking.

Happy Thursday!

PS Looking for more educational real estate investing articles? For the more serious-minded, here's an archive of real estate investing articles, specifically for landlords and rental investing.

Trying to add some sizzle to your real estate or rental listings? There are a lot of desperate sellers and landlords out there at the moment, so here are a few tips to add that extra spice and secure a signature on that sales contract or lease agreement!

Beach Party!

Remember in college when those wild men down the street threw a beach party in their house by filling it with sand? Well that's probably not a good idea for your open house, unfortunately, but what IS a good idea is making your open house more of a party atmosphere. A keg of beer, a five foot sub, and your nephew's band playing in the back yard will certainly draw the masses. Here's the trick: you want people to have to walk THROUGH the house to get to the party out back, but you have to keep the party ITSELF outside, to prevent damage to the house.

Wine Tasting

Everyone knows an oenophile or two who just won't shut up about wine. Invite them to host a wine tasting at your property, and tell them you'll pay for the wine, but they must stick to a certain budget and provide a certain amount of wine. Invite all your friends, and post flyers or other ads around the neighborhood, and make it a civilized affair! Cheese and crackers recommended.

Remember the Deck or Patio

When it's covered in snow in January, no one's thinking about the deck out back, but in summer cookout season, it will be fresh on their minds and they WILL notice if the deck or patio are in bad shape. Consider re-staining, re-pointing, or otherwise shaping up the deck or patio. Tiki torches can be a nice touch for the evenings, and they're cheap to boot.

Olfactory Staging

Everyone talks about (and spends a fortune on) visual staging, and some even get as far as auditory staging, but few remember the simplest and most powerful type of staging: tempting the nose! Two older tricks include baking cookies or brownies in the kitchen before a showing or open house, and they're a great way to instill a sense of home in the prospective homebuyer or lease applicant. Another great one is grilling steaks, cheeseburgers, or bacon, preferably with charcoal and smoky wood, to make mouths water and appeal to the carnal senses, and of course you can always serve samples of these at the open house to deliver on the promise. If food isn't your bag, consider lighting a few cinnamon-scented candles on each floor of the house.

Getting that sales contract or lease agreement signed is harder than ever these days, but summer is the right time to push, so go above and beyond, and get those signatures!

Part I: Introduction, Defining Destination & Budget Goals, and Becoming an Absentee Landlord

Whether you're a landlord, a real estate investor, or just a regular wage slave looking to escape the drone-like existence of 9-5, most of us have daydreamed about living on a tropical island somewhere sipping pina coladas and having income wander its way into our checking accounts.

What if you could live off your lease income alone? What would that take? What would it look like? No, it's not a get rich quick scheme, or some kind of snake oil I'm trying to sell, but merely a description of a lifestyle possibility that you may not have realized existed. Welcome to the three-part Absentee Landlord series: you are now reading Part I.

Introduction

Let's start with a disclaimer: The Absentee Landlord lifestyle is not ritzy or glitzy, it's not about shooting Kristal corks at your fellow rap star while girls dance in the background, and it will NOT make you rich. What it will do is allow you to live anywhere you like, stress-free, and work-free, with minimal obligations.

"So what does the Absentee Landlord lifestyle look like? Do I even want it?"

The average Absentee Landlord earns only a few grand per month, which is not much by, say, New York City terms. However, the Absentee Landlord can live anywhere in the world, so they don't have to pay New York City prices if they so choose.

The Absentee Landlord has a property management company handle their lease properties, so the Landlord is only minimally involved. Further, all of their payments are made automatically and electronically.

The Absentee Landlord is free to pursue their dreams, whether that means spending a year in Costa Rica learning how to surf, or becoming a ski instructor in the Swiss Alps, or moving to the mountains of China to become a Kung Fu master. The Absentee Landlord lives frugally but comfortably; they lead a rewarding lifestyle.

"All right, all right, I get the picture. In broad terms, what does it take to accomplish the Absentee Landlord lifestyle?"

First, you need to start building an investment portfolio, with a solid, long-term lease agreement signed on each one. Second, you need to maximize your cash flow from these lease agreement investments. Third, you need an excellent property management company, who can handle everything from tenant screening to landlord forms to eviction procedures, etc. Fourth, you need a Goal Budget, which will become more or less fixed. Fifth, you need a Destination, and the accompanying planning. Sixth, you need to go mobile.

The good news is that those steps do not necessarily have to be done in order. In fact, we're going to start with Step 5, before moving on to Step 4, and then we'll adjourn until Part II of this series.

The Destination

What are your dreams? To live in a coconut shack on a white beach with blue-green water lapping your feet? To ski every day? Maybe to help build infrastructure for outlying villages in third-world countries?

