Profile cover photo
Profile photo
HK Creative Investments — HK Luxury Realty
Happiness through learning and financial wellness...
Happiness through learning and financial wellness...

HK Creative Investments — HK Luxury Realty's posts

Post has attachment
Here’s three things that they’ll never tell you.  And all three are intimately inter-related with this back-door meeting.

President Obama recently met with Janet Yellen.  

FED meetings are typically announced publicly.  Not this time.  In the last post, I provided a link directly to the IMF statement that basically puts the world on “notice”—that things aren’t kosher.  History teaches us that when communism (and all the ceaseless money printing/stealing between nations) continues on a mass scale, inevitably you end up with war.  

Isis was just the beginning

(1) Jim Rickards tips the scale.  Gulf War III is on.  But they (politicians) won’t publicize this...

Why should you listen-in on Jim Rickard’s every move?  I’ve noted it before.  But here's his stunning credentials again...

(2) The Obama/Yellen meeting conveniently happens at a time where bank bail-ins are now back en vogue: this time in Austria.

The 2012 Cyprus bail-ins were largely ignored by the distracted majority.  Probably because it wasn’t your money.  But when it’s your money, you will have wished you were attentive.

As you know, your deposits in the bank: are loans made to the bank. 

You are an unsecured creditor.  You are not the senior piece in the capital stack (the pie).  In other words, it’s not your money if the bank can’t meet other obligations.

In short, first there was Cyprus, and now Austria...

(3) As if that wasn't enough, look who let the cat-out-of-the-bag regarding the silver market manipulation: Deutsche Bank.

You would think the Consumer Financial Protection Bureau (CFTC) would have been the teller of truth.  But of course, no.  And why? 

Because the fact is: the government owns/controls and uses the banks to execute the government lies in the first place.  Simply stated, banks are a (proxy) for big government.  

Now the truth comes out, that yes, the big silver bullion banks were fixing the price of silver all along.  To rig the public’s perception of how unstable the global economy truly is:

The Obama administration is trying to keep the wheels from coming-off, until after the election season.  They’ve been squeaking by because of all the lies and manipulation (help from the FED) in every market (stocks, bonds, silver).

But now, the dirty laundry is starting to air out.  

And as Dorothy pulled the curtain to expose the hoax orchestrated by the Wizard of Oz, so too shall these global debt markets unravel, and reveal the subtle swindle of the last 8 years.  Rightfully, the Obama administration should be called: The Big Lie.

Post has attachment
Shhhhhh.  Don't tell anyone.

But here's a dirty little secret.

Cutting edge tools, market data and advice shouldn't be exclusive to the players on Wall Street.

You should also be able to conduct your next home buying decision with the same insider information that the big boys use.  Yes, the kind of deadly information that's NOT typically available to the general public.

Information that most brokers will never reap because (i) they're not willing to pay to get it or (ii) they don't know where to find it in the first place.

If you're buying any single family residential property, then here's a stealth way to double-check what levels (price!) you're buying at.

In other words, are you overpaying, underpaying or getting a fair price?

It's called the: MORTGAGE/RENT RATIO.

Attached here is a picture from Chapter 2 of my real estate book.

Here's the single most important ingredient that you'll need to get from a good broker whenever you buy any residential property:

Answer: the "Rented rate" if the unit were to be rented at the current market.

When you run a comparable market analysis report on the rental rates for a condo in a specific building... or a house in a particular sub-division... then you're half-way done.

After you learn what the unit would currently rent for... you then find-out what the monthly mortgage payment (assuming a 100% loan with no down-payment) would be... on a standard 30-year fixed rate mortgage at that time.

As an example, the interest rate on a 30-year mortgage is currently 4%.

Therefore, if you were borrowing to buy a $399,900 home, then your monthly mortgage payment would be $1,905/month.

Simply take your monthly mortgage payment and divided (/) it buy the monthly rent that the property would legitimately rent for—at that moment.

