So far my reality show is in full swing. Click this link to find the first 3 rules to home buying. Remember to check your credit, get pre-approved, and save for your down payment. First 3 Rules
Once I complete the first 3 rules, I set out to search for my house of dreams. Here are the steps to make sure your ready to find your dream house:
1. Practice Before The Real Thing - This is the first step in your reality check as a home buyer. Before waisting your time and stressing your agent out, practice finding the home of your dreams on your own and see what your pre-approved amount gets you in many different neighborhoods. The web is a great tool for pr acting with specialty sites and sites that tap into all Multiple Listing Service (MLS) listed homes. For Chicago, here are the sites I practiced with:
Dreamtown.com
Trulia.com
Zillow.com
Realtor.com ***
chicagotribune.com (Real Estate section)
Redfin.com ***
*** These sites helped me get the most accurate information
2. Narrow Your Search - Its time to narrow your search by more than just price. Choose the following: Preferred Locations, Total Price, Must Have Features. Here is mine:
Preferred Locations -
Here is a listing of all Chicago neighborhoods: http://www.chicagohome.com/neighborhoodMasterList.cfm
Most of the North Side: (Irving Park, Avondale, Roscoe Village, Logan Square, Bucktown, Wicker Park, St. Ben’s, North Center, Rogers Park, Lakeview, Lincoln Square, Albany Park, Lincoln Park, Uptown, Edgewater, Portage Park, Ravenswood)
South Side (Hyde Park, Kenwood, UIC)
Total Price - Know two key things about the price: 1. List Price, 2. Monthly Payment Price
List Price - The total amount you want to spend. This will impact your down payment.
Monthly Payment Price - Also estimate your total monthly budget which should include the mortgage payments, taxes, association fees...and be aware of insurance costs.
Must Have Options
Property Types: Primary - Duplex, Townhome, Single Family Home
Square Feet - At least 1600
Bed Rooms - At least 2
Bathrooms - At least 2
Balcony/patio/deck
Closet space
Washer/Dryer in unit
Central air or separate unit in each room
High ceilings
Intercom/Security/Buzzer Door Entrance or Locked Fence
Good parking situation
Access to Transportation
Grocery/food/stores
Hardwood
Kitchen - Stainless Steel Package, Update Cabinets
Bathroom - Updated Features
3. Get Professional Help, Choose an Agent
My personal opinion is that if you are well informed your agent is helpful but not vital. Don't be afraid to find your home on your own and then just rely on the agent to show you the property (and then help you close the deal). I would explore a growing breed of agencies that allow you to use a powerful site to 'Narrow Your Search' and choose the properties that meet your criteria...on your own. The catch for you doing all that work is the agency will split the COMMISSION with you. Check out sites in Chicago like Redfin.com and ZipRealty.com. I learned through my experience that a traditional agent will do the exact same thing, however, they put in your 'Narrow Your Search' criteria for you and then you choose the properties that look interesting.
I used Redfin and enjoyed their service. However, I went with a traditional agent because Redfin doesn't focus on short sales...a type of distressed property I was leaning towards. Look for agent that lives works and surrounds in the city for at least 5 years. They have seen highs and lows in the economy.
If you choose a traditional agent, create a questionnaire to grill your potential candidates (yes, they are working for you):
~ Is this your full-time job?
~ Are you familiar with distressed properties (foreclosures & short sales)?
~ Where were you last five deals?
~ Who else will be working with me?
~ Will you show me ALL properties available for sale?
~ When am I committed to working with you?
~ Has a client ever filed a complaint?
~ How are you paid?
4. Tour The Homes - Schedule roughly 4-6 homes in a session. This is a good amount that will allow you to remember each property. I recommend taking a camera with you when touring homes. This was the best tool because I remembered so much more.
Thursday, August 20, 2009
Saturday, August 15, 2009
What's in My New Fave Five Portfolio
Well if I had my T-Mobile Sidekick I would be dialing up these stocks in my Fave Five list. After reading my previous post you see that I am looking to build a base with longer term plays that will offer protection and growth. Stocks like TIP, EPD, and GE are for the long road because they protection you from inflation, provide a nice dividend, and offer large cap value...respectively.
I became to write about clarity and the activity that I am seeing in the markets allows me to return to my screening process. A process that allows me to rely on quantitative data analysis and less on my emotions. Here are my picks and the my views of what the data tells me.
My FAVE FIVE for August with price points:
Interactive Brokers (NasdaqGS: IBKR) - This may be my favorite pick this month. I would be a heavy accumulator between $18.15 -18.60. Also any points when they dip below $19.12 I would start nibbling at the stock. I like the activity in the stock market which allows this company to garner more fees and I am bullish on the fact that they market themselves as a low cost fee servicer.