We live in a world that is, for better or worse, driven by money, so you'll have to consider the costs associated with your dreams before you can go about budgeting for them. It costs a lot more to live in Hawaii than it does in Belize, for example. Decide on your first dream, print off some pictures that embody your dream, and put them up around your office, cubicle, home, bedroom, refrigerator, and anywhere else where they'll remind you of what you're working towards. For the sake of argument, I'm going to say that my dream is living in an artsy little town on the shore of Costa Rica, where I can surf, sell my photography, and lead tour groups through the canopy of the rain forest.

Your Projected Budget

What is the historical exchange rate? What is the cost of living in this destination? What will your monthly expenses be? In my case, it will cost me roughly $1,000/month for the comfortable house I want within a ten minute walk from the beach, and within range of cell phone and internet services. I will not need a car, because I walk anywhere in the little town I've picked out. I will need to pay for my phone and internet bills, so I'll set aside $50 for each. I will also need roughly $250/month for food and another $250 for entertainment. I'm up to $1,600/month, and I'm going to add 10% for unforeseen expenses ($160) and another 10% for savings, plus $100/month for health insurance, or $2,020 total.

We now have a goal to work towards, so we'll spend Part II of this series going over the details of accomplishing monthly cash flow through lease agreement investing and other Absentee Landlord principles… see you next time!

Links to The Absentee Landlord Part II and The Absentee Landlord Part III

Customizable Lease Agreement through EZ Landlord Forms

Currency Converter

If you're one of the four people in the world considering investing in real estate right now (five including me), you're probably looking to make the safest bet you can. While short term investment returns are pretty basic to predict, as the market won't shift much over the course of a few months, it's a different story if you're looking to sign a lease agreement and settle in for the long haul. What would a safe bet look like, over a long investment period?

This being an age of bu11$hit litigation and nervous legal disclaimers, let's start with this: there ARE NO bulletproof investments, in real estate or anywhere else. Your tenant could make up a reason to sue you and win, or your city could decide, in their infinite wisdom, that constructing housing projects right next to your rental property would be just peachy. There is risk in any investment, so wake up to that reality before pulling a dime out of your wallet.

That being said, there are certain long term trends that are pretty predictable, and can be identified. Let's take a look at a few of those, and see what we can dig up.

Population

This one is pretty basic: as population increases, so does demand, which of course increases value; just look at that ridiculous water park. Look for cities and neighborhoods that have high long-term population growth projected, and consider the most advantageous spots. Here's a hint: middle class white people don't breed well, because they want to protect their quality of life. Immigrant influx is the fastest vector for population growth, so consider buying in and signing a long term lease agreement here.

Urban Planning

Some cities are FAR more organized when it comes to urban planning, and will make efforts to combat sprawl and consolidate wealth in areas that are already developed. These make for far better long term investments, as sprawling suburban strip mall communities will just keep expanding outward, making supply infinite.

Water

People love water. They love boating on it, swimming in it, fishing in it, and having a view of it. Waterfront property is a fixed supply, while demand will always rise. Caveat: beware of flood plains and hurricane alleys, as these are already hard to insure, and you might end up like these poor schmucks with your car underwater.

Stable Institutions and Employment Providers

Some institutions aren't going anywhere, and provide a LOT of jobs. An example would be a local governments, universities, hospitals, etc. People want to be as close to their jobs as is practical, so find out where the employees like to live, research that institution's long term expansion/relocation/etc. plans, and consider these neighborhoods for a safe long term lease agreement.

This is a short list, but hopefully gives you some ideas in your area. Good luck, and here are a few good sites for a lease agreement (EZ Landlord Forms), rental listings (Hotpads), and credit checks (NTN Online).

Some tenants just plain suck. I'm looking at you, Mr. I-Can't-Pay-Rent-This-Month-Because-My-Pet-Pigeon-Died, and you Ms. I'm-Going-To-Call-You-Every-3-Days-And-Whine. You and all of your friends are a pain in my a$$, and this post goes out to you.

As the years of being a landlord go by, I've found that gut instincts regarding tenants are almost 100% accurate. We justify putting a tenant that we don't feel great about into our rental properties, saying "Oh he had a couple problems in the past, but now he's got a job, and he seems to really like the property…" etc. NO MORE. Here's what to look for when you hand out rental application forms to prospective tenants.

First of all, what do they do for a living, and how long have they been at their current job? Watch for anything that sounds like an excuse.

Garbage: "Well, I was doing construction, but that wasn't working out that well, so I started doing work on cars with my brother, but…"

Legit: "I've been a mechanic for about nine years now, over at J&J Automotive."

Look for definitive, declarative sentences, and watch their body language. Do they look down, or up, or away? Or do they look you in the eye? Sounds like a lot to concentrate on at once, but just listen to your gut.