>A fair Mortgage Rent Ratio would be between 1.00 and 1.05

>Anything below 1.00 would imply the home is undervalued (good buy).

>Anything above 1.05 would imply that the home is overvalued.

As you can see in our image, MORTGAGE/RENT ratios in the 1980's housing bubble were 1.25.

In the real estate bubble of the last decade, they were out in the stratosphere at 1.85.

What levels are you buying at?

Do you even know?

Does your advisor even know?

Have you ever heard a broker say: "'s not the time to buy?"

I've never heard a broker say that.

All I ever hear brokers say is:

" great the location is; or that interest rates are at all-time lows."


Interest rates were also at all-time lows in the last decade.

Last decade, all the brokers were touting how important it was for you to own real estate.  Take a hardened look at the cycle image to see what it led to.

WARNING #1: if you're buying a unit where the seller claims there's a tenant at the tail-end of their lease...residing in the property and paying $$$ per month in absolutely must run your own analysis to see IF the market rents are supporting that threshold.

For instance, I recently stumbled across a condo for sale in LakeShore East (downtown Chicago) where the owner has a tenant residing in the property (for 5 more months) and paying $1,600/mo in rent.  Which equates to $2.46/sf... for a unit that would otherwise rent for $2.30/sf.  In fact, I've seen the same units in that building rent for $1,400/mo in rent.  And rarely for $1,600.

Hence, IF that tenant moved out today, the likely rent it would fetch is $1,500/mo.

Luxury Houses in Lincoln Park Chicago are renting for up to $12,000 per month rent.  Depending on the size and location, they can rent for $8,500 per month.

Bottom line, you have to intimately know your local market rents inside-and-out before you buy any property—even if you plan to live in the property.

Therefore, make certain to ONLY draw your rental comps (and sales comps for that matter) from the MLS.

Not from Zillow...

Not from Trulia or etc...

...ONLY from the MLS.

If you're attempting to be a pricing expert by looking at Zillow "Zestimates" and such... then congratulations, you've just taken your first step toward losing money in real estate.

WARNING #2: the Mortgage/Rent ratio analysis is intended to quantify levels (price) for single family detached houses; which actually don't have monthly association fees.

Therefore, for condos/townhouses, I always add the monthly assessment fee to the numerator of the equation:

Ex. Mortgage payment + association fee / monthly rent

Repeat: condo association fees can/do affect the value of a property.

To use the mortgage rent ratio for condos/townhouses, definitely include the monthly association fee in the calculation.

I've run these calculations for my downtown Chicago market at least 10,000 times.

For fun, I choose a building...

Then I run a report that shows me all RENTED units the last 6 months... which gives me my rent levels for that building or subdivision...

Then I run a similar 6-month look-back report on all the actual CLOSED for sale units...

Then I just do the math.

I know what the actual rents are...

I know what the actual sales prices were...

I know what the current mortgage rates are—simply by going to Chase, Wells Fargo or Bank of America's website and looking...

And I know what the association fees are because (as a managing broker/owner) I have access to all the real data at my fingertips.

If you're ever feeling bored, and wish to spend 5 glorious hours on a Saturday afternoon (instead of going golfing), you can run these numbers too; assuming you have access to the data.

It will offer you a tactile sense of what levels (price!) these assets are trading for in various areas—and without leaving the comfort of your favorite chair.

or, you can hire someone to help you: CAVEAT EMPTOR!

One things for certain, if you (or your advisor) is only looking at the "Sales Comparison" approach to guide your buying decisions, then don't be surprised when your wallet finds its way into the Bermuda Triangle.

Here at HK, we use 4 methods to cross-check what a property is ultimately worth. The Sales Comparison approach and the Mortgage/Rent Ratio are merely two of them.

Post has attachment

Learn more...

Post has attachment
What's your yield target?

If it's a safer 5.3%, then this one's for you.  This is a limited time offer from our insider portfolio.  Own it today.

