Your Monopoly Coach

30-year fixed rate at 5.62%; 10-year Treasury yield at 3.33%

Long-term mortgage interest rates fell Thursday, and the benchmark 10-year Treasury bond yield dropped to 3.33 percent.

The 30-year fixed-rate average dipped to 5.62 percent, and the 15-year fixed rate sank to 5.08 percent. The 1-year adjustable rate rose to 5.53 percent.

The 30-year Treasury bond yield slipped to 4.17 percent.

Rates and bonds are current as of 7:15 p.m. Eastern Standard Time.

Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.

In other economic news, the Dow Jones Industrial Average climbed 261.66 points, or 2.16 percent, finishing at 12,361.32. The Nasdaq jumped 48.15 points, or 2.18 percent, closing at 2,258.11.

Stock figures are current as of 7:30 p.m. Eastern Standard Time.

Commentary: Economy's in good shape, despite Bear Stearns, recession fears!!!!!

Some progress this week by the authorities has helped mortgage rates fall to the 5.75 percent area for the first time since January. However, the improvement is limited to vanilla "agency" loans, the jumbo and even agency ARM markets still broken. The credit crunch is still alive, growing tighter, and the financial system is unstable.

Meanwhile, there is also still an economy out there, very much alive. It is deteriorating, but at a remarkably gentle slope. Industrial production slipped 0.5 percent in February, but 80.9 percent of capacity is in use, a half-dozen points above the last, shallow recession. The weekly total of new claims for unemployment insurance is crawling up to the 375,000 range, about right for recession onset, but not spiking.

The break in commodity prices this week may not hold, but even if it doesn't it's likely a foreshock of the real thing to come. Gold and oil each lost 8 percent of value since Tuesday, and overall indices are off 10 percent; even the almighty euro has begun its overdue fade.

Aside from the thumbtack-in-shoe sensation while driving past a foreclosure sign or pulling into a gas station, the most difficult aspect of this time is sorting through misinformation to find bits of reality. The commodity/currency break, if durable, will silence all that yammering about inflation, stagflation, dollar-to-hell-in-handbasket, and gold gold gold GOLD!, and let us move on to real concerns and solutions.

Progress and the authorities

Although Federal Reserve Chairman Ben Bernanke is certain to have understood the danger in the credit crunch from its onset in August, he has throughout appeared reactive, always late and surprised by the failure of the prior measure and next ugly development. Rather like a man who has parked his car on a hill and left it in neutral: As it began to roll, he walked alongside, puzzled, unable to grasp the need to jump back in to put on the brake. As speed has gathered, he has tossed his coat, then a few books, then briefcase under the wheels, buying time but losing ground to momentum.

Treasury Secretary Henry Paulson has appeared above it all. It's not his car, after all. His are safe. This is a little-people problem (from where he sits, all are). For months he has chanted, "Losses should be recognized and written off; those who need capital should raise it." Eat some cake while you're at it.

We have not heard that demented mantra since the failure of Bear Stearns got through to both men. As with most history, the magnitude of a crisis is clear only after it has passed. Last Thursday afternoon, SEC and Fed teams began to review Bear's situation. After the all-nighter, the authorities knew that Bear had one more day of life, that Friday, and would not be able to open for business the following Monday. If it did not open, Bear's integral role in the tangle of financial-system counterparties would cause the rest of the system to close shortly after attempted opening.

The Bear Stearns event missed by 10 days the 75th anniversary of FDR's "bank holiday," and by an inch a repeat. The only solution to panic in 1933 was to close the banks and stock market for five days, pass bank-guarantee legislation (Congress did not even debate the bill; FDR signed still-wet copies eight hours after passage), cross fingers and try to reopen. That time, the economy was so badly damaged that it took six more years and WWII spending to pull it out.

This time the economy is still in good shape. Housing needs new credit more than anything else, and emergency measures have begun to help with cost if not supply and strangling standards. Regional and local banks are in fine condition, crunch and recession not yet causing defaults. Basic business conditions are good, with most Americans annoyed by energy, food and home prices but wondering what all the fuss is about.

However, the authorities are still behind. The problem is a system trying for eight months to implode upon diminished capital. Whether market- or government-supplied, or guaranteed, capital must be found. The annualized yield on a 90-day T-bill was 0.65 percent yesterday, panic still in the belly of the system. In 1933, T-bills paid 0.52 percent.