Second, ask about their housing history. Where do they live now? How long have they lived there? Who do they live with? You want someone who has been living as independently as possible, at the same place for as long as possible.

Garbage: "Things were a little hard for a while, so I was crashing with my brother in law, but it's time for me to get my own place, so…"

Legit: "My husband and I have been living down in Mount Vernon for the last five years, but we're really looking to move out of the city so we can have a yard."

Again, watch out for vague nonsense, and watch out for people who bounce around a lot, or who have been living for free with friends or family.

Finally, ask them about their current landlord. Don't ask how they get along with the landlord, because that'll tip them off, but ask "How's your landlord right now?"

Garbage: "My landlord's such an a$hole, we've been on him for six months to fix this broken plank in the fence, but he won't get off his a$ and actually do anything…"

Legit: "My landlord's been all right. He didn't fix this broken plank in the fence, but for the most part he's been ok."

Basically, you want to see if they're going to be demanding or antagonistic, which MANY tenants turn out to be.

Don't make excuses for rental applicants; if they give you a bad vibe, don't even give them a rental application. There are good tenants out there, but you'll have to put in some work to find them, and if you do you'll be rewarded with a headache-free (and lawsuit-free) experience as a landlord.

By the way here's a free rental application form if you're new to the landlord game, good luck.

We know what the last domino in the chain is: the global economy circles the toilet bowl, and 6 billion people (myself included) all start crying and whining and jumping up and down looking for someone to blame. It's the mortgage lenders! It's the banks! It's Wall Street! It's the CEOs!

The public cries for heads, and the U.S. Government starts looking for unpopular people to blame. What do they do then? They slap the scapegoats with regulation, making it harder for anyone to do business in the future, and a longer economy recovery period. But these are all shallow answers when investigating the true chain of dominoes, because it's all misdirection and finger-pointing, hosted by people who want blame elsewhere so they can be re-elected. So we're going to look at the chain of dominoes a little closer, and discover where this chain started.

Domino 1 (1977): President Carter signs into law the Community Reinvestment Act of 1977, requiring mortgage lenders to lend to borrowers and neighborhoods that they normally would not have. Subprime lending is now mandatory.

Domino 2 (1994): President Clinton approaches the Department of Housing and Urban Development (HUD), and pushes an initiative called The National Homeownership Strategy. Under this initiative, both public and private lending programs are highly encouraged to create looser and more creative lending guidelines, to encourage homeownership for all Americans. They released a document entitled “The National Homeownership Strategy: Partners in the American Dream;” perhaps it speaks best for itself in this little excerpt:

"For many potential homebuyers, the lack of cash available to accumulate the required downpayment and closing costs is the major impediment to purchasing a home. Other households do not have sufficient available income to to make the monthly payments on mortgages financed at market interest rates for standard loan terms. Financing strategies, fueled by the creativity and resources of the private and public sectors, should address both of these financial barriers to homeownership."

Sound familiar?

Domino 3 (1994-2005): Homeownership in America rises from roughly 64% to 69%, due to both private and public lending institutions' newly loosened lending guidelines.

Domino 4 (2001): President Bush continues pushing this moronic initiative. 

Domino 5 (2001-2004): The Federal Reserve, led by Alan Greenspan (appointed by President Bush), overheats the economy with extremely low interest rates. Money is now both cheap AND available to everyone, regardless of credit-worthiness.

Domino 6: A real estate buying frenzy is created, due to the cheap and ubiquitous availability of money.

Domino 7: Real estate prices spike precipitously, due to the heightened demand.

Domino 8: Foreclosure rates spike, as undeserving homeowners (inevitably) start defaulting, creating a plethora of inexpensive supply.

Domino 9: Real estate prices drop even faster than they rose.

Domino 10: Bank assets, in the form of mortgages, which have now been traded worldwide in massive securities bundles, are suddenly worth a lot less, as the holders realize that they were inaccurately rated by credit rating agencies, and the collateral they're secured against are worth substantially less than they were 2 years ago.

Domino 11: The world economy collapses.

My question to you: if it was government intervention and regulation that brought us here, through the actions of three bumbling, myopic presidents and their respective congresses, then is more regulation the answer? Is blaming the companies who unknowingly bought up these assets the answer? Maybe blaming the people whose only crime was to COMPLY with government regulations and mandates?

Of course not. The answer is that government regulation to promote a political agenda makes for a bad economy, and we would do well to remember that in the future, instead of letting ourselves be placated when the government (who got us here in the first place) starts offering us scapegoats, and then goes back to the hyper-regulation drawing board to pump out more garbage for businesses to try to bend and twist to maintain compliance.

What a nation of fools we are. We make problems and find scapegoats, just like Homo Erectus did 100,000 years ago.