Market rent is $1,600/month = $19,200/yr income
HOA + Taxes = $730/month = $8,760/yr costs
Net Operating Income = $10,440/yr net operating income

Townhome prices in this area are now climbing above $200K.  This is priced for bargain hunter buyers looking for a better place to earn safer yields.

FACT: The junk bond market (otherwise known as the high yield market) currently offers a 4.75%-5.25% yield.  Fortunately or unfortunately, many of the companies issuing junk bonds don't even have a net worth.  If you've watched any of the Car Icahn interviews that I've posted—you'll find that the billionaires are very skeptical (uneasy!) of how long the junk yields/market will last. 

This property beats junk—high yield—bond rates; and it's a rock solid property. View this video tour now...

Note: great for personal residence also (not just investment).

Post has attachment
In 2010, the F.B.I & The Department of Homeland Security found a Russian attack virus in the NASDAQ stock market operating system. It was there for several months before the defense department actually found it. This was Russian military intelligence inside NASDAQ. As you know, V. Putin has a 6,000 member cyber-brigade capable of shutting down the New York stock exchange tomorrow. While the world has been in a Currency War since 2010—as now all of our socialist nations battle with money printing policies (in attempt to steal growth from one another) for the sake of bigger government. In fact, if you study monetary history...not the history you're taught in'll clearly find that World Wars break-out following excessive money printing (stealing) behavior of this magnitude. And because no military in the world can stand toe-to-toe with the United States—the asymmetric war space (currency, financial markets, digital computer viruses, and biologic weapons) is now the modern-day battlefield. Simply stated—the asymmetric battle-field is an even playing field where the USA can be equally matched. These days, the USA can only impose so-many sanctions on Russia—because the Russian computer scientists have the ability to wipe-out your stock portfolio—as was made evident in the 2010 market flash crash. This is one reason why high-net worth individuals store their wealth in gold/silver/real estate (because it can't be digitally erased). With that said, all the social unrest around the globe is haunting proof of President Obama's poor foreign and domestic agenda.

What is a portfolio lender?  

Before answering that question, it's important to note 'why' it matters to know in the first place.  

The reason why it matters to know is so no one (especially, your leaders) can pull-the-wool over your eyes.  And when banks confiscate your savings one day—you'll know why.

In the lending business, there are two types of companies: "MOVING COMPANIES" & "STORAGE COMPANIES"—that's basically it.

As their name might imply, Moving companies move loans which, ultimately, are stored with the Storage company.  Moving companies do not hold/own the loan.  The Storage company does; and the Storage company is the actual note investor.

Moving companies are big banks (intermediaries) whose role is to market and find borrowers.  Moving companies also "service" loans on behalf of the Storage company.  

Obviously, the Storage company doesn't want to communicate with hundreds of millions of borrowers... 

Rather, the Storage company wants to deal with a few high volume Moving companies—and leave the brain-damage (and ongoing expense) of customer service and marketing for new borrowers to the Moving company.  

In short, Storage companies are true "passive investors." 

Moving companies create loan documents.  And in order to fund the loan—look to the Storage companies for the money.

As you might suspect, Storage companies are called the Secondary Market.  Secondary market players are Fannie, Freddie, Chinese govt, and etc.  The way the 'paper' gets moved to the Storage company is via a step called—hypothecation.  

Which begs the question...

Who makes the rules for what the borrower's qualifications should be?

ANSWER—the Storage Company (not the Moving company).

REPEAT: a Moving company will not create a loan that it cannot hypothecate to the Secondary Market.


ANSWER—because the Moving company doesn't have the money to fund all the loans to begin with.  We just stated, the Moving company is in the marketing and servicing business.  

Moving companies make money and are paid on the 'spread' between the interest rate you pay on your loan—minus the interest rate that the Storage company wants as a return.

Example: If you're a home borrower willing to pay 5%...and the Storage company is eager for a 3.5% return...then the Moving company earns an ongoing spread of 1.5%.  

From that 'spread,' the Moving company has to operate the entire business profitably (eg. pay employees, advertising costs and etc).  And it's easier said than done.

