Adding a Shout to the Twist – Waking Up from the Illusion of How Money Works
Are we ready to wake up and use our big “outside” voices? If you aren’t already on the track of understanding how our wealth, individually and collectively, has been intentionally and systematically highjacked, perhaps it’s time… it’s not that fun, but shining a light on the truth of what is happening is the first step towards healing.
Watch “The Money Masters“, and/or sign up for “The Solari Report“. There are a lot of other sources of similar information, but this is a place to start.
I’ve been pretty quiet lately on this blog… doing a lot of studying, thinking, and emotionally and spiritually processing what all of this means to me… deciding what I believe in, what I want to stand for, how I’ll navigate my business and how I’ll counsel others that count on me for advice for maximizing and protecting both their real and paper assets in these uncertain times.
Money is about to get even tighter with the Fed’s latest move. Private lenders and buyers of owner-financed paper are going to be increasingly necessary to provide liquidity in the real estate market.
When you start to realize what has happened to us over the last 98 years since the creation of the Federal Reserve in 1913, and you realize how money really works (hint: it’s not what we were taught in school) you’ll go through disbelief, denial, anger, bargaining and then probably spend some time in despair… until you’re ready for acceptance.
Out of acceptance, the clarity of the next step will have a chance to emerge.
Speaking of Operation Twist announced by our friend, Benny Boy (over at the Fed), Chris Mayer writes…
“It’s a plan so dumb you have to have to Ph.D. to believe it will do any good…” (at least this made me laugh)
Markets haven’t exactly liked it, have they? The DOW is down a few hundred points, most of the big players are selling more than they’re buying, and I hear that trades betting against the S&P 5oo are at an all-time high… and congress is going on vacation without knowing how the government is going to continue to operate next month. Good times, good times.
Most people should not have direct exposure to the stock market right now. If you’ve still got regular equities, consider selling them… soon, yesterday or last year.
How is the average saver/investor supposed to protect what is left of their wealth, their money, their assets?
Doing nothing (hiding money under your mattress or in a 1% CD) has become even more risky than investing. If you aren’t making at least 9% on your money (the current rate of inflation), then it’s disappearing while you sleep.
I happen to believe that investing in notes with lots of protective equity, secured by generously cash-flowing properties in strong, non-bubble, job-supporting markets, is one of the last bastions of growth and preservation of the wealth of the average investor.
Yes, many people want to own those cash-flowing properties and have them professionally managed. But I’d rather hold the note secured by those assets at half the value of the property or less. It’s simpler, easier, and I am hedged against further fluctuations in the prices of real estate and rents.
I want to be happy if the note performs, and happy if it doesn’t.
And… there are blended products that give you both…
You can have hassle-free, safe, note-investment returns, plus a piece of the upside of the real asset that secures it.
For the record, here are my other sentiments…
- Have some basic preparedness items on hand… food, water, etc. You never know when even a random power outage could create craziness around you. Plus, buying commodities (the things you need and use every day) at today’s prices is a hedge against future inflation
- Start growing some of your own food, even if you’re only sprouting alfalfa and garbanzos. Here in suburbia, our food markets and warehouses only have a 3-day supply of food.
- Get backyard chickens (this could actually just be a reaction to “empty nest syndrome”… as the children left, I bought poultry. You feed these goofy little birds for a few months, and they start laying eggs for your breakfast. I fed four kids for 20 years, and never once did they lay me an egg… just sayin’)
- Hold some physical gold and silver
- Stay grounded in things that make you feel good and help you stay aware of how much abundance is around you right now… the gratitude game
- Look into alternative and complimentary local economic systems that will support our communities. The California Federation of Time Banks is holding their annual convention in Pasadena on Oct. 1st & 2nd. We need to create a safety net for all the people who are falling through the cracks
OK, so that’s quite enough for one day…
Find more of my brilliant philosophizing and training segments over at Owner Financing Club (members’ only protected content), and if you want to invest in notes with me, please fill out this Note Investor’s form.
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Dawn, Operation Twist will work very well for the FRBNY’s Primary Dealers (PDs). They will dump their worst long-term Treasuries on the Fed, and will make a handsome commission for doing so. My guess is that the big banks, through the GSEs, will have the Treasury Department convert their junk mortgages into agencies, and the Fed will use some of that $400 billion, along with the proceeds of any refinanced Fannie/Freddie mortgages, to buy this newly created, Government-backed junk paper, at full face, mark-to-model values. Only the lower yield spreads will hurt the Wall Street banks in their profitable, formerly risk-free carry trade.
As far as creating owner carry paper, I worry that the “Safe Act”, buried in Dodd/Frank, will make it nearly impossible to collect on mortgages that could be subject to reversionary treatment for even those sellers who carefully have dotted every “I” and crossed every “T”. Also, in this age of shrinking collateral values and counterparty defaults, the risk of owning paper, even as a holder in due course, may be too much for what may turn out to be too little reward.
I have been watching the nothing down flippers for sometime.I am in the mortgage loan and life insurance business.
I think apartment buildings is a good opportunity to make nothing down owner carry back financing deals with because it would not take much to convince them that a down payment or cash for equity is a tax problem for them whereas the taking payments out of positive cash flow from the property provides income and a minimum of taxation.
Can you apply the note business to this model?If so I would like to talk to you about it and I will find some properties to go talk to .
You might have to tell me what conditions to look for in the equity and current financing they have.Know ing the structure of how to take possession of the property is a question?
I would think obtaining the note on deals like this would work but I am asking you that question.I am suggesting a partnership here.
Bravo Dawn! Your observations on current fiscal policy are right on the mark. And so is your sage and timely advice about looking out for yourself and your family in modern day America. Once again, the supposed experts have come up with a “solution,” that’s far worse and more economically damaging than the actual problem that they’re trying to solve! But then again, what else can one expect from federal regulatory agencies that are run by political appointees, staffed by nitwits and totally dysfunctional. Personally, I blame the average American citizen’s apathetic attitude, for what now passes as “public service!”
Thanks for adding in your thoughts and ideas…
@black swan – it’s hard for me to get my head around how all of that exactly works, but I’m sure that whatever is going on benefits those who favor the centralization of wealth and power… and hurts the average American.
I agree that paper can be risky, but the SAFE Act does not apply to every owner-financed transaction. That’s one reason I like the investor deals… no SAFE Act complications, huge down payments, higher net worth individuals as mortgagors, with collateral that pays for itself with strong rents in strong areas of the country.
@David – I can imagine that some owners would be open to nothing down, but most want at least something. Most are advised by their agents and attorneys to get 25% – 30%, but may take as little as 10%.
In any owner financed deal, either the owner has to have equity or good underlying financing, or a combination of the two. If you have a free and clear owner, and they want more cash at closing than you have as a down payment, then they could create and immediately sell a portion of the note created to generate more cash.
One of my past clients picked up 5 units for $100K over market, but with these terms: 6% down payment, the remaining note carried at 4.75% interest amortized over 50 years… needless to say it cashflows for him right out of the starting gate. The lady just wanted to defer capital gains, sell for a price that was stuck in her head, and get the hassle free income. I guess she didn’t care that most of her wealth was going to be diminished by the time value of money.
The way you take possession of the property depends on several factors. If you can find apartment owners who want to sell and are flexible about terms (and they have at least 50% equity) then let’s talk.
@Thomas – thanks, Tom. Yes, I agree that we all need to regain consciousness after a long mental slumber!