stock is up, but we're entering worst month of the year: SEPTEMBER

Today is the last trading day for month of August. Market make a nice rally in responds to the positive words from FED regarding subprime and credit crisis. However, my feeling is the market will continue its downward movement in next month or so. Especially, we're entering month of September, which in history all the major index perform worst on this month. So, I sell most of my holding today just to get back cash. I'm prepared to hunt for great bargain when opportunity strike in September.

I wish I know this trick before I buy my first real estate

At age 23, I buy my first real estate. At that time, I know nothing about how Real estate works. I don't understand anything about tax advantage, appreciation, insurance, property tax, income tax write-off, etc. These were too complicated for me. All I know is 2 simple fact.
1) Because Real estate is a basic necessity, its value MUST go up over long period of time, just like inflation every year go up around 4%
2) Bank willing to lend me money to buy Real Estate. But bank will not lend me money to buy stock
So, I just decide to get my feet wet and jump into the market. As you can probably imagine, I make mistakes. In fact, some painful mistake that cause me thousands thousands of dollar. Tonight, I want to share with you one of the Biggest Mistake I've made.

IF you're first time buyer, you should look for First Time Home Buyer Loan. This loan come from the government which aim to help more first time buyer to buy their own home with special assistance. The interest rate you get from this type of loan is SIGNIFICANTLY lower than the bank offers. Usually 1point to 1.5 point discount is offered. This is huge saving! In addition, government can lend you 100% (depends on your income) to purchase your property PLUS help in closing cost. Some portion of your loan can even be to be paid back as SIMPLE Interest! Government really try to help us big time! Of course, the rule change from time to time. Check with your local city government for details. You can only qualify once in your life time, once you have record owning property, you may never qualify this loan again. Last advice: Don't let unprofessional mortgage broker who has no experience in this topic talk you out to discourage you participating the program, because they wouldn't make any money from you if you don't go thru a bank with them. Good luck!

Create instant equity with short sale

Recently, I purchased a property where the owner is in short sale condition. This is one of the golden market to invest real estate and could potentially create an instant equity for investor.
What is short sale?
Short sale happen when the borrower fail to make mortgage payment and before the bank take legals steps to foreclose the property, borrower ask the bank's permission to sell at a price lower than the outstanding mortgage balance.
Why would the bank accept?
Two reasons:
1) Bank may suffer more loss due to the lawyer's fee associated with foreclosure process
2) Bank is not in business owning home. Any non-performing mortgage bank carry will negatively affect its balance sheet and the financial strength to approve more loans in future. Therefore, the bank would rather get rid of these non-performing mortgage to reduce its loss.
How do you find this deals?
Newspaper, MLS, agents. I bought mine thru agent who specialize doing this kind of short sale deal.
How much below the market price (or mortgage balance) can we buy?
Depends if the bank is flexible enough. The house I got was at at least 10% below the market value or 30K. This means I instantly create an equity on paper when I acquire this property.

Watch out if you trade Mutual Fund

Mutual fund is designed for a longer term investment mostly. Fund company discourage investor buy and sell mutual fund in a short period of time. Fund company impose these two restrictions to limit trading Mutual fund or called "Market timing." I want you to watch out before you invest in any mutual fund because most mutual fund company never mention in their " highlight summary" and most of us never pay attention to them. At least I didn't.
1) redemption fee. If you buy and sell within a certain period of time (from 7 days to 90 days depends on your fund), they could deduct a penalty (up to 2%) from your sell transaction.
2)trading block. The fund company could prohibit you to repurchase the fund after you sold within in a certain period of time (again depending on your fund 's policy)
My advice, check if the fund you're interested to buy has these limitations before you buy. Otherwise, you will be punished just like I was when I sold a mutual fund within 90 days at a loss AND get beat up by another 2% for redemption fee :( Learn from my mistake!

How did I save 100 dollar for my property tax in 1 min?

