Some highlights of the FHA program are:
Low minimum down payment of only 3.5%
Credit score requirements are a minimum of only 620
Co-signer is allowed without having to live on the property
Can be combined w/ Federal First time buyer credit of $8K before Dec. 1, 2009

• Keep hunting for opportunities but be cautious on final decision of what type of property to buy.
• Build up cash reserves since cash & financing has gotten tighter.
• If you don’t own a home, plan to get one unless you are planning to move soon.  Always good to get the tax breaks and interest rates are very low and will not go much lower before they go higher.
• Lock in a good 30 year rate while guidelines are still good for first time buyers and rates are low, these guidelines may change as the financial market shakes out the proper guidelines for loans.
• Use $8K tax credit for first time home buyers combined with FHA program.  $8K covers majority of the 3.5% required.

Two times not to buy real estate are when you are planning to relocate within 1 year without plans for returning or if you are not financially stable yet.

When you think of real estate you first have to realize that you will always need a place to live so taking that into consideration do you want to rent the place you live or own.? Have you ever considered renting a car long term instead of buying a car? Of course not, because it does not make financial sense. People rarely rent a car but are content to rent a home despite the tremendous opportunity available to make your home the cornerstone of your financial planning.

Ask yourselves these questions and you will come to the same conclusion as we have that it is vital to purchase your home early and plan soundly for the future.

Ask yourself:

How much was rent 30 years ago in Honolulu for a 3 bedroom house. Maybe $350? What is that same house renting for today? Maybe $2400? How much will rent be in 30 years? Sure, it’s hard to say but look at any 30 year period in time and it is clear that rents will rise over time. It is not unreasonable for rents to rise 6 to 10 times the current amount in a 30 year period. Do you want to pay market rent in 30 years or do you want to collect market rent in 30 years? I know this seems silly but ask yourself and imagine yourself in 30 years either paying market rent or collecting it. Here is another no brainer: Do you want to have no equity in 30 years or a fully paid off property with the flexibility to live there with no payments besides property tax and utilities?

How will you afford market rent once you stop working? Wouldn’t a 30 year fixed mortgage with a consistent payment bring peace of mind and the stability needed to plan for the future? The answer is a resounding yes. For the first few years it may be hard but for the next 25 years you will be paying the same fixed amount per month and building equity in your property at the same time.

When you buy a home there are tangible and intangible benefits that are included with the purchase. Stability for yourself and family are priceless, you are now able to build a home and life around the fact that nobody can ask you to leave unless you decide to relocate. In addition you can add value by renovating, landscaping and adding fixtures that are appealing to you and other future people that may buy your property.

Buying a home offers you the opportunity to become wealthy. Without taking that first step, the chances of becoming wealthy greatly diminish. Buying a home puts you in the position to gain equity, leverage for a future home or investment property and provides a solid protection against being priced out of the market. Do you know anyone wealthy that doesn’t own their home?

A great way to look at the market is my Three Outcome Scenario: The market can only go up, sideways or down and either scenario buying is better than renting. If the market goes up, you have high equity building, have a fixed mortgage lower than the current market, stability, ability to leverage to another property, tax deductions as a home owner, you are building good credit, building towards your retirement & pride of home ownership. If the market goes sideways, you get everything above except medium size equity instead of large equity which is still a great position to be in. If the market goes down, you still get everything above and lower equity + you are not exposed to market rent and do not have any monthly payment to pay once your mortgage is paid off. If you decide to rent, no matter what you will not have equity so unless you have an excellent high paying job that you can save money, not spend a high level of your income and sustain your lifestyle without other assets your chances of wealth are slim to none. Without a high income, there is also the chance of getting priced out of the market and maybe even being homeless. If you have a very inexpensive rental, still decide to buy and buy early and maybe stay in your rental and rent out your property but do not delay this because the golden rental from your nice Auntie Rose will not always be available and this your chance to get a headstart.

You may catch a down swing in the market but it is hard to jump on the train at exactly the right moment. Picture a train that is going somewhere, it is important to get on the train rather than try and time it since time is more important than timing. The earlier you start the better off you are.

For those of you saving your down payment, set a plan for the least amount of down payment possible with a payment you can pay very comfortably and buy what you can afford as soon as possible. The key is time and there will be more and more expenses and reasons not to buy in the future so save now, put the small down and instead of saving per month pay a larger mortgage payment. I strongly encourage leveraging to a certain degree and not waiting for a large down payment or putting a large down in many cases since that limits your opportunity to invest in other projects for the future without saving another lump sum of money. In addition, interest rates are very low which increase the reasons to lock in a fixed mortgage payment and be worried about future rate increases.

I strongly encourage you to buy a home for your own financial stability, buy something you can afford, enjoy the benefits of home ownership and call me Adam Lee to make it happen.”

Monopoly has been enjoyed by households around the world for many generations. The reason for its continued popularity and success is its reflection of the day to day financial choices and challenges we face and how to successfully go through the game of life, survive and be successful.

We can learn a lot from Monopoly and apply it to produce positive financial results.

Let’s start by thinking who usually wins. It is usually the crazy person buying every property they land on but half of the time that person also gets overextended and either wins or dies. What about the passive player? The passive player rarely wins and usually is eliminated quickly. Somewhere in between is the right way to play the game in real life. You want to stay in a strong position, invest wisely and not get overextended.

Whether in life or monopoly, the keys are to build your income sources for the future and solidify your position continually.

A few key points on winning in Monopoly:
1. Buy early, buy often & don’t overextend
2. Even if you buy a small property early on it can secure your future

When you analyze properties: What kind of properties do you like? Everyone likes different properties. Some love railroads while others wait for Boardwalk and Park Place. Do you like low end properties like purple, light blues and lavenders? Do you like the medium end orange, red & yellows? or the luxury end Greens and the famous pair of Boardwalk and Park Place.

Different properties have different pros and cons and fit people according to their investment strategies. For example, railroads get good steady income with no homes or hotels needed. High end properties are expensive to buy and develop but offer a high return when people land on the property.

Low end properties are inexpensive to develop and have a lower pay off so think to yourself would you rather have (2) low end monopolies or (1) high end monopoly? There is no right answer but if you have (0) monopolies that is the wrong answer to the question of how to succeed financially in the current world we live in.

Boardwalk and Park Place are like beach front properties and luxury condos on the gold coast. Green s are Hawaii Loa Ridge, ocean view homes in town, Lanikai, Kahala non beach front type properties. I compare the red and yellow to Kaimuki & Aina Haina type areas. The rest of the properties make up the apartment buildings, condos and properties outside of the prime locations.

I agree there is an element of luck but luck only goes so far and runs out so stick to a sound game plan, buy early, buy properties that make mathematic sense, increase value, don’t overextend, plan well to create a steady income for the future and call me Adam Lee.