Americredit (NYSE: ACF) - I am pleased that this stock came up screen. At 16.94, I would be a buyer of this automobile finance contract purchaser and servicer. I believe 'Cash for Clunkers' will be a huge benefit to this company and the proof is in a recent discussion on CNBC with the AutoNation CEO. He directly attributed the program with bringing buyers with good credit scores into showrooms.
Bank of America (NYSE: BAC) This one is simple. Everyone and there mama is buying into BAC and I told you before I don't go against smart money. It came up on my screen and further research shows industry hedge fund smart guys like Peltz, Jana Hedge fund, Dan Loeb and my current favorite John Paulson are jumping on to this train. Take Paulson, my dog owns 168 Million shares. Hmmm, is that enough to make you think twice! I'm struggling with a price point but I'd love to see a small pullback to pick this stock up @ 15.96
Becton Dickinson (NYSE: BDX) - This one is simple. Even though I like Paulson, I am a bigger fan of Warren Buffet. He steered me right with Burlington Northern and now he's on board with BDX. Jump on the wagon @ $65.49
Pfizer (NYSE: PFE) - This was not uncovered by my screen but I like the activity around PFE. This was added at the last minute and switched with my honorable mention Boston Sci. As I was researching PFE, I learned that the management has indicated a plan to raise the dividend by 25% by the end of the year. I can dig that!
Honorable Mention Fave Fives:
Rait Financial (NYSE: RAS) - I have to give you a 'penny stock'. RAS hits my screen and should be picked up at $2! The only problem is that it took off the other day to the tune of 29%. Well you win some and you lose some.
Boston Scientific (NYSE: BSX) - This gets the dubious number six on my list. It got replaced by an older maybe more responsible friend PFE. But grab BSX @ $11.06.
I became to write about clarity and the activity that I am seeing in the markets allows me to return to my screening process. A process that allows me to rely on quantitative data analysis and less on my emotions. Here are my picks and the my views of what the data tells me.
My FAVE FIVE for August with price points:
Interactive Brokers (NasdaqGS: IBKR) - This may be my favorite pick this month. I would be a heavy accumulator between $18.15 -18.60. Also any points when they dip below $19.12 I would start nibbling at the stock. I like the activity in the stock market which allows this company to garner more fees and I am bullish on the fact that they market themselves as a low cost fee servicer.
Americredit (NYSE: ACF) - I am pleased that this stock came up screen. At 16.94, I would be a buyer of this automobile finance contract purchaser and servicer. I believe 'Cash for Clunkers' will be a huge benefit to this company and the proof is in a recent discussion on CNBC with the AutoNation CEO. He directly attributed the program with bringing buyers with good credit scores into showrooms.
Bank of America (NYSE: BAC) This one is simple. Everyone and there mama is buying into BAC and I told you before I don't go against smart money. It came up on my screen and further research shows industry hedge fund smart guys like Peltz, Jana Hedge fund, Dan Loeb and my current favorite John Paulson are jumping on to this train. Take Paulson, my dog owns 168 Million shares. Hmmm, is that enough to make you think twice! I'm struggling with a price point but I'd love to see a small pullback to pick this stock up @ 15.96
Becton Dickinson (NYSE: BDX) - This one is simple. Even though I like Paulson, I am a bigger fan of Warren Buffet. He steered me right with Burlington Northern and now he's on board with BDX. Jump on the wagon @ $65.49
Pfizer (NYSE: PFE) - This was not uncovered by my screen but I like the activity around PFE. This was added at the last minute and switched with my honorable mention Boston Sci. As I was researching PFE, I learned that the management has indicated a plan to raise the dividend by 25% by the end of the year. I can dig that!
Honorable Mention Fave Fives:
Rait Financial (NYSE: RAS) - I have to give you a 'penny stock'. RAS hits my screen and should be picked up at $2! The only problem is that it took off the other day to the tune of 29%. Well you win some and you lose some.
Boston Scientific (NYSE: BSX) - This gets the dubious number six on my list. It got replaced by an older maybe more responsible friend PFE. But grab BSX @ $11.06.
Saturday, August 08, 2009
Urbanomics ~ Portfolio Plays
It has been a busy summer for me. As you can see from my updates I have been consumed with trying to buy a home. Lately, I have increased my number of posts and this could probably means one thing. CLARITY
I won't admit that it is a perfectly clear picture as to what may be coming down the road but I would say that I have a better feel as to how things may continue to play out.
My personal belief is that this rally is a bear market rally. I will admit that it is a rally nonetheless and you can't try to go against the trend. See a post that I wrote away back about sticking with the trend: Bad Banks Will Rally. So here are a quick summary of my points:
- The goverment's combination of TARP, stimulus, and incentives (Cash for Clunkers, Homebuyer Tax Credit) have been the right recipe to bring the economy from lifelining.