I received a property tax bill two months ago for one of my property in Texas. The tax bill was shocking as it use the new appraised market value as the basis to calculate my tax. The market was fast and appreciating since last year and price jump from the price I bought. To keep the long story short, my tax bill increase from $2800 to $3500! I'm not very happy and I decide to appeal although I have no idea how the procedure works.
A phone appointment is setup for me to talk with appraisers. The rule is if we don't get consent, we'll have to go to next step to bring to the court. I just thought, "ok, give it a shot, worst case I just have to pay the tax"
Here's the 1 min conversation
After verifying my identity..
Appraiser: so, what do you think the property worth
529pm: well, I know it's definitely cheaper than your appraised price.
Appraiser: how much?
529pm: 3000 less than your appraised value...I think
Appraiser: Ok, I'm very busy, I will not spend time arguing with you over 3000 dollar. You have it. Give me your fax # and you can sign the paper.
....After I heard him say that, I thought to myself, "man, I should have told him 5000 or even more" Anyhow, it's a good experience. After reducing the property value by 3000, I still manage to save about 100 dollar with 1 min work, although I could have saved more $D

3 winning way to pick stocks like a PRO

Tonight, I want to share with you the three ways I pick stock which earn me over 10% return in last few years of stock investing
1) Pick stocks that has lower P/E ratio. Price/Earning is a measure of the stock’s current price relative to its earning. The higher the P/E ratio mean the stock ‘s current price is traded on the high side. Vice verse, the lower the P/E ratio, it means the stock ‘s current price is traded on the lower side. I suggest you pick the stock that has lower P/E, as it has a higher chance to go up in price once the market correct itself. The historic average of P/E is about 15.
2) Pick stocks that has higher return on Asset. Assume you spend 100 dollar in capital expenditure building up your business, each year the business bring your 10 dollar profit. Then your return on equity is 10%. The higher, the healthier the company. I’d suggest to pick stock that can give 10% return on asset or more for your portfolio
3) Pick stocks that earn high dividend return. Just like putting money in the bank where they give you 2-4% interest. Buying stock giving dividend could be a safe and consistent way to earn your interest. Some stock give out dividend every quarter,others give out dividend every month! I normally buy stocks that can give at least 7% annual return with a very consistent history of paying out dividend. The longer the history, the better chance you will earn the dividend in future. Combining the above three winning ways to pick your stock, it could be a very powerful, safe and rewarding investment you could get.

Most of us do not know this method to invest TAX FREE legally

Tonight, I want to talk about one of the most "overlook" method to invest your money tax free mainly for your retirment purpose. Most people use 401k, IRA, Roth IRA as their vehicle to invest tax free or tax deferred. Very very few people heard about life insurance as a investment vehicle. Generally, people believe that one could get benefit from life insurance if the insured die. Well this is the "old" way-> term insurance. Another type of insurance has cash value built-in the premium. It means that a portion of your premium will go toward the cost of your insurance coverage. The bigger coverage you buy, the higher the cost. The remaining premium will go into an investment account which will earn money for you. The yield % vary depending on which type of cash value insurance you buy and which company you go with. The best thing about this program is that the money grow tax free! Money will compound at a much faster rate compare to taxable account, like our general stock account, CD, etc. So, what's the catch? Most policy has this restriction called Surrender charge. You're not allowed to withdraw money in the first 5 to first 10 years. But if your idea is to invest for long term for retirement, say 20 year +, and you have max out other tax-free investment, life insurance could be another way to diversify and enjoy the tax free benefit.

3 simple steps to win our money game

Tonight, I want to share the 3 simple steps I used five years ago that help me to get ahead money game. I believe you can achieve if you can keep this 3 simple steps in mind to build your wealth.

Step 1) Define my dream (as specific as possible)
Step 2) Know where I'm (how much money and time I have, what is my strength and my weakness, what do I enjoy to do)
Step 3) Find a Vehicle(s) to make it happen. (Real Easter, Stock, network marketing business, etc)

It's like getting a map to travel. First, you need to know where is your destination. Next, you need to know where you are. And Finally, find a vehicle to take you where you 're to where you want to go.

Very hard to do a refinance in these days..

Tonight , I want to share an experience I have in refinancing my primary residence last couple weeks. It was pretty frustrated. I bought this condo 6 months ago , Feb 07. The condition of the condo was not great, kitchen and bathroom need work. I bought it for 300K and spend about 20K to remodel the place. Currently, the price of the condo is going around 350K, there are two transaction in June-July to support the price. Since I put down 20% down for the condo, I'm looking to do a refi-cash out to pull my money. Two months ago, I went to several bank, like wamu, wells fargo, bank of America. However, they all turned down to me! The reason is because I didn't own the place for more than 6 months. I try again last weeks after 6month period, but I didn't have much luck neither. They have another reason to turn me down again. They said they can not use the current market value (350K), instead, they can only use my purchase price (300k) and give me a 80% LTV. Basically, they're saying " NO, WE Don't want to lend you money in this current time" I guess the sub prime has hit the banks BAD. They tightened their policy and is very difficult to give you a cash out loan. Well, I will not give up here, I'll continue to look for banks to get my cash out ... Will update you how I do next weeks.

