Use As Much Of Your Own Money As Possible

Here are some tips from the book Foreclosure Myths:

Novice investors fear borrowing money. They don’t want to risk losing someone else’s money and having that person get mad at them. As a result, they make bad decisions. They’ll cash out all of the equity in their homes. They’ll cash out retirement accounts. They’ll use their businesses as collateral. Without need, they risk their personal assets.

By using their own money, they develop no leverage. Wealth is created by leverage. The limited amount of money they have access to limits the type of home they can afford to buy. That limits their profit.

Investors should use as much of other people’s money (OPM) as possible.

You can convince banks to finance your real estate deals.

Another way to protect your assets is to make your own LLC (limited liability corporation) for buying and selling foreclosures. By operating as an LLC, you protect yourself against any lawsuits.


The Federal Deposit Insurance Corp. today formally proposed its long-talked-about plan to help prevent home foreclosures by offering incentives to lenders and offering government guarantees to cover losses on the modified loans.

The plan, pushed by FDIC Chairwoman Sheila Bair, would cost $24.4 billion and could prevent 1.5 million foreclosures through the end of 2009. It is based on the loan modifications the FDIC has undertaken for mortgages serviced by the failed IndyMac Bank in Pasadena, which the regulatory agency took over in July.

But before people get too excited about the idea, the Bush administration has resisted adopting it, meaning it’s probably going nowhere at least until President-elect Barack Obama takes office in late January.

Treasury Secretary Henry Paulson said this week the FDIC plan and other far-reaching proposals to reduce foreclosures would “require substantial government subsidies” — subsidies that would not come from the $700-billion financial rescue fund.

“I believe it is an important idea,” he said of the plan. “As we evaluate the merits of any new proposal, we also will have to identify and justify the means to finance it.”

But many Congressional Democrats have praised the FDIC plan, and may push it after Obama takes office. Obama has talked about taking more aggressive steps to stem foreclosures, so it may appeal to him as well. And Bair has scored points with Democrats for pushing so aggressively to help homeowners — so much so that she’s been mentioned as a dark-horse candidate for Treasury Secretary.


WASHINGTON (AP) — Publicly breaking with the Bush administration’s official stance, the Federal Deposit Insurance Corp. proposed Friday to use $24 billion in government funding to help 1.5 million American households avoid foreclosure.

Where to find that money, though, is in dispute. FDIC officials want to use part of the $700 billion bailout of the financial industry to pay for it. But the Treasury Department is opposed to that idea.

Testifying on Capitol Hill Friday, Neel Kashkari, the Treasury Department’s assistant secretary for financial stability, said the aim of the $700 billion plan was to make investments with the hope of getting the money back. That he said, was “fundamentally different from just having a government spending program” that would disburse money with no chance of ever seeing any returns.

With the Bush administration adamantly opposed, Congressional Democrats could take up the FDIC’s plan when they return for a lame-duck session next week. Or Bair’s plan could set the stage for a new foreclosure prevention initiative once President-elect Barack Obama takes office in January.

There is intense speculation in Washington that the FDIC’s chairman, Sheila Bair, is positioning herself for a role in the Obama administration. “My assumption is that she’s angling for a promotion,” said Bert Ely, a banking industry consultant in Alexandria, Va. and an FDIC critic.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (, he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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