- Unemployment continues to be the thorn in the side of an economic recovery. As a person that is near to the streets, this and foreclosures are the most important issues.
- The economic data is starting to trend up and when you've hit the bottom there is only one direction to go. We've seen gas, homebuilders, banks, credit card delinquencies, and even unemployment start to tick up
After considering these points, I believe that things are getting better but very SLOWLY. I understand that unemployment is a lagging indicator but I think things are different this time. High umemployement, which I believe will continue to rise...is a problem to a primarily service driven economy. This will be a drain on most American businesses ranging from restaurants, homebuilders, banks, etc. I believe businesses have benefited immensely and are recovering but I think the everyday person is struggling to adjust to the NEW NORMAL. The new normal for businesses mean that cost cutting efforts will continue for long while and hiring will not come back as new revenues will be hard to come by. I think that this is an "incentive" driven rally and a pullback is soon to come because nothing has really changed. Money has been pumped to save starving business but not many industries have really been punished for their actions which got us here. This is the fundamental back drop of moral hazard...no one has learned their lesson. If you need proof, then just look act the actions of the big banks once they got out from underneath TARP. I believe the waste and excesses have not been rung out of the system and the average person on main street is left holding the bag. That bag results in job losses, delinquencies, debt, possibly higher taxes, and UNCERTAINTY. I now bring my lunch and limit my Patron shots due to this uncertaintly. So here is my portfolio which reflects an uncertain world that appears to be getting a little bit clearer:
Stocks based on my view of the ecomony:
TIP - Treasury Inflation Protection EFT; inflation will be coming and this is where the smart money is parking some of their stash
DUG - Ultrashort Oil; if you read above, when the economy improves so does the price of Oil. But high oil is not good for this struggling economy
GE - General Electric; an industry stallworth that should rebound, especially since GE Finance won't be the undoing of this company
BBY - Best Buy; this is where I like to shop and now that Circuit City became a casuality of this economy its more pie for Best Buy (hey that rhymes)
GLD - A Gold ETF; this is an inflation protection move.
Stocks based on my screening:
EPD - Enterprise Partners; this is a natural gas pipeline company that has an outstanding dividend and it prime position it commodities move higher
IBKR - Interactive Brokers; asset managers and investment banks that are still around are benefit from the volatility and new business
GLW - Corning; this maker of LCD displays will stand to benefit as flat screens continue tobe the 'it' thing to buy. I can't wait to get my 52 inch bad boy
I won't admit that it is a perfectly clear picture as to what may be coming down the road but I would say that I have a better feel as to how things may continue to play out.
My personal belief is that this rally is a bear market rally. I will admit that it is a rally nonetheless and you can't try to go against the trend. See a post that I wrote away back about sticking with the trend: Bad Banks Will Rally. So here are a quick summary of my points:
- The goverment's combination of TARP, stimulus, and incentives (Cash for Clunkers, Homebuyer Tax Credit) have been the right recipe to bring the economy from lifelining.
- Unemployment continues to be the thorn in the side of an economic recovery. As a person that is near to the streets, this and foreclosures are the most important issues.
- The economic data is starting to trend up and when you've hit the bottom there is only one direction to go. We've seen gas, homebuilders, banks, credit card delinquencies, and even unemployment start to tick up
After considering these points, I believe that things are getting better but very SLOWLY. I understand that unemployment is a lagging indicator but I think things are different this time. High umemployement, which I believe will continue to rise...is a problem to a primarily service driven economy. This will be a drain on most American businesses ranging from restaurants, homebuilders, banks, etc. I believe businesses have benefited immensely and are recovering but I think the everyday person is struggling to adjust to the NEW NORMAL. The new normal for businesses mean that cost cutting efforts will continue for long while and hiring will not come back as new revenues will be hard to come by. I think that this is an "incentive" driven rally and a pullback is soon to come because nothing has really changed. Money has been pumped to save starving business but not many industries have really been punished for their actions which got us here. This is the fundamental back drop of moral hazard...no one has learned their lesson. If you need proof, then just look act the actions of the big banks once they got out from underneath TARP. I believe the waste and excesses have not been rung out of the system and the average person on main street is left holding the bag. That bag results in job losses, delinquencies, debt, possibly higher taxes, and UNCERTAINTY. I now bring my lunch and limit my Patron shots due to this uncertaintly. So here is my portfolio which reflects an uncertain world that appears to be getting a little bit clearer:
Stocks based on my view of the ecomony:
TIP - Treasury Inflation Protection EFT; inflation will be coming and this is where the smart money is parking some of their stash
DUG - Ultrashort Oil; if you read above, when the economy improves so does the price of Oil. But high oil is not good for this struggling economy
GE - General Electric; an industry stallworth that should rebound, especially since GE Finance won't be the undoing of this company
BBY - Best Buy; this is where I like to shop and now that Circuit City became a casuality of this economy its more pie for Best Buy (hey that rhymes)
GLD - A Gold ETF; this is an inflation protection move.