In this my inaugural and future columns in “My Blog”, my main goal is to inform and educate. The topics will be focused on best practices for real estate investment that I have acquired and gleaned from mentors, partners, consultants and years of experience. I am a disciple of Robert Kiyosaki and Gary Keller. In addition to my own, I will also utilizing material from their books, articles and seminars.

This article, then, will be Real Estate Investing 101, aka, Making Money Work for You, not you working for money. The goal of investing is to make your money grow and/or produce income - or both. First and fore­most is to determine what percentage of your savings and portfolio will be put into various investments.

Once that has been accomplished, deciding that generating capital is the goal, not mere consumption, then you are an investor. Indeed as an investor it is helpful to state that fact as you awake daily. Think in terms of making your money grow not spending it.

The next step is to devise a working, 'living plan' to achieve your financial goals and to establish your financial vision or targets. I call this your “Someday” plan.

Next, based on the chart below, we need to have our investments in the two upper quadrants of the following chart.

You can put some liquid funds in the "safe money" quadrant, but nothing in the "dead money" area. You should have a diversified portfolio built around the upper quadrants.

What is an investor? By definition it is the use of (money, capital, etc.) for the purchase of property, securities, or business with the expectation of profit.

There is always an inherent risk to any investment. However, being too cautious you run the risk that inflation will out pace earnings and erode purchasing power. Of course, some investments are more risky than others and it is up to YOU to determine how much risk can be tolerated. As you see in the definition of Investor above, risk is not mentioned.

I will not, in this article, discuss the investment vehicles of stocks, bonds and mutual funds other than to say, I believe that other than bonds, the risk factor is higher overall than in real estate. The stock market over that last 50 years has been very volatile and it has been proven that it has significant faster shifts than real estate does. Real estate has less market movement and slower movement, so it is more predicable. Predictability insures less risk. I might put some of my investment dollars in REITs or mutual funds that are real estate based based. This would fall in the "healthy money" quadrant.

Now let's discuss investments in real estate. Real Estate is the IDEAL investment.

I = Income (rent, etc)

D = Deferral, Deduction and Depreciation (1031 exchange, expenses, forced reduction in income)

E = Equity (the difference between amount owed and actual value)

A = Appreciation (amount of increased value over amount paid)

L = Leverage (ability to use value to increase purchasing ability – purchasing power)

Real Estate investments produce the financial wealth that is IDEAL as defined above.

Financial wealth is one that creates passive income to finance your life mission without having to work, increases net worth and gives you the ability to live more freely.

So, if you are not, at the present, investing in real estate, you need to rethink your investment strategy and "get in the game". Until next time, remember, "when opportunity shows up, it is to late for preparation".

Dave is a Realtor/Investor/CCIM designate with Keller Williams Realty - Atlanta Partners, has a BS in Econometrics from Rollins College, MBA with a focus in International Finance from Crummer Business School at Rollins College, many working years in corporate America, and investing in real estate for fun and profit. Dave is your "MONOPOLY" coach. He can help you grow your net worth through investments in Real Estate.

A unit of the Treasury Dept. recently issued a report from an investigation into 1031 exchanges that urged the IRS to increase it's oversight of exchanging taxpayers. The report says there appears to be little IRS oversight of the capital gains [or losses] deferred through like-kind exchanges and that the IRS is relying to much on taxpayers to voluntarily comply with the tax law in this area.. We anticipate that the IRS will heed the Treasury's advice and we urge exchangers to keep good records. The report stated that in 2004 (the most recent figure available) there were over 338,000 exchanges reported, a doubling since 1998. The 2004 exchanges alone deferred over $73 billion, a tripling from 1998. The report further stated that individuals represented about 65% of the exchanges and 39% of the deferred taxes with entities responsible for the balance. The investigation found the biggest issues to be with related parties exchanges, incorrectly stated property basis figures and properties that were not really like-kind. Vacation and second homes were also mentioned as an area of concern. On the positive side the report urged the IRS to improve it's published guidance to help taxpayers avoid improper transactions. The full report may be read at this link:
http://www.treas.gov/tigta/auditreports/2007reports/200730172fr.pdf