Top 5 reasons why I LOVE dividend paying stock

The reasons are following:
1) Earn income while I'm holding the stock for a potential gain
2) The dividend is taxed at a lower tax rate than capital gain in most case
3) Higher chance to increase my overall return of investment (dividend income + stocks appreciation)
4) More liquidate than individual cooperate bonds or municipal bonds
5) No minimum investment required for greater diversification.

Most importantly, my strategy in stock investing is: Buy and Hold. As I believe the longer you hold the stock, the less risk of losing money. Plus, frequent buy and sell will increase the chance of error. So, buying a stock with dividend income just match my strategy well.

Commited to become a value investor!

When I enter into stock market, I'd like to follow the best type of investor to follow their success. Who do I follow? you bet, Warren Buffet! His portfolio has performed over 25%+ return in a very very consistent basis over the last 30 years! This is just skill, not luck. I read many many of his book to try to pick his brain and learn his way. In one short sentence, basically, I find that he is a very committed to become a value investor. What's a value investor? Stay tune, I will do my best to explain the concept in details ...

Bearish Market 2nd half of the year?

Stock market has take quite a big hit in last month, mainly due to bad news on subprime market. Many banks which focus on residential loan as their prime business face some serious challenge. And my impression is that the impact is still affecting the market for few month month or even until the end of year. The reason is I saw Dow and other major index try to make some rally in the morning time but fail and drop in the afternoon. This is the exactly characteristics of a bearish market. So overall, I'm pretty bearish for the 2nd half of 07, unless fed is going to do something (like cut rate) to help the suffering subprime market.

4 expense you need to take care when investing Real Estate

1. Principle. This is the amount of money you pay to reduce your outstanding balance. Usually, with most loan that you found in current market, your mortgage payment portion goes toward your principle is very "small" in the first 5 years. After that, the principle will gradually increase until the end of the loan term
2. Interest. Since you're likely to get a loan from bank, you have to pay interest to acquire the loan. This interest payment make up a largest amount of your real estate expense.
3. Tax. This is the property tax you pay to government. Usually it is 1-3% (depending on which state property located in) of your purchase price.
4. Insurance. You need to buy insurance to protect your valuable assest. The typical insurance you need to buy is Fire plus liability.

Remember, PITI. As a smart real estate investor, it is your objective to mimize the expense in each area, so you can have a higher chance to get postive cash flow . (Meaning Income greater than expense)

My first Real Estate

This is the first house I ever buy in my life at age

23 . I bought this house (it's a 2 story 2b1.5b condo) after I learn about so much advantage of owning my own personal residence than paying rent. Although I just took a job and my status is not stable, I decide to take the "risk" and jump in the market to buy my own place. I bought it in decemeber time, which the market is seasonally slow. As soon as I move in, I decide to share room so I can collect some rent to help my mortgage.

Investing in a university or college area is a sure bet

Tonight, I want to talk about why I love to invest real estate in a city where there is a university or college in the area. The reason is very simple: It’s recession proof. Most cities ‘s house market performance is usually tied to how strong local economy, the employment rate, the average salary people getting etc. Thus, when there is a bad news about the local economy or recession comes, which almost every cities could experience some point of the time, the house market tends to fall. Also, it may become harder to rent out the property during recession. However, if I invest into city where there is a well-established university or college, I will have students coming in and out every semester or quarter and I can easily rent out my house to students. In fact, there will be more students to rent my apartment if the economy is not doing good because most of them can’t find a job and decide to go back school. Therefore, investing in a university or college area would give you a more stable cash flow for your real estate investment during the down time .

If you can Dream it, you can Build it!

I'm a firm believer of having a dream, in fact, a BIG DREAM. The size of your success is depending on the size of your dream. So, the bigger your dream, the higher success you
most likely will achieve! I have met many people who have a 9am to 5pm job, working few years at their work, become a very very small dreamer! They accept the "reality" and forget about pursuing their dream. In fact most people don't even have a "serious dream".
The first step in getting ahead of your financial life, is start to DREAM. Spend a lot of time defining your true dream. Once you do that, with the help of this site, I hope I can share with you tips, ideas, skills to help you build your dream at 529pm (after your working time)