Here at HK, we operate a traditional luxury real estate brokerage (HK Luxury Realty); however, on the other side, we function as a boutique Moving company (HK Creative Investments).  

Assuming you know the rules of the game—and how to run a modern real estate and marketing business—anyone can be a Moving company; even you. 

What matters when you're a Moving company is—who is the Storage company behind you; and what are their qualifiers for borrowers?

How can you (as a Moving company) advertise loans to attract borrowers when you don't even know what yield/terms your Secondary market desires?

ANSWER—You can't. 

Which leads me to point #1:

Banks don't create bad loans.  They only create loans that they know will attract money from the Storage company (secondary market).

It's that simple.

Yet, when you listen to many people, they are misled by their politicians to believe that the banks were just making loans to anyone who could fog a mirror.

Which actually was true—if you could fog a mirror in the mid-2000's, you could get a loan.  

But it wasn't because you were getting it from banks.  

Were there a few cases of 'predatory' lending by bad brokers?  

Sure—but that would be the minor exception.  Are you foolish enough to believe that there were $22 Trillion worth of predatory loans made in just 8 years.  If that were the case, then every single working real estate professional would be a crook.

And I don't recall anyone complaining when they got their bank loans either.  No one puts a gun to your head to make you borrow money.  You choose to borrow the money.

The GSE's (government sanctioned enterprises)—like Freddie and Fannie—were creating the rules on what loans they wanted. 

And the U.S. Treasury and FED know that if things go awry—they can print money (which tax payers now pay for) out of thin air to assure Freddie/Fannie and Wall Street don't go bust. 

If I were to present my Storage company (secondary market players) the loans Freddie/Fannie are willing to accept—my secondary market would laugh in my face (at best).  At worst, they would cease doing business with me all-together.

FACT: $42 Trillion of private debt alone was created in America between the years 1983-2008.  And half of that debt, $22 Trillion, was created in just 8 years—between years 2000-2008.

And how were people getting these loans?  

Because there was a rigged secondary market (Freddie/Fannie) Storage company salivating to accept loans/'paper' from anyone who could fog a mirror.

Those loans would never have been made by a Portfolio Lender.

Which brings us back to the original—and final—point.

Q. What is a portfolio lender?  

A portfolio lender is smaller bank that makes its loans with its depositor's money (the old fashion way).

If those loans go bad...the lender has to answer to the depositors (you).  Therefore, portfolio lenders don't accept poor borrowers because a portfolio lender's secondary market is it's depositors.

The portfolio lender "portfolios" the loans in-house (as a Storage company)—hence the name.

When you here these socialist/democrat/communist politicians in America using phrases like:  

"...banks privatizing the gain while socializing the risk."

That couldn't be further from the truth.  

The agonizing truth is...the risk was always socialized on the taxpayer ALL-ALONG (from the very beginning)...courtesy of the government intervention that insured loans be made to risky borrowers.  

By the way, the Obama administration started on the same path again in 2010.  FHA is making low-to-no down payment loans to shaky borrowers.  

These are not portfolio lenders making these loans.  These are big banks (Moving companies) who are incentivized to attract these borrowers because the government Storage company (secondary market) wants them.  

If you don't agree with much of this—then here's your next exercise:

Start a company like that of HK...and see how far you get talking to investors (your Storage company investors) telling them you'll loan their money (their family's life savings) to low-or-no money down borrowers. 

When they ask why—tell them...

 "... because you believe everyone is created equal—and therefore, is entitled to get a home loan."

Oh, yeah...and then tell that Storage company investor of yours...that you'll pay them a whopping 2% return...because the current rigged interest rates are 3.5% for borrowers (which will fit a Moving company 'spread' of 1.5% for you).

Considering your Storage company investor can't print money out of thin air...I doubt they would even take you seriously.

And in that scenario—why should they?

How happy do you think they'll be when the borrower stops paying you...and the property (collateral) at foreclosure appraises for less than the initial money they loaned you to fund the loan?