Stocks based on my screening:
EPD - Enterprise Partners; this is a natural gas pipeline company that has an outstanding dividend and it prime position it commodities move higher
IBKR - Interactive Brokers; asset managers and investment banks that are still around are benefit from the volatility and new business
GLW - Corning; this maker of LCD displays will stand to benefit as flat screens continue tobe the 'it' thing to buy. I can't wait to get my 52 inch bad boy
Friday, August 07, 2009
Junk Your Clunker...
I previewed the details of this program awhile back. Cash for Clunkers has been a huge success for the automotive industry and they just got extended another lifeline. The Congress approved another $2 Billion dollar measure that will allow the program to continue. If you still have questions about junking your clunker see the official site here:
Car Allowance Rebate System: http://www.cars.gov/
Car Allowance Rebate System: http://www.cars.gov/
Monday, August 03, 2009
My Reality Show: Homebuying 101
My online reality show is probably the slowest show that you've followed in awhile, but hey its still running! If you recall, my show started with trying to determine if the stimulus bill really had any stimulus to it??? So I read through some of sweet parts of the bill to see if they could get a penny pincher like me off the sidelines and contributing to a deteriorating economy. The one part of the bill that immediately attracted me what the Homebuyer Tax Credit. Yes, welcome, first time homebuyers like me. I searched high and low and I'm sometimes surprised at the lack of direct information provided to help you through what is a huge huge purchase. So far here are the rules to help you finance the purchase of your next home:
Rule 1: From a previous post, you learned to CLEAN UP YOUR CREDIT. Click here to learn about how to view your credit for free ---> Free Credit Check
Rule 2: Find a reputable bank or mortgage broker who will pull up your credit and give you a Pre-Approval amount based on your gross income and outstanding debt levels (i.e., credit card balances, car loan, student loans, etc). Knowing "How Much Home You Can Afford" is critical! My rule of thumb is try not to spend more than 80% of what your Pre-Approval amount is. If you haven't received your Pre-Approval use this rule of thumb, don't spend more than 40% of your net monthly paycheck. Remember net = take home pay. This rule prepares you for a few things things that you may still want to spend money on like: the ability to still save/contribute to your retirement, afford new expenses, and still have a life.
Rule 3: SAVE, SAVE, SAVE for at least of a 10% Down Payment. This will be a huge step in determining if you are really ready to commit to buying a home. For instance, the average condominium (in my book) is roughly $300,000. This means you need to come up with $30,000 as a down payment!!!!
Tricks up my sleeve:
- A trick to Rule #1 is to contest all questionable items on your credit report with support and in writing. The nice thing is contesting your credit history can be done online.
- The trick to Rule #2 is to follow my "Rule of Thumb" notes above. Budget for less and you will be able to sleep easier at night.
- And my last trick! For Rule#3, consider or ask if the home you are looking into qualifies for a FHA Loan. This loan is government sponsored and only requires you to put 3.5% Down!!!
Stayed tuned on how to begin your house search...
Rule 1: From a previous post, you learned to CLEAN UP YOUR CREDIT. Click here to learn about how to view your credit for free ---> Free Credit Check
Rule 2: Find a reputable bank or mortgage broker who will pull up your credit and give you a Pre-Approval amount based on your gross income and outstanding debt levels (i.e., credit card balances, car loan, student loans, etc). Knowing "How Much Home You Can Afford" is critical! My rule of thumb is try not to spend more than 80% of what your Pre-Approval amount is. If you haven't received your Pre-Approval use this rule of thumb, don't spend more than 40% of your net monthly paycheck. Remember net = take home pay. This rule prepares you for a few things things that you may still want to spend money on like: the ability to still save/contribute to your retirement, afford new expenses, and still have a life.
Rule 3: SAVE, SAVE, SAVE for at least of a 10% Down Payment. This will be a huge step in determining if you are really ready to commit to buying a home. For instance, the average condominium (in my book) is roughly $300,000. This means you need to come up with $30,000 as a down payment!!!!
Tricks up my sleeve:
- A trick to Rule #1 is to contest all questionable items on your credit report with support and in writing. The nice thing is contesting your credit history can be done online.
- The trick to Rule #2 is to follow my "Rule of Thumb" notes above. Budget for less and you will be able to sleep easier at night.
- And my last trick! For Rule#3, consider or ask if the home you are looking into qualifies for a FHA Loan. This loan is government sponsored and only requires you to put 3.5% Down!!!
Stayed tuned on how to begin your house search...
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