Post has attachment
If you're a first-time home buyer, investor or buying any property, one of the most important variables responsible for your
success pertains to how well you know your local market.

And not just the bird's eye view either—but the street-level
metrics too. How many closed sales? How many sales
were cash and/or foreclosures?

For example, one particular zipcode in Downtown Chicago
had 1,113 CLOSED sales in 2014; while another—just blocks
away—had only 70.

If you're an investor, then velocity (turnover volume) is key. If
you're not an investor, then property turnover rate may be less
important—because you intend on residing in the dwelling.

View this infograhic which uses downtown Chicago as an example. However, keep in mind that you'll benefit by underwriting your local market similarly. In the end, heeding this top-down format will save you money and time—See it now...

Post has attachment
Did you know that 65% of family's squander inherited wealth by the second generation?  And by the 3rd generation, 90% of inherited wealth is erased completely.

Despite what your politicians fool you to believe, inheriting money is not a free pass toward future prosperity.  

It reminds me of a young man I met 4 years ago at a Starbucks coffee shop located in a wealthy northern Chicago suburb (true story).  At the time we met, he was pursuing photography; scraping by.  I saw some of his portfolio photos—incredible talent.  Some of his nature shots have been used in National Geographic magazine.  

This 30-something-year-old guy started out making half-a-million dollars a year working in the family business.  The family had a net worth of anywhere between $50mm-$100mm at the time of his employment.  He mentioned to me that he was paid way too much; to do way too little.  In a nutshell, you know how the story ends.  

The fact of the matter is, if you see a family that has preserved generational wealth—then you need to pay attention—because it doesn't happen by accident.  It all starts with educating the succeeding generation on what wealth, money and real assets actually are.  

You will not learn that in a university; nor from your politicians.

How has one wealthy Italian family preserved its wealth for 900 years?

Here's your answer from my 'go-to' insider J. Rickards.  

Watch this video so you can learn the: 1/3—1/3—1/3 RULE

Post has attachment
Do you know what it looks like when everyone rushes for the fire exits at once?

These photos on the latest 6-month oil plunge (and the not-to-long-ago real estate bubble collapse) tell the story best?

Did anyone on Wall Street predict these?

Answer—NO. And if they did, they would have been 'labeled' a cynic.

So, what's the point?

The point to nail down is—this is what happens when the Government manipulated markets implode. From the deflating of bubbles that the very same manipulators created themselves—via Quantitative Easing (QE) and rigged secondary market policies.

Who's next?

Either the bond market...the stock market...or both.
For starters, if Janet Yellen at the FED follows through with initiating interest rate hikes this year—the stock market will deflate because all the leverage/debt (cheap money) players will have to sell faster than Michael Jordan can pivot around three defenders.

If the 10-year U.S. treasury bond starts to pay (which is starting to appear reality) a higher yield—bond prices will tank. [aka. as you know, bond prices and bond yields move in inverse relationship]

Personally, I believe the government is dead broke... So how can the FED raise interest rates?

If the government can't afford to pay back the loans it now has at ZERO percent interest, then how are they planning to afford interest rate payments at higher rates?

For this reason, I expect rates to NOT rise for many years; and therefore, the stock market to muddle along sideways for a long while.

WARNING!: But here's the problem with my assessment.

The problem with my assessment is that Janet Yellen (and the so-called experts) actually believe that everything is fine and dandy. Therefore, it's quite possible that they decide to raise interest rates as intended—because their view of the real world is completely different than mine.

They (U.S. Treasury and Fed) actually believe they know what they're doing; whereas I'm quite confident that they have no clue about what they're doing (and the problems they cause).

And if you still don't believe that...take a look at the 40-year USA real estate chart. The RED ARROW (in 2005) is a point-in-time when then Chairman of the FED—Ben Bernanke—was still claiming real estate was not in a bubble.

In fact, if you notice the tools I use...They (green dashed areas) were alerting us to be well-out of the San Francisco real estate market back in 2002 (it's red line started deflating)... and back into the San Fran market starting in 2012.

For Chicago, our tools (green dashed areas) were alerting us to be out of Chicago near 2006—still ahead of the collapse.  And back in again in late 2014.

All of this is extremely important if you're using debt/financing to purchase your investment (or any home).

If you're not using debt (maybe using all-cash instead) to acquire—and you intend on living in the same asset for 20 years—then these cycles will matter a bit less because you're plan is to use the property long-term (as personal shelter).

Here at HK, we believe the best investment you can make is starting (or in) your own business. Beyond that—once your business is stable and dripping with extra cash—then look to a mix of other quality investments (that are backed by quality collateral; which is why I love luxury real estate).

If you follow the herd of 'experts' and the mainstream, don't be surprised if your wallet finds its way into the Bermuda Triangle.

Post has attachment
Who's lying?

Something doesn't add up for the little-guy. And why this "leaders eat last" talk reveals more about President Obama than you think.

The Obama administration and the FED/Treasury have repeatedly stated that "Inflation" is not a threat.

This is the message they keep forcing down your throat. Maybe they're right; maybe not.

However, don't you find it odd that in 2009 President Obama made certain that federal employees got a raise?

Don't you find it even more odd that in 2012, President Obama made certain that both Congress and federal employees received yet another pay raise?

In the midst of what the government considers a deflationary environment (where the middle class is getting crushed), President Obama felt compelled to take care of his own with pay hikes.

It's funny that only in 2014 did President Obama start his campaign to give America a raise.

Where was this message in 2009?

Why didn't President Obama start his give America a raise back in 2009? Or in 2012?

Why did America come second (5-years later)?

Not only did the Obama administration allow the banking sector and the government to steal from the little guy at unprecedented levels... he gives the government class a "pay raise"... TWICE.

You might be asking " are they stealing from the little guy at unprecedented levels?"

Answer: zero percent interest rates implies that savers earn no return on savings. However, there is another side to the trade... the bank side that borrows at zero percent.

Banks (government) borrow at zero percent and "lever-up" to get large percentage returns. As a result, in the last several years there has been a $400Billion wealth transfer away from the little guy over to the banks.

If you were to include the money printing (stealing) done by the Treasury... the transfer of wealth (via taxation) away from the middle class will be even more.

And all this time, President Obama rewards the government class with pay-hikes.

With what merit do these people deserve a raise?

Which brings us to the main point...

The White House Intruder (the "Ultimate Proof")

If you recall, last year there was an intruder that made his way inside the White House.

Many found it hard to believe; and wondered how the Secret Service and other personnel could allow a breach like this to occur (where someone could possibly get so close to the President).

If you were to watch the first half of this video, then you would have your answer. It has to do with human psychology.

Simply stated... President Obama has proven by his actions (forget about his words; go by what he does) that he eats first.

It's highly unlikely that he would ever give you the shirt off his back.

The reason why the White House personnel let their guard down has little to do with laziness or distraction. Rather, it has to do with psychology.

The lack of leadership by this administration (except to help the banks) further revealed that if the shoe was on the other foot... President Obama would not look out for them.

Hence, why no level of security would have ever prevented the intruder.

And here's one last snippet of proof...

In August 2014, the SEC under the Obama administration signed a new regulation:

The Money Market Reform Regulation.

Money market accounts are those accounts that you would normally be able to redeem from your bank (no questions asked).

Not anymore.

The new SEC regulation allows banks to withhold from redeeming your money market funds.

Can someone ask the President " does this help the little guy?"

Certainly, I can see how this helps the banks (at the expense of the little guys)

Do they know/fear something the public doesn't know?

Fear not! The government class lives by a different set of banking principles. Therefore, President Obama will undoubtedly be able to access his funds (even though you won't be able to).

Someone is lying. You can decide for yourself who it might be.

All I know is that: true leaders eat last.

President Obama could learn a vital lesson from the message revealed in this widely known video. Watch it now to learn the psychology behind this natural human survival instinct.
Wait while more posts are being loaded